New Geography

Category: Urban Issues

  • City Rankings: An Alternative View

    Why is Austin, Texas the inevitable winner or runner-up on every ranking of the most “livable” cities in the United States? The downtown is a wasteland, the hip barbecue joints are dismal, and the bookstores, despite the population’s admirable intellectual mix, are heavy with espresso westerns.

    If Austin were in Europe, its place in the power rankings would be just ahead Bratislava but behind Faro, which, in turn, would be way down the list of great European cities.

    Herewith is an idiosyncratic assessment of Europe’s most livable cities, based on my continental wanderings (I live in Switzerland). Confession: I haven’t, sadly, been recently to Paris, and I often judge a city by its rail service and bookstores. Put simply, I see cities as works of art, and wonder in which paintings I might like to live:

    Geneva: I love it because it’s home. But it’s not really a city. Swiss cities are villages that have gelled together, like drifting icebergs. Geneva works because it’s a civil society. The public schools impressed even Benjamin Franklin, and Calvin ended the practice of lawn mowing on Sundays.

    Berlin: It’s flat, so it is perfect for biking, has many open spaces, affordable housing (thanks to the worker flats left behind by the German Democratic Republic), history from every tragic era, superb public transportation, enough museums to fill up a month of Sundays, ethnic food, three airports, and a diverse economy. Downside: the North European climate is unspeakable.

    Moscow: It has, by far, the greatest metro in the world, with fast trains every minute, easy changes, and mosaics of the Great Patriotic War, not to mention Stationmaster Lenin. In winter, Moscow is an ice bowl. In summer it has bright nights, terrific walks, a wild west economy, quirky museums (one is devoted to border guards), and funky modern architecture. Caveat: the traffic is becoming Asian, housing is expensive, and only the quick and the dead can cross the wide boulevards, not to mention the mafia.

    Cambridge, England: The streets are uncrowded, the colleges world class, and the bookstores exhaustive. I get around by bike. London is now less than an hour by privatized rail, and the Fens, the nearby marshlands, are enchanting for walks. The only “new” roads are Roman.

    Barcelona: Easily Europe’s favorite summer city, if you don’t mind dinner after midnight. The tourist crowds are oppressive, and the sidewalks crowded. There’s a beach downtown, trade from Europe and Africa, and cultural links to Madrid and Paris.

    Prague: Go in April, and you will love it. Go in August, and you will flee the crowds in desperation. For a weekend the old town in Prague rivals Venice and St. Petersburg, although native son Franz Kafka caught the dark undertones.

    Rome: Classical history; quirky neighborhoods — I try to like Rome for these reasons. But I despair at its devious taxi drivers, dirty sidewalks, Basil Fawlty hotel clerks, and overpriced and often bad meals. Nor do I like the airports or the railroad stations. That said, I go often. It’s the price for wallowing in the shadows of Cicero and Hadrian.

    Bucharest: It’s the European leader in vacant lots. I love the Hotel Rembrandt, the outdoor ethnographic museum, the Romanian railways, with their sleepers to Transylvania and Iasi, and I love the sense that the city is starting over after communism. The history museum could have more exhibits about the Russo-Turkish war of 1877-78, but I can’t ask for everything.

    Edinburgh: It has a great station hotel, a castle, the moors and highlands nearby, the aura of golf, many great companies, historic if insolvent banks, Harry Potter, single malt Scotch, Robert Louis Stevenson, and a new parliament building. I should like it more than I do. When it’s rainy, windy, and cold, which is often, it feels like the end of the earth.

    Dublin: I hated the banks and their balance sheets, the pubs and the spilled booze sticking to the sidewalks, and the forlorn neighborhoods, Ulysses notwithstanding; and I hated my hotel, which reeked of cigarette smoke and felt like a hangover.

    Athens: For $10 billion of Olympics money, all Athens gained was a tram. Don’t harbor any allusions that it works as a city. Like the economy, the train station is a dead end. Further, the small hotels are crummy, the tourist food inedible, and the traffic a nightmare. Business meetings all take place at midnight, in a haze of smoke. But to gaze at the illuminated Parthenon, even from a gridlocked taxi, is to look up at heaven.

    Istanbul: Economically it faces north-south and east-west, and it’s the only city both in Europe and Asia. The traffic is stifling, the touts are everywhere, the population is on a Los Angeles scale — but it’s hard to beat for its visual and historical sweep. The ferry views rival those of Hong Kong, and the climate is close to ideal, with cool nights and warm days. It has trains to Berlin and Tehran, a nonstop parade of ships on the Bosphorus, and the sultan’s harem (to accommodate his speed dating habits).

    Amsterdam: I try and try with Amsterdam, but am close to writing it off. I guess it would help if I were interested in recreational drugs, Heineken beer, red light districts, or the art of Van Gogh. I do love canals, the Anne Frank house, anything to do with bicycles, and Dutch landscape paintings. But what a terrible climate, and, to paraphrase Spiro Agnew, if you have seen one cobblestone street, you have seen them all.

    London: What’s not to love about the Globe Theatre, the bookstores, the Underground, the Imperial War Museum, the double-decker buses, the walks along the Thames, the pubs in Chiswick, business lunches in the City, or the morning phalanx of newspapers?

    What’s my ideal European city? It would look something like Venice, but have the Moscow metro and lots of sidewalks and bike lanes. The climate would be that of Rome. The city population, like that of Geneva, would not exceed 500,000, and the last stop on the metro, as in Munich, would be a lake with terraced cafes and little beaches. To get to work, everyone would bike, walk, or ride the underground. Electric cars and buses would transport the elderly. The ferries would run all night, as in Istanbul, and serve fresh orange juice and tea on deck.

    The business day would end at 2:00 PM when, as in Barcelona, many would take lunch overlooking the sea. There would be several grand railroad stations, operated by the Swiss, and affordable overnight rail connections to London, Berlin, Florence, and Madrid. At night, there would be concerts in the parks, as in Vienna in summer, or book lectures, as in Oxford.

    Tourists would take breakfast on small balconies. Coffee and wifi would be free. The local industries would be several universities, a teaching hospital, book publishing, glass blowing, cartography, high-tech, ship building, and railways. Night ferries would connect the city to the Greek islands. The library would be open all hours, and many cafes and bookstores (all open late) would have well-fed cats.

    Photo by Suzanne Bouron: Pause Café, 100% Aribica

    Matthew Stevenson is the author of Remembering the Twentieth Century Limited, and editor of Rules of the Game: The Best Sports Writing from Harper’s Magazine.
    He lives in Switzerland, commutes on a bike, dreams about night trains, and loves long weekends in places like Chisinau, which did not make this list.

  • Australia: Housing Soars Down Under

    Finally, an important turning point has been reached for Australians in the housing market: on 22 April 2010 the Council of Australian Governments endorsed a new housing supply and affordability agenda.

    The shift in attitude is long overdue. The population of Australia has passed the 22 million mark and is growing at 2.1 per cent per annum. Until now, planning policies based on higher densities have been seen as the solution for this population increase. Such policies are variously euphemistically termed “smart growth”, “urban consolidation” or, more recently, “urban renewal”.

    The deleterious results of high-density policies on both people and the environment are becoming more and more apparent. Australian cities, especially Sydney, are starting to exhibit the downside effects of what might be the most aggressive high-density policies in the world. The general public has not yet comprehended how tight the link is between these restrictive planning policies and the increasing prevalence of community problems.

    The Australian strategy of high-density has had two components. The first has been to artificially strangle the land supply. Residential land release in Sydney has been reduced from a historic average of 10,000 lots per year to less than 2,000, thereby radically reducing the number of dwellings available from greenfield sites.

    The second component of the high-density strategy has required each municipal council to submit a rezoning plan that increases population density to government satisfaction; otherwise, that municipality is adversely impacted. These tactics force high-density onto communities originally designed for low densities.

    Smart-growthers claim a plethora of benefits resulting from high-densities. But any clear-headed examination shows that high-density is detrimental to the public good. Greenhouse gas emissions per person are greater in high-density. The policy overloads infrastructure; choking traffic congestion and longer travel times result. Sewers overflow, electricity supply reaches a breaking point, and there are chronic water shortages. Concrete, tiles and bitumen replace trees, gardens and public open space. Sustainability is adversely affected.

    And, of course, high-density policies create land shortages that result in unaffordable housing. This is the darkest side to the impetus for Smart Growth. The resulting increase in the overall cost of housing is sobering. Even the global financial crisis had very little effect on house prices in Australia. Prices continue to rise, and the Australian Federal Government has become concerned about the impact of increasing housing costs on the economy. The Governor of the Australian Reserve Bank has said that the price of a marginal block of land is too high for a time when interest rates are low and credit is available , and similar sentiments have been expressed by other officials.

    Time series data for Australian cities shows a strong correlation between inadequate land release and excessive housing cost. The land component of the price of a dwelling in Sydney has increased from 30% to 70%. It is apparent that strangling the release of land on the outskirts in order to force high-density has resulted in a shortage and, in the face of ever-increasing demand, the price of land has risen dramatically.

    The 6th Annual Demographia Housing Affordability Survey of six countries portrays a widespread relationship between high housing cost and overly restrictive planning. In the chart below, housing cost is measured as years of family income needed to purchase a house. This year the picture is somewhat complicated by the collapse of the housing bubble in some prescriptive jurisdictions resulting in a substantial reduction of previous high prices.


    Median house price divided by gross annual median household income.

    Only about seven per cent of Australians wish to live in apartments. In spite of this, smart growth policies have resulted in apartments being the only type of housing available to most new entrants to the housing market. These apartments command higher prices than otherwise would be the case, due to an inadequate supply of competing single-residential housing resulting from the scarcity of available sites. This provides the potential for apartment developers to make large profits. Such profits provide the resources for developers to make large donations to the political parties.

    Over the previous five years, the ruling New South Wales Labor Party received donations from the development industry of $9 million, while the Liberal opposition party netted $5 million. These donations exceeded the total contributions to all political parties over the same period from the gambling, tobacco, alcohol, hotel, pharmaceutical and armaments industries combined.

    Numerous documented cases show a large donation being made shortly before permission is granted for a particular development. In response to long-term escalating public anger, the New South Wales Government in December 2009 passed legislation to prohibit donations from property developers. However, the public cynically consider this will not solve the problem and that “donations” will be given in other ways.

    In the face of criticism, state governments maintain that recent land releases have been sufficient. The New South Wales Minister of Housing has stated that land for 131,000 homes has been released in Sydney. Yet the shortage continues to get worse. One reason is the tortoise-like progression of the rezoning process.

    Another is market manipulation. As the Demographia survey points out, governments flag well in advance which greenfield areas will be zoned for developments. Sellers then realise they are cushioned from competition and can command higher prices for their land. Purchasers – developers — know they can pay substantial premiums compared to what would be the case if land release were not so predictable.

    It appears that developers (both government and private) then carefully control the rate at which these greenfield sites are made available to home buyers. It has been reported that the Melbourne government development agency is sitting on a stockpile of 25,000 house blocks that have been zoned for residential approval, but is selling just 700 per year. Private developers and landholders currently hold almost 70,000 house blocks, yet only 1400 of these are available to the market . In the current situation of high demand, it is evident that housing land is being drip fed onto the market, thus keeping prices high.

    The Council of Australian Governments seems to have taken cognisance of this situation, as the review will examine large parcels of land “to assess the scope for increasing competition and bringing land quickly to the market”.

    The Council’s review indicates a welcome change in thinking. Up to now it has not been generally recognised that planning policies are a significant factor in excessive housing cost. Other adverse effects of these policies still need to be acknowledged. One hopes that this review will represent the beginning of a broader appreciation of the downside of high-density policies.

    Photo: A strip of ‘Sydney Lace’in Balmain, Sydney, New South Wales

    (Dr) Tony Recsei has a background in chemistry and is an environmental consultant. Since retiring he has taken an interest in community affairs and is president of the Save Our Suburbs community group which opposes over-development forced onto communities by the New South Wales State Government.

  • Shanghai: The Rise of the Global City

    The opening of the World Expo heralds Shanghai’s coming of age, the rising economic might of China, and the financial power of Asia’s legendary metropolis.

    But that’s only part of the story. The World Expo also reflects the rise of Shanghai as a global city and the intensity of competition among emerging Chinese mega-cities.

    At the eve of the World Expo, Shanghai was buzzing with anticipation and excitement. Presented by 192 countries and 50 international organizations, the World Expo will continue for six months. It will also be the largest world exhibition ever and is expected to attract 70 million visitors from home and abroad.

    With a population of over 20 million people, Shanghai is a hugely popular tourist destination renowned for its historical landmarks such as the Bund with its historical buildings lining the Huangpu River. In turn, Shanghai’s increasing financial power and China’s rapid economic development is reflected by the ultra-modern and ever-expanding Pudong skyline, with the Oriental Pearl Tower, the Jin Mao, and the 492-meter (1,614 ft) World Financial Center.

    For foreign sinologists, the World Expo heralds not only the resurgence of the great metropolis, but the “comeback of the city’s brash patrons.” In reality, Shanghai’s comeback started in the early 1990s, and today the resurgence of the colossal city may still be in its infancy.



    China Pavilion Preview
    Theme: Chinese Wisdom in Urban Development
    The main structure of the China Pavilion, “The Crown of the East,” has a distinctive roof, made of traditional dougong or brackets, which date back more than 2,000 years.



    Shanghai Pavilion
    Theme: New Horizons Forever
    Taking the form of Shikumen, Shanghai Pavilion seeks to blend history and modernism, the East and the West.

    In 2005, the wealthiest metropolises, as measured by their estimated GDP, were still led by the great urban centers of the leading advanced economies. By 2020 a third of these wealthy cities will be in the large emerging economies. Shanghai‘s strategic position at the mouth of the Yangtze River has made it an ideal location to assume a position in the urban paragon.

    In fact, Shanghai and the Yangtze River Delta already constitute one of the largest concentrations of adjacent metropolitan areas in the world. It is the home to some 80-90 million people with GDP (PPP) of some US$2 trillion, or about the economic size of France. However, unlike France, which is growing at the rate of 1-2 percent in 2010-2011, Shanghai enjoyed a double-digit growth in 1992-1997 and continues to grow at about 8-9 percent per year.

    Shanghai’s Resurgence

    Originally a fishing and textiles town, Shanghai grew to importance in the 19th century. The rapid development of the city began in the aftermath of the Opium War of 1840 when the Western powers forced China to open five of its coastal cities, including Shanghai, to foreign trade. The colonial powers forced the weak Qing government to sign treaties granting them the right to establish foreign concessions. In Shanghai, the part of the city proper west of the Huangpu River grew ever larger in size, whereas Pudong on the east side of the river was left untouched.

    Back in 1918, founder of the Republic of China, Dr. Sun Yat-sen put forward the idea of building a major harbor in East China with Pudong as its base. By the 1920s and the early 1930s, Shanghai was a major center of international trade and finance in the East Asian region.

    Shanghai’s Pudong and the Lujiazui Financial District

    In the late 1930s and 1940s, Shanghai was engulfed by one calamity after another. First it was battered by the currency crisis in 1935, the Sino-Japanese War starting in 1937, the onset of the Pacific War in late 1941 and, in the aftermath of World War II, the Civil War (1945-1949).

    After the declaration of the People’s Republic of China in 1949, most foreign firms moved their offices to Hong Kong, as part of an exodus of foreign investment. As Shanghai fell into a historical oblivion, Hong Kong thrived. The “Pearl of the Orient” lost its position as East Asia’s main financial center.

    During the 1950s and 1960s, Shanghai was transformed into an industrial center. It paid a crippling price in terms of taxes; until 1990, one-sixth of the central government’s revenue came from Shanghai. After China embarked on its open-door policy in the early 1980s, things began to change. After decades of neglect,there rose a resurgence of trade and investment.

    A Wedding Couple by the People’s Heroes Memorial on the Bund

    The great transformation came in the early 1990s, when Deng Xiaoping declared that Shanghai would be “the head of the dragon” pulling the country into the future. The development of Pudong helped to restore Shanghai’s historical role for the Yangtze River Delta and, more broadly, to China.

    In a whirlwind of two decades, Shanghai increased its role in finance, banking, and as a major destination for corporate headquarters. It became a major lure to the highly educated portion of China’s workforce.

    Dusk in Pudong’s Financial District

    Tale of Two Cities

    Since the early 2000s, Shanghai and Hong Kong have increasingly been seen as rivals for the economic center of the Greater China region. Hong Kong has the advantage of a less opaque legal system, international market integration, broader economic freedom, greater banking and service expertise, lower taxes, and a fully-convertible currency. Shanghai has stronger links to both the Chinese interior and the central government, and an impressive base in manufacturing and technology.

    Since the late 1990s, Shanghai has been booming and thriving, while Hong Kong, despite its historical wealth and capabilities, has been haunted by anxiety and doubt over the future. Yet Hong Kong remains one of the world’s great financial centers. According to Financial Development 2009 by the World Economic Forum (WEF), Hong Kong ranks 5th worldwide in terms of financial sector development. Along with Tokyo and Singapore, it stands as one of the premier financial centers in Asia.

    With the recent global financial crisis, Asian cities are closing in on London and New York as leading financial centers. Although still behind Hong Kong, Shanghai has been catching up.

    The financial strength of Hong Kong has been boosted by decades of globalization. The rise of Singapore as a financial center has been also driven by determined government policies and multinational investment. Shanghai’s emergence as a future financial hub has been shaped by similar forces: years of financial reforms and multinational investment and more recently, a strong support by the central government.

    In early 2009, China’s State Council approved Shanghai’s plans to position itself into one of the world’s leading financial and shipping centers by 2020. A month later, five major trading cities – including Shanghai – got the nod from the central government to use the yuan in overseas trade settlement, which reflects China’s recent, gradualist moves to expand the use of its currency globally.

    In the long term, China will play a major role in the emerging global financial architecture. What is less certain is how this emergence will shape the roles of Shanghai and Hong Kong. Already Shanghai’s stock market is worth more than Hong Kong’s, but the city’s financial sector lacks Hong Kong’s depth and the breadth. Hong Kong has an active financial futures market, whereas Shanghai trades commodities futures. In fixed income markets, Hong Kong is far more active in global bonds than Shanghai, which is far more active in domestic currency trading.

    A big barrier: the Hong Kong dollar can be traded freely in international markets, whereas China’s RMB is not fully convertible. But over time this barrier will dissolve. Hong Kong’s regulatory system is considered independent and transparent, whereas Shanghai’s whereas Shanghai’s regulator is part of the government’s state council. In addition to the regulatory regime, there are substantial systemic differences with legal system and taxation.

    In the future, some observers expect China to have a single dominant financial center. Others believe that, due to China’s massive size, multiple centers are conceivable. In the third scenario the assumption is that, in the medium-term, Shanghai and Hong Kong will co-exist as complementary centers. But in the long-term, Shanghai will become China’s international financial center.

    Competition of Chinese Cities

    As can be seen in other parts of the world, there is increased competition among China’s cities. But since the number and scale of Chinese cities is far higher relative to their counterparts in advanced economies, the implications of Chinese urban rivalry are broader and global.

    Having suffered relative decline since the establishment of the People’s Republic of China, Shanghai’s population base increased faster relative to other cities only briefly during the massive infrastructure projects of the 1990s. Economically, Shanghai is still growing, but doing so more slowly relative to other Chinese first-tier cities such as Beijing, Shanghai, Guangzhou, Shenzhen, and in particular the emerging second-tier cities such as Chengdu, Dalian, and Shenyang. In the footprints follow the third-tier cities from Harbin to Ningbo and the fourth-tier cities from Kunming to Hefei.

    The criteria for these tiers comprise GDP per capita adjusted to purchasing power parity, level of economic development, property markets, foreign direct investment, distance to ports, and so on. As productivity levels are increasing in the more prosperous cities, the old low-margin industries are migrating to poorer regions. The process of migration predates the global crisis, but the latter has amplified it. Today, Shanghai’s growth model is predicated increasingly on innovation and high-value industries.

    Yet despite the rise of second and third tier cities, the true competition for global financial preeminence in China will boil down to a contest between Shanghai and Hong Kong. However, it may not result in a win-lose scenario. As Shanghai is evolving into China’s global financial hub, Hong Kong’s efforts to accelerate IPOs and regional innovation and the proposed merger of Hong Kong and Shenzhen could support a Nasdaq-like stock exchange in the future Pearl River Delta Metropolis.

    Meanwhile, China is giving rise to a number of megacities, which seek for specialized competitive advantages. The central government is urging and providing incentives for the wealthiest urban centers to cooperate with other cities in order to accelerate urban growth regionally. Shanghai is no exception; emulating the lessons of the Pearl River Delta, it is boosting the regional innovation system in its Yangtze River Delta.

    Shanghai’s advantage lies in its size and industrial diversity, the competitiveness of several manufacturing subsectors, and the emergence of business services. At the same time, Shanghai’s expanding technological capabilities are being nurtured by a deepening pool of human capital, increasing R&D, FDI in high-tech activities, and the openness of the city to the rest of the world. The dynamic megapolis is driven by a growing middle class, which is feeding a nascent demand for innovation. With its advanced services, large population base, and China’s largest retail sales, Shanghai is well-positioned to emerge as China’s premier business city.

    Just as New York City exemplified the strengths and aspirations of emerging America in the 20th century, Shanghai, perhaps more than any old or emerging rival, will personify the capabilities and dreams of rising Asia in the 21st century.

    Dr. Dan Steinbock is research director of international business at the India, China and America Institute (USA). He currently also serves as senior fellow at the Shanghai Institute for International Studies (SIIS), and visiting professor at the Shanghai Foreign Trade Institute. He focuses on the post-crisis integration of G-7 and BRIC economies worldwide and advises companies, governments and municipalities on issues of competitiveness and innovation. He divides his time between New York City, Shanghai and Guangzhou, and occasionally Helsinki, Finland.

  • When Saving 90% is Not Enough: The Transit Savings Report

    The American Public Transportation Association (APTA) is publishing monthly Transit Savings Report to illustrate the purportedly great savings that can be achieved by giving up the car and traveling by transit instead. APTA compares the average cost of buying a monthly transit pass to replace a car, which is assumed to travel 15,000 miles annually.

    The latest edition was made public on April 6 and reveals astounding savings, as was reported by The Wall Street Journal and other press-release echoing press outlets. The APTA release indicates that households could save from $8,174 to $13,784 annually by giving up a car for transit in the 20 urban areas with the highest transit ridership. Overall, the APTA figures calculate to an average savings of $10,183. The APTA press release does not say how much the monthly bus pass would cost. However, our own quick survey of 17 major transit systems indicates that a monthly pass averages approximately $90 per month, or $1,080 per year. This means that getting rid of the car and riding transit instead saves approximately 90%, ($10,183 divided by [$1,080 + $10,183]) at least according to APTA (Note).

    With savings such as these, a visitor from Mars to APTA’s Fantasyland might expect that nearly all urban travel should logically be by transit rather than by cars. But, alas, no. Nothing could be further from the truth. In fact, cars, which APTA tells us cost nearly 10 times transit, account for more than 98% of motorized travel in US urban areas.

    Profligate Americans? What could possibly explain this paradox? Surely, there is plenty of evidence that Americans would much rather spend less than more on products of equal value. This has been painfully evident to “legacy” airlines that have had to lower their prices to compete with discount carriers like Southwest Airlines. Traditional supermarkets have lost hoards of customers stores like Wal-Mart or Costco over amounts that pale by comparison to the savings that APTA would have us believe are so readily available by rejecting our “love affair” with the automobile.

    Of course, the choice is not that simple. Americans no more have a love affair with the automobile than with flush toilets or refrigerators. The American (and Canadian, Australian, European and Asian) love affair is not with products, but rather with the better life style that the products make possible. People have refrigerators because they keep food fresh and prevent spoiling. Under certain circumstances, however, refrigerators are not practical, such as when one uses a cooler instead at a picnic. Transit is like that. It makes sense for some trips, but not a large share in the overall scheme of things.

    The Largest Downtowns: Where Transit Works Best: For the overwhelming majority of trips, the automobile provides much faster and generally more comfortable travel than can be made available by transit. There are times, however, when transit is superior. For example, the car is particularly impractical for commuting into crowded Manhattan, which is served by an enormous subway, commuter rail and bus system that extends to the further reaches of the metropolitan area.

    This is evident in data from the latest US Bureau of the Census American Community Survey, which indicates that transit accounts for 80% of the motorized commuter travel to Manhattan. Manhattan’s business district has nearly 2,000,000 jobs in a relatively small area, and riding transit and the average transit commute is only slightly longer than the average car commute. With Manhattan’s world class traffic, transit is a demonstrably superior competitor to the car.

    This, in reality, simply demonstrates that transit is “about downtown.” Consumer preferences demonstrate that commuting to some of the nation’s largest downtown areas is better by transit. The impressive skyscrapers can leave the impression that downtowns are dominant in metropolitan employment. However, downtowns represent only 10% of metropolitan employment. The largest downtowns are well situated for transit service, by virtue of their high employment densities and the fact that transit systems focus on them.

    These include central business districts, including New York’s Manhattan and Brooklyn, Chicago, Boston, Philadelphia and San Francisco. All of these downtown areas where transit is dominant were added together, they would cover barely one-third of the expanse Orlando’s Walt Disney World. But consumer preferences also show that the car provides superior mobility to virtually all other destinations. Our already heavily indebted public sector could not begin to provide a level of service to replicate transit’s downtown access throughout the urban area.

    Transit even has difficulty competing in the dense outer boroughs of New York City. While slightly more people commute to Brooklyn jobs by transit than by car, the reverse is true in the Bronx. Twice as many people commute to jobs in Queens by car than transit, despite the borough’s having a population density greater than that of San Francisco, the nation’s second most dense large municipality.

    Transit’s share falls off even more sharply in the suburbs of New York. Nine times as many people commuting to jobs in inner suburban Nassau County use cars as use transit. Commuters to outer suburban Suffolk County use cars 40 times as much as transit.

    Consumers make these choices not because cars are inherently superior to transit or vice versa. A commuter who lives in New Brunswick, New Jersey and works in Manhattan, usually takes a New Jersey Transit train or bus to work, because the car competes poorly for such a trip. The neighbor, however, who works in the suburban I-287 corridor takes the car, because transit cannot compete for that trip.

    It remains true that for the overwhelming majority of trips cars meet the needs of consumers far better than transit. Cars are faster and deliver people within walking distance of their destinations.

    Even the ultimate — making transit free — makes little difference. In 1990, Austin, Texas eliminated fares. Yet the share of travel in the Austin area by car declined about a quarter of one percent. For most urban travel, transit is so uncompetitive that you can’t even give it away.

    Note: None of the above should be interpreted to be an acceptance of the APTA figures. APTA assumes annual parking costs of $1,850, yet most parking outside downtowns. Some might object that there is a cost to this free parking, but to ignore its costs is quite appropriate, given that APTA’s figures do not include subsidies to transit, which would quadruple its cost. Further, APTA uses especially high costs for automobile use, which assume that everyone purchases a new car every five years. This substantially overstates the cost of cars relative to transit.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

    Photo: New Jersey Turnpike

  • Arizona’s Short-Sighted Immigration Bill

    Arizona’s recent passage of what is widely perceived as a harsh anti-immigrant bill reflects a growing tendency–in both political parties–to focus on the here and now, as opposed to the future. The effort to largely target Latino illegal aliens during a sharp recession may well gain votes among an angry, alienated majority population, but it could have unforeseen negative consequences over time.

    In terms of the Arizona law, this is not simply a case of one wacko state. The most recent Gallup survey shows that more Americans favor the law than oppose it, with independents and Republicans showing strong support. Despite the negative coverage in the media, the Arizona gambit could somewhat pay off in November. A weak economy tends to exacerbate nativist sentiments, something that has been constant throughout much of American history.

    But there is a distinct danger for the GOP here, not only in Arizona but in the rest of the country as well. As Bill Frey of the Brookings Institute points out, there is a growing gap between the electorate, which is still largely white and older, and the much younger, far more rapidly growing Latino population. In Arizona Frey says the “cultural generation gap” between the ethnicity of seniors and children is some 40%, meaning that while 83% of senior are white, only 43% of children are. Nationwide, Frey estimates the gap in the ethnic composition of seniors and youths stands at a still sizable 25 points.

    Arizona’s large disequilibrium in the ethnicity of its generations is a product, in part, of the state’s historic pull to white retirees. Yet its formerly booming economy, based largely around construction and tourism, required a massive importation of largely Latino, low-wage labor, much of it illegal. As a result over the past two decades, Arizona’s Latino population has grown by 180%, turning what had been a 72% Anglo state to one that is merely 58% white.

    You don’t have to go very far–in fact just across the California border–to see what awaits Arizona’s nativist Republicans. The Grand Canyon state’s future has already emerged there. In the 1970s and 1980s California’s generally robust economy made it a primary destination for immigrants from both Asia and Latin America. Comfortable in their Anglo-ness, papers like the Arizona Republic were dismissing California as a “third world state,” particularly in the wake of the 1992 LA riots.

    Like their Arizona counterparts today, many white Californians then were sickened by pictures of mass Latino participation in looting during the riots. Many were also concerned with soaring costs of providing social services to a largely poor immigrant population. Sensing an opportunity, in 1994 Gov. Pete Wilson–locked in tough re-election battle amid a deep recession–endorsed Proposition 187, a measure designed to prevent illegal aliens from accessing public services. The measure passed easily, with support from both whites and African-Americans. The strong backing among Independents and even some Democrats helped Wilson win re-election with surprising ease.

    But the long-term consequences of 187 reveal the longer-term consequences for the GOP. During the Reagan era and even the first Wilson term, Latino voters split their votes fairly evenly between the parties. But after 1994 there was a distinct turn toward the Democrats, with the GOP share at the gubernatorial level falling from nearly half in 1990 to less than a third in subsequent election. In some cases, right-wing Republicans garnered even smaller portions of Latino voters.

    This is a classic case of the past waging war on the future. Since 1990 Latino and immigrant population has continued to grow. Overall, the percentage of foreign-born residents, according to USC demographer Dowell Myers, has grown from roughly 22% to 27%. One-third of Californians in 2000 were Latino; Myers projects Latinos will constitute almost 47% of the state’s population in 2030.

    The political consequences will only get worse for Republicans. Latino population voting power already has doubled from roughly 10% of the total in 1990 to 20% in 2006.

    This Latino population will become increasingly active and engaged. It is, for one thing, ever more English-fluent, and increasingly dominated by the second and third generations. This group could become permanently estranged, like African-Americans, from the GOP. If that happens, notes longtime Sacramento columnist Dan Weintraub, Republicans could “all but become a permanent minority party in California.”

    And the rest of the country will feel these trends; between 2000 and 2050, the vast majority of America ‘s net population growth will come from racial minorities, particularly Asians and Hispanics. Already one out of every five American children–tomorrow’s voters–is Hispanic.

    Of course, as Latinos integrate and intermarry, they may become less particular in their world view and share more in common with other middle-class Americans. Yet memories of slights against a particular group can overcome even economic self-interest. Blood often proves thicker than bank accounts. The tendency of Jews, a largely affluent and entrepreneurial tribe, to back often harshly anti-business Democrats has its roots in old world scars left from the pogroms in czarist Russia as well as the right-wing genocide in Nazi Germany. Some older voters recall the rabid anti-Semites once prominent in the American far-right as well as the more genteel exclusionism practiced by more refined upper-class Republicans.

    In the future, today’s images of shrill, anti-immigrant right-wing activists could resound for coming generations of Latinos as well as Asians and other newcomer groups. It could essentially deprive the Republican Party of voters who might otherwise consider the GOP option, handing the Democrats a permanently expanded base, not only in southwest but in much of the country.

    None of this is necessary or good for the country. Political competition for ethnic groups is a healthy thing for national interests and for the individual groups. Lock-step support by African-Americans may make them powerful within the Democratic Party, but it also means they can also be taken for granted when push comes to shove. And, of course, when they are in power, Republicans have little real political stake in confronting the serious issues facing black America.

    All this is particularly disturbing since competition for Latino voters should be intense. Heavily employed in construction and manufacturing industries, they have been badly hurt in the recession and their interests were not particularly addressed in the Obama stimulus plan. Many are also socially conservative, supporting, for example, California’s Proposition 8 ban on gay marriage.

    In coming months other proposed steps by the administration and its congressional allies, such as the proposed cap-and-trade legislation, could prove very tough on industries that tend to employ Latinos. Climate change-inspired moves against single-family homes–already in place in California–conflict directly with the aspirations of many Latinos as well as other immigrants who, unlike the usually affluent, homeowning white population, are still seeking the chance to buy their own home.

    But instead of fighting for their economic interests, the Arizona law has handed the Democrats a golden opportunity for to engage their own demagogy on race issues. Instead of having to defend their plans to restart the economy and reorient them to middle and working class needs, Democrats now can play to narrow racial concerns among Latinos while further bolstering the self-righteousness of their affluent, white, left-wing base.

    The reversion to racial politics prompted by the Arizona law ultimately does no good for anyone except “base-oriented” partisan campaign consultants, nativists and ethnic warlords. With all the long-term economic and social challenges that face this growing country, Phoenix’s folly marks an unfortunate step backward to our more shameful past and away from a potentially promising future.

    This article originally appeared in Forbes.com.

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

    Photo by Caleb Alvarado

    May 4, 2010

  • Growing America: Demographics and Destiny

    Over the next four decades, American governments will oversee a much larger and far more diverse population. As we gain upward of 100 million people, America will inevitably become a more complex, crowded and competitive place, but it will continue to remain highly dependent on its people’s innovative and entrepreneurial spirit.

    In 2050, the U.S. will look very different from the country in 2000, at the dawn of the new millennium. By mid-century, the U.S. will no longer be a “white country,” but rather a staggering amalgam of racial, ethnic and religious groups, all participants in the construction of a new civilization whose roots lie not in any one country or continent, but across the entirety of human cultures and racial types. No other advanced, populous country will enjoy such ethnic diversity.

    The implications of this change will be profound for governments-perhaps in ways not now commonly anticipated. Many “progressives” believe a more diverse, populous nation will need more guidance from Washington, D.C., but a more complex and varied country will increasingly not fit well into a one-size-fits-all approach.

    Although the economic crisis of 2008 led to a rapid rise of federal power, there has been a stunning and largely unexpected push-back reflected, in part, by the tea party movement. Some states have passed laws that seek to restrict federal prerogatives on a host of issues. More importantly, public opinion, measured in numerous surveys, seems to be drifting away from major expansions of government power.

    Of course, most Americans would accede to the federal government an important role in developing public works, national defense and regulations for health and safety. But generally speaking, they also tend to believe that local communities, neighborhoods and parents should possess the power to craft appropriate solutions on many other problems.

    This also reflects our historical experience. From its origins, American democracy has been largely self-created and fostered a dispersion of power; in many European countries, and more recently in parts of Asia, democracy was forged by central authorities.

    Other periods of massive government intervention, most notably after the New Deal and the Great Society, also elicited reactions against centralization. But the current push-back’s speed and ferocity has been remarkable. Yet the often polarizing debate about the scope of federal power largely has ignored the longer-term trends that will promote the efficacy of an increasingly decentralized approach to governance.

    Perhaps the most important factor here is the trajectory of greater growth and increasing diversity of who we are and how we live. Not only are Americans becoming more racially diverse, but they inhabit a host of different environments, ranging from dense cities to urbanized suburbs, to smaller cities and towns, that have different needs and aspirations.

    Americans also are more settled than any time in our history-partially a function of an aging population-and thus more concerned with local developments. As recently as the 1970s, one in five Americans moved annually; in 2004 that number was 14 percent, the lowest rate since 1950. In 2008, barely one in 10 moved, a fraction of the rate in the 1960s. Workers are increasingly unwilling to move even for a promotion due to family and other concerns. The recession accelerated this process, but the pattern appears likely to persist even in good times.

    Americans also prefer to live in decentralized environments. There are more than 65,000 general-purpose governments; the average local jurisdiction population in the United States is 6,200-small enough that nonprofessional politicians can have a serious impact on local issues. This contrasts with the vast preference among academic planners, policy gurus and the national media for larger government units as the best way to regulate and plan for the future.

    Short of a draconian expansion of federal power, this dispersion is likely to continue. Roughly 80 to 90 percent of all metropolitan growth in the last decade took place on the periphery; at the same time, the patterns of domestic migration have seen a shift away from the biggest cities and toward smaller ones. As Joel Garreau noted in his classic Edge City, “planners drool” over high-density development, but most residents in suburbia “hate a lot of this stuff.” They might enjoy a town center, a paseo or a walking district, but they usually resent the proliferation of high-rises or condo complexes. If they wanted to live in buildings like them, they would have stayed in the city.

    Attempts to force major densification in these areas will be fiercely resisted, even in the most liberal communities. Some of the strongest anti-growth hotbeds in the nation are areas like Fairfax County, Va., with high concentrations of progressives-well educated people who might seem amenable to environmentally correct “smart growth”-advocating denser development along transit corridors. As one planning director in a well-to-do suburban Maryland county put it, “Smart growth is something people want. They just don’t want it in their own neighborhood.”

    The great long-term spur to successful dispersion will come from technology, as James Martin first saw in his pioneering 1978 book, The Wired Society. A former software designer for IBM, Martin foresaw the emergence of mass telecommunications that would allow a massive reduction in commuting, greater deconcentration of workplaces and a “localization of physical activities … centered in local communities.”

    Technology would allow skilled people to congregate in communities of their choice or at home. Today not only knowledge workers but also those in construction trades, agriculture and other professions are home-based, conducting their operations out of trucks, vans or home offices.

    Many leading-edge companies now recognize this trend. As much as 40 percent of IBM’s work force operates full time at home or remotely at clients’ businesses. Siemens, Hewlett-Packard, Cisco, Merrill Lynch and American Express have expanded their use of telecommuting, with noted increases in productivity.

    At the same time, employment is shifting away from mega-corporations to smaller units and individuals; between 1980 and 2000, self-employed individuals expanded tenfold to include 16 percent of the work force. The smallest businesses, the microenterprises, have enjoyed the fastest rate of growth, far more than any other business category. By 2006 there were some 20 million such businesses, one for every six private-sector workers.

    Hard economic times could slow this trend, but recessions have historically served as incubators of innovation and entrepreneurship. Many individuals starting new firms will have recently left or been laid off by bigger companies, particularly during a severe economic downturn. Whether they form a new bank, energy company or design firm, they will do it more efficiently-with less overhead, more efficient Internet use and less emphasis on pretentious office settings. In addition, they will do it primarily in places that can scale themselves to economic realities.

    Simultaneously the Internet’s rise allows every business-indeed every family-unprecedented access to information, something that militates against centralized power. Given Internet access, many lay people aren’t easily intimidated into accepting the ability of “experts” to dictate solutions based on exclusive knowledge since the hoi polloi now possess the ability to gather and analyze information. Even the powerful media companies are rapidly losing their ability to define agendas; there are too many sources of information to mobilize mass opinion. The widespread breakdown of support for climate change is a recent example of this phenomenon.

    Once the current drive for centralization falters, support for decentralization will grow, including progressive communities that now favor a heavy-handed expansion of federal power. Attempts to impose solutions from a central point will be increasingly regarded as obtrusive and oppressive to them, just as they would to many more conservative places like South Dakota. In the coming era, in many cases, only locally based solutions-agreed to at the community, municipal or state level-can possibly gather strong support.

    This drive toward dispersing power will prove critical if we hope to meet the needs of an unprecedentedly diverse and complex nation of 400 million. New forms of association-from local electronic newsletters to a proliferation of local farmers markets, festivals and a host of ad hoc social service groups-are already growing. Indeed, after a generation-long decline, volunteerism has spiked among Millennials and seems likely to surge among downshifting baby boomers. In 2008, some 61 million Americans volunteered, representing more than one-quarter of the population older than 16.

    It’s these more intimate units-the family, the neighborhood association, the church or local farmers market-that constitute what Thomas Jefferson called our “little republics,” which are most critical to helping mid-21st-century America. Here, our nation of 400 million souls will find its fundamental sustenance and its best hope for the brightest future.

    This article originally appeared in GOVERNING Magazine.

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

    Photo by slynkycat

    May 3, 2010

  • California is Too Big To Fail; Therefore, It Will Fail

    Back in December I wrote a piece where I stated that California was likely to default on its obligations. Let’s say the state’s leaders were less than pleased. California Treasurer Bill Lockyer’s office asserted that I knew “nothing about California bonds, or the risk the State will default on its payments.” My assessment, they asserted, “is nothing more than irresponsible fear-mongering with no basis in reality, only roots in ignorance. Since it issued its first bond, California has never, not once, defaulted on a bond payment.”

    For good measure they labeled as “ludicrous” my comment that the Governor and Legislature may not be able to solve the budget problem next year because “debt service is subject to continuous appropriation. That means we don’t even need a budget to make debt service payments.”

    The Department of Finance was also not amused. They resented my prediction that California is on the verge of a default of its bond debt. They insisted that the state has

    “multiple times more cash coverage than we need to make our debt service payments.“

    “There are three fail-safe mechanisms in place to ensure that debt service payments are made in full and on schedule.”

    “Going back as far as the Great Depression, California has never — ever — missed a scheduled payment to a bondholder or a noteholder. Not during the recession of the early 1980s. Not during the collapse of the defense industry in the early 1990s. Not during the dot-com collapse of the early 2000s. And not now. And we, along with the Treasurer and the Controller, will continue to ensure that this streak will never be broken.”

    I am not alone in being taken to the state woodshed. More recently, Lloyd C. Blankfein, Chairman of the Board and CEO of Goldman, Sachs & Co. received this letter from Lockyer’s office, a letter that was ridiculed by The Financial Times’ Spencer Jacob here.

    Once you get past the name calling, California has two arguments. One argument is that California has never defaulted; therefore it will never default. This is, of course, absolutely absurd, insulting our intelligence. Every person, corporation or other entity that has ever defaulted on a loan has been able to say, at least once, that they have never defaulted. As they say in finance: Past performance is not a guarantee of future performance.

    California’s second argument is that it has both a constitutional requirement to meet certain debt payments and the cash to do so.

    That’s nice.

    I have no idea what a constitutional requirement to meet debt payment means, but it doesn’t mean that California will always pay its bills. California has a constitutional requirement to have a balanced budget every June. That constitutional requirement is ignored almost every year. It was ignored last year. It will be ignored this year. It will be ignored next year, unless the Feds have bailed out California, relegating the state’s legislature to rubber-stamp status.

    California’s constitutional requirement to meet debt payments will mean nothing when the state’s financial crisis comes. It won’t mean anything if a debt issue or rollover can’t be sold. It won’t mean anything if the state has no cash, and banks refuse to honor California’s vouchers.

    The relevant analysis begins with the recognition that California is too big to fail, which means it will fail.

    Since there is no procedure for a state to file bankruptcy, the solution to California’s financial crisis will be chaotic. What does it look like when the government of the world’s eighth largest economy can’t pay its employees, or pay its suppliers, or meet its obligations to school districts, counties, cities or other local government agencies?

    It looks ugly, ugly enough to have huge economic ramifications far beyond California’s borders. It looks ugly enough to mean that California is too big to fail, and that’s why we will have a financial crisis.

    Once something (a bank, a car manufacturer, a state) is too big to fail it has perverse incentives. A moral hazard is created because of the free insurance. In California’s case, the moral hazard is exacerbated by a system that assigns responsibility to no one. The super-majority requirement means that both parties will escape blame, and the required cooperation of the legislature will absolve the governor. The governor will blame the legislature. The Republicans will blame the Democrats. The Democrats will blame the Republicans. The citizens will blame the political class. Talking heads will blame an allegedly fickle electorate. Everyone will point fingers, but the blame will not settle on anyone.

    In the end, blame will not matter. No one in a position of power in California has the incentive to make the tough decisions needed to avoid a crisis. So, no one will. Indeed, at this point everyone has an incentive to not make any hard decisions. A bailout from the Feds will be a wealth transfer from the citizens of other states to California’s citizens. The incentive is to drag things out, to appear to be working on the problem, to maximize the eventual windfall.

    I’d love to see California’s political class show some leadership, step up, and effectively deal with the state’s financial problems, but that really is unlikely, requiring as it will, tough decisions on spending priorities and taxes and foregoing a windfall. Ultimately, money usually trumps character.

    Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org.

    Photo by pirate_renee

  • How Tough Times May Lead to Better Architecture

    By Richard Reep

    While Ben Bernanke fantasizes about the Recovery, most people in the building industry – especially in overbuilt Florida – will correct this gross error immediately and emphatically. The recession may be over for the Fed Chairman, but unemployment in the design and construction professions is probably in the 25-30% range, matching that of the Great Depression.

    Even so, tiny glimmers of light shine in what many design professionals call the “microeconomy” of building – small commercial renovations, house additions, tenant improvements, and other projects normally too small to even be counted. Although they lack the whallop, or the profits of big stuff – hotels, hospitals, or new towns – these do count, and are anecdotally turning towards local vernacular design and even contemporary architectural design as a strategy to beat the system, possibly pointing the way for the future.

    Architectural styles are a slow-moving parade of fashions, too often divorced from climate, regional characteristics, or the cultural backgrounds of those who choose them. For most commercial and residential architecture that sprang up around neighborhoods, a mix of Victorian and Spanish Mediterranean styles seemed to be universally implemented by developers trying to please the largest quantity of people in the shortest period of time. Homes with terra cotta tiles and beige arches seemed to lurk behind bland Victorian Main Streets that sprouted everywhere from Montana to Alabama, betrayed by skin-tight fixed windows and paper-thin detailing. As branding elements, these styles nationalized what was once regional and climate-specific design.

    Once again, we seem to be repeating history. In the 1870s and 1880s, suburbs began in many cities, and for the first time homeowners could choose custom-designed houses rather than production homes. Relative peace and prosperity begat a rush to consumerism matched only by our recent ambitions, and the Victorians became well known for an architecture and interior design style that promoted fussy detailing, the display of ornate and exotic materials, and homes overlaid with a frenzy of patterned wood siding, stained glass, carved woodwork, and high-pitched rooflines so that even the roof shingles could be a place to show off wealth. Furniture makers and material suppliers invented new products to feed the demand for consumer goods.

    Yet this all crashed right at the turn of the 20th century, mostly because of the economic transitions suffered going back to the Panic of 1893. Suppressed until that time, modernism came out as a style in the Edwardian era that was much more sensitive to the modest budgets of homeowners building in the 20th century. Even Frank Lloyd Wright, whose career was famously independent of the vagaries of fashion, conceded that affordability was part of the appeal of his style – his “usonian” architecture reveled in simplicity and he took low-budget commissions to prove that good design need not be cluttered with doodads.

    Today, after a similar consumerist run-up, residential architecture is suffering from a similar hangover, as we recover from the granite countertops and carved stone lions of the pre-recession era. These egregious displays of affluence may be gone for a long, long time. But people are still going about the business of adjusting their homes and businesses to suit their needs – and there is a steady microeconomy of residential and small commercial construction.

    Cost, however, is the single overriding factor in most small projects today, and a focus on localism favors the budget. For one thing, a region’s vernacular style usually responds best to the climate, and typically employs materials that can be locally sourced – no stone from Chinese quarries is necessary. In Florida, for example, the vernacular style suspends the floor over a crawl space and includes deep roof eaves extending over the walls – both in response to the combination of harsh sun and heavy rains that task the building envelope. The benefit of this style is lower construction cost (gone are all the elaborate carved woodworking pieces, the high rooflines with multiple dormers and turrets) and also lower energy costs.

    Other clients are waking up to the simple fact that contemporary architecture costs less. Like the Edwardians before who developed a taste for the modern, owners building homes and additions in today’s economy have a newfound simplicity in their styles. With a few choice materials around the entry, some simple, strong lines, and a restrained approach to details, contemporary architecture is making a comeback in the residential market. Midcentury modern, a residential style all but forgotten in the McMansion era, was particularly suited to the returning GIs after World War 2 who desired a home but possessed the most modest of budgets. This affordability is the key driving factor to the rise of this style, and is also a naturally “green” architectural style because of what it does without. Modernist Mies Van Der Rohe’s dictum “less is more” can mean here that less ornament and fussy detailing means more money in the owner’s pocketbook at the end of the day.

    Even more interestingly, house additions and remodeling still seems to exist in this economy. Owners are taking advantage of the construction market’s reduced material costs, are building in more home offices, and enlarging their homes to accommodate a multigenerational lifestyle – parents living at home, or grown children living at home. Larger family clusters within single residences point to reduced mobility, and an evolving, relatively easy re-densification of suburbs that have been winnowed by a plethora of empty nesters.

    This new respect for budget has some naturally green outcomes, as families cluster together to save money and energy, and home offices save commuting. By adapting a home in a budget conscious way, taking advantage of vernacular architecture and developing a taste for simple, clean design, many owners are unconsciously working with sustainable strategies already. If sustainability means the preservation of future generation’s choices, then by conserving money and aggregating closer together, owners have already implemented their own sustainability policy.

    Green design should be seen as a grassroots response to the local climate, rather than a prescriptive code forced down from above. And it can produce a magnificent architecture in a timeless style. No federal program or international design guru can impact this like the microeconomy; instead people are making pragmatic choices, and once again discovering that the local vernacular architecture has a lot of good, commonsense clues about how to live a sustainable lifestyle.

    Richard Reep is an Architect and artist living in Winter Park, Florida. His practice has centered around hospitality-driven mixed use, and has contributed in various capacities to urban mixed-use projects, both nationally and internationally, for the last 25 years.

    Photo by cliff1066™

  • Finding the Good in This Bad Time

    This year’s best places rankings held few great surprises. In a nation that shed nearly 6.7 million jobs since 2007, the winners were places that maintained or had limited employment declines. These places typically had high levels of government spending (including major military installation or large blocs of federal jobs) or major educational institutions. Nor was the continued importance of the energy economy surprising in a nation where a gallon of gas is still about $3 a gallon.

    Even including part of 2010, only 13 cities (out of 397) showed growth, reflecting the breadth and depth of the downturn. In an economy where the most promising statistic is a “limited” decline in the number of new job losses from month to month, where is the proverbial silver lining?

    It is found in two places: (1) areas that show some resilience in this dour economy; and (2) a newly retooled American economy positioned to compete more strongly in the future.

    Read how we pick the best cities.

    Regions of Current Hope
    With disaster as a backdrop, the early signs of buoyancy in the economies of the Intermountain West, the Great Plains, and even parts of the Midwest are quite impressive. Many predicted these areas would mirror the collapse of their larger, high-growth counterparts in California, Florida, Arizona and Nevada. To the contrary, these relatively rural locations are emerging as beacons of hope.

    In the big cities, there have been across-the-board declines in most sectors led by the collapse of construction and financial services. Thousands of small businesses have disappeared in addition to huge layoffs by large employers. You see many “For lease” signs now at what were once your favorite shops and watering holes.

    In a business climate like this, a lot can be said for slow and steady. Comparatively, slower-growing cities across the middle parts of the country are recovering more easily and more quickly.

    Perhaps the most important lesson is that the economies of the future are not all about the “knowledge class” and that “too-good-to-be-true” high wage jobs may be just that. As seen in the dot-com bubble and in this real estate bubble, those fancy, high-wage finance and tech jobs are highly vulnerable to swings in the economy and high-paying construction jobs are only as good as the housing market.

    This is simply because markets eventually adjust. In the case of overheated stock and real estate markets, the losses are felt by the knowledge class, financiers and construction workers. In the case of manufacturing, as the price is bid up through labor costs, other places become more competitive.

    During volatile times, places with the broad-based growth strategies — like Texas and Utah — do best. Cities that are heavily dependent on a narrow set of industries leave themselves vulnerable, paying back the gains of good years in poor years.

    Part of the success of Texas is not just energy (as the modest performance of Midland and Odessa shows), but rather to the state’s adjustments to a past crisis, the savings and loan crisis of the 1980s. The state instituted new laws that imposed a range of disciplines on financial markets — such as limiting home equity lines — thereby minimizing the damage to the state’s economy as those markets went topsy-turvy.

    Regions of Future Hope
    There remains hope for the future in the story of this recession. One of the defining aspects of this recession was not just that certain sectors were hit hard, but that it was also broadly distributed across the economy. This pervasiveness extended deeply enough to cause every enterprise in America to seriously reconsider their business model and re-engineer how they served their customers.

    Consequently, the American economy is leaner and cleaner than it was three years ago. Businesses are more in touch with what makes them successful. While growth will be slower, it will be focused on areas that will bring about quick increases in productivity across the economy and bring new, real wealth to the local economies.

    Where will this happen most quickly? In those places where businesses survived best. Expect the Intermountain West and smaller manufacturing hubs across the United States to lead the charge (because of their lower costs), but large metros like Los Angeles, Chicago, Houston, Minneapolis, and Dallas, with their deep inventories of manufacturers and large labor pools, should see these returns before too long.

    Similar stories can be told for nearly every sector although the beneficiaries will be different. Much of the growth in information sector, for example, will continue to take place outside Silicon Valley. Business services will grow most rapidly where there is growth in business overall, initially outside the core hubs. Midsized and small communities will lead this recovery, and the big cities will eventually follow.

    Economies open to a wide array of occupations will do better than those that are less diversified. Places like Portland and Atlanta, so deeply focused on attracting high-wage, knowledge-based jobs are likely to miss out on the “basic” job growth that will fuel the first stage of the American recovery. Venture capital is still tight across the nation and capital markets are uncertain, especially with new government regulations up in the air. Consequently, high-end, white collar, and high tech jobs, with their insatiable need for investment capital, will develop more slowly. Even among the high-tech superstars, high profits will not lead to huge surges in hiring.

    Why Government Holds the Key
    Government’s actions over the next six to 12 months will define potential and the pace of this recovery. With an election looming, all sides will be jockeying for electoral advantages in November. They will cater legislation to many competing constituencies, fostering tremendous uncertainty in the private sector.

    One thing is certain, however. The current pace of government spending is unsustainable. Not even the US economy can support ongoing deficits in excess of $1.5 trillion per year. Either government spending must slow or someone must pay a lot more. The only alternative — high inflation — will have its own negative effect. One way or another some combination of the three MUST happen.

    Additionally, current regulatory initiatives will change the dynamics and employment patterns within some important sectors. Whether it is the complete restructuring of the health care industry (part of one of the only bright spots in the current economy), or the prospective new regulation in the financial services sector, potentially destabilizing change is coming.

    And the feds are not the only destabilizing government actors. California’s aggressive climate legislation, for example, and the mixed signals it is sending businesses across the state’s 28 MSAs will certainly shape their near and midterm economic futures.

    So what should the federal and state governments be doing at this time? Most importantly, they need to ensure stability: stable capital and lending markets, a consistent and stable tax code, focusing interventions on broad-based, low-shock actions, and developing a plan for moderating and containing the national deficits and mounting national debt. The key to continued prosperity in these times is a growing private job base, not a growing government sector.

    Moreover, government needs to learn the lessons of the private sector. Even as private firms retrench, governments at all levels need to reduce their cost structures. This is happening in many localities, at least on a temporary basis, as even unionized local employees are accepting wage and benefit reductions to retain jobs. Localities and states must recognize the true cost of the services they provide. They must either find consistent ways of providing funding for them, or eliminate them to preserve more critical services.

    Finally, public and private sectors alike must learn that this has been a transformational recession. Unlike downturns in the past, business and government cannot expect things will return to the way they were. Markets and banks will not be printing imaginary value increases in real property for consumers to spend any time soon and capital markets are cautious about financial good news,,preferring the old tried and true winners to novelties.

    Government and government employees are behind the curve understanding this transformation. Wage and benefit concessions given up during this recession are not likely to reappear. The concepts of furlough and unpaid time off are here to stay. Even as the private sector has been forced to reconsider its baseline practices, so, too, the political pressure now will be on government to retain savings obtained during the recession.

    Michael Shires, Ph.D. is a professor at Pepperdine University School of Public Policy.

  • The Worst Cities For Jobs

    In this least good year in decades, someone has to sit at the bottom. For the most part, the denizens are made up of “usual suspects” from the long-devastated rust belt region around the Great Lakes. But as in last year’s survey, there’s also a fair-sized contingent of former hot spots that now seem to resemble something closer to black holes.

    Two sectors have particularly suffered worst from the recession, according to a recent study by the New America Foundation: construction, where employment has dropped by nearly 25%, and manufacturing, which has suffered a 15% decline. The decline in construction jobs has hit the Sunbelt states hardest; the manufacturing rollback has pummeled industrial areas such as the Great Lakes as well as large swaths of the more recently industrialized parts of the Southeast.

    Read how we pick the best cities.

    Then there is California, a state that should be doing much better given its natural advantages and vast human capital but whose regions–with the exception of government-rich Hanford–share various degrees of distress. The bursting of the real estate bubble has hit the Golden State hard, but seeing so many poor performances in my adopted home state is distressing and points to much deeper problems. Rankings author Michael Shires, pointing to the looming prospect of high taxes and expanding regulation, notes that “While California’s economy has come roaring back many times before, a resurgence this time will be slowed by the state’s increasing willingness to aggressively tax and regulate those who will make it happen.”

    Rust Belt Ruins

    The traditional manufacturing heartland long has suffered, and in this recession industrial jobs have declined rapidly and only now seem to be slowly expanding. Ever since we started these surveys back in the early 2000s, cities and towns along the rust belt have inhabited the bottom rungs.

    Starting up from the last place finisher, No. 397 Warren-Troy, Mich., these old industrial cities dominate the nether regions; of the bottom ten finishers overall, six come from the Wolverine State, including long-suffering Detroit, which ranks 394th overall and 65th on the list of large metros (next to its neighbor, Flint, in last place). Other rust belt bottom-dwellers include No. 395 Elkhart and No. 392 Kokomo in nearby Indiana.

    Perhaps more disturbingly, many of those at the bottom come from what used to be called “the new South,” cities that industrialized late and often benefited from the flow of jobs from the old rust belt. Places such as No. 396 Morristown, Tenn., No. 390 Dalton, Ga., and No. 389 Hickory-Lenoir-Morganton, N.C., have suffered from a recession that has either forced companies to shut down or move overseas.

    Sun Belt Busts

    Ever since the collapse of the housing bubble in 2007, we have seen a remarkable turnaround in many Sunbelt regions. Traditionally, these led the list as emerging boomtowns. Now many appear more like bust-towns.

    Take a look at the rapid decline of such hot spots as Las Vegas, which now ranks 57th out of the 66 largest metros in the country; Phoenix, now lurking at No. 51; and No. 61 West Palm Beach, No. 56 Fort Lauderdale, No. 54 Tampa and No. 45 Miami, all in Florida. Many of these cities stood proudly near the top of the list as recently as three years ago. Perhaps nothing illustrates the reversal of fortunes than the fall of Reno, once our fastest-growing mid-size region, now No. 92 in the same category.

    California: The Great Disaster

    No state has suffered a greater reversal of fortunes than California. Five or six years ago California regions generally inhabited the top half or third of our lists. Today they generally have fallen even faster than the other Sunbelt states, even though the state’s economy boasts many assets beyond merely real estate speculation.

    California now accounts for a remarkable 7 of the bottom 20 regions on our big metro list. The diversity of the disaster spans both the urban centers and the exurbs–witness exurban Riverside-San Bernardino at No. 63 and the city of Oakland at No. 62. Historic high-flyers No. 59 Los Angeles and neighboring Santa Ana-Anaheim Irvine, which checks in at an abysmal No. 60, didn’t fare much better.

    Perhaps more shocking is the poor performance handed in by the state capital, Sacramento, a former high-flyer now mired at No. 54, and San Diego, a high-tech haven with a near-perfect climate, that resides at No. 48. Even No. 47 San Jose/Silicon Valley has done poorly, despite all the consistent hype about the world class tech center. The likes of Steve Jobs of Apple and Eric Schmidt at Google may be minting money, but the region, paced by declines in construction, manufacturing and business services, now has 130,000 fewer jobs than a decade ago. San Francisco does not do much better, clocking in No. 42, just ahead of its equally celebrated alter-ego Portland, Ore.

    Prognosis From the Emergency Room

    If this list tells us the current occupants of intensive care, what then are the prognoses for recovery? It seems the story differs for each of our three basic categories. For the rust belt cities, relief will only come when the country decides to reprioritize industry, while allowing for the restructuring of firms and contracts. On the bright side is the recovery of Ford and the potential for a second life for a greatly reduced General Motors and even Chrysler. A modest surge in production of these firms and related industries, such as steel and electronics, could help some selected regions rise up from the bottom.

    The recovery of the Sunbelt economies seems likely to take hold first. Despite the giddy predictions of East Coast pundits that places like Las Vegas, Phoenix, Orlando and Tampa are doomed to what Leon Trotsky allegedly described as the “dustbin of history,” this is not the first time these areas have suffered a setback. They have still not shown much life yet, but I would not count them out for the long term. There is a lot to be said for a sunny climate, greatly enhanced affordability and what many see as a high quality of life.

    Ultimately, notes Rob Lang, director of Brookings Mountain West and professor of sociology at the University of Nevada-Las Vegas, the assets of these regions have either not changed–pro-business administrations and warm weather–or, in the case of housing affordability, have become more attractive. “Phoenix and Las Vegas will be fine,” Lang predicts, noting that Las Vegas is working to reinvent itself beyond gaming to becoming a “convening capital” for the world economy. Similar dynamics could also boost cities in Florida, particularly if they begin focusing beyond tourism and housing.

    And then there is California, which by all rights should be leading, not lagging, the current recovery. Statewide unemployment, already 12.6%, has been rising while most states have experienced a slight drop. Silicon Valley companies, Hollywood and the basic agricultural base of the state remain world-beaters. But the problem lies largely in an extremely complex regulatory regime that leads companies to shift much of their new production and staffing to other states as well as foreign countries. The constant prospect of a state bankruptcy, in large part due to soaring public employee pension obligations, does not do much to inspire confidence among either local entrepreneurs or investors.

    Hopefully this will be the year when Californians decide that it needs an economy that provides opportunities to people other than software billionaires, movie moguls and their servants. It will have to include much more than the endlessly hyped, highly subsidized “green jobs.” More than anything, it will take rolling back some of the draconian regulations–particularly around climate-change legislation–that force companies, and jobs, to go to places that, while not as intrinsically attractive, are friendlier to job-creating businesses.

    This article 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. He is author of The City: A Global History. His newest book is The Next Hundred Million: America in 2050, released in Febuary, 2010.

    Photo: JSFauxtaugraphy

    April 27, 2010