Category: Politics

Demographic Dead End? Barack Obama’s Single Nation

President Obama brought up Planned Parenthood three separate times at Tuesday’s town hall debate. It was an appeal aimed directly at a key part of his base: If he is reelected, it will be because of the Single Nation.

Democrats have woken up to the huge political rifts that have emerged over the past 30 years—between married and single people, and people with kids and those who don’t have them. And save African Americans, there may be no constituency more loyal to the president and his party than the growing ranks of childless and single Americans.

In the short term at least, the president and his party are seizing a huge opportunity. Since 1960, the percentage of the population that is over age 15 and unmarried increased by nearly half, 45 percent from 32 percent. Since 1976, the percentage of American women who did not have children by the time they reached their 40s doubled, to nearly 20 percent.

And even as the president has slipped in the polls, the fast-growing Single Nation has stayed behind him. Unmarried women prefer Obama by nearly 20 points (56 to 39 percent), according to Gallup, while those who are married prefer Romney by a similarly large margin.

Unmarried women (along with ethnic minorities, the poor and the workers in the public bureaucracy) are rapidly becoming a core constituency of the Democratic party, in a sense replacing the ethnic white working class.

And while single women have long been ignored (or at least not courted directly) by national politicians, Democrats are now taking direct aim—as in the Life of Julia campaign, where every milestone in her life is marked by the government benefit she’d receive under President Obama’s hubby state. Democratic strategists such as Stanley Greenberg also urge targeting singles, particularly “single women,” whom he calls “the largest progressive voting bloc in the country.”

Even among the married, children have become less of a priority. A 2007 Pew Research Center survey found that the number of adults who said that children are very important for a successful marriage had dropped by a third, from 65 percent in 1990 to 41 percent in 2010. Over that same span, financial considerations, and the willingness of a spouse to share chores and even political beliefs all became important to a greater share of adults.

The rise in both childlessness and singlehood parallels developments already evident in other cultures, notably in East Asia and Europe. Many of these countries have experienced declining marriage and birth rates for decades. In Germany and Japan, the demographic results of this—fewer workers to support more retired people—has led to difficult tax hikes to allow the remaining young workers to maintain the funding for a growing number of aging boomers. This is the Europe’s screwed generation: “the victims of expansive welfare states and the massive structural debt charged by their parents.”

In America, by contrast, birth rates rose somewhat over the past two decades. But since the recession, the number of new children has plummeted, and it’s dropped the most precipitously for new mothers. The number of households with children today is 38 million, about the same as a decade ago, even as the total number of households has shot up by nearly 10 million.

There are now more houses with dogs than houses with children.

Singles don’t always show up at the polls, but Democratic party strategists see their numbers as simply too large to ignore, especially in close elections. Singletons almost elected John Kerry: red states had fertility rates 12 percent higher than those than blue ones.

In 2008, singles helped put Obama over the top, something widely recognized by party leaders. This summer’s surge in Obama’s ratings also derived largely from his growing appeal to single voters, and particularly women.

This reliance on single and childless voters could transform the Democratic party in the years ahead. Singlism, a term coined by psychologist Bella De Paulo, embraces the idea that far from undeserved subjects of derision or pity, the unattached represent a bridge to a more evolved humanity. De Paulo sees them as more cyber than the married set, and “more likely to be linked to members of their social networks by bonds of affection” rather than blood. Unlike families, who, after all, are often stuck with each other, singles enjoy the linkage to “intentional communities” and are thus more likely “to think about human connectedness in a way that is far-reaching and less predictable.”

A singleton approach to public policy, notes Eric Klinenberg, author of the widely celebrated Going Solo, notes, favors a high density, urban “new social environment.” This is particularly true in the central cores of social-media hubs such as Manhattan, San Francisco and, most of all, Washington D.C. In many dense urban areas now, 70 percent or more of households are childless. In contrast, the largest growth in families with children are found in places such as Dallas-Ft. Worth, Houston, Raleigh, and the Salt Lake area, which have relatively little impact on the national culture.

The new post-familial politics departs in many ways from the old urban politics. In the past, urban voters focused largely on issues concerning neighbourhood, public safety, schools, ethnic enclaves and churches. The new childless class, notes the University of Chicago’s Terry Nichols Clark, identify less with these mundane issues and more with cultural preference and aesthetics.

Clark also suggests the new singles-dominated electorate will have transcended the barriers of race and even country, embracing what he hopefully calls “a post materialist” perspective that transforms the baser considerations of those embroiled in raising children and maintaining kinship ties. No longer familial, as people have been for millennia, he predicts they could be harbingers not only of a “new race, but even a new politics.”

The emerging “new politics” of the rising Single Nation could impact elections for decades to come, particularly in Democratic strongholds like Chicago, New York or San Francisco. These areas will be increasingly dominated by a vast, often well-educated and affluent class of voters whose interests are largely defined around their own world-view, without overmuch concern with the fate of offspring, along with the urban poor and the public workers who tend to both groups. Since the childless frequently lack the kinship networks that are obliged to provide for them in moments of trouble, they tend to look more to government to care for them in hard times or old age.

But the Single Nation’s grip on power may not be sustainable for more than a generation. After all they, by definition, will have no heirs. This, notes author Eric Kauffman, hands the long-term advantage to generally more conservative family-oriented households, who often have two or more offspring. Birth rates among such conservative populations such as Mormons and evangelical Christians tend to be twice as high than those of the nonreligious.

As a result, Kauffman predicts that inevitably “the religious will inherit the earth” and ensure that conservative, more familial-oriented values inevitably prevail. Even among generally liberal groups like Jews, the orthodox and affiliated are vastly out-birthing their secular counterparts; by some estimates roughly two in five New York Jews is orthodox, including three quarters of the city’s Jewish children. If these trends continue, politics even in the progressive nirvana of Gotham may be pulled somewhat to the right.

But in the here and now, and especially this November, these long-term trends will not yet be evident. The tsunami of Chasidic and Mormon children are not yet eligible to vote, and won’t be for a decade or two. So even as the president loses among the married, the growing ranks of the Single Nation could still assure his reelection, and propel his party’s ascendency for a decade or more before the whole trend crashes against a demographic wall.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in The Daily Beast.

Barack Obama Photo by Bigstock.

October 18, 2012
The Land Premium That’s Punishing Property

High land prices have all but killed the Australian housing industry.

Lower housing starts has led to lower GST revenues (house construction attracts full GST) and lower stamp duty receipts are crippling state budgets and cruelling the chances of low and middle income earners to get a start in the housing market.

What has caused this slump in housing starts? Land prices.

Raw land for new housing developments should be close to its agricultural value – in other words, around $10,000 per hectare. But land released for residential development fetches up to $1 million per hectare – 100 times the agricultural price.

Government land management agencies and private land developers may well argue a lot of land has been released for residential development, but clearly it is not enough.

Only when urban growth boundaries are removed will we know a piece of land’s true value. It will then be a trade-off between price and distance. People may be prepared to travel another 10 or 15 minutes by car (10 to 20km) to get a cheaper block.

To highlight the “‘X’ years supply of land available” argument, I heard a state bureaucrat say recently that the government had released enough land for 15 years supply. I raised my hand and asked “15 years supply – at what price?” He didn’t know what I meant. I said “at $200,000 a block it may well take 15 years to sell. So why don’t you double the price and then you’ll have 30 years supply?”

These points highlight the fact that, as with most central planning, housing planning is based on a fundamental flaw – that price does not matter. But as we know, price does matter. Imagine the demand for housing if land was $100,000 per block cheaper. Think LCD, LED and plasma TVs over the past five years.

Australia does not have, and never has had, a housing affordability problem, it has a land affordability problem. The cost of building a new house has hardly moved in 20 years. Land prices however have skyrocketed. By restricting the amount of land available on the urban fringes of our cities, state governments have sent the price of entry-level housing through the roof.

The reasons state governments give for these restrictions all centre on urban planning. They have persisted with their policies of urban densification (squeezing more and more people into existing suburbs), an idea that has failed all over the world.

Whether it’s traffic congestion, air pollution, the destruction of bio-diversity or the unsustainable pressure on electricity, water, sewage or stormwater infrastructure, urban densification has been a disaster. The evidence is overwhelming; urban densification is not good for the environment, it does not save water, it does not lead to a reduction in motor vehicle use, it does not result in nicer neighbourhoods, it does not stem the loss of agricultural land, it does not save on infrastructure costs for government and, worst of all, it puts home ownership out of the reach of those on low and middle incomes.

State governments use urban planning laws to restrict the amount of fringe land available and then drip feed it through their land management agencies to a land- starved housing industry at inflated prices. Hmmm. After a change of state government a few years ago, a former cabinet minister was asked why her government didn’t release more land to kick-start the housing industry. She replied: “We needed the money.” So much for urban planning.

And of course land developers with massive land banks on their books urge state governments to maintain the scarcity to maintain the ‘value’ of the developers’ inventory. Developers would be better off if they supported the removal of urban growth boundaries and allowed more broadacre land to come onto the market which they could buy at greatly reduced prices. With land prices significantly lower than they are today it wouldn’t take long for the industry to recover. Until land prices fall, there will be no recovery.

The Australian housing industry is building 40,000 fewer homes a year than it should be. That’s more than $10 billion worth of work a year the industry is missing out on. That’s a lot of bricks, concrete, timber, tiles, steel and, of course, labour.

Governments and industry associations have known for years this was coming but just played footsies with each other – read US economist George Stigler’s book Regulatory Capture to understand how and why this happens.

Australia’s economy has been seriously distorted due to a massive overinvestment in household debt. We have a housing industry on its knees. Getting all this back into alignment with reality will take time but it is a realignment that is necessary.

We cannot continue to deny the next generation a home of their own merely to satisfy the indulgences of urban planners and state government treasury officials.

This piece originally appeared in Business Spectator.

Bob Day AO is managing director of national homebuilder Home Australia.

Brighton Beach bathing box photo by Bigstock.

October 18, 2012
Warnings of an “infrastructure Crisis” are Meeting with Skepticism

Is the "infrastructure crisis" a myth or a reality? Many  within the transportation community firmly believe that the crisis is real. They point out that many of our roads, bridges and transit systems are approaching the end of their useful life and are badly in need of repair, reconstruction and modernization. They are convinced that without an ambitious program of investment —beyond the billions that already are being spent—the transportation infrastructure will continue to deteriorate, rendering great harm to the nation’s economy. They find it difficult to understand why politicians and the public do not necessarily share the same sense of urgency. They tend to blame themselves for doing a poor job of "educating" the public about the catastrophic consequences of inaction.

Even though the new two-year transportation bill has barely gone into effect (on October 1), activists already are strategizing how better, i.e. more convincingly, to present the case for higher transportation spending in the next transportation bill.  As an AASHTO spokesman reminded us recently, "it is never too early to consider your strategy for making the case that the United States should continue to invest in its transportation infrastructure." "We can’t afford to relax," echoed Pete Ruane, president of the American Road and Transportation Builders Association (ARTBA). "We’re in a very serious struggle over the future of federal investment in transportation." Similar sentiments have been voiced in various transportation-related meetings over the past several months..

But proponents of greater spending ignore the political realities. With mounting deficits and the shadow of a $16 trillion debt hovering over all fiscal decisions, Congress is not about to vastly increase spending on transportation. Concern about deteriorating infrastructure has failed to resonate with the electorate during the election campaign. Nor did  the presidential condidates care to mention transportation in their recent debate on domestic priorities, despite pleas by stakeholder groups to include infrastructure on the political agenda.

Infrastructure crisis believers decry this supposed "indifference" or "short-sightedness" on the part of the politicians and the public. But their anger is misplaced. People recognize and acknowledge the need to modernize and expand the nation’s infrastructure. They simply are not convinced by the "sky is falling" rhetoric employed by the alarmists—dire warnings of collapsing bridges and crumbling roads if  government does not greatly increase spending on infrastructure.

As the Washington Post editorialized no too long ago, people see no signs of "crumbling infrastructure." They trust their own eyes more than they trust the unverified claims of the experts —and what they see is highways and transit networks that are well maintained and functioning smoothly and reliably most of the time. They suspect that warnings of catastrophic consequences if spending on infrastructure is not boosted, are overblown, self-serving, and more often than not inspired by liberal advocacy groups, lobbyists and industry spokesmen who have a financial stake in pushing for more federal spending.  As one senior congressional aide confided to us, "I don’t see our constituents lobbying to raise the gas tax in order to spend more money on transportation."

Moreover, the public is not sure that all of the billions of dollars that the federal government already devotes to transportation ($114 billion in FY 2012) are spent wisely, nor that more money will make the transportation system perform any better (e.g. reduce congestion). They believe that the desire to greatly increase investment in infrastructure must be tempered by the overriding imperative to get the nation’s fiscal house in order.

Beyond MAP-21
The fiscal and political climate in the next few years will make the job of convincing the skeptical electorate to support higher transportation spending even harder. Funding constraints will continue to make it difficult if not downright impossible for Congress to commit hundreds of billions of federal dollars in a single legislative package, regardless of which party controls the purse strings. Unwilling to raise fuel taxes, Congress is likely to embrace short-term bills as a convenient way out of the dilemma. Short-term authorizations such as MAP-21 will require only modest transfers from the general fund —especially if states are willing to step in with increased contributions of their own. On the other hand, a six-year bill would require an injection of nearly $90 billion in general revenue.

To be sure, some in the stakeholder community will contend that longer-term (i.e. five- or six-year) authorizations are necessary to allow for orderly planning and implementation of capital projects. They will argue that short-term bills will not provide the kind of funding certainty that major public works require. But to the extent that large capital investments still figure on State DOTs’ and transit authorities’ agendas, private capital, tolling, and credit instruments such as TIFIA and state infrastructure banks, will provide adequate alternatives to the funding stability that long-term congressional authorizations offered in years past.

The bottom line: regardless of the outcome of the November elections, do not expect a boost in federal transportation spending. Indeed, minor reductions in discretionary programs (TIGER, New Starts) are possible if automatic year-end spending cuts under sequestration are not avoided.

October 9, 2012
As Partisan Rancor Rises, States That Back a Loser Will Be Punished

Never mind the big-tent debate talk from both Barack Obama and Mitt Romney about how their respective politics will benefit all Americans. There’s a broader, ugly truth that as the last traces of purple fade from the electoral map, whoever wins will have little reason to take care of much of the country that rejected them.

At least since the dissolving of the “solid South” in the late ’50s and early ’60s, both parties have competed to extend their reach to virtually every region. As recently as 1996, Democrat Bill Clinton could compete in the South, winning several states in the mid-South and even in the heart of Dixie, including Louisiana, Arkansas, Kentucky, and Tennessee. President Obama has about as much chance of winning these states this year as Abraham Lincoln did in 1860—giving him little reason to consider them in a second term.

In the Clinton years, powerful Democrats hailed from what we now call red states not only in the South but also in the Great Plains. South Dakota’s Tom Daschle served as both Senate majority and minority leader, and Louisiana’s John Breaux and North Dakota’s Kent Conrad and Byron Dorgan were also players.

After his 2008 win, Obama dismissed Republican objections to his stimulus with a two-word rejoinder: “I won.” But it’s become clear since that neither party is willing to accept the other’s claim of a popular mandate for its agenda. And the log jam probably won’t be broken in November—especially if, as seems like the most likely outcome, Obama wins a second term while Republicans hold the House and edge closer to retaking the Senate.

The 2010 Republican landslide was the rare election that radicalized both parties. The new GOP House majority was attained by adding Tea Partiers who have pushed the House—and to a lesser extent the Senate—rightward. At the same time, Democrats lost many of their remaining members who’d held on in Republican-leaning districts, leaving the party with a smaller but more ideologically pure cast of true believers in office.

The right-leaning Blue Dog Democrats who once dominated the party’s ranks in the Plains and the Southeast are virtually extinct (as are Northeastern Republicans). In 2008 there were more than 50 Blue Dogs; the 2010 election sliced their ranks by half. After November there could be fewer than a dozen remaining. More and more Democrats, as Michael Barone has noted, come from overwhelmingly Democratic districts.

A reelected President Obama may well find himself with almost no Plains or Southern Democrats in Congress outside of a few House members in Dixie’s handful of overwhelmingly African-American districts. With little reason to make compromise or common cause with solid red-state Republicans, the administration could leave the denizens of these states to bitterly cling to their guns and religion, while the president expands on his first-term practice of bypassing Congress to legislate by decree on everything from environmental policy to immigration and the implementation of health-care reform.

Already, notes National Journal’s Ron Brownstein, Democrats hold congressional majorities in only three noncoastal states—Iowa, New Mexico, and Vermont. Much of the country inside the coasts may find themselves with little sympathy from or access to a president whose reelection they will have rejected, often by lopsided double-digit margins.

This could impact, in particular, energy policy since American fossil-fuel production is increasingly concentrated on the Plains, the rural Intermountain west and the Texas-Louisiana coast. Virtually all the mineral-rich economies excepting green-dominated California now lies well outside the electoral base of the president and his party. In a second Obama term, these states could well propel the national economy but could have little say on energy policies. Farming and ranching concerns will also have little political leverage with the White House. And traditional social concerns, most deeply felt in the Southern and more rural states, would lose all currency in a second-term administration whose worldview stems from that in big-city-dominated, deep-blue coastal states.

The dissenting states with large fossil-fuel-driven economies—West Virginia, Texas, Oklahoma and North Dakota—would likely go to court to battle regulatory steps that they see as threatening large parts of their economies. In the Great Plains, expect a reprise of the 1970s Sagebrush Rebellion that bedeviled Jimmy Carter, as states fight back against green-oriented Washington regulators cracking down on users of federal land and water.

Of course, if Romney finds a way to win, the coastal states would likely come in for some similarly rough treatment. The former Massachusetts governor has saved his harshest remarks for closed-door private events with big backers, dismissing 47 percent of the electorate as spongers at one such event, and telling backers at another that the Department of Education would become a “heck of a lot smaller” under his presidency and that the Department of Housing and Urban Development, which his father led during Richard Nixon’s first term in office, would face substantial cuts and “might not be around later.” The most devastating policy move he shared behind closed doors, though, was telling donors that he might eliminate the deductibility of state and local income and property taxes on federal returns—a move that would amount to a significant tax hike to many people living in high-tax and high-cost-of-living deep-blue states like New York and California.

But since those states are solidly Democratic, Romney has little to lose politically by punishing or alienating their citizens.

Deep-blue business interests could also lose their influence in a Romney administration, particularly if Republicans hold on to their strong majority in the House. The green-energy tax and subsidy farmers that have staked their future on the continued favor of the Democratic Party could find themselves cut off, and transit developers would also take a hit as the vast majority of train and bus riders come from a handful of dense and Democratic states (almost 40 percent of all national riders are in the New York area alone).

But with Romney, the blue states would at least have a kind of patrician insurance, much as Clinton brought Southern sensibilities to the Democrats. The former Massachusetts governor is tied by a cultural and financial umbilical cord to his old comrades in the financial world of New York and Boston, making him less of a threat to the coastal ruling structures than Obama is to those of the interior states or the South.

Whoever takes the White House, the nation’s best hope may be the regional mavericks who defy the trend toward geographical polarization. Democrats such as Sen. Jon Tester in Montana and Senate candidate Heidi Heitkamp in North Dakota are running hard against the anti-Obama tide in their states. Should they win, the party’s need to protect their seats would help press the White House to modify the party’s drift to an increasingly leftish social and environmental agenda.

On the Republican side, the need to protect a middle-of-the-road politician like Massachusetts Sen. Scott Brown would push other party members into moderating their more extreme positions on social issues and regulation. Republican victories by Tommy Thompson in Wisconsin and Linda McMahon in Connecticut might also help moderate the party by adding to the numbers of “blue states” in the GOP caucus.

For the federal union to work effectively, there has to be a sense that we are all, in different ways, linked to each other and share common interests that mean we’re willing to make compromises to live together. It’s time to bridge our partisan regional divides and avoid an ever more nasty, and divisive war between the states.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in The Daily Beast.

State text map by Bigstock.

October 5, 2012
America’s Last Politically Contested Territory: The Suburbs

Within the handful of swing states, the presidential election will come down to a handful of swing counties: namely the suburban voters who reside in about the last contested places in American politics.

Even in solid-red states, big cities tilt overwhelmingly toward President Obama and the Democrats, and even in solid-blue ones, the countryside tends to be solidly Republican.

What remains contested are the suburbs, which—despite the breathless talk in recent years of an urban revival—have accounted for 90 percent of metropolitan growth over the past decade.

But as the suburbs have grown—in large part by collecting families priced out of cities or seeking more space or better schools—they’ve shifted from reliably Republican territory to contested turf. Barack Obama won 50 percent of the suburban vote in 2008, a better performance than either Bill Clinton or John Kerry.

Obama’s success resulted from demographic changes sweeping the periphery of most major cities. Long derided by blue-state intellectuals as stultifying breeders of homogeneous white bread, the suburbs increasingly reflect and shape the country’s ethnic diversification. The majority of foreign-born Americans now live in suburbs, and many suburban towns—like Plano, Texas, outside Dallas; Cerritos, south of Los Angeles; and Bellevue, near Seattle—have become more ethnically diverse than their corresponding core cities. Among the metropolitan areas with the highest percentage of suburban minority growth are swing state regions Des Moines, Iowa; Milwaukee; and Allentown and Scranton, Pa.

Minorities, according to a recent Brookings study now represent 35 percent of suburban residents, similar to their share of overall U.S. population.

The suburbs of Las Vegas in hotly contested Nevada are now minority-majority, as the number of Latinos living there has shot up. Nationwide, well over 5 million Latinos moved to the suburbs during the past decade—and many more Latinos now live in suburbs than core cities. In the past, Hispanic suburbanites tended to vote somewhat more Republican than their urban counterparts. But this year, they appear to be solidly Democratic—as Latinos have been repelled by the GOP’s ugly embrace of nativism ,and drawn to Obama’s clever election-year move to offer effective amnesty to young illegal immigrants.

Asians—another group that’s strongly favored Obama—have moved even more quickly into the suburbs. While many immigrants hail from some of the world’s densest cities, few immigrants come to America dreaming of a small apartment near a transit stop.

“Many Asian immigrants today are bypassing the city entirely and going straight to suburban neighborhoods first to fulfill their version of the American dream,” says Thomas Tseng, a founding principal at New American Dimensions, a Los Angeles–based ethnic marketing and research firm.

Over the past decade the Asian population in suburbs has grown at nearly four times the rate of that in cities, with 2.7 million more Asians in suburbia compared to 770,000 in the core cities. In the northern Virginia suburbs around Richmond, the number of Asian suburbanites has doubled, as it has in the suburbs around Columbus and Cincinnati. The Asian suburban population nearly tripled in the Raleigh area and doubled around Charlotte. Even in Florida, there are now well more than 100,000 more Asians in the suburbs of the Sunshine State’s four major cities—Miami, Jacksonville, Orlando, and Tampa—than there were a decade ago.

Obama also will likely receive significant backing from white professionals, who tend to cluster in the suburbs of cities such as Columbus or around Washington, D.C. Virtually all the 10-best educated counties in America are suburban; seven are in the greater Washington area. The fact that many of these professionals work directly or indirectly for the federal government that Obama has expanded dramatically will only help him in his bid to remain in the White House.

So what about Romney? He’s clearly a product of the suburbs, growing up in the tony periphery of Detroit and now living in leafy Belmont, Mass., a comfy close-in commuter suburb that has seen little population growth since 1950.

In the primaries, Romney did well in suburbs, particularly upper-class ones, and those voters played a critical role in putting him over the top against Rick Santorum.

Romney continues to score roughly 50 percent support in polls with voters making at least $100,000, a group that tends to live in affluent commuter towns ringing cities. But to win, the Republican needs to reproduce his party’s wave of 2010, when they captured roughly 55 percent of the suburban vote on their way to retaking the House. But can Romney reach beyond his classic country-club GOP base to the middle- and working-class swing state suburban voters?

On paper, he should do well in lower density suburban areas, in large part because they tend to have far larger concentrations of married families with children, a group that tilts Republican. But despite his own family, he’s been overshadowed by Obama’s better-marketed, albeit far smaller, domestic unit.

Romney also may be missing a chance to appeal to suburbanites on the contentious issue of “smart growth.” Opposition to suburban housing has become a favorite cause among Democratic politicians, and widely praised by the Manhattan-centric national media.

But Romney, in his term as governor of Massachusetts, was a classic patrician corporate modernizer, showing a penchant for the kind of planning that uses strict growth controls to constrain suburban expansion.

In this sense Romney resembles other politicians from the gentry class—such as Al Gore, Arnold Schwarzenegger, and John Kerry—who, in the name of “rational” societal objectives, make it harder for middling-class people to achieve the suburban dream they’ve taken for themselves.

So while they represent the majority of the nation, suburban voters have no real champion in this election. Taken for granted by conservatives and betrayed by Wall Street, they have few friends in high places—except at election time. They are also increasingly detested by progressives, a long way from the days when Bill Clinton keyed in on “soccer moms.” Instead the suburbs have evolved into a shapeless political lump, divided by income and race, cultural conflict, and regional rivalries.

On balance, this all works to the president’s favor. If Obama can manage anything close to a split in suburbia, as he did in 2008, he will surely win a second term. Such a loss, at a time of economic hardship, may be enough to force even the dullards of the GOP back to the drawing board to confront their inability to win over enough of the suburban voters (homeowners, small businesspeople, parents of any races)—who should provide the GOP an electoral majority, but so far are not.

Joel Kotkin is executive editor of NewGeography.com and is a distinguished presidential fellow in urban futures at Chapman University, and contributing editor to the City Journal in New York. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in February, 2010.

This piece originally appeared in The Daily Beast.

Suburbs photo by Bigstock.

September 21, 2012
Rethinking Brand Chicago

So many Midwest places flail around looking for a brand image or identity. Not Chicago. In fact, the identity and stories of Chicago overflow the page. They are too numerous to be written in a mere blog posting.

Yet Chicago has in effect decided to jettison that powerful, historic brand identity in favor of a type of global city genericism. This, I believe, is a mistake.

One trend you can’t help but notice if you travel is the increasing homogenization of the urban culture and standard of urban development. Global markets demand standardized commodities that can be graded and traded. This includes cities. This forces cities increasingly into a standard model of what one expects.

I’ve written in the past about the example of the Wallpaper guides to world cities. These travel guides, ostensibly a guide for the modern, sophisticated urban traveler to the best of each globally elite locale, often seem identical except for the name on the spine. One modern boutique hotel, one swank restaurant or bar, one fashion outlet, one bike share program, one piece of starchitecture is much the same as another in any city you visit around the world. The frosting might be different, but the cake is the same. And once you’re commoditized, you’re done.

So it is too with Chicago. I noted in my review of the city’s street lighting what appears to be a deliberate downplaying of the city’s rough-edged, masculine past in favor of a feminized, generic, even suburban motif. You see this repeated throughout.

It’s truly incredible. Travel anywhere in the world in mention that you’re from Chicago, and immediately the other person will mime a couple of pistols with their fingers and say, “Bang! Bang!” This is a sore spot with many local leaders, who hate the notion that it is still known more for gangsters than glitter. The city over the years has so tried to suppress its Al Capone heritage that it has obliterated many historic sites related to the mob. It’s like the city that wants to pretend it doesn’t exist.

This sadly makes Chicago like all too many smaller cities that suppress their strongest brand assets out of embarrassment and a desire to be taken seriously by members of the cool kids club. Go talk to urban boosters in Indianapolis, and you probably won’t hear much about the Indy 500, for example. So too it is with Chicago. It’s as if to prove it’s a member of the club – i.e., is exactly like every other cool city – Chicago has to ignore its gritty past and essential culture.

A friend of mine likes to say that “Chicago is a city that runs on testosterone.” It’s a rugged, manly city, a place where it was said high culture was just the ransom rich men paid to their waves. A place where people wore their shoe leather out trying to make a buck. The land of the hustler. A place of bellowing blast furnaces and brawny immigrants. A place where pedigree didn’t matter and crazy newcomers, dreamers, schemers, and gamblers could win or lose big. A place with audacious ambition and a relentless determination to demolish rivals, whether that be Cincinnati, St. Louis, or Milwaukee. A place that once dreamed to dethroning New York. A place of limitless imagination and inventiveness that brought us everything from the skyscraper to the futures market. A place with music like the blues made for and by the hard luck working man. And yes, a place of gangsters and crooked politicians.

None of that is part of new Chicago, at least not the image the city wants to portray. The iconic architecture remains, but it has been drained of its cultural content. Listen to what the city tries to project of itself and see what it says. It says that Chicago has become just another way-station along the global city parade. Starchitecture (no longer architecture made in Chicago for the most part), microbrews and microroasts, culinary delights, high culture, boutique hotels, great shopping, bike infrastructure, digital startups (the exact same type every other “hub” is bragging about), music festivals by and for the high end educated hipster, global conferences, etc. Almost every box is checked, with a few exceptions like fashion and media as I highlighted earlier.

All of this is good in a way and proof of a transformation in Chicago that is in many ways for the better. But something has been lost along the way. These items are all disconnected from the city in which they happen to reside. It’s as if they descended on the place out of the heavens like that flying saucer on top of Soldier Field. Drawing Room mixologist Charles Joly may have a Chicago flag tattooed on his arm, but his bar could be located anywhere.

Saskia Sassen has written that the economies of global cities are not generic but are inherently linked to their histories. Chicago in the past was a great center of manufacturing, for example, and today is expert at providing global services to manufacturers. But where in underlying economic reality there may be distinctiveness, on the surface there is more homogenization. This may explain why people tend to assume all global cities are alike. To a visitor staying in the central core, the experience may well be quite similar in many ways.

What’s more, the aspiration seems to be generic. The idea, again, is to demonstrate that you are part of the club by focusing on replicating all the same stuff everybody else is already doing and talking about yourself in much the same way. I’ve seen little in Chicago’s branding or global city rhetoric that is much different from anywhere else.

Yet the differences remain, especially outside the rarefied precincts of the global elite. And much of that continues to inspire embarrassment to this day. Corruption and cronyism seem to continue unabated, for example.

Yet there is good as well. Ask yourself what more than anything epitomizes Chicago. To me, it is none other than former Mayor Richard M. Daley. Listen to him speak. Barack Obama he is not. But character he had, lots of it, and what’s more, a fanatical dedication to making Chicago the best city it could possibly be. Was there a lot of corruption in Daley’s Chicago? No doubt. Did he desire to have maximum power over politics in his city? Of course. But nevertheless I get the impression of, as I said in my last piece, a guy who every morning wakes up and asked himself, “What can we do today to make Chicago a greater city?” This is a quality of leadership all too lacking in most Midwestern cities. The character of Chicago and the character of Mayor Daley himself seem to me to have so much in common.

Ironically, under Mayor Daley, the city pursued that policy I mentioned of abandoning its past, of abandoning the image of the city as evidenced by the mayor himself. You walk down Michigan Ave., through Millennium Park, around the newly thriving neighborhoods, and you expect that city to be led by a Dr. Smooth type character, not a blunt, plainspoken man like the Mayor. But if only he had seen the value in a city that presented a face like his own. A city not ashamed but proud of its rough and tumble edge, of the fact that it was where generations of ne’er-do-wells and hustlers came to wear out their shoe leather trying to make it big, a city that both Al Capone and Paddy Bauler thought not ready for reform, a city that drew generations of farm boys off to its earthly delights, a city from Bridgeport not the Gold Coast. That’s Chicago. Not a genteel, refined metropolis, not a swank, sophisticated type of town, not a city on a hill. No, but a city of dreams nevertheless, where people came to get rich, to reinvent themselves, to change the course of world history. That’s Chicago.

No, Chicago will never be the Chicago of Cyrus McCormick and Philip Amour and Aaron Montgomery Ward and all the rest. You can’t live off the past. That’s nostalgia and there’s no more corrosive force known to mankind. But you can know who you are, what you stand for, what your heritage is, and how it fits into the future. Not a clinging to the past, but letting your essential character be a guidepost to the future.

The fifth Frank Gehry titanium Bilbao clone, the n-th swank restaurant or shop, the latest in Italian furniture – ultimately none of them will make Chicago Chicago. It’s going to take the real city, an expression of its own terroir and primal identity to do that.

I happen to think Chicago can do it. If it changes course and gets way from following the trends to creating its own future. If it steps up and makes sure the world knows that Chicago, and not just yet another generic world city, is here, and determined to claim its rightful place.

Chicago will only realize its potential for greatness if it is willing to let go of its insecurity and desire to be a member of the club, and dares once again to think of itself as it did back in the days of the Burnham Plan as a city destined to be the greatest in the world, a city proud of itself and not afraid to boldly chart its own course into the great unknown of the future.

Is Rahm Emanuel is the person who can pull this off? He’s from the North Shore. He was a ballet dancer. He’s a man clearly most comfortable dealing with the elite. Yet he’s also got a rougher side. He’s supposedly Captain F-Bomb. He hates to lose. He mailed some dead fish to a someone once to show his displeasure with some polling. I’d say there’s more than a streak of authentic Chicago in there.

Maybe the bigger question is whether he wants any change of course. The NATO Summit play suggests not. But it’s still early.

I would strongly urge the city to rethink its brand and what it wants to be in the marketplace. Bottle up some that classic Chicago heritage and apply it liberally. This is a huge opportunity in the marketplace. With the vast bulk of cities trying to convince you they are all the same, this is in opportunity for Chicago to seize the advantage and stride forth with classic boldness and braggadocio, making other cities take real notice for a change. Want to actually put Chicago on the brand consciousness map? That’s the way to do it.

In short, it’s time to stop aspiring to global city goo and instead give the world a punch in the face with a little old school Chicago.

This is the fourth installment in my “State of Chicago” series. Read part one here, part two here, and part three here.

Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

September 19, 2012
The Answer Is Urban Consolidation – What Was The Question?
The New Zealand Green Party is perpetuating the claim that development beyond Auckland’s “city limits” imposes a high cost on ratepayers. A spokesperson claims that the current Auckland plan, which allows for some new development outside the current urban area, “will cost ratepayers $42b billion to 2042, an annual levy of $200 per ratepayer” according to a report in the New Zealand Herald.

But is just so happens that study on which these calculations are based is a flawed commissioned report [1] rather than a peer reviewed academic study.

Oops – Contradictory Claims
The authors of the Curtin report acknowledged at the outset that

"The challenge … is that infrastructure costs are so heavily dependent on area-specific values. For instance, road costs among different prospective development areas may vary based on the necessity for major arterial roads, costs for sewerage and water infrastructure could vary immensely depending on terrain and trenching conditions, and many infrastructure components will differ depending on the level and degree of excess capacity” (p.4)

So why did they try to develop a generic tool for estimating the cost of urban development in Australiancities based on a mishmash of evidence from different cities and suburbs in Australia and the United States?  And why would anyone even contemplate applying such “findings” to Auckland with its distinctive physical geography, so different from its Australian counterparts?

A Quick Critique
The Productivity Commission actually considered the study, among others, in a brief review of housing costs and urban form (Appendix B of the final report). It noted substantive differences in the physical and social settings behind the data assembled to support the study’s claim to some sort of universal cost relationship between development and distance from the city centre.

And there are glaring methodological deficiencies:

“An obvious one is mixing discount rates (zero for infrastructure capital costs, 7% for transport-related costs, and 3% for health and emission costs), and omitting operating costs for some items (non-transport infrastructure) and not others (pp. 295-296)

To these flaws can added the assumption of a cost of Aus$170/tonne for carbon emissions when the carbon floor price set by the Australian government (of $15) has since been rescinded and figures at or below $10.00 may be more appropriate based on today’s European prices. So the environmental argument is seriously overstated.

And the analysis fails to deal with the costs of expanding the capacity of ageing infrastructure in long-established urban areas, of remediating services designed for far lower loadings than they are now expected to sustain, of the health impacts of apartment living in an increasingly brown – not green – environment, and of reductions in the physical and social resilience of high density and often congested urban areas in the face of possible natural disasters or infrastructure failures.

Penalizing the Household – is that Socially Sustainable, or Politically Justified?
Even if it can be proven that the balance of public benefits favours medium or high density living, is there any evidence that such savings will not be offset by the better affordability of traditional suburban housing and the benefits residents derive from living into it?

Putting aside the flawed data and methodology for the moment, the results indicate that 70% of the differences in costs between decentralized and central locations is attributable to travel and transport. Over half of these comprise travel costs and time carried by households. If we take these private costs out of the equation the authors’ estimate of the difference between centralized and decentralized development falls by 40%.

The resulting "present cost" for the average household (whatever that might be) of A$22,000 is easily justified by savings on land and housing in “outer” areas, the benefits households get from additional space, greater choice over housing style, and the security and community benefits of suburban environments.

So who pays if we deny people the choice of living in medium to low density housing? It’s new households due to exclusion from household ownership, or commitment to punitive mortgages, or through the insidious extension of housing poverty through ever higher income brackets.

So what about the Auckland case: where does the evidence really lie?
Surprisingly, given the obstinacy of the planners and politicians pushing the consolidation barrow, no-one has actually done the analysis required to determine the relative economic benefits of different urban development paths for Auckland.

A technical analysis of the gaps in the Auckland Regional Growth Strategy made the point that the planning model that informed it was hardly up to the task. The principal conclusion that came from using the Regional Councils land use and transport model was that there is “little [identified] economic difference between growth options”.[2]

The failure of the model to demonstrate economic differences between alternative urban forms was used to suggest that intensification imposes no additional costs than traditional decentralized development. Of course, the converse is true – although it has been conveniently ignored – there were no demonstrable economic benefits from consolidation or net cost penalties to decentralization. This suggests that it would make most sense to let the market prevail, subject to broad environmental standards and fiscal constraints.

The conclusion that consolidation was the best option for Auckland ignores other shortcomings in the model that could tip the balance in favour of strategic decentralisation:
- The failure to actually define realistic alternatives that would clearly demonstrate economic differences;
- A failure to the marginal rather than average impacts of differences in urban form;
- Ambiguous measurement (both omissions and double counting);
- The failure to identify the costs of implementation.
To this list we can add underestimation of the high infrastructure and development costs associated with brownfield development and urban consolidation. These are turning up today in high financial and development contributions for inner city projects.

Calling for Consolidation – a Case of Artificial Intelligence
So why is the Auckland Spatial Plan so fixated on consolidation –despite the begrudging lip service the final version pays to decentralization (and even that appears to have upset so upsets the Green spokesperson)?

I can only think it is "artificial intelligence": if enough people say the same thing, it must be right. Consensus becomes an excuse for lack of evidence, critical analysis, or even common sense. Groupthink prevails: a phenomenon defined by psychologist Irving Janis as:
A mode of thinking that people engage in when they are deeply involved in a cohesive in-group, when the members’ strivings for unanimity override their motivation to realistically appraise alternative courses of action [3]

Contrary evidence is dismissed while reports favouring an emerging consensus, such as the Curtin one, obtain a degree of currency which, while unjustified, plays into the hands of policy makers looking for easy (or ideologically comfortable) answers to difficult problems.

And so we blunder on, potentially building our cities on myth and misconception and reinforcing the gap between generations as we do it.

Phil McDermott is a Director of CityScope Consultants in Auckland, New Zealand, and Adjunct Professor of Regional and Urban Development at Auckland University of Technology. He works in urban, economic and transport development throughout New Zealand and in Australia, Asia, and the Pacific. He was formerly Head of the School of Resource and Environmental Planning at Massey University and General Manager of the Centre for Asia Pacific Aviation in Sydney. This piece originally appeared at is blog: Cities Matter.

Aukland harbour photo by Bigstockphoto.com.

[1] Roman Trubka, Peter Newman and Darren Bilsborough (2008) Assessing the Costs of Alternative Development Paths in Australian Cities, Curtin University Sustainability Policy Institute, Fremantle, Report commissioned by Parsons Brinckerhoff Australia
[2] McDermott Fairgray Ltd (1999) Gap Analysis, Review and Recommendations: Auckland Regional Growth Strategy, Technical Report, Auckland Regional Growth Forum

[3] Janis, I L (1972). Victims of Groupthink Houghton Mifflin p. 9
September 13, 2012
5000 Public School Teachers Could Lose Their Jobs in Chicago

The Democratic Party in Chicago is at war. The one party town is seeing an important element of the coalition on strike. Rahm Emanuel is at war with a real adversary: teacher’s union boss Karen Lewis. Last year Lewis began laying the groundwork for a strike as witnessed in this Chicago Magazine interview with reporter Carol Felsenthal:

CF: So you have an issue with [Secretary of Education, former CPS CEO] Arne Duncan?

KL:Yeah, because he has a bachelor’s in sociology from Harvard and played basketball [he’s an education expert]? I think he’s completely and totally unqualified to do this job. And to me, it’s sort of indicative of how education is such a political tool now, as opposed to [his] having a real bent toward education. I think this is a way for Obama to try to make an olive branch with Republicans. There’s this mentality that outsiders and people with no education background are the… experts…. They want to privatize public education…. Arne’s policies here were a disaster.

Karen Lewis, like Rahm Emanuel, isn’t shy about expressing her opinions. Conflict is in the air. For 25,000 teachers to be on strike weeks before a Presidential election is a major problem for Barack Obama and Rahm Emanuel. Karen Lewis has even organized children to chant slogans against Rahm Emanuel. As veteran Chicago reporter Greg Hinz has said:

Mr. Emanuel has loudly declared what he wants, issued his demands in what I hear was an f-bomb-filled meeting with Ms. Lewis, and moved to impose some items by fiat — i.e., enacting a longer school day and directing the board to rescind a negotiated 4 percent pay hike.

Chicago is running out of money. There’s much blame to go around. The financial math is a threat to the status quo. The public school system has been a lucrative racket for some. Chicago Tribune columnist John Kass explains:

Unfortunately, the system works just fine. It works for the teachers union that wins the big raises (the current offer: a 16 percent bump over the next four years) and for the bureaucrats who are creatures of patronage, and for the vendors who feed from the almost $6 billion budget.

It works for Democratic politicians. They increase property taxes to pay for union raises and, in exchange, receive union support and political donations in election years. It’s been going on that way for years.

But does it work for the kids? Not when nearly half don’t graduate.

As New Geography readers remember, we warned that Chicago was on the downswing. The 2010 Census confirmed this decline. The difficult part of decline is the hardship that comes with layoffs. University of Chicago Professor Tim Knowles says 5000 Chicago Public School teachers could lose their jobs because of 100 schools may shut. When you lose 6.9% of your population in 10 years, closures are inevitable.

In conclusion, Karen Lewis has picked a perfect time to strike: right before a Presidential election. The Democratic party needs all the help it can get from unions to get out the vote in nearby battleground states. What if they don’t get out the vote in Ohio and other unions strongholds in November?

September 12, 2012

The State of Economy in the Swing States

I was living in Pennsylvania, voting in my second presidential election when my mom asked me that question in the months leading up to Ronald Reagan’s defeat of Jimmy Carter: “Are you better off today than you were four years ago?” Four-year-ago comparisons are tricky when the worst financial collapse in my lifetime occurred four years ago. Comparing the swing states not to their conditions four years ago, but how they might feel compared to the rest of the nation, Virginia, Colorado and New Hampshire appear to be “better off” than the average American. But in North Carolina, Florida and Pennsylvania, prices for the basic necessities are above the national average while median incomes are lagging. If consumer confidence translates into voter confidence, then the elections in some of the key swing states will belong to the Republicans in 2012.

Conditions as Percent of National Averages

Contested State	Dozen Eggs	Gasoline	Utilities	Income	Unemployment
NC	110%	100%	100%	85%	116%
FL	114%	101%	126%	85%	106%
PA	117%	101%	97%	98%	95%
CO	103%	97%	84%	118%	100%
NV	90%	104%	54%	105%	145%
VA	101%	99%	96%	121%	71%
NH	78%	95%	87%	131%	65%
OH	78%	97%	126%	92%	87%
WI	69%	108%	89%	101%	88%
IA	61%	80%	94%	100%	64%

Prices for eggs, gasoline and utilities from www.numbeo.com. Unemployment rates from www.bea.gov. Median income from www.census.gov. Percent of national average calculated by author. Contested states from www.brookings.edu.

A presidential election year may be a bumper season for political professionals, but it’s also a time of worry for voters. In the months leading up to the 2000 election, we were wondering how long we could ride the upside of prosperity while the Federal Reserve was busy raising interest rates designed to keep inflation in check. Eighteen months before the 2004 election, tax cuts were battling with the cost of the Iraq war in the federal budget, unemployment was up and consumer confidence was at a 10-year low with stocks headed for their third straight annual decline. A Republican – in fact the same Republican – became president both times.

Eighteen months before the 2008 election, the overall economy was very mixed according to a Federal Reserve Board report based on data collected from their twelve district banks. Economic activity through the summer was slowing down in five regions, while the other seven reported relatively steady – though not really growing – economic activity. That summer, with the election looming, most people were worried about inflation.

Discussions of labor shortages showed up in the Federal Reserve reports before the 2008 election from some of the swing states – states with a large number of unaffiliated voters-like Ohio (shortages in truck drivers), Wisconsin and Iowa (shortages in skilled manufacturing workers and engineers). Pennsylvania reported tight labor markets for both skilled and unskilled workers, suggesting that wages would rise in 2009 while prices were expected to hold steady – a sure way for consumers to feel prosperous. The onset of the financial crisis in September turned all that into a fantasy.

The party that controlled the White House during the collapse got the blame – Democrats retained the control over the House of Representatives that they won in 2006, no incumbent Democratic senators lost their seats and a Democrat was elected to the White House in 2008. In the 2010 mid-term elections, Democrats retained control over the Senate despite the largest gains by the Republican Party since 1994, yet lost their majority in the House of Representatives. The House has constitutional responsibility for federal spending; a federal budget has not passed on time (meaning there were no threatened shut-downs of the federal government) since 2007. Neither Democrats nor Republicans in the House are doing the job we pay them for – hence, their current new-record-low well-deserved 12% approval.

This time around, Wall Street has all of the Washington Democrats cheering for a rally. New Geography reader NellyHills put it succinctly (08/26/2012 comment on The Next Public Debt Crisis Has Arrived): “Unfortunately at this point we have 2 choices which are both bad: Continue to believe live with the inflation…, or, Pop the bubble and all suffer through a 10 to 20 year depression. Either way, the middle class loses.” Regular New Geograpphy readers know that having a choice of candidates does not always mean having a good choice. But presidential elections are not won at the national level – they are won in the states, thanks to the Electoral College process of assigning votes. Jobs are a subject every voter understands: Either you have one or you don’t. Again, some of the swing states are really not feeling it while a few – notably Iowa, New Hampshire and Virginia – are doing better than the rest of the nation.

Contested State	Unemployment as percent of national rate
NV	145%
NC	116%
FL	106%
CO	100%
PA	95%
WI	88%
OH	87%
VA	71%
NH	65%
IA	64%

Unemployment rates from www.bea.gov. Percent of national average calculated by author. Contested states from www.brookings.edu.

Reviewing more recent Federal Reserve Board reports, it is clear that the uncertainty about U.S. fiscal policy and weak demand from consumers are being blamed for the conservative approach to hiring by most employers.

District	Contested States	Jobs	Wages
Atlanta	FL	Flat to up slightly except in discount retailers where hiring is up significantly	Positive growth, especially for highly skilled*
Boston	NH	Mostly flat, but without layoffs	(No comment provided)
Chicago	IA, WI	Flat to up slightly	Flat except for highly skilled*
Cleveland	OH + Pgh PA	Little hiring except highly skilled	Flat
Philadelphia	PA Ex Pgh	Up slightly	Steady to falling
Kansas City	CO	Flat	Flat except for highly skilled*
Richmond	VA, NC	Temp-to-permanent transitions rising though demand for labor continues to weaken except in highly skilled	Some widespread gains in wages.
San Francisco	NV	High unemployment and tepid hiring except in highly skilled	Limited upward pressure (mainly from cost of benefits)

*Highly skilled workers include information technology, health care, transportation and some profession services, plus certain manufacturing jobs. Source: Federal Reserve Board Beige Book, July 2012

Once voters have a source of income, the next concern has to be prices — Reagan’s exact words were “Is it easier for you to go and buy things in the store?” Despite lower input prices, consumer product prices are creeping higher across most of the nation.

District	Contested States	Input Prices	Consumer Prices
Atlanta	FL	Lower energy prices, slightly higher input prices with expectation of future decline	Higher (based on increased sales in discount stores).
Boston	NH	Steady, but sluggish production	Steady to slightly higher
Chicago	IA, WI	Lower energy prices, lower retail and wholesale prices for cotton, lower steel and scrap metal prices.	Food prices expected to rise as crop production deteriorates. Weak response to “sale” promotions.
Cleveland	OH + Pgh PA	Steel and scrap metal price rises easing, some off-shore labor costs rising	Steady
Kansas City	CO	Steel and scrap metal price rises easing, increases in the cost of building supply materials	Steady
Philadelphia	PA Ex Pgh	Increases in the cost of building supply materials; otherwise, falling prices.	Generally falling price levels. Limited ability to pass price increases to homebuyers.
Richmond	VA, NC	Lower prices for cotton to retailers and manufacturers, increases in the cost of building supply materials	Price increases passed on to homebuyers
San Francisco	NV	Declining prices for raw materials and energy	Upward pressure easing somewhat

Source: Federal Reserve Board Beige Book, July 2012

Back in 2000, Alan Greenspan’s Federal Reserve raised interest rates one time too many, Al Gore won the popular vote, George Bush became president and by March of 2001 we were in recession. In 2008, Bernanke considered making changes to the Fed’s policy to stop all the guessing and swooning that the markets do over Federal Reserve interest-rate changes by making a target known. Credit markets froze solid, Wall Street got bailed out in September, Barack Obama was elected in November. The Wall Street Reform Act passed in 2009 has yet to be enacted in any significant way. Changes in monetary policy – along with double-dip recessions and other economic problems overseas – have so far offset any predicted decline in the dollar that would result in measurable inflation. But that doesn’t matter if you are in Pennsylvania, Florida or North Carolina and struggling to put a roof over your head and food on the table.

Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Dr. Trimbath’s credits include appearances on national television and radio programs and the Emmy® Award nominated Bloomberg report Phantom Shares. She appears in four documentaries on the financial crisis, including Stock Shock: the Rise of Sirius XM and Collapse of Wall Street Ethics and the newly released Wall Street Conspiracy. Dr. Trimbath was formerly Senior Research Economist at the Milken Institute. She served as Senior Advisor on United States Agency for International Development capital markets projects in Russia, Romania and Ukraine. Dr. Trimbath teaches graduate and undergraduate finance and economics.

States map image by Bigstock.

September 10, 2012

Carmel, IN Named Best Small City in America to Live In But Can Others Follow?

Money Magazine just named the Indianapolis suburb of Carmel as the top small city in America to live in. Fishers, another Indianapolis suburb, ranked #12.

Any ranking survey, and particularly one done by a magazine, needs to be taken with a grain of salt. However, Carmel and Fishers (along with occasionally Noblesville), frequently show up high in various national rankings. For those interested in suburban living, these places offer a pretty strong combination of good schools, low real estate prices (Indianapolis is basically the cheapest big city housing market in America), low taxes, and fairly high quality of life. With populations of over 75,000 each, these communities also have the scale to efficiently provide quality public services.

I personally think Fishers has long term sustainability issues. It has kept up with very rapid growth admirably, but it has really not done much to secure its long term future, and when it reaches buildout, I expect problems to set in.

Carmel by contrast has invested heavily in building towards a future where greenfield growth is no longer the driver. It has invested in high quality public facilities, some of the best suburban transportation infrastructure in the nation, building new urbanist neighborhoods from scratch, upgrading utilities, improving the environment, etc. Dan McFeely of the Indianapolis Star covers Carmel and wrote a bit about this.

I’ve covered Carmel extensively for years here on the blog, calling it the “next American suburb” and writing about its civic strategy, new urbanist approach, and various criticisms of its leadership.

I think the Carmel story is an interesting one because it shows how a city, albeit an affluent one, in a very conservative state can fundamentally transform itself in a way that that demonstrates results. This includes urbanism standards and infrastructure standards that exceed those of the urban core of Indianapolis, with many of its public services being better as well.

The results most notably show up in incomes. While incomes cratered relative to the US in both Indiana and metro Indianapolis, Carmel’s median household income actually inched up versus the US average despite starting from a higher base.

In short, the strategy has been working, though obviously the national economy has had an effect. And I don’t necessarily support everything they have done. Their $150 million performing arts center, for example, all paid for with public funds, seems expensive for a city of this size, and has saddled the city’s redevelopment commission with debt. But on the whole, things seem to be paying dividends.

This is part of the explanation for why Indianapolis as a region has done well while its urban core lags many other cities. The majority of people prefer suburbs, and Indy’s newer suburbs provide an exceptional value proposition.

Ultimately to be successful, the region will have to fire on all cylinders. This means both urban and suburban, with each neighborhood and town bringing a unique approach and its A game to the table. It’s not an either/or situation. I want to build urban cores up, not tear suburbs down. (Downtown Indianapolis has its own game going. Despite some recent criticisms that I stand behind, downtown Indy has positive momentum in a lot of areas. For example, another 300 tech jobs were just announced yesterday).

I previously highlighted Columbus, Indiana, which has accomplished something similar in a more blue collar environment. So positive stories based on different variations of the same playbook aren’t limited merely to upscale suburbs.

In a state that has long lagged the nation in job and output growth, and where the very large decline in relative incomes has been a huge issue at all levels, you would think that leaders would be streaming in to study these successful models.

Alas, that is not the case. Not only is there little interest in learning from models that are actually working (save perhaps for other Indy suburbs looking to Carmel), there’s actual hostility. It’s as I said in some recent posts: Indiana actively discourages the pursuit of excellence. They’d rather cut down the successful than bring up the failing. State level policy choices are trying to do just that.

Start with school funding. As part of a property tax reform process, the state of Indiana took over 100% of all local school operating funding. However, they also changed the funding formula in a way that stuck well performing metro Indy districts at the bottom of the pile. Out of about 360 school districts statewide, Carmel is fourth from the bottom in per pupil funding from the state. Other regional districts like Fishers and Zionsville are also at the bottom. In effect, the state decided to starve fast growing and well performing suburban districts. Somehow this didn’t make the list of education reforms in that recent Economist article. For a state that claims to want to base its economic future on things like life sciences, this sure seems puzzling.

The state has also sought to impose a one size fits all, least common denominator approach to services. While it didn’t affect Carmel directly since they already built their first class library, the state’s Department of Local Government Finance vetoed plans by the suburbs of Westfield and Greenwood to build new libraries (partially inspired by Carmel), even though the bonding plans survived a petition challenge. The state’s rationale was that the cost per resident was higher than the state average. It’s easy to see that a policy like this acts as a one way downward ratchet.

The state also passed a law that not only capped property taxes as a percentage of assessed value – a measure I support – but also put in place a de facto spending freeze for all cities at current levels through a levy cap.* (This levy cap ignores growth in commercial tax base, so if a town built a 50 million square foot industrial park, it wouldn’t even be able to raise the revenues to provide services to it).

This has left cities increasingly depending on gimmicks to finance anything. And every time a city figures something like that out, the state makes noises about shutting it down. The state has also refused to allow communities to even let their own citizens vote in favor of spending money on things like transit. Indiana has never particularly empowered municipalities, but recent years have seen a strong turn towards disempowerment, with the state’s General Assembly serving as a sort of uber-city council (and now uber-school board too).

I’d be willing to venture that neither Carmel nor Columbus would be able to accomplish what they have if they were starting out on the journey today under the current state legal and political climate.

This is not to say that spending money is a solution to problems. Actually, by national standards, places like Carmel and Columbus don’t spend very much money at all. With some exceptions like that performing arts center, they are actually quite frugal. They understood the concept of long term total cost of ownership, and as a result have kept taxes low by not being penny wise, pound foolish in the short term, while so many other places that thought only about the now have descended into a near death spiral of service cuts, tax increases, and abandonment. That’s the tragedy.

In a rational world, one would think that we’d look at models that are producing population growth, job growth, corporate (including foreign) investment, high quality of services and quality of life, keeping incomes at or above US levels – and mostly importantly all while keeping taxes well below normal (at the bottom of the state in Carmel’s case) even by the standards of Indiana – and say to ourselves: how can we get more of that? Unfortunately, that’s not the case here. (Again, some other Indy suburbs excepted).

Before proposing solutions to Indiana’s long term under-performing economy, I would suggest that the candidates for governor first take a look around the state to examine at the places that are already doing well and have been doing well over the last decade or more. Then ask the question: what are they doing different and right and what do we need to do to get other places doing those things? First among the places to visit would be suburbs like Carmel and industrial cities like Columbus. If you’re ranked #1 in America, you must be doing something right.

* This is complicated, but my understanding is that the total property tax levy cannot grow faster than inflation + population growth. This has had many perverse incentives, including keeping entities like townships from lowering their tax levy even when possible because they’re afraid they’ll never be able to raise it again if needed.

Aaron M. Renn is an independent writer on urban affairs and the creator of Telestrian, a data analysis and mapping tool. He writes at The Urbanophile, where this piece originally appeared.

Carmel City Hall photo by Bigstock.

September 7, 2012