New Geography

Category: Politics

  • Cities Have Outgrown Their Role as Mere Creatures of the Provinces

    The Martin Prosperity Institute recently released the map below, which compares the GDP of several US metropolitan areas to the size of national economies. For instance, the Boston-Cambridge-Quincy metropolitan statistical area (MSA) has a GDP of $311.3 billion dollars. If it were a country, it would be the 40th biggest national economy on earth, ahead of countries such as Denmark ($310.1) and Greece ($303.4). The Houston-Sugar Land-Baytown MSA has a GDP of $378.9 billion, which would make it the 31st biggest national economy, bigger than Austria ($375.5) and Argentina ($368.9). New York-Long Island-Northern New Jersey ($1.28 trillion) isn’t all that far behind Canada ($1.57 trillion).


    While trotting out such comparisons is an interesting exercise, the comparison also gives us some important perspective.  Despite the fact that these cities, as well as many others, produce as much as large countries, they have nowhere near the same fiscal levers at their disposal. Further, they are subservient to higher levels of government. The same problem exists in Canada. The Greater Toronto Area’s economic output ($233.9) is nearly equivalent to Finland’s total GDP ($270.6). Note that this definition is far less expansive than the US metro areas listed above. If the definition were expanded to include the entire Golden Horseshoe, it would be closer to the Size of Norway ($414.3 billion).  Yet the City of Toronto can’t finance a public transit expansion without the two senior levels of government. Calgary ($62.5 billion), roughly the size of Lithuania, couldn’t decide to create a municipal sales tax. Vancouver ($85.5 billion), slightly bigger than Serbia, can’t even decide how to allocate gas tax dollars without a special deal with the federal government.

    The problem isn’t that we have too little government spending, but that revenue collection and spending decisions often happen at the wrong level. Revenue generation and spending should take place as close as possible to the point of delivery. There is no reason why someone in Moose Jaw should pay federal income taxes so that the Federal Government could partner with the province of New Brunswick to build a highway near Moncton. Similarly, there’s no reason why someone in Edmonton should send property tax dollars to the province so that it can pay for a transit expansion in Calgary. Not only is filtering money through multiple layers of bureaucracy inefficient, but it leads to bad decision making. Decisions both on the revenue, and expenditure side need to be made at the lowest level of government possible.

    In order to ensure that cities can meet their infrastructure requirements, provincial governments should gradually devolve spending responsibilities and revenue generating capacities to the municipalities, and the federal government should end the practice of intervening in infrastructure issues altogether. Some municipalities may choose to raise property taxes, others may increase user fees, and still others may experiment with municipal sales taxes. But regardless of how municipalities decide to raise revenue, they are better placed to determine how much revenue is required, and which projects are really essential. More importantly, devolution gives more direct control over decision making to the people that are actually impacted by the decisions. Devolution means more accountability, and more local input. And if tiny Iceland can fund it’s own infrastructure, there’s no reason why Winnipeg or Edmonton couldn’t do the same.

    This piece originally appeared at the Frontier Centre for Public Policy Blog.

    Steve Lafleur is a public policy analyst with the Frontier Center for Public Policy.

  • Citizen Bloomberg – How Our New York Mayor has Given Us the Business

    This piece originally appeared in the Village Voice.

    After a charmed first decade in politics, Mayor Mike Bloomberg is mired in his first sustained losing streak.

    His third term has been shaky, marked by the Snowpocalypse, the snowballing CityTime scandal, the backlash to Cathie Black and “government by cocktail party,” and the rejection by Governor Andrew Cuomo of his plan to change how public-school teachers are hired and fired. With just a couple more years left in office, Bloomberg is starting to look every one of his 70 years.

    Soon, he’ll be just another billionaire.

    The mayor’s legacy is remarkably uncertain—largely because he’s done his best to keep New Yorkers in the dark about what it is he’s really set out to do in office.

    In part, this is because the mayor has been far more effective at selling his Bloomberg brand than in getting things done. But it’s also because what he has done—remaking and marketing New York as a “luxury city” and Manhattan as a big-business monoculture—he prefers to discuss with business groups rather than the voting public.

    Withholding information while preaching transparency is a Bloomberg trademark. He aggressively keeps his private life private—meaning not just his weekends outside the city at “undisclosed” locations, but also his spending, his charitable giving, and his privately held business.

    New Yorkers who have received city, campaign, or Bloomberg bucks in one form or another and who expect to do business again in the future agreed to speak anonymously with the Voice about the mayor’s personality, the intersection of his political and private interests, and the goals he aims to achieve.

    Several sources agreed to speak only after hearing what others had said. “It’s Julius Caesar time,” said one source. “There’s lots of knives, but no one wants to be first.” Others refused to be quoted, but encouraged me to give voice to their complaints—which sometimes diverged but often built into a sort of Greek chorus, an indictment of Bloomberg’s mayoralty from those who have seen it in practice, and are vested in it.

    “Hanging out with a billionaire does bad things to your brain,” a source said. “It makes you think you’re right.”

    The candidate who first ran in 2001 on his private-sector résumé and a deluge of advertising never did bother telling voters much about his agenda.

    He pledged in that first run not to raise taxes and to step away from the daily running of his private company if elected to public office, but he brushed aside both vows after the election. In the case of his business, he claimed to have kept his word until his own testimony in a lawsuit unsealed in 2007 showed that he’d been far more active than he’d previously acknowledged.

    The vast redevelopment schemes he unveiled in office were never mentioned on the stump.

    New Yorkers have no trouble picturing Giuliani’s New York, or Dinkins’s “gorgeous mosaic,” or Koch’s “How’m-I-doing?” New York, or Beame’s bankruptcy, or Lindsay’s “Fun City.”

    After two full terms and change, what do you call Bloomberg’s New York? In many ways, the mayor has been merely a caretaker.

    While Bloomberg has called himself the “education mayor,” his claimed success with the public schools has been exposed as largely accounting tricks.

    When asked to describe the boss’s vision for the city, aides and allies tack post-partisanship on to a checklist of Bloomberg LP buzzwords: transparency, data-driven results, and a CEO fixed on the bottom line. Pressed for actual accomplishments, the city’s post-9/11 resurgence usually is mentioned first.

    The attack and its economic fallout played key roles in all three of Bloomberg’s runs, though the story has less to do with strong leadership than with good timing and salesmanship.

    The attack itself, along with his opponent Mark Green’s fumbled response to it, helped put Bloomberg over the top in 2001. The ensuing Fed-sponsored low-interest-rate bubble inflated New York’s markets just in time to help rescue the mayor from record-low approval ratings and ensure his re-election in 2005. When that bubble finally burst in 2008, the Wall Street meltdown became the public rationale for the “emergency” third term.

    “Post-partisanship” has always meant the party of Bloomberg, a convenient handle for a lifelong Democrat who left the party to avoid a contested primary in New York. After the presidential plotting that occupied most of his second term fell short (the big hit that began his losing streak), Bloomberg aimed for a soft landing with a nakedly undemocratic “emergency” bill to allow himself a third term. Instead, it alienated New Yorkers and wrecked his expensively built reputation as a “post-political” leader in the process.

    Transparency has always been something Bloomberg has preferred to pitch rather than practice. In his 1997 business memoir, Bloomberg on Bloomberg—a sometimes valuable guide to the mayor’s approach—he notes that “if public companies change what they’re doing midstream, everyone panics. In a private company like Bloomberg, the analysts don’t ask, and as to the fact that we don’t know where we’re going—so what? Neither did Columbus.” It’s a philosophy Bloomberg brought with him to City Hall.

    “Data-driven”? It’s hard to credit that when crime numbers are artificially deflated by re-classifying rapes as misdemeanors, NYC-reported public school gains disappear when compared to outside measures, and when the city’s 65 percent graduation rate is undercut by state tests showing only 21.4 percent of city students are ready for college.

    “Bloomberg’s data-driven shtick,” said one source voicing a sentiment repeated by several others, “means no one will tell him anything’s failed.”

    As the city’s “CEO,” Bloomberg has managed only to track the ups and downs of Wall Street and the national economy. It’s a strictly replacement-level performance.

    New York went through its rainy-day reserves this year and, with the federal stimulus money spent, now faces $5 billion budget holes in each of the next three fiscal years. The coming budget crunch, says Manhattan Institute fellow Sol Stern, stems in large part from the mayor’s penchant for awarding generous contracts to teachers and other public-sector workers that also add to the pension bills the mayor has at times written off as “fixed costs.”

    Pushing the idea that the city, like a corporation, has a bottom line, Bloomberg diverts attention from the fundamental issue every mayor faces: what the city ought to be doing.

    So what kind of New York has Bloomberg tried to produce?

    The “buck-a-year mayor” offered his business success and vast wealth as his main credentials for running New York. In office, he has envisioned a big-business-friendly city supporting a New Deal welfare state.

    To make that work, he’s promoted “knowledge workers” as New York’s distinguishing resource, the way that waterways, rail lines, and manufacturing facilities were for industrial cities.

    The mayor has often described that group (which, not coincidentally, matches the profile of Bloomberg terminal subscribers) as “the best and brightest,” with no irony intended. The city now acts as its own advertisement to draw in members of the so-called “creative class” who are as likely to work in ICE (Ideas, Culture, Entertainment) as in the city’s traditional FIRE (Finance, Real Estate, Insurance) base. In his typical salesman’s formulation, Bloomberg often suggests that the only alternative to courting that crowd and their wealthy employers would be a cost-cutting race to the bottom.

    How else to pay for the array of services the city provides if not by building a safe and beckoning environment for elites and their Ivy-educated service class to live and work in, unmolested by an untidy big city?

    That promised environment is the vastly expanded and uninterrupted Midtown Central Business District, a coveted goal of the business and real estate communities for nearly a century—if one viewed with suspicion farther south on Wall Street, where Bloomberg effectively ceded control of Ground Zero to a succession of bumbling governors, a major reason that it’s taken a decade for the Trade Center site to even begin rising back up.

    Bloomberg has used a series of mega-plans including his Olympics bid, historic citywide rezoning changes, and pushing the sale of Stuyvesant Town to cut down what remained of working- and middle-class Manhattan. Gone, going, or forcibly shrinking are the Flower District, the Fur District, the Garment District, the Meatpacking District, and the Fulton Fish Market. Even the Diamond District is being nudged out of its 47th Street storefronts and into a city-subsidized new office tower.

    “If New York is a business,” the mayor said in 2003, “it isn’t Walmart—it isn’t trying to be the lowest-priced product in the market. It’s a high-end product, maybe even a luxury product. New York offers tremendous value, but only for those companies able to capitalize on it.”

    (Perhaps oddly, the mayor is a big booster of Walmart’s push to open stores in the city. Earlier this month, he defended the big-box store’s $4 million donation to a city summer job program, snapping at a Times reporter, “You’re telling me that your company’s philanthropy doesn’t look to see what is good for your company?” Asked how Walmart fits into the mayor’s vision, Deputy Mayor Howard Wolfson told me on Twitter that it “fits into the strategy of creating jobs and capturing tax $$ here that are currently going to NJ and LI.”)

    But even as Wall Street has revived, ordinary New Yorkers haven’t benefited from the promised trickle-down.

    Middle-class incomes in New York have been stagnant for a decade, while prices have soared, with purchasing power dropping dramatically. Never mind Manhattan—Queens taken as its own city would be the fifth most expensive one in America. While unemployment in the city has dropped below 9 percent, through June the city had replaced only about half of the 146,000 jobs lost during the recession—and the new jobs have mostly been in low-paying retail, hospitality, and food services positions, according to the Drum Major Institute for Public Policy. Poorly paid health care and social-service jobs, often subsidized by the city, make up 17.4 percent of all private-sector jobs as of 2007, a nearly one-third increase since 1990. Only 3 percent of the private-sector jobs in New York are in relatively high-paying manufacturing positions as of 2007, a figure that’s in the low double digits in Los Angeles, Chicago, and Houston. And the jobs expected to appear over the next decade are also clustered at the bottom of the pay scale.

    A Marist Poll this year showed a striking 36 percent of New Yorkers under 35 intending to leave in the next five years, with 61 percent of that group citing the high cost of living. New York State already leads the nation in domestic out-migration—and New York City has had more than twice the exit rate of struggling upstate locations like Buffalo and Ithaca. More New Yorkers left the city in every year between 2002 and 2006 than in 1993, when the city was in far worse shape, with sky-high crime rates and an economy on the verge of collapse.

    Despite the mayor’s recruiting efforts, people with bachelor’s degrees continue to leave the city in greater numbers than they arrive here, with Brooklyn alone declining by 12,933 such citizens in 2006, according to the Center for an Urban Future, with many of those leaving discouraged by New York’s high costs, and the low quality of the public education available to their children.

    Mike Bloomberg thinks everyone’s dream is to come to the city with an MBA and find an inefficiency to exploit and become a billionaire, or at least get a good job with one, argued three unrelated sources who have worked with the mayor, all of whom asked not to be quoted directly on the mayor’s view of himself. His idea that everyone’s dream is to be on Park Avenue, say those sources, has alienated and insulted outer-borough “Koch Democrats.” Their dream is a house, and Mike Bloomberg diminishes that dream because he thinks everyone wants to be him.

    As Bloomberg memorably put it while floating his candidacy in early 2001: “What’s a billionaire got to do with it? I mean, would you rather elect a poor person who didn’t succeed? Look, I’m a great American dream.”

    Without an impressive public-school system, Bloomberg’s vision for New York falls apart. But the public-school “miracle” the mayor touted for years has proven all pitch and no payoff.

    Despite a massive 40 percent hike in per-pupil spending during Bloomberg’s first two terms, along with a 43 percent boost in teacher pay, the “historic” gains the mayor trumpets failed to register at all on the gold-standard national tests taken by the same students. When new state leaders put an end to the state’s easily gamed tests, what was left of the city’s years of paper gains disappeared.

    The ever-rising test scores Bloomberg had relentlessly promoted fell almost all the way back to the mundane levels that had prevailed when the mayor took control of the system in 2002. The incredible success he’s claimed in closing the achievement gap between black and Hispanic students and their white and Asian peers that’s vexed generations of educators disappeared entirely by some measures.

    Without high-quality schools to produce a cadre of well-educated citizens attractive to employers, Bloomberg’s implicit social contract with New Yorkers—that courting big businesses will help the little guy—breaks down, and the city’s appeal to those businesses is seriously tarnished, along with its long-term appeal to employees with children.

    “Bloomberg yoked his education agenda to his ambitions for higher office,” said Stern, who had initially backed both mayoral control of the schools and Bloomberg’s education agenda. “He recognized that the way he was going to prove [to voters nationwide] that he’d given more bang for the buck was through test scores, while at the same time he was also introducing cash incentives to principals and teachers for getting the scores up.” (That program was quietly shuttered this month after a city-commissioned study found the payments had no impact on student performance.)

    “So he invited the corruption,” Stern said, adding that he expects a numbers-juicing scandal to hit before Bloomberg leaves office. New Chancellor Dennis Walcott, responding to reports of grade-tampering in the city and a nationwide wave of such scandals, announced his own investigation this month, but it remains to be seen if the school system can fairly probe itself, and with the mayor’s reputation hanging in the balance.

    Asked in 2007 how New Yorkers could register their discontent with the schools now that he was presumably term-limited out of office, Bloomberg cracked, “Boo me at parades.”

    Some New Yorkers have taken him up on that, but more significantly they’ve also stopped caring enough to vote.

    The mayor has indeed governed as the city CEO he promised to be in 2001, redefining public life so that businesses are “clients,” citizens “customers,” and Bloomberg the boss entrusted with the city’s well-being, with no need to consult with the board before acting.

    After 1.9 million New Yorkers took to the polls in the 1989 and 1993 contests between Dinkins and Giuliani, less than 1.5 million voted in 2001’s nail-biter, and just 1.3 million turned out in 2005, when the outcome was never in doubt. Bloomberg nonetheless spent $84.6 million running up the score in a 19-point win intended to make him look “presidential.” In 2009, the mayor, responding to internal polls showing most New Yorkers wanted him out, broke the $100 million mark to project inevitability and discourage voters from showing up at all. Despite perfect weather on election day, three out of every four voters didn’t bother to participate. Just 1.2 million New Yorkers voted in an election that Bloomberg won by only 50,000 votes—collecting the fewest winning votes of any mayor since 1919, when there were 3 million fewer New Yorkers and women didn’t have the franchise. For the first time, Bloomberg’s spending failed to translate into popular support.

    As the city’s electorate shrank around him—even as its population grew by more than a million people between 1990 and 2010, Bloomberg’s political stature swelled. The voters who just stayed home allowed the mayor to hold on to power despite an outnumbered base of the city’s social and financial elites and the technocratic planners they often bankroll, a political and governing coalition last seen 40 years ago under fellow party-switcher John Lindsay.

    “My neighbors [in Manhattan] don’t vote in city primaries,” said a source. “They vote in presidential elections where their vote is useless. They’ve privatized their lives. Private schools, country houses, Kindles instead of libraries, cars instead of trains.”

    In exchange for Citizen Bloomberg’s benighted leadership, we’ve accepted a staggering array of conflicts of interest. The mayor’s fortune renders obsolete the “traditional” model of interest groups buying off politicians. He not only does the reverse, buying off interest groups to advance his political agenda but also uses his fortune to staff and support his business. At the same time, he builds the Bloomberg brand that supports it all: Bloomberg LP, the Bloomberg Family Foundation, Bloomberg Terminals, Bloomberg News, Bloomberg View, Bloomberg Government, Bloomberg Law, Bloomberg Markets—not to mention Mayor Bloomberg.

    The mayor wrote his own rules in a remarkably deferential 2002 agreement with the city’s toothless Conflict of Interest Board, and then ignored them when it was convenient, continuing to be regularly involved in his company’s affairs and acting in city matters where Bloomberg LP or Merrill Lynch (which until recently owned 20 percent of Bloomberg LP) had a stake.

    Top-level City Hall workers, favored legislators, and others have moved freely between City Hall and the mayor’s private interests, keeping it in the “Bloomberg Family.” Bloomberg LP is now run by former Deputy Mayor Dan Doctoroff, while the Bloomberg Family Foundation’s approximately $2 billion endowment is controlled, on a “volunteer” basis, by Deputy Mayor Patti Harris. The prospect of a private Bloomberg jackpot job is on a lot of minds around City Hall and throughout New York.

    Craig Johnson, the former state senator who lost a re-election bid after bucking his party to back the mayor in supporting charter schools, was hired this month by Bloomberg Law. “I wasn’t about to let him go to some other company,” Bloomberg said, all but winking. “I was thrilled to see my company hired him. I didn’t have anything to do with that.”

    Beyond the $267 million he spent in three mayoral runs, he documented nearly $200 million more in “anonymous” charitable contributions. And that cool half-billion is just the spending Bloomberg has chosen to disclose.

    Harris, now City Hall’s highest-paid official, came to the administration from Bloomberg LP. Through her control of Bloomberg’s ostensibly anonymous donations passed through the Carnegie Foundation to local institutions, she’s served as the Medici Mayor’s chief courtier—working for the city while using his private fortune to rent the silence, and occasionally the active assent, of its cultural groups on his behalf. That city giving dropped precipitously when Carnegie was replaced by the new Bloomberg Family Foundation, also run by Harris, which is now spreading cash to potential Bloomberg constituencies nationwide.

    As Bloomberg explained in 1997, when Harris worked for Bloomberg LP:  “Her sole job is to decide which philanthropic activities are appropriate for our company and to ensure we get our money’s worth when we donate time, money, and jobs. One of Patti’s questions is, ‘When does helping others help us?’… Not only does Patti commit our dollars, she also follows, influences, and directs how our gifts are used, ensuring our objectives are met.”

    Elsewhere in his memoir, he adds: “Peer pressure: Its impact in the philanthropic world is hard to overstate.”

    Meanwhile, Bloomberg News, supported by income from his sophisticated “Bloomberg terminals,” has grown to employ about 2,500 journalists, and at some of the best rates in the industry.

    After offering up vague statements about avoiding conflicts of interests—no easy task when the boss is a potential presidential candidate, mayor of the nation’s biggest city, and one of that city’s wealthiest men—Bloomberg View debuted in May with a remarkable opening editorial. The editors conceded that they didn’t know yet what their principles would be—”We hope that over time a general philosophy will emerge”—but they were confident they would end up aligned with the “values embodied by Mike Bloomberg, the founder of Bloomberg LP.”

    In June, brand-name Bloomberg pundit Jonathan Alter launched into an exceptionally vitriolic attack on charter school detractor and former Bloomberg education adviser-turned-foe Diane Ravitch. The piece ran with no acknowledgment of the evident conflict of interest in taking shots at perhaps the most prominent critic of Citizen Bloomberg’s education policies, under the Bloomberg View banner.

    Bloomberg seems to view himself as congenitally above such conflicts, explaining in Bloomberg on Bloomberg, “Our reporters periodically go before our sales force and justify their journalistic coverage to the people getting feedback from the news story readers…. In return, the reporters get the opportunity to press the salespeople to provide more access, get news stories better distribution and credibility, bring in more businesspeople, politicians, sports figures and entertainers to be interviewed…. Most news organizations never connect reporters and commerce. At Bloomberg, they’re as close to seamless as it can get.”

    Speaking of seamless, in 2000 Bloomberg rolled out a new city section, just in time for the boss’s run. Jonathan Capehart, brought in from Newsday, ended up doing double duty as candidate Bloomberg’s policy tutor and his host in different corners of the city, according to former Times reporter Joyce Purnick’s biography of the mayor, Mike Bloomberg: Money, Power, Politics. When the mayor-elect reached out to Al Sharpton on election night to tell him “things will be different with me as mayor,” it was Bloomberg News employee Capehart who placed the call.

    Much as City Hall staffers dream of a Bloomberg job as the big payoff for their loyal labors, few reporters will go out of their way to tweak a potential employer, let alone one who frequently lunches with their current boss. And especially one whose long-rumored ambition is to buy the Times one of these days—a buzz that the mayor’s camp hasn’t discouraged, Berlusconi comparisons be damned. (The Italian prime minister and Ross Perot are two of Bloomberg’s neighbors when he weekends in Bermuda).

    Along with Berlusconi, other comparisons heard in various conversations about Bloomberg included his Trump-like leveraging of his name (“It would be me and my name at risk. I would become the Colonel Sanders of financial information services…. I was Bloomberg—Bloomberg was money—and money talked”), his Hearst-like seduction of legislators with private jet rides and self-serving party-jumping, and his Rockefeller-like use of his private fortune on behalf of the state GOP, though for very different reasons.

    The lifelong Democrat who became a Republican to dodge the mayoral primary has also given millions to the state GOP (as well as $250,000 to the Republican National Committee in 2002, and $7 million in support of the 2004 Republican convention in Manhattan). The cash shipments continued even after the mayor left the party in 2007 to hitch his star to the misleadingly named “Independence Party”—run in the city by crackpot cultist Lenora Fulani.

    While Bloomberg’s support for the GOP dwarfed the money he channeled to the Independence Party, both received just a drop from his enormous bucket of cash—which still made Bloomberg easily the state Republicans’ biggest patron, his table scraps their feast. The party repaid that support in part with their ballot line in 2009, two years after he’d left the party, to go along with his “Independence” line, which proved crucial to his 2001 and 2009 wins, and would have been key had his presidential plans moved forward.

    His Albany cash, though, has often failed to pay off. Perhaps that’s because Bloomberg hasn’t been willing or able to salt the state’s interest groups and leadership class as thoroughly as he has the city’s—his political persuasiveness and popularity have always been coterminous with his cash. In each of his terms, major aims—Far West Side development, congestion pricing, and teacher hiring—have been simply abandoned in the capitol without so much as a vote. Those losses came despite dealing with three weak governors before Cuomo, whose dramatic ascent has left the mayor further diminished. (One of Bloomberg’s rare wins in the state capitol, mayoral control of the city schools, was actually given to him by Assembly Speaker Sheldon Silver, the mayor’s most frequent Albany foil—who had withheld the same gift from Mayor Giuliani.)

    Given Citizen Bloomberg’s success in buying off the city’s opinion makers, cultural institutions, community groups, and organized protesters, it’s no wonder the mayoralty began to feel too small for him, and he spent the bulk of his second term trying to leverage it into the presidency. While his signature congestion-pricing plan failed in the city, it succeeded in landing him on the cover of Time. He followed up by a nationwide victory tour with then-Chancellor Joel Klein and well-compensated occasional sidekick Sharpton to tout the school system’s “amazing results.”

    The master salesman, who talked of transparency while keeping his own cards down, used his fortune to establish at City Hall the “benevolent dictatorship” he saw at Salomon and then employed in his private business: “Nor did so-called corporate democracy get in the way. ‘Empowerment’ wasn’t a concept back then, nor was ‘self-improvement’ or ‘consensus,’ ” Bloomberg writes in his business memoir. “The managing partner in those days made all the important decisions. I suspect that many times, he didn’t even tell the executive committee after he’d decided something, much less consult them before. I’d bet they never had a committee vote. I know they never polled the rest of us on anything. This was a dictatorship, pure and simple. But a benevolent one.”

    But dictatorships never last. “Once Bloomberg leaves a room, it doesn’t exist to him,” said one source, skeptical that the mayor would care about maintaining his influence after he exits office. But given the value of his name, he is taking care to be sure that it isn’t damaged in the exit process.

    Campaign filings released last Friday show the lame duck nonetheless spent $5.6 million on TV and direct mail spots promoting himself in March and April. And after failing to groom a successor, the mayor has belatedly been trying to institutionalize parts of the Bloomberg way.

    “The administration is finally trying to do systematic reform, that’s what [Stephen] Goldsmith is here for,” a source said, referring to the former Indianapolis mayor who emerged as a star of the 1990s “reinventing government” movement, and signed on for Bloomberg’s third term as a deputy mayor. “I think he’s really frustrated. He complains a lot about lawyers.”

    While Police Commissioner Ray Kelly reportedly mulls a Republican run, buzz has been building that Bloomberg will support City Council Speaker Christine Quinn, his Democratic partner in changing the term-limits law, as his successor. A slush-fund scandal left her damaged, but a third term she and the mayor pushed through bought her time to recover, along with a chip to cash with him. Mayor Koch last month outright said that Bloomberg had told him he was backing Quinn, before Koch dialed back his words later the same day.
    But some of the Bloomberg-for-Quinn hype has come from operatives with reason to find a new patron once the billionaire exits office. The mayor, meanwhile, has reason to want a pliant speaker in his final years.
    “Even if he does back her,” a source noted, “he’s not giving her $100 million for a campaign, or to wield as mayor. Once he’s gone, it’s done.”

    Contact Harry Siegel at hsiegel@villagevoice.com

    Photo courtesy of Be the Change, Inc. :: Photo credit Jim Gillooly/PEI

  • Are Millennials the Solution to the Nation’s Housing Crisis?

    During his Twitter-fed Town Hall, President Obama admitted that the housing market has proven one of the “most stubborn” pieces of the economic recovery puzzle to try and fix.  The President — as well the Congress and the building industry — should  consider a new path to a solution for housing by tapping the potential of the very generation whose votes brought Barack Obama into the White House in the first place.   

    The Millennial Generation (born 1982-2003) represents not just the largest generation in American history but the largest potential market for both existing and new housing in the United States. There are over 95 million Millennials and over the next five years the first quarter of this cohort will enter their thirties, an age when people are most likely to buy their first home.

    Contrary to what is often written about this generation it is very much interested in owning a home, preferably in the suburbs. Sixty-four percent of Millennials say it is very important for them to have an opportunity to own their own home; twenty percent named it as one of their most important priorities in life, right behind being a good parent and having a successful marriage.

     And, contrary to the usual claims of “new urbanists” (themselves largely members of the older X and Boomer Generations) most Millennials want to live in the suburbs where the current housing crisis is most acute. According to a study by Frank N. Magid Associates, 43 percent of Millennials describe suburbs as their “ideal place to live,” compared to just 31 percent of older generations, most of whom still yearn for the smaller towns and rural settings of an earlier America.  

    Most Millennials already live in suburbs and enjoyed growing up in suburban settings surrounded by family and friends that supported them.  A certain portion, of course, enjoy living an urban life while young, but most tell researchers that they want to raise the families many are about to start in the same suburban settings they grew up in.

    Furthermore, Americans between the ages of  25 and 34, both Millennials and those on the “cusp” of the generational change from X to Millennial,  represent a greater proportion of the overall population in the South and West than elsewhere. These are the very regions that suffered the most from the collapse of housing prices that stemmed from the mortgage financing scandals of the last few years. Unleashing this potential demand for suburban housing in these hard-hit areas would bring two huge benefits. It would stabilize prices for existing homes while at the same time boosting the prospects for new housing construction.  

    The challenge is how to enable the Millennial Generation to achieve its desire to own homes without reigniting the speculation and unsustainable financial leverage that   triggered the Great Recession. Clearly, in the immediate future at least, the current excess of supply in the housing market should mitigate the risk of too much demand chasing too few houses.  As much as they are criticized by the financial industry and its Republican allies, the recently enacted financial regulatory reforms might also provide an additional bulwark against allowing the market to misbehave a second time.

    But the biggest factor may be the lessons learned from experience.  Millennials have borne much of the brunt of the Great Recession and tend to be keenly aware about the importance of living within your means.  Wanting a suburban home does not mean, as many urbanists assert, that Millennials want McMansions. Like earlier generations, especially their GI Generation great grandparents, they are likely to be cautious and frugal home-buyers. However, this frugality and caution does not translate into a meek acceptance or desire for a future as apartment renters, as some suggest will be the case.    

    In the short run, Millennials will not be able to engineer a turnaround all by themselves; most Millennials can’t afford much beyond the next month’s rent, let alone the down payment on a mortgage. Many are still living with their parents to avoid having to pay rent and the cost of a college education at the same time.

    To address this part of the challenge, the federal government needs to do what it did to revive the moribund housing market in the 1930s. The New Deal created today’s commonly accepted 30 year mortgages with a 20 percent down payment by making them a financial instrument that the newly formed Federal Housing Administration would insure. Before that landmark legislation, home mortgages were rarely offered for more than half of the home’s value and normally had to be repaid in no more than five years.

    As a result that era’s civic generation (the GI or Greatest Generation) was able to afford single family homes with a surrounding tract of land, an offer returning World War II veterans seized with alacrity. These houses now make up much of the country’s inner suburb housing stock.    Today’s housing crisis requires a similarly radical reinvention of the basic home mortgage to be offered to those buying their first home. Under this proposal the length of the mortgage could be extended up to as many as 50 years, reflecting the increased life expectancies — and longer working careers — that most Millennials can expect to enjoy. Since no market for such debt instruments currently exists, it would be up to the federal government to create one through the process of reinsurance, just as it did in 1934.

    To further encourage home buying by Millennials, the federal government should also provide incentives to financial institutions to swap out the principle of the Millennials’ student loans in exchange for a new loan, whose principal would be collateralized by the value of the real estate the former student would be acquiring. The student loan would be paid off as part of the mortgage, making Millennials better able to afford a home and freeing up additional discretionary spending that current worries over student debt curtail. Today’s lower housing prices today might make this package both attractive to investors and financially viable.

    Many economists today argue against the whole notion of encouraging home ownership by anyone, let alone young Millennials. Some point out that when looked upon strictly as an investment choice, the value of a home rarely appreciates faster than the overall stock market.

    This type of analysis, which forms the basis for arguing against any federal policy that would further encourage home ownership, ignores the proven benefits to the nation that derive from home owners committed to the success of their local community.  Voting participation rates among home owners, for instance, traditionally run higher than rates among renters, and neighborhoods of owners tend to be more stable places to raise children. 

    More important still is what homeownership means to the nature of a property-owning republic. Survey after survey shows that home ownership remains a central part of the American Dream and a central aspiration, particularly for immigrants and young people. A policy that works against this ideal presents a political risk that any politician should be wary of taking.

    To restore this part of the American Dream, and to lift the worry of millions of Americans whose house is worth less than what they owe on their mortgage, the Obama administration must take bold steps to restore a vibrant residential housing market.    President Obama, who built his winning margin in 2008 through an unprecedented mobilization of Millennial voters, is the ideal person to combine a plan for economic recovery efforts with meeting the aspirational goals of most Millennials to own their own home.

    To save the housing market, and extend the recovery beyond the financial elites, America will need a new wave of home buyers.  If the President works to tap this resource, he can begin to turn around the “stubborn problem” of the housing market and restore the middle class economy. If he does so, the whole country will soon be tweeting his success.

    Morley Winograd and Michael D. Hais are fellows of NDN and the New Policy Institute and co-authors of Millennial Momentum: How a New Generation Is Remaking America to be published in September and Millennial Makeover: MySpace, YouTube, and the Future of American Politics.

    Photo by 3Ammo

  • Another Congressional Cut for High Speed Rail

    July 15: Today there was another indication that the newly constituted House of Representatives understands the “litmus test” imperative of zeroing out high speed rail appropriations, in light of potentially required cuts in essential programs like Medicare, Social Security and others. $1 billion was switched to Midwest flood relief in an approval today of the Energy and Water Appropriations bill for the 2012 budget.

    The bill may or may not pass the Senate and lobbying is underway to “obligate” the money before the rescission becomes law. Either way, this action and the previous action to reduce high speed rail funding by $2.5 billion in a previous budget deal with the White House indicates a very tough road ahead for the Administration’s high speed rail program, most of which is not genuine high speed rail.

    The rescission would block funding that has been promised by the US Department of Transportation to a number of projects around the nation, such in California, North Carolina, Michigan, Missouri and Illinois.

  • A Most Undemocratic Recovery

    Unemployment over nine percent, the highest rate this far into a “recovery” in modern times, reflects only the surface of our problems. More troubling is that over six million American have been unemployed for more than six months, the largest number since the Census began tracking their numbers. The pool of “missing workers” – those neither employed nor counted as unemployed – has soared to over 4.4 million, according to the left-of-center Economic Policy Institute.

    Not surprisingly, working class and even educated middle class Americans have become increasingly pessimistic about their children’s ability to achieve their level of well-being.2 Average consumers are more pessimistic about their financial prospects that at any time for a quarter century.3 The failure of this “recovery” to reach the middle class is unprecedented in modern American history in its scope. The consequences – economic and political – could be profound.

    In sharp contrast, for the affluent few, things improved rapidly even before the recovery started. Large financial institutions, in particular, have been blessed with cheap money and implicit government guarantees for their survival; this has boosted the size, profits and wealth among the very sector most implicated in creating the great financial crisis. Top pay for CEOs of financial companies, including those bailed out by the taxpayers, is once again soaring.4 Stock prices have risen, mostly benefiting the top one percent, who own some forty percent of equities and sixty percent of financial securities.

    How did this very undemocratic scenario unfold? One explanation lies in the significant demographic, economic and geographic shifts within the Democratic Party, epitomized by Barack Obama.

    The Triumph of Gentry Liberalism
    From the beginning, Obama has been first and foremost a gentry candidate. Even in the Democratic primaries, his strongest base lay, outside of the African-American community, within college towns, affluent urban areas and the toniest suburbs. Unlike his predecessors Bill Clinton or Jimmy Carter, he never connected well with working class and middle class suburbs.

    The gentrification of the Democratic Party, of course, predates Obama. Starting in the 1970s, the party has focused more on the liberal social and green values of concern to the urban upper classes than the bread and butter issues of middle or working class voters.

    For financial support, Obama and his Party have become increasingly close to Wall Street. Hedge fund managers have done very, very well under Obama; the top 22 managers in 2010 earned a remarkable $25 billion. Overall in 2010, Wall Street compensation hit a new record of $135 billion. And despite the fact that some hedge fund and bank executives have recoiled at the President’s occasional public chastisement, the financial community and the Republican Party, as the American Prospect recently noted, are the ones “drifting apart.” One source of division lies with the Tea Party movement that, along with its radical fringes, reflects a genuine grassroots middle class disdain for the financial hegemons and their political allies.

    This does not necessarily apply to many Republicans who may play up to Tea Party populist sentiments but in practice favor policies – for example in terms of financial legislation and taxation – that favor financial hegemons and large corporations. As you speak to business groups around the country, particularly in small and mid-sized cities, one senses little more enthusiasm for corporatist Republicans than for their Democratic counterparts.

    Obama’s gentry liberalism is no less corporate and tailored to the powerful than that of the Republicans but differs in what constitutes its economic and political base. President Obama’s other key pillars of support include “new economy” centers as Silicon Valley, Hollywood and the heavily subsidized “green” industrial complex. From the beginning, “green jobs” have been one of the linchpins of the Administration’s job creation strategy and arguably one of its biggest disappointments. Heavily dependent on government mandates and subsidies, the growth trajectory of solar, wind and battery companies, at least in the near term, remains dubious, particularly against even more lavishly subsidized foreign competition.

    At the same time, the Administration has been almost unfailingly hostile to the green-industrial complex’s greatest nightmare, the orderly development of the nation’s prodigious oil and gas resources. This has occurred despite rising fossil fuel prices, expanded off-shore drilling in ascendant countries such as Brazil, and the fact that the country continues to burn a dirtier fuel – coal – while buying much of its oil from other nations.

    The Administration’s green tilt also infects its urban policy. The dogged emphasis on expensive programs like high-speed rail and support for “smart growth” initiatives around the country reveal a cultural mindset that rejects the fundamental aspirations of a vast majority of Americans to own their homes in low-density neighborhoods.

    Here is the ultimate political irony of the Obama era and gentry liberalism: the metropolitan areas most passionately committed to the progressive agenda – which have adopted them on the state and local level – also tend to be those with the highest rates of inequality and the deepest poverty. Indeed, if cost of living is included, most of the urban counties with the highest percentage of poor people are located in the very bluest areas of New York, California or Washington, D.C., which together account for five of the nation’s ten poorest counties. As a state, California, once a prototype for democratic capitalism, now suffers the worst income inequality in the country.

    This is also the case in New York, the other anchor of the Obama economy. Wall Street – the beneficiary of Administration fiscal and monetary policies – is booming, but as the Fiscal Policy Institute notes, the poorest 50 percent claimed barely 8 percent of the city’s income while a shrinking middle class just about 34 percent. Overall, Gotham has become, as The Nation recently noted, “the most unequal large city in America.”

    In contrast to much of the country, government centers, notably Washington and its suburbs, are flourishing. Five of the richest counties in the country are located in the belt around the nation’s capital. The region is also the only one in the nation seeing real estate price gains.

    If you believe some pundits, California, New York and Washington, D.C. represent progress due to the enlightened social and environmental rhetoric espoused by the media, academics and politicians based in these regions. But in reality this new ruling class seems likely to create an American future that looks a lot like today’s Great Britain, with a significant affluent population concentrated in core cities and some affluent suburbs that lives an exciting life at the top of the world economy, surrounded by a large underclass and a fading middle class.

    Learning from the New Deal
    The gentry liberalism that has triumphed in the Obama era differs radically from its New Deal forbearers. For one thing, many places closest to Obama are themselves almost “failed states,” including the President’s nearly-insolvent home state of Illinois. In contrast, the New Deal was forged by a New York that was at the time a leader in economic growth, infrastructure development and social democracy. In the 1920s and 1930s, small entrepreneurs and skilled craftsmen, office workers and the unskilled flocked to New York. Today those same populations are deserting the Obama bastions in huge numbers for places, notably Texas, that embrace a very different political philosophy.

    Unlike the urban-centered Obama, Roosevelt also focused heavily on the nation’s less developed regions. Indeed, the Hudson Valley gentleman farmer had among his stated goals “to make the country in every way as desirable as city life…” The New Deal great hydro-electric plants, for example, literally brought light to large areas that had barely emerged from semi-feudalism, particularly in the South.

    Instead of narrowing his base, Roosevelt’s policies expanded the Democratic Party’s sway from cities to many rural areas which historically might have opposed a progressive agenda. Similarly his successors – notably Truman, Johnson and Clinton – embraced suburbanization as means to assure upward mobility and reduce the overcrowding and unhealthy living conditions associated with cities. To be sure, sometimes bipartisan enthusiasm sparked a surplus of unwise credits to boost homeownership, but at least the party embraced the lifestyle aspirations of Americans, as opposed to seeking to transform them to an urbanist model.

    These approaches must be changed if the Administration and their allies want to create the basis for, as they often claim, a long-term progressive era. Here again the New Deal model could be helpful. One idea, particularly in an era of long-term persistent unemployment, would be to revive the Work Progress Administration (WPA), which along with the Civilian Conservation Corps, which employed roughly three million of the unemployed during the height of the Depression. To be effective, and worth it to the public, a new WPA should concentrate on such things as the expansion of ports, roads, electrical transmission lines and other critical elements needed to revive American industry.

    Most future growth would come from the private sector, but one has to ask what kind of industries should be fostered. Do we really need to spend money for more post-modernist English professors and lawyers, or to lend billions to investment bankers? Perhaps policies should be redirected instead towards bolstering those “basic industries” – notably agriculture, energy and manufacturing – that since the beginning of the Administration have received, at best, mixed signals.

    This approach would counter the fashion, common among both techno-libertarians and “creative class” enthusiasts, asserting that the country’s future can be assured by hip startups, software companies and videogame producers alone. As Intel co-founder Andy Grove has noted, we cannot rebuild our job base just with sexy start-ups; we need to also “scale up” our emerging companies, the very thing that made Silicon Valley and its counterparts across the country such prodigious opportunity regions in the past.

    Rather than being excoriated, for example, the oil and natural gas industries need, with improved regulation, to expand at a time of growing global demand and rising prices. Farmers, notably in the West, have been greeted with pronouncements by senior Interior Department officials about the end of dam-building, a critical source of water, at a time of generally rising demand and prices.

    Manufacturers, particularly smaller ones, have been hard-pressed by regulatory reform when their competitors elsewhere are dialing into the developing country market. There is a pervasive sense that the Administration favors only large and well-connected crony firms, such as General Electric (which paid no taxes last year) and the kinds of green start-ups backed by John Bryson, who has been selected to be Obama’s next Commerce Secretary.

    The well-connected sections of the investment community may well howl at such changes, but ultimately the future of our financial industry depends upon the health of the America’s productive sectors. Without a strong US economy at its back, in the long-term, Wall Street will become ever weaker in its growing competition with London, Frankfurt, Singapore, Shanghai and Hong Kong.

    Ultimately, the only progressive agenda that can work – from the environment to healthcare to education – rests on the foundation of widely dispersed economic growth, not upon policies that favor a few influential sectors at the expense of everyone else.

    This piece was originally published by The New America Foundation Economic Growth Program Decent Jobs Forum.

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

    FDR fireside chat statue photo by Tony the Misfit

  • Let’s Face It, High Speed Rail Is Dead

    Advocates were ecstatic when President Obama had $8 billion for high speed rail put into the stimulus bill. His administration planned to make HSR one of the cornerstones of its infrastructure investment program. Secretary of Transportation Ray LaHood visited Europe to check out HSR there in person and came back proclaiming, “High speed rail is coming to America.” The $8 billion, we were told, was a down payment, and that in little more than two decades, America’s largest cities would be linked by a web of high speed trains.

    But as it turns out, a series of snafus and reversals has left Obama’s HSR agenda on life support.

    First is the public perception of the failure of the stimulus bill. Unemployment never came down to projected levels. Spending largely went to keep state and local government workers already employed, not towards infrastructure or new jobs. Obama has since admitted he was mistaken to believe there were such things as “shovel ready” projects for even roads, much less a complex undertaking like high speed rail. But more importantly, rather than put that $8 billion towards focused projects that would really advance the ball of high speed rail in America, it was peanut butter spread across a large number of projects around the country, ultimately not driving significant improvements. This feeds the perception of $8 billion that just went “poof.”

    At the same time, the federal deficit ballooned to $1.5 trillion and the national debt to an astounding $14 trillion. Virtually all parties agree on the need to address our massive structural deficit. The Tea Party focused on a hodge podge of issues, but primarily on reducing government spending. The movement grew to prominence and fueled a Republican comeback in the 2010 elections. In this environment, getting anything done will be difficult, and especially funding items like HSR that are easy to characterize as frivolous and favoring just a few urban regions.

    The biggest impact may have been at the state level, however, as a wave of new Republican governors ripped up HSR plans and sent stimulus funds back to Washington.  This includes Scott Walker of Wisconsin, John Kasich in Ohio, and Rick Scott in Florida, all of whom said “thanks, but no thanks” to federal rail funds.

    But beyond those philosophically opposed to HSR, some  high speed rail advocates have done themselves no favors either. They’ve resolutely backed pretty much any and every rail project regardless of whether it is potentially useful or an outright boondoggle. They’ve engaged in false advertising by labeling 110 MPH peak speeds as “high speed rail” instead of what it really is:Amtrak on steroids. (One of the more serious HSR advocates is Richard Longworth, who labeled the Midwest 110 MPH rail plan the “Toonerville trolley”). Nevertheless, Illinois is pocketing well over $1 billion of the HSR stimulus funds for this “high speed” system that will offer end to end journey times that are at best only slightly better than what’s already being provided today by Megabus – and that for only a handful of trains a day on a line still subject to freight interference.

    Advocates have excoriated opponents to high speed rail, but have shown themselves largely utterly unserious about the enterprise as they have put no focus on overcoming major institutional barriers such as the steam road era thinking of the Federal Railroad Administration which is stuck in the 90s – the 1890s – or the mismanagement at Amtrak.  Getting to an HSR system that works is going to involve major reform (or replacement) of those agencies since all proven, international HSR systems are illegal in the US under current rules.  Witness here also the histrionics about a Republican proposal to privatize the Northeast Corridor rail operations rather than engage with it as a starting point.  Even in Europe and Japan, many HSR operations are private, so there’s no reason they can’t be in the US too.

    To be clear, though I myself have been ambivalent about the high speed rail enterprise, I do not consider myself anti-rail in the slightest. I agree that HSR could bring potentially significant benefits, particularly in the Northeast, although it’s a somewhat more speculative enterprise in most parts of the country.  This is one on which reasonable people can disagree.  But however one feels, getting to the benefits will require a properly designed and operated true high speed system, something few of the current proposals would provide.

    It’s time to take a major gut check on high speed rail in America and rethink the direction. Clearly, with the budgetary and political situation, significant future HSR investments are unlikely. Even if some billions materialize, the experience of the stimulus suggests that they will be frittered away as salami slices sent hither and fro.

    A better approach might be to take some time to think more clearly about what we want high speed rail to look like in America.  It starts with learning from best – and worst – practices abroad, while noting the important differences versus the US. We need to put a proper regulatory regime in place and reform the FRA; to set up a framework for a successful privatization of any system, probably with operations contracted to an international operator with high speed experience; and to jettison any thought of Amtrak as the ultimate HSR system operator.

    We can then prove these concepts out in the one corridor where high speed rail is clearly a slam dunk in America: the Northeast Corridor from DC to Boston.  Despite what the Acela brand might imply, this is far from high speed service today, and there’s clearly room for vast improvements. Studies can proceed in parallel in other regions, and one we’ve proven in the NEC that HSR can be for real in America, other regions might opt in.

    In short, it’s time to stop pretending we are going to get a massive nationwide HSR rail network any time soon.  Advocates should instead focus on building a serious system in a demonstration corridor that can built credibility for American high speed rail, then built incrementally from there.  That’s about the best hope for HSR left in America. Without a rethink of the current approach, high speed rail is well and truly dead.

    Aaron M. Renn is an independent writer on urban affairs based in the Midwest. His writings appear at The Urbanophile.

  • America’s Burgeoning Class War Could Spell Opportunity For GOP

    Last week’s disappointing job reports, with unemployment rising above 9%, only reinforced an emerging reality that few politicians, in either party, are ready to address. American society is becoming feudalized, with increasingly impregnable walls between the classes. This is ironic for a nation largely defined by its opportunity for upward mobility and fluid class structure.

    According to the latest data, the current unemployment rate is the highest it has been so deep into a recovery since the 1940s.  Even more troubling, over 6 million Americans have been unemployed for more than six months — the largest number since the feds have begun tracking this number decades ago.

    That’s not the worst of it.  The pool of “missing workers” — those who are unemployed but are not counted as such — has soared to over 4.4 million. And under the first African-American president the employment rate for black men now sits at a record low since the government started measuring the statistic four decades ago.

    This recovery has been particularly parlous to the middle class, of all races. Despite the massive stimulus, small businesses — the traditional engines of job growth and upward mobility — have barely gotten off the matt. Indeed, according to a recent National Federation of Independent Business survey, they are now more likely to reduce payrolls than expand them.

    Many blue-collar and middle-class Americans are becoming increasingly pessimistic about the future and their children’s chances for achieving their level of well-being. Middle-age college graduates, who supported Obama previously, increasingly have shifted from the administration.  Even the young seem to have lost their once fervent enthusiasm. After all, they are seeing their prospects dim dramatically.

    Overall disapproval of President Obama’s economic policies now stands at 57% and will likely grow due to the latest job numbers.  And while the middle and working classes have seen their prospects worsen, the very rich have enjoyed a huge boom.

    Of course, no one in a capitalist country should begrudge the earned wealth of the rich.  But there must be some sense that the prospect of greater prosperity extends beyond the privileged. The policies of Fed chief Ben Bernanke and Treasury Secretary Tim Geithner have done little for the small businesses on Main Street while enriching the owners and managers of financial companies by showering them with cheap money and implicit government guarantees for their survival. Top pay for CEOs of financial companies, including those bailed out by the taxpayers, has soared.  The rise in stock prices has benefited the wealthiest 1% of the population, which owns some 40% of equities and 60% of financial securities.

    The consequences will be profound — socially and politically.  For one thing, the president, despite his occasional barbs against “the rich,” has turned out something of a faux populist. If a George Bush recovery was as bad as this one, we would never hear the end of it from the “progressives” who still cling to Obama.

    Of course, not all the blame belongs to the White House. The formerly Democrat-controlled Congress largely ignored the middle class’ concerns over the economy and jobs. Instead they focused on health care — which, according to the Pew Foundation survey, ranks as only a middling concern among voters — and climate change, which ranked dead last among the top 20 issues for the electorate.

    Even with the Main Street economy grasping for air, Congress chose to impose new regulations and taxes on the entrepreneurial class. Meanwhile Washington has given huge government support to often marginal green ventures such as Tesla, which is building $80,000 plus electric cars. Such assistance was not extended to the struggling garment-maker or semiconductor plant forced to compete globally largely on their own.

    Of course Democrats resort to stirring up class resentments, but their credibility is thin. After all it’s New York Sen. Charles Schumer, not some fat-cat Republican, who remains the financial industry’s designated hitter on the Hill. Instead of chastising the big financial institutions, the administration has largely coddled them. Despite the obvious abuses behind the financial crisis, there have been virtually no prosecutions against what Theodore Roosevelt once identified as “the malefactors of great wealth.”

    This has created a class divide large enough to propel a Republican sweep next year. Some Republicans, like former Bush aide Ryan Streeter, understand this opportunity. Streeter argues for the GOP to become more economically populist approach.  He calls for an “aspiration agenda” based on policies to spark private sector economic growth and a wide range of entrepreneurial ventures. To succeed, the GOP needs a viable alternative to middle and working class voters who are losing faith in Obama-style crony capitalism but who do not want to replace it with policies focused on enhancing the bottom-lines of the top 1% of the population.

    Yet at a time when people are worried primarily about paying their bills and prospects for their children, many Republicans seem determined to campaign on social fundamentalism, something that is already distressingly evident in the Iowa primary race. This may have worked in the past, in generally more prosperous times. Right now what sane person thinks gay marriage is the biggest issue facing the nation?

    Neither right-wing ideology nor mindless support for corporate needs constitute a winning strategy in a nation plagued by a sense that the system works only for the rich and well-connected.  Only by focusing on working and middle class concerns can the GOP permanently separate the people from the party which pretends to represent them.

    This piece originally appeared at Forbes.com.

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

    Official White House Photo by Pete Souza

  • Infographic: State Property Tax Data

    Credit Sesame has created an interactive map showing property tax rates for all 50 states. Based on data from the Tax Foundation, the graphic also shows property tax rates as a share of home value and as a share of median income of homeowners. It’s important to note that property taxes can vary regionally within states, and property taxes are only one part of overall state and local tax burden.


    Mortgages – CreditSesame.com

    Here’s the Tax Foundation’s numbers on overall state and local tax burden. For more on overall state business climates, check out our Enterprising States report.

  • Australians Are Getting A Carbon Tax They Don’t Want

    Within weeks, the Australian government is expected to announce a package of measures including a carbon tax to stimulate renewable energy sources and abate carbon emissions. Officials, activists and journalists around the world will hail Australia as a courageous and forward-looking country, ready to take its responsibilities seriously. Some will rebuke their own governments for being less bold. Yet they will ignore an inconvenient detail. According to opinion surveys, at least 60 per cent of Australians strongly oppose the tax. Since it was flagged in February, support for the ruling Labor Party has fallen to its lowest level in 40 years. Only 27 per cent of Australians now nominate Labor as their first preference. Nor did they vote for it. In the lead up to last August’s federal election, both major parties ruled out a carbon tax. Prime Minister Julia Gillard declared, just hours before polling day, that “there will be no carbon tax under the government I lead”. Her job approval rating is 31 per cent.

    So why is this happening? The current malaise can be traced to a combination of long and short term causes. Like other western countries, Australia was profoundly changed by the 1960s social movements. In the decades after World War II, as Britain lost its empire and turned to Europe for an economic future, Australia shifted its agricultural and mineral commodity trade to Asia, admitted growing numbers of immigrants from outside the British Isles, and came to rely on the United States for security. Elites in the professions, judiciary, churches, universities and bureaucracies conceiving Australia as an outpost of British civilisation, found the ground moving under them.

    Radicalised by Australia’s participation in the Vietnam war, baby boomers poured out of an expanded university system to spearhead a range of movements, over time supplanting the old elites. By the 1980s, universities, schools, many professions, the media, and most of the public sector were dominated by left-progressives. Their “long march through the institutions” was perhaps more thorough-going than in the United States, since anti-leftists had yet to find a substitute for British imperialism.

    One of the social movements was environmentalism. Australia is an isolated, sparsely populated continent with hauntingly beautiful landscapes and unique natural species. Late-coming westerners found a pristine wilderness, populated by aboriginals with close spiritual ties to the land. Since European settlement, these features have, in various forms, injected a romantic strain into the country’s transplanted British culture. That strain was mostly confined to the arts and radical fringe movements. In large part, the colonies, federated in 1901, evolved a practical outlook shaped by nineteenth-century liberalism and the blessings of trade, industry and commerce.

    The 1960s saw a fusion of the romantic strain with ideologies shaped by streams of Marxism, left-wing anarchism and revivals of Counter-Enlightenment Romanticism. Sharing a preference for ecological protection over economic growth, inner-city-based activists, including many socialists, current or former communists, Trotskyites and others from counter-culture circles, like hippies, together with aboriginal peoples, campaigned to lock up remnant bushland, native forests, wetlands and traditional aboriginal sites in “green-belts” or national parks. They targeted urban expansion and industries like logging, cattle-grazing and mining, which boomed in a mineral-rich arc across northern Queensland and Western Australia. Conflicts over mining projects were routine in the 1970s and 1980s. Uranium was particularly contentious.

    But it was in Tasmania that the new environmentalism came of age. State government plans for a hydro-electric dam on the Franklin River became a cause celebre, attracting strong opposition from environmentalists, and wide public interest. Many leading-lights of the movement, including the current Greens Party leader, made their name in that struggle. Ultimately, the activists came out on top, winning support from federal Labor just before the 1983 election, at which they returned to power.

    The Franklin tussle cast a long shadow over Australian politics. Many analysts thought it contributed to Labor’s victory. Nature conservation crept onto the mainstream agenda. In 1984, various green lobby groups, including some of the more hard line activists, came together to form Greens parties in New South Wales and Queensland, modeled on the German Greens. Other states followed, and in 1992 a national Greens Party emerged. Over time, Greens gained a presence in state and federal parliaments. Some were ideological refugees from defunct communism. Before joining the Greens, for instance, one serving Greens senator was a member of the Socialist Party of Australia, a successor organisation to the Communist Party.

    While open to compromise on environmental concerns, Labor never embraced green ideology. A moderate party in the British tradition, built on craft trade unionism rather than socialism, Australian Labor was essentially pragmatic. Its environment agenda was adapted to job security, rising living standards and the interests of mining, forestry and transportation workers. For most Australians, the environment was still a marginal issue.

    Then came the climate panic. Australia is a land of climate extremes, where severe drought alternates with devastating floods. By 2006 the continent had been in the grip of drought for virtually a decade. Water restrictions even hit the major cities, as morale began to sag under fears of interminable dryness. That year also saw some unseasonably hot days. From their posts on the “commanding heights” of academia, politics and media, green ideologues sensed a chance to ramp up their rhetoric on global warming, claiming the drought would persist until carbon emissions were cut. Now they hoped to impose their anti-growth philosophy on the whole economy, not just individual projects.

    This time their message fell on fertile ground. Surveys began to show majority support for strong action on climate change. Conservative Prime Minister John Howard, who was lukewarm on the issue, and had refused to sign the Kyoto Protocol, was caught off guard. Looking to the election due in 2007, Labor succumbed to opportunism. They took to spouting green rhetoric, promising ratification of Kyoto, an emissions trading scheme (ETS) and a renewable energy target. Come 2007, the sense of exhaustion around Howard’s eleven year government was enough to tip Labor into office. But the party’s green chickens eventually came home to roost. Having hyped global warming as a great moral cause, Prime Minister Kevin Rudd suffered the indignity of returning empty-handed from the failed Copenhagen Conference. By this time the drought had broken, and the Liberal-National opposition changed course, defeating Rudd’s ETS in the senate.

    Public support for climate action began to slide. According to the authoritative Lowy Institute Poll, it is now down to 41 per cent, from 68 per cent in 2006. Workers grew nervous about the implications for trade-exposed or energy intensive industries like mining, steel production and power generation. They shifted back to former attitudes on the environment, leaving the government stranded. Following advice from his inner-circle, including then Deputy Prime Minister Gillard, Rudd deferred the ETS until after the election scheduled for late 2010, but he suffered a crushing loss of credibility. His colleagues dumped him for Gillard.

    For city-based progressives, especially in the publicly-funded sector, climate action became a vehicle to burnish their moral authority and claim a larger share of the nation’s wealth, reversing two decades of market-oriented reform. Prompted by Labor’s turmoil, more of them defected to the Greens. At the election hastily called for 21 August 2010, neither major party won a majority in the House of Representatives. The balance of power was held by the Greens and four other independents. In the senate, the balance went exclusively to the Greens. Desperate to survive, Gillard signed up to a formal alliance with them. After weeks of negotiation, the Greens and enough independents sided with Labor to form a minority government. Their price was the carbon tax she ruled out just hours before election day.

    When the dust settled, Australians found that, by pure chance, their country was in the hands of a climate junta, euphemistically called the Multi-Party Climate Change Committee, consisting of Gillard, the Treasurer, the Minister for Climate Change, the Greens leader and his deputy, and two independents. Posing as an open-minded enquiry into Australia’s climate options, the Committee is driven by an inescapable political logic. None of them can break ranks without bringing down the government, ending the most power any of them will ever have. This logic overrides everything, even rising public anger. The opposition’s line, that “Labor may be in government but the Greens are in power”, resonates widely. Few think Gillard really believes in the tax. Moreover, it comes at a time when consumer confidence is weak, and cost-of-living pressures dominate surveys of public concerns.

    Never has such a gulf opened up between elite and popular opinion. Nothing has turned around opposition to the Committee’s tax, not Gillard’s promise of compensation for low to middle income earners, not favourable media coverage, not reports by scientific experts, not declarations signed by eminent citizens, not even an advertising campaign fronted by Oscar-winning actress Cate Blanchett. Urging Australians to “say yes”, the ad unleashed a wave of resentment towards the globe-trotting star, who owns a $10 million “eco-mansion” in one of Sydney’s exclusive suburbs. Tabloid newspapers dubbed her “Carbon Cate”.

    Most opinion-leaders will applaud Gillard’s carbon tax package. They will ignore the real story: Australians are being made to walk the climate plank, with a cutlass at their back.

    John Muscat is a co-editor of The New City.

    Photo by MystifyMe Concert Photography

  • Drones on the Prairie

    When the Base Realignment and Closure Commission was drawing up its list of military installations to close back in 2005, consultants assured the city of Grand Forks, North Dakota, that its Air Force base would be spared. Days before the list was made public, though, word leaked out that Grand Forks was on the chopping block, after all.

    North Dakota’s Congressional delegation swung into action and managed to win the base a reprieve; its KC-135 Stratotankers would be reassigned, but they would be replaced by unmanned aerial vehicles (UAVs). Earlier this month, in a ceremony that drew local dignitaries, industry executives, and military brass, Grand Forks Air Force Base marked the arrival of its first Global Hawk aircraft.

    Gunmetal gray, with long, white wings stretching out from the fuselage, the Global Hawk can stay aloft for 30 hours at a time, transmitting sensor data back to operators on the ground. The plane, manufactured by aerospace giant Northrop Grumman, has become a staple of the Air Force’s intelligence, surveillance, and reconnaissance efforts in Iraq and Afghanistan. Eleven Global Hawks will eventually be stationed at Grand Forks, along with 450 additional base personnel.

    “The base is our second largest economic engine,” said Eric Icard, senior business development officer at the Grand Forks Region Economic Development Corporation. “To have a new mission with a new technology solidifies the Air Force’s commitment to the Grand Forks region.”

    Sgt. Joseph Kapinos couched the plane’s arrival in more personal terms: “I think people are excited, because they feel like we have a mission again.”

    Grand Forks AFB

    Col. Don Shaffer, Commander of the 319th Air Base Wing at Grand Forks Air Force Base, told a crowd of dignitaries that the arrival of the Global Hawk marked a transition for the base to a "global vigilance mission." Photo by Marcel LaFlamme

    The ceremony came on the eve of the fifth Unmanned Aircraft Systems Action Summit in Grand Forks, which was sponsored by the Red River Valley Research Corridor. With military procurement of unmanned aircraft projected to double over the next decade, North Dakota has worked to position itself as one of the nation’s hubs for UAV research and training. Last month, the University of North Dakota (UND) awarded degrees to the first five graduates of its unmanned aircraft operations program. At the Summit, Northrop Grumman presented Minnesota’s Northland Community and Technical College with a full-scale model of a Global Hawk for use in its UAV maintenance and repair shop.

    It’s too soon to say whether the Upper Great Plains will emerge as a new powerhouse of the military-industrial complex, a new buckle on what regional planners have dubbed the Gunbelt. Participants at the Summit said that the real economic boom would come as UAV technologies begin to find commercial applications. One major impediment is the ban on flying UAVs in the National Airspace System; North Dakota Congressman Rick Berg has pushed for the creation of test sites where UAVs could fly (and it’s no secret that North Dakota is angling to be one of them), but the FAA reauthorization bill that would make that possible is currently mired in conference committee.

    North Dakota has been riding a wave of media adoration as of late, buoyed by low unemployment numbers and a massive oil strike. But 42 of its 53 counties still posted population losses in the 2010 Census.

    How, the question remains, do rural communities stand to benefit from the burgeoning UAV industry? Are all of these "knowledge economy" jobs bound to spring up in Grand Forks
    and Fargo, even as the state’s struggling farm communities continue to wither away?

    Not if Carol Goodman has anything to say about it. Goodman heads the Job Development Authority in Cavalier County, up by the Canadian border; the county lost 17% of its population between 2000 and 2010, dipping below 4,000 people for the first time in over a century. She’s working to redevelop an abandoned missile base from the Cold War era as a UAV testing site, which could create as many as 670 jobs in the county.

    “Tell them to send some of those UAVs over here,” said Bob Wilhelmi, owner of the lone bar in the wind-blown town of Nekoma. A man from neighboring Walsh County said that, the year after next, his school district will not have a single child enrolled in kindergarten. 

    Mickelsen Safeguard Complex

    The Stanley R. Mickelsen Safeguard Complex: once an antiballistic missile site with its eyes on Moscow, now a potential test bed for unmanned aircraft. Photo by Marcel LaFlamme

    The unmanned aircraft industry in North Dakota is a sort of test case for what happens when a traditionally agrarian state decides to pursue high-tech growth. It’s still not clear whether the state will succeed. But to watch those airmen jostle for a picture with their base’s newest piece of hardware, or to hear a recent UND graduate pitch the start-up company that will keep him in Grand Forks, or even to look up for a while at the clear, empty Dakota sky, you start to think that the state’s drone charmers may just have a shot.

    This piece originally appeared at Daily Yonder.

    Marcel LaFlamme is a graduate student of the Department of Anthropology at Rice University in Houston.

    Lead photo: Official U.S. Air Force