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  • State of Chicago: The Decline and Rise

    I’ve had it in my head for over a year now to do an in-depth exploration of Chicago, a project I’ve called “State of Chicago.” This is the first a series of pieces that expand on the themes in my recent article “The Second-Rate City?”

    First, I’d like to list three reasons why I wrote that piece:

    1. To bring to the attention of Chicago the very poor statistical performance of the city on basic demographic and economic measures.
    2. To write a corrective to the many national puff pieces that have been written on the city that totally overlooked its real and serious problems.
    3. To lay out some frames that I had on the underlying causes that are different from the typical explanations, in particular the excessive focus on “global city” and the “cost of clout.”

    As it turns out, Rahm Emanuel’s own economic plan and the OECD report beat me to the punch on point #1. As a lot of what I wanted to accomplish with State of Chicago was data oriented, my project is now much less ambitious than I’d originally intended since Chicago’s leaders are now, fortunately, owning up to the problems.

    The Fall of Chicago

    Today I want to start out by giving the prequel to my article: Chicago’s Rust Belt decline and subsequent comeback, particularly in the 90s. I think everybody knows that cities had a rough 70s and early 80s. It was the “Rotten Apple” era in New York, for example, a time of needle parks, mugger money, graffiti trains, a brush with bankruptcy, and much more.

    Chicago had a similar rough patch. When Richard Longworth (now of Caught in the Middle and Global Midwest fame) returned to Chicago in 1976 from many years overseas as a foreign correspondent for the Chicago Tribune, it was to a grim, decaying city that, like so many big cities in America at the time, clearly was a city that did not work.

    This was perhaps best symbolized by the city’s inept response to the Blizzard of ’79, which left the city paralyzed for days. Mayor Michael Bilandic’s blizzard response was widely credited for his subsequent re-election defeat. Old mayor Richard J. Daley’s City Hall alliance with business had preserved the Loop as a powerful, if somewhat drab, business district while so many other Midwest downtowns fell into ruin. But otherwise Chicago was a troubled, declining city covered by a veneer of boosterism.

    In 1981 Longworth wrote a damning four part, front page series for the Chicago Tribune called “A City on the Brink” drawing a powerful portrait of a city in crisis. He noted that, “Chicago has become an economic invalid. The situation may be permanent.” The Economist, in a far cry from its praise in the 2000s, described the city as having little more than a “facade of downtown prosperity.”

    The city was losing people, losing businesses, and losing jobs – even in the Loop. Manufacturing was collapsing and the middle class was fleeing, leading to neighborhood decline and eroding the city’s tax base, which in turn degraded the city services residents had come to expect and demand. The decline in services and neighborhoods drove more people way, which led to further declines, perpetuating a vicious cycle.

    University of Illinois at Chicago Professor Pierre de Vise predicted, “I see very little hope for locating economic activities here again.” And a local business executive added, “Is the city being annihilated? It’s probably inevitable.” While careful to note that Chicago was not at the point of New York City’s brush with bankruptcy nadir, Longworth noted it was headed that direction and glumly asked, “What happens when a major city becomes a backwater?”

    The city was failing on nearly every measure. I was struck by how similar Longworth’s litany of statistics were to my own. There was a big different however: back then things were way worse. Today the problems of Chicago take place against a backdrop of many areas of strength in the urban core and a secular uptrend in the fortunes of cities. Given that Chicago has come back from far more dire circumstances than it faces today, there’s reason for optimism in the present.

    Chicago Reborn

    As I noted in City Journal, during the 90s (probably starting in the late 80s), Chicago had a massive comeback. It gained people, it gained jobs, and the core reasserted itself. I moved to Chicago in 1992 when only a few select lakefront precincts were really gentrified. Though I lived in Lincoln Park, I was told not to move west of Racine, not because it was dangerous, but because it was dead. The area where I used to live near Belmont/Ashland/Lincoln was completely boarded up except for the Army-Navy surplus store. Recruiters for my company tried to sell me on the city by telling me it was now a location of the uber-hip coffee chain Starbucks. I watched vast tracts of the city transformed before my eyes. The 90s boom was real. I saw it. I felt it.

    It also showed up in the data. I don’t want to go too crazy, but I wanted to look at some economic statistics. First, I want to look at metro area job growth in the 1990s for selected cities. I’ll show the percentage gains in a moment, but here’s the raw job growth for the ten largest US metros during the 1990s. (Top ten selected based on today’s 2010 census population).



    Note: Data in thousands

    Chicago actually had the third highest total job growth. Not only did metro Chicago outgrow New York and crush LA (which got bruised by the “peace dividend”), it actually added more total jobs than Houston, everybody’s darling today. Wow. And more than currently booming Washington, DC. In short, Chicago beat out its mature tier one peers while holding its own with the emerging boomtowns. Very impressive.

    Here’s the percentage view:



    Not as impressive vs. the emerging cities, but Chicago held its own with Boston (a big beneficiary of the dotcom boom) and more than doubled up traditional peers New York and LA. I think it’s fair to label Chicago an outperformer here.

    Let’s do a quick look at unemployment rates for the big three:



    As you can see, Chicago metro had a much lower unemployment rate than NYC or LA during most of the 90s. Since unemployment rate is available at the municipal level, here’s a quick look at the big three core cities. We’ll see again that even at the municipality level, the city of Chicago had a lower unemployment rate:



    So in terms of quantitative measures, Chicago was winning in the 90s. But it also seemed to do well qualitatively. I don’t have GDP data going back to the 90s, but I do have per capita personal income. Here’s how the top ten cities fared:



    Boston topped out, perhaps to be expected from the dotcom boom. But Chicago beat NYC and LA again, and also Washington, DC. (Interestingly, the southern boomtowns that did well on this metric in the 90s mostly got killed on it in the 2000s, Houston excepted).

    So I think it’s fair to say that compared to its large mature peers, Chicago economically was the winner (or at least near the top depending on who you put in there) during the 1990s, along with Boston. This is the type of performance Chicago is capable of delivering.

    But beyond the statistical measures, there were many qualitative improvements as well. For example, Chicago was really the early leader in quality of space. After Mayor Daley’s famous trip to Paris, he came back and encased the city in wrought iron. He also put in miles of streetscapes, with median planters, new streetlights and the like. (I happen to think the aesthetic style of these was not appropriate to Chicago, but they clearly upgraded the city in a big way). The CTA saw a brand new L line open to Midway Airport. New cultural facilities blossomed. For example, both the Chicago Symphony and the Lyric Opera undertook $100+ million building projects. And Daley even brought political stability back to the city after the turbulence Bilandic-Bryne years and the racially driven “Council Wars” of the 1980s.

    In a post-Cold War global order, Chicago also emerged as a global city. No longer just a superpower of the American interior, Chicago came to play a critical role in the global economy, through its derivatives exchanges, its professional services complex, and its status as a transport and cultural hub. Globalization became the lens through which the city sees its role in the modern economy, and with some justification. By 2010, Foreign Policy magazine ranked Chicago as the sixth most important global city in the world, for example. Chicago began to regard itself no longer as merely the “Second City,” but as a global player in its own right.

    So in the 1990s, Chicago was riding high. Little did the city know that with the dotcom collapse and the national economic trends of the 2000s, the city was about to enter a tailspin. But there was clearly a lot of real progress and change in the city and a lot for the city to feel good about and be proud of. Chicago was the big city champion of the 90s.

    I don’t want that story to get lost and people to think I’m just picking on Chicago. I’m happy to shout out its accomplishments when merited. But when things aren’t going so well, the city likewise deserves people who are willing to tell the truth.

    In the next installment, we’ll expand a bit on the troubles.

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

    Chicago skyline photo by BigStockPhoto.com.

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  • Are Millennials the Screwed Generation?

    Today’s youth, both here and abroad, have been screwed by their parents’ fiscal profligacy and economic mismanagement. Neil Howe, a leading generational theorist, cites the “greed, shortsightedness, and blind partisanship” of the boomers, of whom he is one, for having “brought the global economy to its knees.”

    How has this generation been screwed? Let’s count the ways, starting with the economy. No generation has suffered more from the Great Recession than the young. Median net worth of people under 35, according to the U.S. Census, fell 37 percent between 2005 and 2010; those over 65 took only a 13 percent hit.

    The wealth gap today between younger and older Americans now stands as the widest on record. The median net worth of households headed by someone 65 or older is $170,494, 42 percent higher than in 1984, while the median net worth for younger-age households is $3,662, down 68 percent from a quarter century ago, according to an analysis by the Pew Research Center.

    The older generation, notes Pew, were “the beneficiaries of good timing” in everything from a strong economy to a long rise in housing prices. In contrast, quick prospects for improvement are dismal for the younger generation.

    One key reason: their indebted parents are not leaving their jobs, forcing younger people to put careers on hold. Since 2008 the percentage of the workforce under 25 has dropped 13.2 percent, according to the Bureau of Labor Statistics, while that of people over 55 has risen by 7.6 percent.

    “Employers are often replacing entry-level positions meant for graduates with people who have more experience because the pool of applicants is so much larger. Basically when unemployment goes up, it disenfranchises the younger generation because they are the least qualified,” observes Kyle Storms, a recent graduate from Chapman University in California.

    Overall the young suffer stubbornly high unemployment rates—and an even higher incidence of underemployment. The unemployment rate for people between 18 and 29 is 12 percent in the U.S., nearly 50 percent above the national average. That’s a far cry from the fearsome 50 percent rate seen in Spain or Greece, or the 35 percent in Italy and 22 percent in France and the U.K., but well above the 8 percent rate in Germany.

    The screwed generation also enters adulthood loaded down by a mountain of boomer- and senior-incurred debt—debt that spirals ever more out of control. The public debt constitutes a toxic legacy handed over to offspring who will have to pay it off in at least three ways: through higher taxes, less infrastructure and social spending, and, fatefully, the prospect of painfully slow growth for the foreseeable future.

    In the United States, the boomers’ bill has risen to about $50,000 a person. In Japan, the red ink for the next generation comes in at more than $95,000 a person. One nasty solution to pay for this growing debt is to tax workers and consumers. Both Germany and Japan, which appears about to double its VAT rate, have been exploring new taxes to pay for the pensions of the boomers.

    The huge public-employee pensions now driving many states and cities—most recently Stockton, Calif.—toward the netherworld of bankruptcy represent an extreme case of intergenerational transfer from young to old. It’s a thoroughly rigged boomer game, providing guaranteed generous benefits to older public workers while handing the financial upper echelon a “Wall Street boondoggle” (to quote analyst Walter Russell Mead).

    Then there is the debt that the millennials have incurred themselves. The average student, according to Forbes, already carries $12,700 in credit-card and other kinds of debt. Student loans have grown consistently over the last few decades to an average of $27,000 each. Nationwide in the U.S., tuition debt is close to $1 trillion.

    This debt often results from the advice of teachers, largely boomers, that only more education—for which costs have risen at twice the rate of inflation since 2000—could solve the long-term issues of the young. “Our generation decided to go to school and continue into even higher forms of education like master’s and Ph.D. programs, thinking this will give us an edge,” notes Lizzie Guerra, a recent graduate from San Francisco State. “However, we found ourselves incredibly educated but drowning in piles of student loans with a job market that still isn’t hiring.”

    More maddening still, the payback for this expensive education appears to be a chimera. Over 43 percent of recent graduates now working, according to a recent report by the Heldrich Center for Workforce Development, are at jobs that don’t require a college education. Some 16 percent of bartenders and almost the same percentage of parking attendants, notes Ohio State economics professor Richard Vedder, earned a bachelor’s degree or higher.

    “I work at the Gap and Pacific Pak Ice, two jobs that I don’t see myself working long term nor jobs that are specific to my major,” notes recent University of Washington graduate Marshel L. Renz. “I’ve been applying to five jobs a week and have gotten nothing but rejections.”

    Particularly hard hit are those from less prestigious schools or with majors in the humanities, notes a recent Pew study. Among 2011 law-school graduates, half could not find a job in the legal field nine months after finishing school. But it’s not just the lawyers and artists who are suffering. Overall the incomes earned by graduates have dropped over the last decade by 11 percent for men and 7.6 percent for women. No big surprise, then, that last year’s class suffered the highest level of stress on record, according to an annual survey of college freshmen taken over the past quarter century.

    The proliferation of graduate degrees also impacts those many Americans who don’t go (or haven’t yet gone) to college. High-school graduates now find themselves competing with college graduates for basic jobs in service businesses. Unemployment among 16- to 19-year-olds this summer is nearly 25 percent, while for high-school graduates between 2009 and 2011, only 16 percent have found full-time work, and 22 percent work part time.

    Once known for their optimism, many millennials are turning sour about the future. According to a Rutgers study, 56 percent of recent high-school graduates feel they would not be financially more successful than their parents; only 14 percent thought they’d do better. College education doesn’t seem to make a difference: 58 percent of recent graduates feel they won’t do as well as the previous generation. Only 16 percent thought they’d do better.

    This perception builds on the growing notion among economists that the new generation must lower its expectations. Since the financial panic of 2008, “the new normal” has become conventional wisdom. Coined by Mohamed El-Erian at Pimco, it’s been used to describe our world as one “of muted Western growth, high unemployment and relatively orderly delevering.”

    The libertarian Tyler Cowen, in his landmark work The Great Stagnation, makes many of the same points, claiming that the U.S. “frontier” has closed both technologically and in terms of human capital and resources. He maintains that we’ve already harvested “the low-hanging fruit” and that we now rest on a “technological plateau,” making any future economic progress difficult to achieve. Stagnation is not such a bad thing for people already established in college-campus jobs, think tanks, or powerful financial institutions. But it wipes out the hope for the new generation that they can achieve anything resembling the American Dream of their parents or even grandparents.

    Inevitably, young people are delaying their leap into adulthood. Nearly a third of people between 18 and 34 have put off marriage or having a baby due to the recession, and a quarter have moved back to their parents’ homes, according to a Pew study. These decisions have helped cut the birthrate by 11 percent by 2011, while the marriage rate slumped 6.8 percent. The baby-boom echo generation could propel historically fecund America toward the kind of demographic disaster already evident in parts of Europe and Japan.

    The worst effects of the “new normal” can be seen among noncollege graduates. Conservative analysts such as Charles Murray point out the deterioration of family life—as measured by illegitimacy and low marriage rates—among working-class whites; among white American women with only a high-school education, 44 percent of births are out of wedlock, up from 6 percent in 1970. With incomes dropping and higher unemployment, Murray predicts the emergence of a growing “white underclass” in the coming decade.

    The prospect of downward mobility is most evident in recent discussions about the future of the housing market. Since World War II the expectation of each generation was to own property, preferably a single-family house. The large majority of boomers became homeowners during the Reagan-Clinton era. Yet it is increasingly fashionable to insist this “dream” must be expunged. If millennials ever move out of their parents’ house, they will live in apartments they don’t own. There’s a lot of talk about a “generation rent” replacing a primarily suburban ownership society with a new caste of city-dwelling renters. “I’m hoping that the millennial generation doesn’t set its sights on homeownership as a benchmark of economic stability,” sociologist Katherine Newman suggests, “because it’s going to be out of reach for so many of them.”

    No doubt the prospects for homeownership will be tough in the years ahead. But it’s delusional to believe millennials don’t desire the same things as previous generations, note generational chroniclers Morley Winograd and Mike Hais. Survey research finds that 84 percent of 18- to 34-year-olds who are currently renting say that they intend to buy a home even if they can’t currently afford to do so; 64 percent said it was “very important” to have an opportunity to own their own home.

    And where do millennials see their dream house? According to research at Frank Magid Associates, 43 percent describe suburbs as their “ideal place to live,” compared with just 31 percent of older generations. Even though big cities are often preferred among college graduates in their 20s, only 17 percent of millennials say they want to settle permanently in one. This was the same percentage of members of this generation who expressed a preference for living in rural or small-town America.

    So far, the Great Recession has driven young people around the high-income world to the left. Generations growing up in recessions appear more amenable to arguments for government-mandated income redistribution. And since so few young people pay much in the way of taxes, they are less affronted by the prospect of forking over than older voters, who do. This left-leaning tendency has been on display in recent European elections. In France, 57 percent voters 18 to 24 supported the Socialist François Hollande, one of the reasons why the conservative Nicolas Sarkozy lost. Similarly, 37 percent of those in that age category voted for Syrizia, the far-left party in Greece.

    But Winograd and Hais—and Democratic strategist Ruy Teixeira—say it’s not just economics working for the Democrats. Social issues such as gay marriage, women’s rights, and immigration—a large proportion of millennials are children of newcomers—tend to drive younger voters toward the Democrats. Half of millennials, for example, favor gay marriage, compared with a third of boomers, and some predict the Republican embrace of draconian social conservatism will serve to harden the Democratic tilt of millennials for the foreseeable future.

    Yet Republicans may take heart from some of the more conservative values embraced by the young. As a group, millennials appear to be very family-oriented—being good parents is often their highest priority—and roughly two thirds claim to believe in God. And since their long-term aspirations are not so different from those of earlier generations—they still want to own a home in a nice, secure neighborhood—Republicans could make a case that their economic model will work better with their personal goals.

    Right now, politics is just another place where American millennials are getting screwed. Republicans want to deport young Latinos while cutting investments, such as roads and skills education, that would benefit younger voters. Democrats, meanwhile, seem determined to mortgage the future with high spending on pensions, predominantly for aging boomers; cascading indebtedness; and economic policies unfriendly to the rapid growth necessary to assure upward mobility for the new generation.

    This suggests millennials need to force the parties to cater to them and play hard to get. Being taken for granted, as African-Americans have been, does not always produce the best results for any demographic grouping. Politicians target “soccer moms,” “independents,” and suburban voters precisely because they are not predictable. Millennials should not want to be in anyone’s hip pocket.

    Wanting the next generation to succeed is in everyone’s long-term interest. Eventually they will constitute the majority of parents, potential homeowners, and workers. This year they will comprise 24 percent of voting-age adults, up from 18 percent in 2008; by 2020 they will amount to a third of all eligible voters. And if, by then, they are still a screwed generation, they won’t be the only ones suffering. America will be screwed, too.

    Research assistance by Gary Girod. Portrait interviews by Eliza Shapiro.

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

    This piece originally appeared in Newsweek Magazine.

    Unemployed photo by BigStockPhoto.com.

  • China’s French Connection

    No two countries would appear more divergent than France and China, especially in the age of Eurozone collapse. One country represents the Asian future, while the other is the capital of the failed, if diverting, old world.

    The French recently elected a socialist president and assembly on the basis that everyone should share the country’s deficits and decline. The Chinese, meanwhile, have enough surpluses to buy out the European Union, should they wish to exchange their EU debts for an equity stake. (Maybe they will choose to have Paris shipped east in boxes?)

    To take the measure of the two economies — although I admit this survey lacks academic rigor — I recently crossed each country by rail.

    In China, I rode a succession of trains, high-speed and low, between Beijing and Hong Kong, with stops along the way in Yenan (Mao’s revolutionary capital), Xian (of Terra Cotta Warrior fame), Chongqing (Chiang Kai-shek’s wartime capital), Zhuzhou (a rail junction), Guangzhou (used to be Canton) and Shenzhen (the biggest city near Hong Kong you’ve never heard of).

    I have also recently taken a number of train trips between Geneva and Bordeaux and crossed “France profonde” through the mountainous Massif Central, or gone on more roundabout routes through Toulouse and Tours.

    My conclusions, which even I find surprising: France has a better balance between its land and cities, as well as richer farms and a more sustaining political culture, even if the presidency is a reality show.

    China, at least from a train window, seems to be devoting most of its budget surpluses to moving the population into fifty-story, high-rise apartment buildings, the dormitories of its industrial revolution.

    Like France, China has a high-speed rail network that travels on segregated tracks, allowing for speeds close to 200 miles per hour. I went from Zhuzhou to Guangzhou in about four hours, a trip that used to take overnight. The stations of the expanding high-speed Chinese network, however, are outside the downtowns of most cities, so getting to them feels like a trip to the airport.

    Unlike trips in France, most intercity trips in China take place on slow night trains, with thousands of passengers tucked into open couchette berths. On my trip south, I was usually assigned the cramped middle bunk and rode, even during the day, like “John Malkovich” on floor 7½.

    The French have largely given up on night trains. My regional train from Geneva to Bordeaux is a milk run (skim, I would say, to judge by the amenities), with beautiful views but few passengers. French high speed trains — Trains à Grande Vitesse or TVGs — do go downtown, although the French have the annoying habit of routing every trip through Paris.

    In the current economic crisis, however, funding is being bled from the rails, and many TGV cars look thread-worn. Nevertheless, the TGV remains the inspiration for the Chinese high-speed system, perhaps because many Communist leaders had warm memories of their Paris underground cells.

    Sadly, Chinese cities retain few of their French inspirations. Apart from old Beijing and some quarters of Shanghai, Xian and Guangzhou, Chinese cities are faithful to Maoist doctrine in that that they serve as worker housing and base camps for industrial output.

    I may, however, be one of the few who prefers Beijing over Paris; the biking is better and the hotels are cheaper. Nevertheless, the average Chinese city is going the way of Los Angeles and Phoenix. The streets are less forgiving to cyclists, pedestrians, and kids playing after school. The outskirts of Chinese cities are great walls of housing projects that probably can be seen from the moon.

    In France, because I often travel with a bike, during waits between trains I sometimes go for a downtown spin, which has allowed me to discover the old world charms of Orleans, Tours, Toulouse, and Blois.

    Because French cities were laid out in the eighteenth and nineteenth century and not in 2003, they have narrow streets, often unsuitable for cars, but perfect for walking, bikes and sidewalk cafés. Bordeaux, a hive of narrow streets and small, self-contained neighborhoods, is an excellent example of a car-unfriendly French city that is flourishing.

    Away from the glittering high-rise buildings in places like Dalian and Shanghai, much of train-window China remains a poor country, a succession of terraced subsistence farms, cut out of rocky hillsides and inevitably encased in a steamy fog. Elsewhere, China has the fault lines of runaway development: a population confined to worker housing, and agricultural provinces that are stripped for minerals or exports.

    By comparison, French trains are never far from verdant pastures or neatly tended vineyards. Ironically, China’s detached “people’s” government is the largest consumer of first-growth French wines.

    The wine industry is one of the few meeting points where the French and the Chinese find harmony. China is now fifth (ahead of the U.K.) in wine consumption, and at the high end nearly all of it comes from Bordeaux and Burgundy. (The low end is a concoction of bootlegged Algerian and Rhône reds.) The reason that the wines of Château Lafite Rothschild can command $2000 a bottle is because newly coined Chinese millionaires find it a must-have brand.

    Since France produces a surfeit of wines, the trade should stimulate the economies of both countries for a long time. Nevertheless, French producers live on the precipice of Chinese wine tariffs, should the Beijing government want to promote its own vineyards south of Shanghai at the exclusion of those in Pauillac.

    Which country will fare better in the coming decades: China with its Dickensian economic juggernaut, or France with its budget deficits, despite having well-fed cows and landscapes worthy of Monet?

    Just because my Geneva to Bordeaux train crosses through the contours of an Impressionist painting does not mean that France will return to its imperial glories. Nor do China’s traffic jams mean that it will dissolve into Manchu feudalism. Furthermore, to paraphrase Chou En-lai on the French revolution, it may be “too soon to tell” if Chinese communal capitalism will put an end to the party or to free enterprise.

    Ironically, France does have the surplus of a self-contained economy, even if now it is in hock to German debt markets. Similarly, China has the deficits of post-Maoism—something close to the state capitalism of fascism—including that the best that can said of its Politburo is that it keeps the high-speed trains running on time.

    Personally, I hope that both countries do well. I love that in each I can take trains, get around by bike, read about the Revolution or the Franco-Prussian war, enjoy the cities—especially Beijing and Bordeaux—and, well, drink French wines.

    Photo: The new high-speed rail station, Zhuzhou, China; from the studio of Matthew Brady.

    Matthew Stevenson, a contributing editor of Harper’s Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His next book is Whistle-Stopping America.

  • How Fossil-Fuel Democrats Became An Endangered Species

    In an election pivoting on jobs, energy could be the issue that comes back to haunt Barack Obama and the Democratic Party as the cultural and ideological schism between energy-producing Republican states and energy-dependent Democratic ones widens.

    As the economy has sputtered since 2008, conventional energy has emerged as one of the few robust sources of high-paying work, adding roughly half a million jobs since 2007 as new technologies and changing market conditions have opened up a vast new supply of exploitable domestic reserves. This is good news for Mitt Romney: nine of the ten states that rely most heavily on the sector for jobs are solidly behind him. (Colorado, where polls show Obama with a narrow lead, is the one exception).

    President Obama’s heavy-handed regulation of the booming old-energy economy—the moratorium on offshore drilling following the BP spoil, the decision to block the Keystone XL Pipeline, and the prospect of a fracking ban—and his embrace of green-energy policies has played well in the solidly-Democratic post-industrial coastal economies that he also depends on for fund-raising. But it’s left him with few friends in the energy belt that spans the Great Plains, the Gulf Coast, Appalachia and now some parts of the old rustbelt, despite his election-year claims of an “all-of-the-above” energy policy.

    It’s a far cry from Bill Clinton, whose close ties with Great Plains and Gulf Coast Democrats and energy producers there helped him twice carry Louisiana, Kentucky and West Virginia—all states that appear to be solidly behind Romney this year.

    Today, Democratic senators in regions that depend on fossil fuels are becoming an endangered species. Over the past two years, Virginia’s Jim Webb and Byron Dorgan and Kent Conrad, both from booming North Dakota, have announced their retirement or retired, while Montana’s Jon Tester has distanced himself from the president as he faces a difficult re-election fight. And that diminishing presence in turn means less intra-party resistance to any potential second-term plans to cut the burgeoning fossil-fuel business to size.

    The administration’s hostility to the dirty business of energy, and the sector’s fear of new bans or regulations in a second Obama term that would gut the industry were perhaps best captured by the then-EPA administrator who claimed Administration policy was to “crucify” fossil fuel.

    Yet as Obama pursues a 50-percent-plus-one re-election strategy reminiscent of President Bush in 2004, his energy approach has been embraced by his core constituents, particularly the public-sector union workers and urbanized “creative-class” members. This is particularly true in the coastal enclaves like New York and California that import much of their energy (and in California’s case in particular has declined to exploit its own considerable reserves). Sixty-percent of the electricity in Los Angeles, a key bastion of Obama support, comes from coal-fired plants in Utah and Arizona; much of the natural gas that provides nearly half of the power for California’s grid is imported. While Pennsylvania and Ohio have exploited their large shale reserves that have become vastly valuable in recent year thanks to new extraction techniques and shifting energy prices, New York State has yet to follow suit, even as New York City lacks the supply to match peak summer demand, forcing it to depend on an aging nuclear power plant at Indian Point that’s years overdue to close.

    President Barack Obama defends his energy agenda during his visit to oil and gas production fields located on federal lands outside of Maljamar, N.M., Wednesday, March, 21, 2012. (Pablo Martinez Monsivais / AP Photo)

    If anything, the pressure from environmental activists , many of them well-heeled and living far removed from power sources and the jobs they create, is for Obama to go even further. A few rich donors from the green lobby complain the President has not been environmentally correct enough; Mother Jones actually asked if Obama has been “morphing into Dick Cheney” on energy issues.

    But for the most part, the coasts are on board with Obama’s energy policy. Silicon Valley and Wall Street have invested heavily in the renewable industries favored and frequently propped up by the administration, putting their money where Obama’s mouth is. Silicon Valley hegemons like venture capitalist John Doerr and Wall Street giants like Goldman  Sachs regard the green energy business as a profitable, state-supported way to grow their profits. One disgusted  venture investor described the investors in the heavily subsidized green game as “venture porkulists.”

    These investments are now critical to many powerful tech firms, who increasingly have little domestic involvement in the manufacturing businesses that was central to a prior generation of Silicon Valley titans. Google alone has invested more than a billion dollars in the green-energy sector, as the valley’s new dominant clique of venture capitalists and tech executives donate at record levels to the president’s re-election.

    Nowhere is the element of choice inherent in energy policy more evident than in California, home to five of the nation’s twelve largest oil fields and energy reserves equal to those of Nigeria, the world’s tenth-largest producer. As high-paying energy jobs swell payrolls in the Great Plains, the Intermountain West and parts of the Gulf, the Golden State has double-digit unemployment, a collapsed inland economy and a series of bankrupt municipalities. Amidst a great national energy boom, California’s energy production has remained stunted even as the state’s draconian “renewable” energy mandates are slated to drive up its already high electricity rates. The state’s high cost of energy has impacted industry:  despite its vast human and natural resources, the Golden State, with 12 percent of the nation’s population received barely 2 percent of the country’s manufacturing expansions last year.

    Such inattention to California’s resources may be  popular in wealthy precincts of Silicon Valley, San Francisco and west Los Angeles, but the state’s green approach has helped place traditionally manufacturing-oriented communities such as Oakland, east Los Angeles, San Bernardino and Stockton in deep distress. Despite central California’s vast deposits of oil and gas, unemployment rates in some oil-rich areas there are over 15 and sometimes even 20 percent. 

    As economic forecaster Bill Watkins recently told an audience in hard-hit Santa Maria: “If you were in Texas, you’d be rich.”

    Meanwhile  the fossil-fuel energy producers, related chemical manufacturers  and financiers who are getting rich, from the Koch Brothers to Chesapeake Energy and Arch Coal, have been investing in Romney and the super-PACs supporting him.

    Much of the money they’re pouring in will likely be spent persuading voters in the four crucial energy states –long-time producers New Mexico and Colorado and emergent natural gas producers Ohio and Pennsylvania—that will be up for grabs in November. Colorado has generated more than 20,000 while new energy jobs since 2000, third highest in the nation, while Ohio and Pennsylvania combined have created 25,000 new energy jobs in that span—and that’s not counting the services those largely  well-paid workers demand or the new manufacturing jobs making pipes and compressors the industry creates. What all four contested states have in common is that their energy sectors are pitted against powerful competing interests, including true-blue urban constituents, and tourism and technology sectors that employ workers and industries more concerned with the local environment than with energy-driven growth.Still, a boom is a boom, and President Obama is doing his best to claim credit for the huge surge in oil and gas production under his watch, although the increase has been almost completely on private and state lands outside his reach. Production on federal lands has actually dropped. Yet his “all of the above” rhetoric comes off as more evenhanded and substantial than the drill- baby-drill GOP set.

    Romney, though, can point to a series of Obama decisions and priorities—including the painfully slow resumption of Gulf Shore oil operations after the BP spill, the effective veto of the Keystone XL pipeline, and proposed EPA greenhouse gas restrictions—as mortal threats to the American energy boom. He can also contrast the economic rise of energy-friendly Texas with the troubles of hyper-green California.

    Whether Romney, far from a master communicator, is savvy and bold enough to stick the point may prove decisive in November.

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

    This piece originally appeared in The Daily Beast.

    Oil well photo by BigStockPhoto.com.

  • High Speed Rail Advocates Discredit Their Cause – Again

    Is there any high speed rail boondoggle big enough to make rail transport advocates reject it?  Sadly, for all too many of them, the answer is No, as two recent developments make clear.

    The first is in California, where the state continues to press forward on a high speed rail plan for the state that could cost anywhere from $68 billion to $100 billion. Voters had previously approved $10 billion in bonds for the project, but as the state’s economy and finances have continued to sour – including multiple major cities going bankrupt – the polls have turned against it, and with good reason. The state faces the prospect of already enacted education cutbacks if Gov. Jerry Brown’s tax increase proposal in not approved in a vote this fall.  Other painful service cuts loom. Voters are rightly asking themselves if now is the time to be borrowing public money for very expensive, speculative infrastructure. 

    Equally, many of the much cited overseas examples of high-speed rail seem, well, to be off the tracks.    China’s rail system has serious safety problems, for example. And developing the most extensive high speed rail system in Europe hasn’t stopped Spain from seeing 50% youth unemployment, a 3 percentage point increase in the VAT tax, and a humiliating bailout from the rest of the EU.

    Nevertheless, the California assembly recently voted to go full speed head on its high speed rail plans. As part of an overall $8 billion rail spending package, the state is borrowing $2.6 billion to complement $3.2 billion in federal funds left over from the stimulus (shovel ready???) to build a starter segment of the line linking Bakersfield and Madera through the Central Valley. This is the easiest segment on which to build – though legal action is likely to delay construction – but doesn’t do anything to link the state’s huge population centers around LA and the Bay Area. With no more significant federal funds likely to be forthcoming, and the state’s finances a wreck, this segment risks becoming an embarrassing white elephant, or, as critics call it, “a train to nowhere”.

    After this vote it came to light that respected French high speed rail operator SNCF had approached California officials, private funding in hand, with a preliminary offer to build the LA-SF link themselves on a better and cheaper alignment along I-5 that would cost only $38 billion. But this was rejected by the state. The Times account suggests this rejection came about due to a combination of a political preference for the inefficient Central Valley segment and the clout of Parsons Brinckerhoff, the lead contractor.  Some commentators have referred to this revelation as a “bombshell.”

    Despite management misstep after management deception, rail advocates around the country cheered California’s decision to build the Central Valley segment. Jerry Brown, with not much to show for his reprise as Governor, is excited of course. Secretary of Transportation Ray LaHood called it a “big win.”  America 2050 (an offshoot of the Regional Plan Association of New York), “commended” the state for “taking a big step forward.”  Streetsblog called it a “major victory.”  While I respect what these organizations do in other contexts, this high speed rail vote is not a major victory, but a major defeat for common sense.

    But apparently not willing to let California take the prize in the rail boondoggle category without a fight, Amtrak shortly thereafter issued a “vision” for rail in the Northeast Corridor that would provide faster service between Boston and Washington, DC – at a cost of $151 billion. Strange as it sounds, some commentators actually lauded Amtrak for reducing costs since the previous plan was $169 billion.  The Brookings Institution was measured in its reaction to the plan, but managed to describe it as “more rational.”   With Republicans seemingly safely in charge of the House for now, and large federal deficits projected for the mid-term future, $151 billion for Amtrak seems purest fantasy.

    These developments are unfortunate because high speed rail could play an important role in US transportation, particularly in the Northeast. But that’s unlikely to happen because of the indiscriminate way establishment advocates have supported anything with the “high speed rail” label attached, ranging from $2 billion, 110 MPH peak speed Toonerville Trolleys in Illinois that barely beat Megabus in terms of journey time to the California rail boondoggle, regardless of merit. All they know that if it claims to be high speed rail, they are in favor of it.

    There are other people who take a more serious view. Unfortunately, they tend to be outsiders with little influence.  For example, Alon Levy suggested a set of near term, incremental Northeast Corridor improvements that might cost 90% less than Amtrak’s plan.

    $8 billion in stimulus dollars have gone to purchase us nothing of any real significance in terms of rail infrastructure. That money, invested wisely in high priority projects in the Northeast Corridor, could have made a big difference and started building a real demonstrated case for high speed rail investment in America. Unfortunately, the way high speed rail has been botched by its advocates, all the money we’ve spent on it has accomplished just the opposite. If California’s Central Valley segment is built and the complete line is never finished, it will likely discredit high speed rail in America for the long term.

    Aaron M. Renn is an independent writer on urban affairs and the founder of Telestrian, a data analysis and mapping tool.

    CA route map by Wikipedia user CountZ.

  • Summer 2012!

  • Core City Growth Mainly Below Poverty Line

    Over the toughest economic decade since Great Depression, the nation’s core cities continued to gain more than their share the below poverty line population in the 51 metropolitan areas with more than 1,000,000 population. Between 2000 and 2010, core cities (Note 1) attracted approximately 10 percent of the increase in population (Note 2) while adding 25 percent of the increase in people under the poverty line (Figure 1).

    Most New Core City Residents in Poverty: The core city poverty trend was overwhelming. In the core cities of the 51 metropolitan areas with more than 1,000,000 population (2010), 81 percent of the aggregate population increase was under the poverty line. This compares to the 32 percent of the suburban population increase that was below the poverty line. This may be a much lower figure than the concentration in the core cities, but even that also is far too high (Figure 2).

    The trend in core city poverty concentration was also pervasive. In 39 of the 51 metropolitan areas, core cities accounted for a greater share of poverty level population growth than overall population growth. One of the exceptions was Louisville, where the core city expanded to nearly six times its 2000 land area and more than doubled its population (Note 3). The result was to convert Louisville into a largely suburban city, which masks the high poverty rate in genuine urban core of the former city.

    Poverty in the Suburbs: At the same time, as core city population growth has stalled, much of the numeric increase in the below poverty line population has been in the suburbs. In 2010, the Brookings Institution reported that a majority of the metropolitan population below poverty was in the suburbs (Note 3). This is to be expected, since suburban areas account for nearly 75 percent of major metropolitan area population.

    Partially in response to the Brookings Institution finding, there has been some misinterpretation as to the relative economic fortunes of the core cities and the suburbs. This is consistent with the continuing "drumbeat" of the "return to the cities," which results of the last definitive ten year census only briefly quieted. The "great inversion" cited by Aaron Ehrenhalt and others, wherein the affluent "flock" (the recurring term) to the cities, as the suburbs are ghettoized, remains far from an actual reality.  

    Overall the average major metropolitan area poverty rate rose from 10.9 percent in 2000 to 14.1 percent in 2010. Rather than gentrify, the core city rate rose from 19.2 percent to 23.3 percent, while the suburban rate rose from 8.2 percent to 11.3 percent (Figure 3).

    Core City Poverty Rates Double the Suburbs: In 2010, core city poverty rates were higher in every major metropolitan area than in the suburbs. Overall, average core city poverty rates were more than double that of the suburbs in most metropolitan areas (27 of 51). Among the 10 largest metropolitan areas, the core cities of New York, Chicago, Houston, Philadelphia, Miami, Washington and Boston (Figure 4) suffered poverty rates more than double  those of their suburbs. The cities of Milwaukee and Hartford had the highest poverty rates relative to their suburbs, at four or more times.

    Shares of Poverty Level Population in the Core Cities: On average, 41 percent of metropolitan area populations living below the poverty rate resided in the core cities. The city of San Antonio had the highest share of its metropolitan below poverty population, at 73 percent, followed closely by the city of Milwaukee, at 72 percent. New York City accounted for 63 percent of its metropolitan below poverty line population and the city of San Jose 61 percent. Even after incorporating suburbs, the city of Louisville contained 57 percent of its metropolitan below poverty level population (Figure 5).

    Highlights of the 2010 Data: The 2010 poverty rates for metropolitan areas, core cities and suburbs are shown in the table below. Highlights of the data are described below:

    Metropolitan Areas: The highest metropolitan area poverty rates were in Memphis (19.1 percent), New Orleans (17.4 percent) and Riverside-San Bernardino (17.1 percent). The lowest metropolitan area poverty rates were in Washington (8.4 percent), Hartford (10.1 percent) and Boston (10.3 percent).

    Core Cities: The city of Detroit had the highest poverty rate, at 37.6 percent, The city of San Bernardino, whose city council voted to file for bankrupcty on July 10, had the second highest poverty rate at 34.6 percent, and Cleveland ranked third highest, at 34.0 percent.  The lowest core city poverty rates were in high-tech centers, the city of San Jose (12.6 percent), the city of Seattle (14.7 percent and in the two core cities of San Francisco-Oakland (15.7 percent). Despite the strong metropolitan area showing (#1) and high suburban ranking (#3), the city of Washington had only the 15th lowest poverty rate among core cities.

    Suburbs: The highest suburban poverty rates were in Riverside-San Bernardino (16.2 percent), Miami (15.9 percent) and Oklahoma City (15.2 percent). The lowest suburban poverty rates were in Baltimore (6.7 percent), Milwaukee (6.9 percent) and Washington (7.1 percent), with Baltimore and Washington profiting from strong federal government employment and contracting.

    The data reflects the continuation of longer term trends as wealth losses continue to afflict many core cities and as domestic migrants continue to move away (As was previously reported core counties, the lowest level at which there is migration data, have predominantly lost domestic migrants, both between 2000 and 2009 and in the latest estimates, between 2010 and 2011.) The problem, however is much larger. Both the core cities and the suburbs are are challenged by heightened poverty rates. The entire urban form, from the exurbs and the suburbs to the core cities   need  a substantial reduction in poverty, although  present economic trends are working against this   result.

    2010 Poverty Rates: Major Metropolitan Areas, Core Cities & Suburbs
    Poverty Rates
    Metropolitan Area (MSA) Historical Core City (HCM) MSA City Suburbs City/  Suburbs
    Atlanta, GA Atlanta 14.8% 26.1% 13.9% 1.88
    Austin, TX Austin 15.9% 20.8% 11.7% 1.78
    Baltimore, MD Baltimore 11.0% 25.6% 6.7% 3.80
    Birmingham, AL Birmingham 17.0% 29.5% 14.2% 2.08
    Boston, MA-NH Boston 10.3% 23.3% 8.3% 2.80
    Buffalo, NY Buffalo 14.4% 30.2% 9.7% 3.13
    Charlotte, NC-SC Charlotte 14.5% 17.2% 12.6% 1.36
    Chicago, IL-IN-WI Chicago 13.6% 22.5% 10.0% 2.24
    Cincinnati, OH-KY-IN Cincinnati 14.0% 30.6% 11.4% 2.69
    Cleveland, OH Cleveland 15.1% 34.0% 10.7% 3.19
    Columbus, OH Columbus 15.7% 22.6% 10.5% 2.16
    Dallas-Fort Worth, TX Dallas 14.6% 23.6% 12.5% 1.88
    Denver, CO Denver 12.5% 21.6% 9.7% 2.21
    Detroit,  MI Detroit 16.6% 37.6% 12.4% 3.02
    Hartford, CT Hartford 10.1% 31.2% 7.8% 3.99
    Houston, TX Houston 16.5% 22.8% 13.1% 1.74
    Indianapolis. IN Indianapolis 14.8% 21.1% 9.1% 2.31
    Jacksonville, FL Jacksonville 15.3% 16.7% 13.1% 1.28
    Kansas City, MO-KS Kansas City 12.4% 20.4% 10.0% 2.05
    Las Vegas, NV Las Vegas 15.1% 16.0% 14.7% 1.09
    Los Angeles, CA Los Angeles 16.3% 21.6% 14.0% 1.54
    Louisville, KY-IN Louisville 15.3% 18.9% 12.2% 1.55
    Memphis, TN-MS-AR Memphis 19.1% 26.5% 12.0% 2.20
    Miami, FL Miami 17.1% 32.4% 15.9% 2.04
    Milwaukee,WI Milwaukee 15.5% 29.5% 6.9% 4.30
    Minneapolis-St. Paul, MN-WI Minneapolis & St. Paul 10.9% 23.7% 7.6% 3.10
    Nashville, TN Nashville 15.4% 20.8% 12.2% 1.71
    New Orleans. LA New Orleans 17.4% 27.2% 13.4% 2.02
    New York, NY-NJ-PA New York 13.8% 20.1% 9.0% 2.24
    Oklahoma City, OK Oklahoma City 15.9% 16.8% 15.2% 1.11
    Orlando, FL Orlando 14.7% 18.5% 14.2% 1.30
    Philadelphia, PA-NJ-DE-MD Philadelphia 12.7% 26.7% 7.9% 3.36
    Phoenix, AZ Phoenix 16.3% 22.5% 13.0% 1.73
    Pittsburgh, PA Pittsburgh 12.2% 22.3% 10.7% 2.08
    Portland, OR-WA Portland 13.4% 18.5% 11.7% 1.59
    Providence, RI-MA Providence 13.7% 30.5% 11.7% 2.60
    Raleigh, NC Raleigh 12.9% 18.4% 10.0% 1.84
    Richmond, VA Richmond 11.6% 25.8% 8.9% 2.91
    Riverside-San Bernardino, CA San Bernardino 17.1% 34.6% 16.2% 2.13
    Rochester, NY Rochester 14.2% 33.8% 9.3% 3.62
    Sacramento, CA Sacramento 15.1% 21.5% 13.3% 1.62
    St. Louis,, MO-IL St. Louis 13.3% 27.8% 11.5% 2.42
    Salt Lake City, UT Salt Lake City 13.1% 22.3% 11.3% 1.98
    San Antonio, TX San Antonio 16.3% 19.1% 11.7% 1.64
    San Diego, CA San Diego 14.8% 17.4% 13.0% 1.34
    San Francisco-Oakland, CA San Francisco & Oakland 10.9% 15.7% 9.0% 1.74
    San Jose, CA San Jose 10.6% 12.6% 8.4% 1.49
    Seattle, WA Seattle 11.7% 14.7% 11.1% 1.33
    Tampa-St. Petersburg, FL Tampa 15.4% 21.3% 14.6% 1.46
    Virginia Beach-Norfolk, VA-NC Norfolk 10.6% 16.4% 9.7% 1.69
    Washington, DC-VA-MD-WV Washington 8.4% 19.2% 7.1% 2.69
    Average (Unweighted) 14.1% 23.3% 11.3% 2.18
    Data from American Community Survey, 2010

     

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

    Photograph: Downtown Detroit (by author)

    ———————-

    Note 1: "Historical core municipalities," which are defined here. One such city is designated in each metropolitan area, except in Minneapolis-St. Paul and San Francisco-Oakland. In each of the metropolitan areas, these are the core cities of the metropolitan area at the beginning of the great automobile-oriented suburban expansion. These cities represent at least the urban core. However, in most cases, these cities  include considerable post-war suburban development is not genuinely urban core, largely due to post-1950 annexations.

    Note 2: The data in this analysis is extracted from the American Community Survey for 2010 and the United States Census of 2000. The metropolitan areas for both years are as geographically defined in 2010. The total population figures are the population for which poverty status has was determined by the Bureau of the Census (in each year this was approximately 98 percent of the total population).

    Note 3: The city of Louisville reached its population peak of 390,000 in 1960. Its highest density was nearly 9,300 per square mile (3,600 per square kilometer) in 1950, when it had a population of 370,000 in 40 square miles (100 square kilometers). The suburban incorporating consolidation of 2000 left the city with under 600,000 population in 340 square miles and a population density of 1,700 per square mile (700 per square kilometer), one of the lowest core city population densities in the nation.

    Note 4: The Brookings Institution report compared its "primary cities" to suburbs for 95 metropolitan areas. The primary cities included some that were little more than small towns at the beginning of the great automobile oriented suburban expansion, such as Aurora (Denver), Mesa (Phoenix), Santa Ana (Los Angeles), Fremont (San Francisco-Oakland) and Arlington (Dallas-Fort Worth), which is not served by mass transit. Each of these municipalities is classified as suburban in this analysis.

  • freelance writer