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  • Millennials’ Home Ownership Dreams Delayed, Not Abandoned

    Eighty percent of Americans buy their first house between the ages of 18-34. While the Millennial Generation’s (born 1982-2003) delayed entry into all aspects of young adulthood has sometimes been characterized as a “failure to launch,” the generation’s  preference for single tract, suburban housing should become the fuel to ignite the nation’s next housing boom as Millennials  fully occupy this crucial age bracket over the next few years.

    According to a study by Frank N. Magid Associates, 43 percent of Millennials describe suburbs as their “ideal place to live,” compared to just 31 percent of older generations. Even though big cities are often thought of as the place where young people prefer to live and work, only 17 percent of Millennials say they want to settle  in one. This was the same percentage of members of this generation that  expressed a preference for living in either rural or small town America. Nor are Millennials particularly anxious to spend their lives as renters. A full 64 percent of Millennials surveyed, said it was “very important” to have an opportunity to own their own home.

    That hasn’t stopped a number of commentators from arguing that Millennials ought to prefer renting a loft apartment to buying a house and that   they would be better off doing so. For example, sociologist Katherine Newman, is “hoping that the Millennial Generation doesn’t set its sights on homeownership as a benchmark of economic stability, because it’s going to be out of reach for so many of them that it will just be a recipe for frustration."

    But survey research suggests it may be her hopes that will be dashed as the Millennial Generation matures. Eighty-four percent of 18-34 year olds who are currently renting say that they intend to buy a home even if they can’t  currently afford to do so. As Neal Coleman, a married Millennial in his mid-twenties, put it, "You’re freer when you own your own home, your own land. You’re not beholden to a renter’s contract, or lease. My feeling is that homeownership is an investment in being able to control your surroundings, to build a life for you and your family."

    Glenn E. Crenlin from the Runstad Center for Real Estate Studies at the University of Washington believes that “what we’re looking at in terms of the Millennial Generation is likely only a delay in homeownership of three to five years, not a long-term trend away from homeownership itself." He cites census data from the American Community Survey that shows a significant increase in homeownership among Millennials as compared to Baby Boomers when they were at the same age that Millennials are now.  “While 900,000 households in the Millennial Generation [now] own their own home, only 500,000 Baby Boomer households owned their own homes at the same point in their lives.”

    This data suggests the key to a resounding revival of America’s housing market may be the availability of affordable homes in neighborhoods with amenities that would appeal to Millennials and their young families. As always, safe streets and good schools are key components of such an environment. But so too are short commutes to work and nearby shops featuring the local products that appeal to younger customers.

    Such neighborhoods already exist in many close-in suburbs whose housing stock is in need of some renovation, or “gentrification,” from energetic owners committed to improving their local community. These attributes describe Millennials precisely. Their willingness to invest sweat equity in rehabilitating their first home should be rewarded in the financing process either by counting its value toward a down payment or using it to wipe out some of the outstanding student debt with which many of the members of this generation are burdened. Alternatively, homes could be offered to Millennials as rentals with an option to buy and with the cost of any renovations performed by the renter deducted from the down payment required to make the conversion from rental to ownership.

    Recently, National Association of Realtors President Moe Veissi announced that "Realtors are committed to ensuring that the dream of homeownership can become a reality for generations of Americans to come." To start making that dream come true for Millennials, realtors and those who finance home purchases need to create innovative new offerings tailored to the needs and wants of Millennials. Policies and programs that will  enable America’s most populous generation to own a  piece of the American Dream offer the best hope for igniting the home construction boom critical to boosting country’s still sagging economy.

    Morley Winograd and Michael D. Hais are co-authors of the newly published Millennial Momentum: How a New Generation is Remaking America and Millennial Makeover: MySpace, YouTube, and the Future of American Politics and fellows of NDN and the New Policy Institute. Full disclosure: Michael D. Hais retired in 2006 as Vice-President of Entertainment Research from Frank N. Magid Associates after a 22 year career with Magid and continues to do occasional work for the firm.

    New home photo by BigStockPhoto.com.

  • The Last Stop in Brooklyn

    Getting out was essential but I was stuck in Brooklyn until I could plot my escape…

    There was no such thing as “diversity” in white, working-class Bensonhurst in the 1950s. Only the Jews and the Italians.

    My tribe descending from Yiddish-speaking East European immigrants who settled in cramped tenements and worked in the schmatta trade of Manhattan’s lower east side.

    Moving – after the war – across the East River to apartments with bedrooms and bathrooms; a 50 minute commute to “the city” on the west end line of the BMT. Sharing the neighborhood with Southern Italian Catholics, a few Irish and fewer blacks and Puerto Ricans who worked for – but rarely lived among – us white “ethnics.”

    My father drove a cab six days a week and my mother typed for a living. We weren’t poor but sometimes for dinner my mother would serve macaroni with ketchup. Sally and Irv enjoyed themselves occasionally – they played penny poker with friends on Saturday night, she watched Liberace, he watched the Yankees, and now and then they would go out for “Chinese.”

    But much of the time they were frustrated and miserable. Irv was known to friends and cousins as “easy going” and – though he didn’t drink – could “snap” and do a lot of damage. Sally was always worrying and felt ashamed of her divorce in the 1940s. Her daughter, my “half” sister, twelve years older, lived with us and hated my father (for good reason).

    I was acting out at home – yelling, cursing and defiant – and in junior and senior high: cutting classes and on my way to becoming an official “truant” and dropout.   In the grip of adolescent anguish, by 14 I would ruminate incessantly about girls, particularly the local Italians, whose appeal was intensified by a taboo that would prevail into the 1970s and beyond.

    Even my pre-pubescent preferences leaned in that direction, stimulated by those lusty Italian ladies of Bensonhurst. Cleavaged, tight-skirted and toe-nail polished, they seemed more overtly libidinal than the Jewish women in the neighborhood. My fascination was a distraction from family problems and a way to imagine my escape.  I enjoyed other diversions, as well: scooting around the corner to play punchball or pedaling my bike to the Cropsey Avenue Park or buying an egg cream – for twelve cents – on Bay Parkway and 86thStreet.

    Rivalries erupted from time to time between the Jewish and Italian boys. I was involved in some of these courtyard fist fights. Though the violence was minimal (no weapons: just a few punches in the face, a headlock and then a submissive “I give.”), these neighborhood battles would not only contest virility but would reveal an ethnic-based class resentment.

    While many of my Italian peers became very successful academically, professionally and financially, it was the Jewish kids who were most eager to leave the old neighborhood (this is decades before the borough became trendy for Gen X bohemians). This ethic of upward and outward mobility, built into Jewish cultural DNA, has fashioned a Jewish-American Diaspora – from Hester Street to the “outer boroughs” to the upper west side, Hempstead Long Island, Southern California and points in between.

    For a time, I resisted the traditionally available route for a smart Jewish kid to get ahead.  Depressed and anxious, I was flunking out of school.  Developing instead the style of free spirit, a malcontent and a wanderer; a persona which required that I reject my parent’s values with a simplistic, snotty and condescending critique of them as vacuous and conventional.

    This fit right in with “generation gap” rhetoric and prevailing notions of liberation pulsing through the counter culture in 1967.  I could distance myself from my painful past and pathetic parents, disparage their “material values” – appalled, for example, by their choice to cover their sofa with clear, thick, sticky plastic – and fashion myself as superior.

    It would take awhile before I would better understand how my parent’s lives shaped my political values. By my late teens I saw as merely incidental the fact that they had joined the ranks of  New York’s unionized civil service. My father was forced out of taxi driving by his health, becoming a clerical for the state insurance fund; my mother putting her fast fingers to work for the city’s board of education.

    But a lonely 17-year-old had no time for such reflections.  On nights when I had trouble sleeping, I would slink out of my parent’s apartment to wander the streets. There was always the faint hope of an exotic sexual encounter, but most of these three-in-the-morning outings were a time for thoughtful solitude.

    Walking past the Coney Island Terminal – the last stop for Brooklyn-bound trains from Manhattan – just a few blocks from the Atlantic Ocean and the famous Boardwalk, Aquarium, Cyclone and Nathan’s, I was ruminating over my academic circumstances.

    In a few hours, I would be starting a new high school. (My parents and I had, in fact, deserted Bensonhurst – but only barely – relocating a few neighborhoods south to Brighton Beach which, ten years later, would take in thousands of Soviet émigrés and gain national fame as “Odessa by the Sea.”)

    I stayed up all night, walked along Surf Avenue as far as “Seagate,” (one of America’s oldest gated communities on the western edge of Coney Island) and – somewhere along the way – decided to stop screwing around in school.

    I could tell this was a big deal.  Later in life when I started to chart these pivotal events, I would mark my Surf Avenue expedition as the first of many.

    That semester in Lincoln High I stuck to my resolve, dropping bookkeeping and merchandising, flipping back to a college prep curriculum, re-taking failed classes – geometry, biology – and planning an extra year in high school.

    Though I would finish Lincoln with a weak overall record, my academic performance improved substantially the final two years – enough to let me shop around for a college which would recognize my potential.

    The last stop on my exit from Brooklyn would be the NYU psychology clinic for nine months of analytic psychotherapy with a grad student who would later become a successful New York analyst. Nowadays, concerned and proactive parents who detect problems in their kids are quick to refer them to psychologists for therapy and psychiatrists for medication. But this was my initiative and I jumped at the chance to see a “shrink.” Twice a week I rode the subway into lower Manhattan and – for 50 cents a session – began what would be decades of various forms of psychotherapy (including a brief period in which I aspired to be a therapist myself).

    Coincidentally – and ironically (given my ultimate career choice) – in 1970, the NYU psychology clinic building was located at 23-29 Washington Place which, 60 years earlier (then known as the Asch Building) was the site of the Triangle Shirt Waste Factory fire which killed 146 immigrant garment workers – mostly young Jewish women.

    I didn’t find out until years later that the building held such enormous historical significance; that this epic tragedy – which triggered fire code and workplace safety reforms across the country – took place at the spot where I was preparing for my life as an adult.

    Though oblivious to quite a bit happening around me (preoccupied with, among other things, overcoming my awkwardness with girls), I was however starting to absorb some of what was going on in the world.

    I could recount stories here about my cultural and political “awakenings” – tying my personal development to iconic historical events: the M.L. King and Bobby Kennedy killings, Woodstock (I was there), the Democratic National Convention police riot (I wasn’t there) – but I’ll save for another time my detailed reflections on this period in American culture and politics. Hasn’t enough already been said about how sex, drugs and rock ‘n roll changed our lives?

    Though I was linked to prevailing counter-culture sentiments – appropriately appalled by the War in Vietnam and other U.S. “atrocities” – my political views were confined (or should I say restrained) by a mainstream liberal tendency that I’ve maintained to this day.

    Sure I was impressed by Ivy League SDSers taking over the dean’s office – I respected their dedication to social causes (and the fun they seemed to be having). But my own working-class resentments may have been surfacing in reaction to what was then perceived – not always correctly – as the “privileged” student protesters of American middle class families.

    My working-class “liberal populism” reflected my parent’s political values pretty closely (though I couldn’t know this at the time).  One example would be my lack of resistance to Hubert Humphrey in the 1968 presidential.  The “no difference” argument didn’t hold as I lined up happily with New Deal Labor Dems to try to beat Nixon.

    I also took an intense interest in the reform movement in Eastern Europe against communist totalitarianism.  While I assume most American liberals and radicals at the time aligned with Czechoslovakians in their protest against Soviet tyranny, I felt a particular affinity for the young reformers.   My revulsion to Soviet Communism was sealed for life when Russian tanks and troops crushed Alexander Dubcek’s Prague Spring.

    I don’t want to make too much of all this – I was just a kid – but I always felt a slight pull to the political center and couldn’t quite wrap my head around radical-chic notions about the Panthers, Mao or a range of utopian ideas espoused by elements of the new left. Though I might have looked like one, I was not a revolutionary.

    Twenty years later, I would find a very nice fit within the American Labor Movement, navigating comfortably among the so-called old guard and the new generation of union militants.  I would develop a revisionist view of Sally and Irv, less critical of their values and more appreciative of how a few extra dollars in their pockets – thanks partly to the New York public sector unions – could make a big difference in workers’ lives.

    I would also take on a more balanced – you could say compromised – view on the potential for personal transformation and social change.  Economic conditions do shape peoples lives, but individual choice enters the mix.  America – at its best – gives you a shot (at least it used to) and you make of it what you will.

    As a Brooklyn, working-class, Jewish American – introspective and inclined toward progressive (but practical) politics – I feel lucky to have come as far as I have.

    I’ve spent my life trying to overcome an agitated mother and angry father.  By 10, I was bratty and foul-mouthed; by 13, sexually-fixated and withdrawn; by 16, defiant and delinquent.  To compensate, I would develop very subtle behaviors to conceal my feelings of isolation.

    But I’m getting ahead of myself.  By the end of the 1960s, these formations were incubating.  In the 1970s I would work on my narrative: success on my own terms and an ongoing struggle for American justice and personal salvation.

    I would also figure out that blaming parents or “society” for low self-esteem – even if it opens the door to self-acceptance – can only take you so far.

  • Cities, Cars, People: Is Changing Car Use a Function of New Urbanism?

    One cornerstone for urban designers and planners seeking to transform the polycentric or suburban city of the 20th Century into something resembling the high density city of the 19th was a cross-city comparison by Newman and Kenworthy and successors. [1]   They argued that this proved automobile dependence is a function of city density.  It followed that regulating for greater residential densities and increasing the capacity of public transport systems to avoid the congestion that would follow if people continued to drive themselves would improve the sustainability of cities.

    Of course, any comparison with the overcrowded and unhealthy cities of an earlier century is unfair: today’s density is achieved with higher standards of private and public space, and much enhanced transit and sanitation.  And many, probably the majority, of 21st century citizens in high income nations can escape the confines of the urban environment on occasional sojourns to country or coast (or beyond), unlike their 19th Century or developing world counterparts.  They can even find repose in the midst of 24/7 city hubbub in their own in-house media centres.

    But can we really build urban policy on the Newman and Kenworthy analysis?  Especially given evidence that car use is declining anyway?

    Questionable correlation
    There are still questions over the original analysis and it successors.  Cross-cultural effects, physical geography, differences in economic structure, incomes, wealth, and growth all intervene in the relationship between city density and car dependence.  And cause and effect are hard to pin down. 

    Perhaps more critical: the leap from observing relationships across cities at a point in time to regulating travel behaviour, housing ,and consumption choices into the future assumes that individual behaviour is a microcosm of collective behaviour. This fallacy of inference has long been recognised by the biological and sociological sciences.  And the likelihood of getting policy wrong by making such an assumption is far greater when dealing with populations of people, with their diverse circumstances, beliefs, values, and means, compared with, say, populations of penguins. 

    Is it this blind spot that has made it so much more difficult to get people out of their cars or their low density houses than anticipated by urban reformists?

    The city as a time warp
    One problem is that analyses of city density and car dependence are usually static.  Plotting urban form and transport consumption at a particular point in time – the mid/late 20th century in the Newman and Kenworthy case – embodies particular patterns of technology, wealth, and behaviour.  Consequently, their urban prescription is based implicitly on the 9 to 5 work day; single city centres that focus urban employment, exchange, and consumption; and the nuclear family with its distinctive housing and service demands. These are all urban artifacts that have been breaking down since the 1960s.

    But the times they are a-changing
    In a 2011 paper the authors acknowledge that things are changing as international evidence shows rates of car use beginning to decline in parts of the world.  A partial view of what they are changing from, though, sustains a deterministic explanation of the why and what they are changing to:

    “technological limits set by the inability of cars to continue causing urban sprawl within travel time budgets; the rapid growth in transit and re-urbanization which combine to cause exponential declines in car use; the reduction of car use by older people in cities and among younger people due to the emerging culture of urbanism and the growth in the price of fuel which underlies all the above factors”.[2]

    The view remains time-bound; even the reference to exponential decline is a simplistic inference of the relationship between public transport and car use taken from a cross section of cities in 1995. 

    Individual agency barely gets a mention.  Any description of an “emerging culture of urbanism” needs to be embedded in the reality of evolving patterns of wealth, income, and consumption and even in simple demographics to determine just how real and significant it is.

    Growing old and driving more
    What are the grounds for the claim that older people are reducing their car use, for example? I took a quick look at the evidence for New Zealand.  It is certainly not the case here.  The rate of growth in driving has been higher among older age groups than among younger – with decline most evident among the under 45s.  

    Is it so different in the other ageing societies from which Newman and Kenworthy draw their examples?

    Figure 1: Changes in Annual Driving Distance by Age, New Zealand 1990-2008

     

    Fewer kilometres doesn’t mean less dependence
    What does go a long way to explaining declining car travel in the aggregate is the fact that older people don’t drive as much younger people, and populations in western cities are simply getting older.  It’s simple maths – as the population ages car usage will go down, despite a greater propensity to drive among older cohorts. Again, look at the evidence from New Zealand:

    Figure 2: Automobile Dependence by Age Group, New Zealand 2004-2008

     

    Car usage appears to decline after age 44, rapidly after retirement age, 65. 

    Why does car use fall with age?
    There are a number of reasons why this may be so.  From 45 years on households have fewer transport-dependent children.  Mature families may have more localised social networks.  A greater share of recreation may be neighbourhood based.

    On retirement work trips disappear and incomes, discretionary dollars and consumption fall.  The capacity for more shared travel and trip planning increases as households age.  Diminished car use doesn’t necessarily mean that households are less automobile dependent.  They just doesn’t generate as much travel demand.

    These explanations don’t depend on particular urban designs.  Yet Newman and Kenworthy claim that diminished driving happens because “older people move back into cities from the suburbs”.  This is not consistent with the common observation of people’s preference to age in place.[3]  (For the New Zealand evidence, see my posting Ageing in the City).

    Moving into the centre – a one-way street?
    And their notion “the children growing up in the suburbs would begin flocking back into the cities rather than continuing the life of car dependence” rather simplifies a historically specific event: the transition of sons and daughters of the baby boomers from young adulthood, advanced education, and job seeking to the career and housing paths associated with their movement into more stable relationships.  As they age, it is highly likely that suburban preferences re-emerge, sustained by the capacity to purchase and operate a private vehicle.

    Generation X boosted inner city dwelling over the past two decades, and Generation Y will do so, to a lesser extent, for another decade.  The 15 to 24 year age group also coincides with the age of greatest automobile independence (illustrated for New Zealand in Figure 3).  But don’t expect this historically-specific phenomenon to sustain some sort of indefinite culture of city consolidation, and I wouldn’t bet the fiscal bank on expensive transit systems designed around the assumption that it will. 

    These are passing generations: their successors will be that much smaller and facing a somewhat different world.[4]

    Figure 3: Use of non-Automotive Modes by Age Group, New Zealand 2004-2008

     

    Who are we planning for?
    Of course, there are plenty of exceptions to prove the rule: but that is the point.  Diverse communities have diverse expectations and behaviours. And they are continuously changing, in composition, in form, and in behaviour. 

    The failure of modernity lay in its assumption of conformity and convergence, compounded by the conceit that we could regulate for it.  And planning for what is little more than a statistical construct – the auto-independent city – risks blinding us to the richness and opportunity of alternatives, of lifestyle, of environmental stewardship, of urban design, and of mobility.

    If we start with the behaviour of individuals and households our designs for sustainable cities may be less deterministic and our planning less didactic, better informed, lighter in touch, and a lot more effective in meeting the long-term needs of evolving urban communities.

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

    Aukland photo by Bigstockphoto.com.

    [1]            Newman, P and Kenworthy J (1989) Cities and Auto Dependency: A Sourcebook. Gower, Aldershot
                         Newman, P and Kenworthy, J Sustainability and Cities: Overcoming Automobile Dependence, Island Press, Washington, D.C.
    [2]        Newman P and Kenworthy J (2011) “‘Peak Car Use’: Understanding the Demise of Automobile Dependence”, World Policy Transport and Practice, 17, 2, 31-42
    [3]        Pynoos R, Caraviello R, and Cicero C (2009) “Lifelong Housing: The Anchor in Aging-Friendly Communities”, Journal of the America Society on Aging, 33, 2, 26-32
    [4]         For New Zealand, check the numbers

  • No, It’s the Deniers who Are Wrong

    Dennis Meyers is the Principal Economist at California’s Department of Finance. He has recently published two parts of what is promised to be a four-part series titled The Declinists are Wrong. He intends to convince us of “the fundamental strength of the Golden State’s dynamic and vibrant economy.”

    I was going to wait until the entire series was complete before commenting, but part one and part two are so poorly argued that I feel compelled to respond now.

    In part one, Meyers argues that California’s economy is strong because it is big. He points out that California represents about 12 percent of the United States population and is the ninth largest economy in the world.

    This is, as Mr. Spock would say, highly illogical. It just doesn’t follow that just because you are big you will have a “dynamic and vibrant” economy. Instead, we have lots of counter examples. Great Britain was once large, wealthy, vigorous, and powerful. Not anymore.

    Closer to home, we have Detroit. In 1950, Detroit’s population was 1.85 million, and it was America’s fourth largest city. Today, Detroit has a population of only 713,777. Its once-vigorous economy is not even a shadow of its former self. Its government is unable to even keep the lights on. It turns out that the lights do go off before the last person leaves.

    In part two, Meyers argues the California is wealthy and this assures a prosperous future. This is, of course, the same logical fallacy as in part one. Detroit was also once one of America’s richest cities.

    Meyers makes another mistake: He talks about average incomes. When it comes to incomes, averaging hides California’s real story, which is its increasing inequality and increasing poverty. California has two of America’s poorest cities. Fresno, with a poverty rate of 30.2 percent, is the eighth poorest American city over 200,000 population. San Bernardino, in the same category, and with a poverty rate of 34.6 percent, is second only to Detroit.

    One of the denialists’ favorite tactics is to find a data point where California does pretty well, and then argue that the selected data point is a reason for the state to do well. Call this a selective data bias. Of course, expanding from the specific to the general is a logical fallacy. This dog is brown therefore all dogs are brown.

    Typically, venture capital is the selected data. A huge percentage of the nation’s venture capital is invested in California, no doubt about it. The problem is that the nation’s venture capital is not all that much. In 2011, California received 51 percent of the nation’s $28.76 billion venture capital net investment — $14.76 billion, which represents less than one percent of California’s almost $2 trillion economy. Almost all of it went to four counties in the Bay Area.

    Meyers takes selective data analysis to a new zenith. He digs through California’s jobs data to find small sectors that are generating jobs at a faster rate in California than nationwide. For example, California’s Computer and Electronic Production Sector (a sub-category of Durable Manufacturing) created jobs at a rate of 2.1 percent in 2010, compared to a national rate of 1.1 percent.

    That’s all well and good, but over the past 12 months, California has lost durable manufacturing jobs. The growth that Meyers cites has only slowed California’s manufacturing jobs losses. Slowing decline is welcome, but it’s not a sign of imminent prosperity.

    And he adds a nice touch discussing mining:

    “The one high-wage sector in which national job gains outpaced those in California was Mining, which includes oil and natural gas production. There are several regions, such as Texas, that are blessed with generous deposits of these resources which California lacks. This advantage also shows up in Engineering Services employment…. The presence of healthy oil and natural gas resources typically generates demand for engineering consulting services related to exploration and extraction.”

    That’s just wrong. California has abundant oil and natural gas resources. In fact, recent California discoveries are roughly equivalent to the proven reserves of Nigeria, the world’s 10th-largest oil producer. We’ve chosen not to extract them. We’ve also chosen to no longer exploit California’s vast mineral resources.

    Chris Thornberg, Beacon Economics founder and economist, recently came up with a novel argument to deny California’s decline. He says that since recent jobs data have been revised upward, “we are in full recovery mode and not looking back.” The problem here is that the jobs data were revised from terrible to merely dismal.

    Look at the data. Below are two charts summarizing changes in jobs since the pre-recession peak. The first is the United States. California is the second. Both are pretty discouraging. Four and half years after the recession, the US is still down almost 5 million jobs. This represents about a 3.5 percent net decline. California, down almost a million jobs, is even worse — down a net 6.2 percent.

    Job Changes From the Peak

    California has also seen slower-than-US job gains over the past year. It is worse than that, though. California has lost jobs in durable manufacturing, non-durable manufacturing, and in the other services category, labeled as Personal, Repair, & Maintenance Services in the table. By contrast, the US only saw job losses in one sector over the past year, the information and technology sector.

    The very recent news is worse. In March, the most recent month for which we have data, California lost jobs while the nation gained. And the number of declining sectors has expanded to include construction, durable and non-durable manufacturing, transportation, warehousing, utilities, education/health, and leisure/hospitality.

    The signs of California’s weaknesses are all around us. With about 12 percent of the US population, we have about a third of the nation’s welfare recipients. It tops the nation in teen unemployment. Domestic migration has been negative for about two decades, after a century-and-a-half of being the destination for people from all over America.

    California’s weakness is the result of California’s choices. It has chosen to be anti-oil and anti-gas, and to unilaterally implement the nation’s most restrictive environmental regulations. California has elected to impose the nation’s most restrictive regulatory regime on all businesses and an onerous tax system. In short, California has chosen to be anti-opportunity and to have a weak economy. The denialists have chosen not to see California’s decline.

    Flickr Photo by Steve Rhodes: Jobless not Hopeless, Ask for my resume – Chris Stewart, Union Square, San Francisco 2009

    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.

  • More Unwelcome News for the California High Speed Rail Project

    Decidedly, early June has not been the best of times for the California high-speed rail project.

    On June 2, came a new poll showing that fifty-nine percent of voters would now oppose building high-speed rail if the measure were placed on the ballot again. Sixty-nine percent said that they would "never or hardly ever" ride the bullet train if it were built. (USC Dornsife/LA Times survey). The poll made news throughout the state, and indeed nationally. The public was treated to headlines such as "Voters have turned against California bullet train" (LA Times); "California high speed rail losing support" (Bloomberg); "California high speed rail doesn’t have the support of majority of Californians" (Huffington Post); "Voters don’t trust state to build high speed rail" (CalWatchdog) and "Poll finds California voters are experiencing buyers’ remorse" (Associated Press).

    Then, on the heels of the poll, came news that Central Valley farm groups have filed a major environmental lawsuit asking for preliminary injunction to block rail construction slated to begin later this year. Plaintiffs include the Madera and Merced county farm bureaus and Madera County. Still more agricultural interests in the Central Valley are reportedly threatening to sue.

    The Sierra Club, traditionally a loyal supporter of Gov. Brown, announced it was "strongly opposed" to Brown’s proposal to eliminate California environmental (CEQA) requirements for the high speed rail program and its Central Valley construction project. The Brown administration has made its proposal despite a solemn promise to the legislature by the Authority’s Chairman, Dan Richard, that they would never try to bypass CEQA ("We have never and we will never come to you and ask you to mess with the CEQA requirements for the project level").

    The multi-billion dollar HSR program is exactly the sort of large scale public works project that CEQA was designed to address, wrote Kathryn Phillips, Sierra Club’s Director in a June 5 letter to the Governor. "By removing a large-scale project such as high-speed rail from full CEQA coverage, the proposal grants the state a status that suggests it does not have to fully and seriously consider and mitigate environmental impacts. … In the interests of the environment and in the interest of rebuilding public support for rail in this state, we urge you in the strongest possible terms to abandon the proposal to weaken environmental review for the high-speed rail system," the letter concludes.

    Nor was this the end to unwelcome news for the Brown administration. A series of editorials and opinion pieces by some of California’s most influential columnists has reinforced the public’s growing disenchantment with the bullet train project and with the Governor’s stubborn determination to defy public opinion.

    In a June 3 commentary,  the Sacramento Bee columnist Dan Walters, a longtime observer of the legislative scene, refuted the Governor’s attempt to compare the high speed rail project with the iconic Golden Gate Bridge. Both projects, the Governor had said in a ceremony marking the 75th anniversary of the bridge, took much political courage and foresight, and both will go down in history as remarkable gifts to posterity.

    "Nice try, Governor," wrote Walters, but the comparison is misleading. The need for the Golden Gate crossing was clearly demonstrable and the bridge used revenue bonds to be repaid with bridge tolls. The need for a bullet train, on the other hand, "exists only in the minds of its ardent backers" and the Governor assumes that the federal government will finance nearly two-thirds of the project’s cost—an assumption that is nothing more than wishful thinking. Asked Walters, if the train is as financially viable as Brown and the Authority insist it is, why wouldn’t they do what the bridge builders did — float revenue bonds to be repaid from the train’s supposed operating profits. "Public works projects make sense when they fit well-documented needs. When they don’t, they are just political ego trips," Walters concluded.

    Daniel Borenstein, columnist and editorial writer for the Contra Costa Times, came to a similar conclusion. In pushing for the bullet train, he wrote, Gov. Brown is motivated by a quest for a legacy. But, the columnist warned, while the Governor strives to be remembered like his late father for the capital projects he leaves behind, he could derail the November tax measure by his "reckless exuberance for spending billions on high speed rail." "Does he really want to anger [the voters] when he needs them the most?" Borenstein asked.

    Perhaps the most devastating criticism of the Governor’s high speed rail initiative came in a June 8 editorial in the San Jose Mercury News, one of the Bay Area’s most influential newspapers. Entitled "High Speed Rail Plan is Delusional" the editorial has been syndicated in a number of Bay Area and Los Angeles Sunday papers. Follow this link to read it at the Mercury News website.

  • Enterprising States 2012: Beating the New Normal and Policies that Produce

    The following is an exerpt form a new report, Enterprising States, released this week by the U.S. Chamber of Commerce and National Chamber Foundation and written by Praxis Strategy Group and Joel Kotkin. Visit this site to download the full pdf version of the report, or check the interactive map to see how your state ranks in economic performance and in the five policy areas studied in the report. The full report include a case for the nation beating the "new normal" and lists of best-performing states by policy area, and an index to select the top 10 states likely to continue to grow.

    Troubled by economic stagnancy and high unemployment, many pundits and policy makers are referring to the U.S. economic malaise as the “new normal,” claiming that we have reached both technological and economic plateaus. To be sure, the relative weakness of the current recovery – arguably the weakest in contemporary history – does support the “new normal” thesis.

    Not everyone, or every state, accepts the notion of inevitable, slow growth and gradual decline. From the onset of the recession, some states have largely avoided the downturn. By the end of 2011, six states – North Dakota, Wyoming, Alaska, Utah, Texas, and Montana – showed more than 8% job growth over the past decade. Another 22 had shown some, although less robust, employment increases compared to 2001.

    More important still, nearly every state enjoyed some overall private-sector job growth between January 2011 and January 2012. Most critically, growth has spread to many states hardest hit by the recession, including Michigan, California, and Florida. The strongest job growth continued to take place in other states, notably Louisiana, Oklahoma, Texas, Utah, and North Dakota.

    The new geography of growth reflects many of the intrinsic strengths of the U.S. economy often missed by many policymakers and commentators. After a brief lapse, the country is already outperforming all its traditional high-income rivals in Europe, as well as Japan, as it has done for most of the past two decades. Key U.S. assets include surging agricultural and energy production, the general rebound in U.S.-based manufacturing, and unparalleled technological supremacy. The country remains attractive to both foreign investors and skilled immigrants.

    For the U.S. to be successful, this new geography of growth needs to extend across the 50 states and expand for long enough to significantly lower the high rate of unemployment. This will require something more than a single-sector focus. Attention must be paid to both basic and advanced industries since innovation and technology growth alone cannot turn around most regions and states. 

    More than anything, governments and business leaders need to appreciate how these sectors interact with each other. To be effective across all geographies, innovation must be applied to a broad array of industries, including but not limited to computers, media, and the Internet. Innovation and new technologies are also a means to unlock the productive potential of both mundane traditional industries and the service sector.

    States striving to do well in this environment face many barriers to fostering economic growth and creating jobs. These barriers include the high level of debt in many states; a growing skills mismatch between the workforce and the jobs available within a state; and outdated regulations and taxes that serve as barriers to free enterprise.

    Policies that Produce

    In the ebb and flow of the global economy, states can no longer rely solely on strategies of keeping costs low and providing incentives to attract footloose, commodity-based branch plants or offices. Instead, states must create the right business climate that allows companies and entrepreneurs to create 21st century jobs. 

    Dramatic changes in the scope and scale of the global economy have significantly altered the nature of foreign competition. Jobs are the new currency for leaders across the globe, and those who can create good jobs will own the future. With 95% of the world’s customers now living outside our borders, trade with other countries is a key part of our economy that will continue to be important long into the future. 

    Businesses need a highly skilled workforce – which includes many workers with certificates or two-year degrees – that is able to perform the jobs of a 21st century economy. States that are able to get students involved in the STEM fields – science, technology, engineering, and math – will be the most competitive. 

    Innovation, now the essential driving force for creating and sustaining economic opportunities, is much more multidisciplinary and global in scope than ever before. Innovation and market cycle times are much shorter and continue to accelerate. This makes it more important than ever that states provide the tools, support, and tax and regulatory environments for companies to continuously innovate without onerous delays and burdensome costs that put their entrepreneurs and businesses at a competitive disadvantage.

    Enterprising States 2012 takes an in-depth look at the specific priorities, policies and programs of the 50 states. Generally, the states fostering economic growth and creating jobs today – and those most likely to grow in the next decade – are defined by the following broad policy approaches:

    • Parlaying their natural resources and historically competitive industry sectors into 21st century job-creating opportunities
    • Paying attention to and addressing their competitive weaknesses
    • Supporting their companies’ business development efforts to reach an expanding global marketplace
    • Creating a fertile environment and workforce for a technology-based and innovation-driven economy
    • Investing in infrastructure – digitally and physically engineered – that meets the operating requirements of business and connects businesses to markets and customers
    • Getting government, academia, and the private sector to collaborate effectively to make sure that more new ideas developed by companies and in research labs scale up into industries
    • Taking steps to make existing firms more productive and innovative, creating an environment in which new firms can emerge and thrive
    • Maintaining an affordable cost of living for middle-skilled and middle-class employees
    • Promoting education, workforce development and entrepreneurial mentoring to continually fill the talent pipeline
    • Fostering an enterprise-friendly business environment by cleaning up the DURT (delays, uncertainty, regulations, and taxes), modernizing government, and fixing deficiencies in the market that inhibit private-sector investment and entrepreneurial activity.

    State policies and programs that most effectively promote job creation are rooted in market reality. This means building on the existing core industries and technological advantages of a state while pursuing opportunities in growing and emerging sectors. Building on and sustaining existing economic momentum remains a key means of guaranteeing success in the future.

    Huge increases in food exports, domestic energy investment, a revived manufacturing sector, a burgeoning tech sector, vital demographics, and increased investment from abroad create a strong base for long-term secular recovery of the U.S. economy. Rather than facing a dismal future of the new normal, we may actually be on the cusp of a recovery that could become one of America’s finest moments. The key to making this work, for the states and the nation, lies in policies that promote broad-based, long-term economic growth.

    Download the full report, or read the Enterprising States 2012 coverage at the National Chamber Foundation blog.

    Praxis Strategy Group is an economic research, analysis, and strategic planning firm. Joel Kotkin is executive editor of NewGeography.com and author of The Next Hundred Million: America in 2050.

  • The Evolving Urban Form: Cairo

    Cairo, Egypt’s capital, has long had some of the highest neighborhood population densities in the world. In the 1960s it was reported that one neighborhood had a density of 353,000 people per square mile (136,000 per square kilometer). The most recent data from the Egypt’s statistical authority (the Central Agency for Public Mobilisation and Statistics or CAPMAS) indicates that within the Cairo governate (the province in which the municipality of Cairo is located), the overall urban population density is 117,000 per square mile, or 45,000 per square kilometer. This means that urbanization in the Cairo governate is more than 1.5 times the population density of Manhattan (in New York city) and the ville de Paris.

    In recent decades, government officials have undertaken a program to encourage people to decentralize their living and work arrangements, and to move to several new towns in the area.

    Overall, the governates that comprise the Cairo metropolitan area have a population of approximately 20.5 million, according to a CAPMAS 2012 estimate. This is approximately the same size of metropolitan areas such as New York and Mexico City. The Cairo metropolitan area is comprised of three governates, which are principally urban, but which also contain millions living in rural areas:

    The governate of Cairo (Al Qāhirah) is the largest of these jurisdictions. Parts of the Cairo governate and the Giza government would be considered in the urban core, but the political jurisdictions in Cairo do not lend themselves well to conventional core versus suburban designations (Note 1). The Cairo governate is located on the east bank of the Nile River, and spreads many kilometers, especially to the East and South. This area includes the Cairo international airport and Heliopolis, one of the most affluent areas in the Cairo metropolitan area. The governate of Cairo also includes "New Cairo," an attractive new town located in the southeastern quadrant. This area includes a number of university campuses, multi-story condominium buildings and detached housing. Eventually, New Cairo is expected to have 4,000,000 residents, though the new town is little more than a decade old and still has a modest population of approximately 125,000.


    New Cairo: University

    The governate of Giza (Al Jīzah) is located on the west bank of the Nile River and, in reality, constitutes a continuation of the urban core. Giza is home the Great Pyramids, which rise on a hill from the western urban fringe. Giza is also home to considerable informal housing development   much different than generally found in other megacities. Much of the development is high rise, with concrete block buildings rising seven and more stories from the streets. Generally, the streets are so narrow and irregular that they are not shown on local maps. The governate of Giza also includes the "6th of October" new town, located on the west side of the hills on which the Great Pyramids stand. Eventually, 6th of October is expected to have a population of 3,000,000, though it appears to be less than 500,000 today. The governate of Giza also includes the Sheihk Zayed new town. These new towns have commercial activities, multi-story condominiums and detached housing.


    Sheikh Zayed: Detached Housing


    Giza: Informal Housing

    The governate of Kalyoubia (Al Qalyūbīyah) is located to the north of the Cairo and Giza governates. Unlike Cairo and Giza, Kalyoubia has a majority of its population living in rural areas. However, the continuous urbanization of Cairo stretches into the governate and includes more than 1.5 million people, much of it in the municipality of Shubrā al-Khaymah.

    Slowing Growth: Like many of the developing world’s megacities, Cairo has experienced its strongest growth in the half century after World War II. In 1937, the metropolitan area had a population of under 3 million. This more than doubled to 7 million by 1966, and again to 14 million by 1996.  From 1996 to 2012, the metropolitan area added 5.5 million people (Note 2). However, more recently, the growth rate has slowed considerably. Between 1996 and 2006, metropolitan Cairo added 28 percent to its population (an increase of more than 4,000,000). However the 2006 to 2012 rate would indicate that by 2016, Cairo is likely to add only 13 percent to its population (approximately 2,000,000 people).

    While the governates of the Cairo metropolitan area do not lend themselves well to urban versus suburban population analysis, Cairo clearly has expanded geographically as it has added population. The more central governates of Cairo and Giza have continued to grow, however much of the growth has been in peripheral areas, such as New Cairo, 6th of October and the Helwan area, south of Cairo on the Nile (in the Cairo governate).

    Where the Growth is Occurring: Even so, the governate of Cairo accounted for only 19 percent of the metropolitan area’s growth from 2006 to 2012, down from 34 percent in the 1996 to 2006 period. The governate of Giza had the greatest growth between 2006 and 2012, at 47 percent of metropolitan growth, an increase from the 39 percent of 1996 to 2016. The governate of Kalyoubia accounted for 34 percent of the growth from 2006 to 2012, an increase from 26 percent between 1996 and 2016 (Figure 1).

    Cairo’s Physical Expansion: Even though the suburban versus core analysis is difficult to gauge from governate data, a paper by Mootaz Farid and Hatam Al Shafie of Cairo University contains depictions of the urban footprint from 1943 to 1982. In each of the depicted years, the continuous urbanization of Cairo covers only a miniscule share of the present urban footprint. Figure 2 provides an estimate of the urban footprint in 1968 compared to the 2012 urban footprint, indicating that much of the growth was on the periphery.

    The Key to Decentralization: The key to making the new towns successful in attracting more residents lies with the dispersion of employment. There is a wealth of international experience to indicate that "self-sufficient" new towns really cannot be self sufficient if they are within commuting distance of the rest of the urban area. In the case of Cairo (as elsewhere) it will prove critical to ensure that there are substantial local employment opportunities for new town residents, although it is likely that a serious degree of self sufficiency may prove difficult to achieve.

    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.”

    Top Photograph: The Great Pyramid (Giza). All photos by author

    ——

    Note 1: In the past decade there  have been reorganizations of governates in the Cairo metropolitan area. This article uses three present governates for all years.

    Note 2: Earlier population data is from http://statoids.com/ueg.html.

  • Is Perestroika Coming In California?

    When Jerry Brown was elected governor for a third time in 2010, there was widespread hope that he would repair the state’s crumbling and dysfunctional political edifice. But instead of becoming a Californian Mikhail Gorbachev, he has turned out to be something more resembling Konstantin Chernenko or Yuri Andropov, an aged hegemon desperately trying to save a dying system.

    As with the old party bosses in Russia, Brown’s distinct lack of courage has only worsened California’s lurch toward fiscal and economic disaster. Yet as the budget woes worsen, other Californians, including some Democrats, are beginning to recognize the need for perestroika in the Golden State. This was most evident in the overwhelming vote last week in two key cities, San Diego and San Jose, to reform public employee pensions, a huge reversal after decades of ever more expansive public union power in the state.

    California’s “progressive” approach has been enshrined in what is essentially a one-party state that is almost Soviet in its rigidity and inability to adapt to changing conditions. With conservatives, most businesses and taxpayer advocates marginalized, California politics has become the plaything of three powerful interest groups: public-sector unions, the Bay Area/Silicon Valley elite and the greens. Their agendas, largely unrestrained by serious opposition, have brought this great state to its knees.

    California’s ruling troika has been melded by a combination of self-interest and a common ideology. Their ruling tenets center on support for an ever more intrusive, and expensive, state apparatus; the need to turn California into an Ecotopian green state; and a shared belief that the “genius” of Silicon Valley can pay for all of this.

    Now this world view is foundering on the rocks of economic reality. The Soviet Union armed itself to the teeth and sent cosmonauts into space while the public waited on line for toothpaste and sausages. Similarly, Californians suffer from a combination of high taxes and intrusive regulation coupled with a miserable education system — the state’s students now rank 47th in science achievement — and a rapidly deteriorating infrastructure.

    The current recession has been particularly severe, continuing at a more acute level than in most states, including places like Florida and Arizona, which also suffered greatly from the housing bust. California now has the third highest unemployment rate in the U.S., beating out only its co-dependent evil twin Nevada and Rhode Island. At the same time, according to a recent Public Policy Institute of California study, inequality in the devoutly “progressive” state has been growing much faster than in the rest of the country.

    The most auspicious sign of grassroots support for perestroika was last week’s smack down of public employee unions in San Jose and San Diego. For the first time in recent memory, the unions suffered a humiliating defeat — the measures passed by a margin greater than two to one — as voters endorsed deep reform of the pension burdens bringing these cities to the brink of bankruptcy. Backed by its Democratic mayor, Chuck Reed, San Jose’s measure B aims to reduce pension benefits for both future and current hires. Unsurprisingly, the public employee have threatened to sue.

    This may precipitate what could become the California equivalent of a prairie fire. Like San Jose and San Diego, many other California cities are on the verge of bankruptcy. Union-dominated Los Angeles could be the next big domino to fall, according to the city’s own chief administrative office, and has been forced to boost its bonded indebtedness and cut back on critical infrastructure spending to stave off the inevitable.

    As services drop and taxes rise — California’s already are among the nation’s highest — voters increasingly realize that one of the main problems is over-generous pensions for public sector workers. This is reflected in the sad reality that the state consistently competes with Illinois for the worst bond rating in the country. Most recently, the state upped its deficit estimate to $16 billion from a $9.2 billion estimate made just in January.

    Brown could have used this mounting crisis to reveal his inner Gorbachev. But instead, he has so far chosen a classic Chernenko-Andropov muddle. He proposed a mild pension reform but could not persuade his own party — aware that vengeful the unions will be around long after the old man is gone — to consider it.

    More recently, the governor showed his own inner Stalinist by jettisoning his original more modest tax increase proposal for a more radical teachers’ union measure that would raise California’s income tax to the highest in the nation.

    Brown’s “millionaire’s” tax, as it is being marketed, starts with individuals making $250,000 or more. Right now it is still ahead in the polls but seems to be losing ground. Joel Fox, a longtime anti- tax activist, senses that people in the state — as evidenced by the San Jose and San Diego votes — are beginning to realize that the tax increases are designed primarily not to improve the schools, keep the parks open or pave the roads but simply to bolster public-sector pay and pensions.

    This collective turning on of the civic light bulb comes at the same time that the primary economic delusion that has dominated progressive politics — the myth of the high-tech savior — has fallen into disrepute. Under Brown and his monumentally incompetent predecessor, Arnold Schwarzenegger, state officials maintained a belief that Silicon Valley’s money machine would be able to bail the state out of its budgetary morass.

    In this context, the underwhelming performance of Facebook’s IPO last month takes on major political significance. Not only will there be fewer puerile billionaires to inflate the Valley real estate market and bankroll “progressive” candidates and causes, scores of hip wannabe start-ups suddenly may find themselves no longer the darlings of venture capital investors or the stock market. Like California’s budget itself, the social media boom is now looking like something of a fraud.

    Another potential casualty of the weak economy could be the green drive to remake the state into a kind of Ecotopian paradise. This is evident in growing opposition to some of Brown’s most beloved initiatives, notably a fantastically expensive high-speed rail system. Sold in the euphoric progressive atmosphere of 2008, support has collapsed as the price tag has soared and the state’s grievous fiscal problems have worsened. The most recent LA Times poll currently finds nearly three in five California voters would like to see the project scrapped.

    Once unassailable politically, the environmental community is fracturing between those thoroughly allied to rent-seeking capitalists and the Democratic Party and those still primarily concerned with preserving nature. The Sierra Club, for example, objects to Brown’s attempt to exempt the high-speed line from environmental review. Some Greens also object to Brown-supported projects like the massive tortoise-roasting solar farm planned for the Mojave Desert.

    Both Brown and the Greens also have failed to deliver many of the much ballyhooed “green jobs” that they insisted their policies would produce. Instead they may soon have to confront an electorate increasingly skeptical about green fantasies and more concerned with a persistently under-performing economy.

    Clearly, the conditions for a California perestroika are coming into place. Still missing is a coherent vision — from either Independents, centrist Democrats or Republicans — that can unite business, private-sector workers and taxpayers around a fiscally prudent, pro-economic growth agenda. Yet it’s clearly good news that , for the first time in a decade, there’s hope that the whole corrupt, failing California political edifice could come crashing down, providing a renewed hope for recovering the state’s former greatness.

    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 Forbes.

    Jerry Brown photo by BigStockPhoto.com.

  • Counting Trees in San Diego

    Recently, I came across “Taking Inventory of County’s Trees” in the San Diego Union Tribune, an article that describes Robin Rivet’s “ambitious effort to map every urban tree in San Diego County”. Rivet is an urban forester-arborist at the Center for Sustainable Energy California and she ”aims to quantify the value of all local trees and make a statement about a huge but often underappreciated resource.” My concern is that this article may be alerting San Diegans to more regulations, costs and loss of property rights coming our way.

    Through California’s legislative sustainable development and smart growth initiatives SB375 and AB 32, look for the implementation of ‘urban forests’ to be another area of focus by the State of CA and environmental NGOs to significantly reduce GHGs by 80% to below 1990 levels by 2050.

    “The website keeps a running tab of the trees’ “yearly eco impact.” The nearly 300,000 trees listed as of Thursday, according to the site, have reduced 19,622,883 pounds of CO2 from the atmosphere, conserved 83,213,745 gallons of water, conserved 8,502,988 kilowatts of energy, and reduced 46,244 pounds of pollutants from the air.”

    This project is being funded by CalFire. Why? Details in the CalFire AB32 Scoping Plan for Forestry reveal that CalFire is looking to assess CO2 sequestration in all forests and range lands across the state in order to mitigate GHG emissions. Capturing a map of San Diego County’s canopy becomes useful data to the state of California that is about to launch their highly controversial and lucrative Cap and Trade auction in November. The CalFire AB32 Scoping Plan states:

    “Unlike engineered projects or measures that reduce emissions at a point source (e.g. stack or tailpipe), the forest sector sequestration benefits are accrued through tree growth over large areas of the landscape, including urban areas. With such a large land base carbon benefits need to be accounted for in average stocks (amount of carbon stored).”

    Not only has the state of California legislated the reduction of GHG emissions through AB 32, it is mandating General Plan changes via SB375. SB375 is requiring municipalities (MPOS) to update their Regional Transportation Plans (RTP) and local land use plans to “reverse sprawl” with the intent of mitigating GHG emissions. Through the forest sector, CalFire suggests that if landowners saw the economic value of carbon sequestration, they would resist selling their land to developers and choose to participate in the carbon off-set market instead.

    “The creation and maintenance of carbon markets for forest carbon, both
    voluntary and compliance-based, will increase sequestration by providing
    landowner incentives to increase carbon stocks on their ownership. The value of
    carbon at $10/t is sufficient to interest landowners in changing their management
    practices to increase carbon storage. Updating the current California Climate
    Action Registry (CCAR) Forest Protocols can create the opportunity for a larger
    number of forest landowners to participate in carbon offset markets. The success
    of these markets will depend upon quality of the carbon that is being sold, which
    will depend upon the accounting principles applied in development of forest
    protocols used to verify and register carbon sequestration projects.

    Other incentives include providing landowners reduced tax or regulatory liabilities, which will encourage the retention of working forest landscapes, instead of land division and development. Additional opportunities may exist for subsidies or carbon taxes/fee revenues collected and reinvested in carbon sequestration projects.”

    The CalFire AB32 Scoping Plan for Forestry is full of useful information that can help us to understand and assess future regulations that might develop from their global warming mitigation and adaption schemes.

    “Tree planting under the urban forestry strategy has direct overlap with the goals
    of the “Cool Communities” strategy in the Land Use sector to encourage the development of communities that have lower surface temperatures. Urban tree planting may also have overlap with the Land Use sector strategies for “Landscape Guidelines” and “Smart Growth”. In addition, the forest sector Reforestation mitigation measure would require developers to provide 1 to 2 acres of reforestation as mitigation for every acre lost to development when converting forest land to other uses.”

    Based on what I know about sustainable development and smart growth, I propose we watch out for the adaptation portion of this urban forestry implementation plan in San Diego.

  • From California to Canberra, the Real Class War

    Just under a year before she crawled over Kevin Rudd to claim the Prime Minister’s office, Julia Gillard visited the United States in her then capacity as Australia’s Education Minister. Her stay in Los Angeles took in the Technical and Trades College, where she brushed up on the teaching of “green skills,” a subject close to her heart. “Here in Los Angeles," she told the media that day, “under the leadership of Governor Schwarzenegger, this is a state that is looking to the future; this is a state that is leading on climate change adaption; and this is a state that’s leading on green skills and I’ve seen that on display today at this college.”

    The date was 5 October 2009. As far as dud forecasts go, these platitudes don’t match Lincoln Steffens on the Soviet Union – “I’ve seen the future and it works” – but they’re bad enough. Today Schwarzenegger has gone, his reputation in tatters, and California, reduced to issuing IOU’s to pay its bills, teeters on the brink of bankruptcy.

    Australians have long seen California as a trend-setter, given the common Anglophone culture and semi-arid climate on the Pacific Rim. There’s also the shared love of motor car mobility and suburban independence, and a voracious appetite for tech and entertainment products pouring out of Hollywood and Silicon Valley. But these days the Golden State is just as likely to fill Australians with unease. They find themselves infected with a strain of the green-welfare-utopianism that brought California to its knees.  

    Sure, this doesn’t show up in official statistics; at least not yet. Gillard and Treasurer Wayne Swan never tire of reminding Australians they are “the envy of the world”: unemployment at 4.9 per cent, GDP growth of 3 percent (or more) this financial year, government debt to GDP ratio of just 23 percent and a projected budget surplus in 2013. In April, the IMF predicted that Australia would be the best performing advanced economy over the coming two years. The government and its allies in the elite media are hyper-vigilant about containing discussion of the nation’s affairs within this bounteous frame.

    It’s hard to reconcile Australia’s position with the plight of California, which routinely attracts phrases like “basket case.” Unemployment is running at around 11per cent, significantly above the national US average of 8.2 percent, and Governor Jerry Brown is struggling with an intractable budget deficit of around $US20 billion. Thousands of teachers and other public servants are being laid off, and revenue imposts are driving businesses to other states. One commentator went so far as to say “California’s situation is in some ways more worrisome than Greece’s,” since it represents 14 per cent of the American economy, while Greece only accounts for 2 per cent of the EU.

    But if any of this is supposed to make Australians feel good about their lot, it doesn’t. However benign the headline figures look, they’re in a restive mood. The Westpac-Melbourne Institute index of consumer sentiment continues to languish in negative territory, and the latest Roy Morgan Monthly Business Confidence Survey recorded a 57 percent fall in businesses which believe “Australia will have good economic conditions in the next 12 months”. Astonishingly, the recent Boston Consulting Group consumer sentiment survey found that Australians feel less financially secure than the average European, even less secure than Spaniards, whose economy is in meltdown.

    Nor is much love flowing to Gillard and Swan. Stuck in opinion-poll hell – support for the government has been around 30 percent for over a year – they would be thrown out in a landslide if an election were held today.  

    Why are Australians so low when their economy is so high? The chattering classes are in a funk over this conundrum. People should be showering this fine progressive government with praise, they insist. In patronising tones so familiar around inner Sydney and Melbourne, one columnist scribbled “we are, as a nation, chucking a full-on, all-screaming, all-door slamming teenager temper tantrum … Maybe it’s time we grew up and realised how good we’ve got it.” Others suggest more sober explanations.

    Topping the list is Gillard’s absurd $23 a tonne carbon tax, effective from 1 July this year. Most pundits are loath to concede that, in international terms, the measure is quite radical and Gillard only embraced it to appease the Greens. From the comfort of their armchairs, they dismiss fears about the tax as irrational. After all, Treasury modelling indicates that the effect on growth will be minuscule and, under the government’s package, households will be over-compensated for cost of living increases. If only the Opposition would drop its inflammatory attacks, they maintain, the pessimism would disappear.

    Some blame the negative wealth-effect of sliding house prices and shrinking superannuation funds, battered by stock market volatility.  

    No doubt, such factors do contribute to the malaise, along with loss of faith in a parliament hit by financial and sexual scandals implicating the Speaker and a Labor MP. But opinion-makers who refuse to look beyond the headline figures are concealing the larger story. Across a range of traditional industries, workers grasp that the economy is shifting in directions that could erode the foundations of their mobility and independence. Understanding more than they are given credit for, they fear that the current Labor Government, beholden to Greens and academic elites, and hiding behind stodgy rhetoric, is driving or exploiting those shifts. The most visible manifestations of this are the carbon tax and other green agendas.

    These workers have cause to be worried, if they glance across the Pacific. In his close analysis of the California crisis, US demographer Joel Kotkin starts with the premise that “California consolidated itself as a bastion of modern progressivism.” Drawing on extensive evidence, Kotkin exposes the suffocating influence of radical environmentalists, progressive high-tech venture capitalists, Hollywood moguls, and civil rights attorneys, who have given California escalating energy costs – 50 per cent above the US average and rising – and dwindling fossil-fuel energy exploration and production, America’s sixth highest tax rates, also rising, coupled with proposals to skew the tax system in favour of the super-rich against microbusinesses, the third heaviest tax burden on business out of the 50 states, enormous subsidies and tax breaks for solar and other renewable-energy producers, and complex labour laws.

    “California’s green policies”, says Kotkin, “affect the very industries – manufacturing, home construction, warehousing, and agribusiness – that have traditionally employed middle and working class residents”. With reason, Kotkin calls these developments The New Class Warfare. There is indeed a class dimension to discontent in the United States and Australia, and it has nothing to do with the confected class-war rhetoric coming out of the Obama Administration – “we must all pay our fair share” – and the Gillard Government –“spreading the benefits of the [mining] boom”.  

    John Black, a demographic profiler and former senator, points out that since Labor came to power in 2007, “public administration, education, and health sector jobs have accounted for almost six out of ten of the 760,000 jobs created, instead of the longer term two out of ten.” The health industry alone has grown by 260,000 jobs in four years, a figure that equates to some 2.6 per cent of the whole workforce. Over those years, manufacturing, which accounts for 8.3 of total employment, lost close to 100,000 jobs.

    Last year, “health care and social assistance” replaced “retail trade” as the largest occupational category profiled by the Australian Bureau of Statistics, while “manufacturing” along with “agriculture, forestry and fishing”, traditional blue-collar hubs, were the only categories to contract. "Education and training" and "public administration and safety" ranked higher than "transport, postal and warehousing" and "wholesale trade".

    Job-shedding by a succession of manufacturing, retail and construction firms has dominated recent news bulletins. According to Black, if not for growth in the publicly-funded sector, the employment rate would be closer to 7 than 5 percent.

    If Gillard and Swan are to be believed, such shifts are beyond their control. In a major address on the economy in February, Gillard explained that “the level of the dollar – and the pace of its rise – has broken some business models and forced economic restructuring”. Displaying Marie Antoinette levels of indifference, she declared “these are powerful, economy-wide transformations, perhaps best thought of as ‘growing pains’.” If you thought this posed a complex challenge, think again. “The equation is simple,” she said, “skills brings jobs, and skills bring job security.”

    Here Gillard genuflects to the progressive dogma that education is the answer to every economic problem. It’s hardly surprising that a movement dominated by academics, researchers, educators and university administrators should claim ownership of the path to salvation. But Gillard has it back-to-front. In activities like manufacturing, economic growth brings jobs, which bring skills, not the other way around.

    It’s true that the mining boom and Australia’s safe credit rating have driven the dollar to near or above parity with the greenback. It’s also true that this has exerted pressures on the export and import-competing sector. But government action has intensified these pressures. Labor is ideologically committed to social gentrification and expansion of the white-collar professional classes, particularly in social services, even if this means transferring resources from productive industries that will slow down, stagnate, shrink or vanish.

    While Gillard and Swan would never be so candid, their allies in Australia’s bulging university system, the public sector unions and the Greens aren’t so inhibited. Nor are Labor figures like former Prime Minister Paul Keating, who criticised the Opposition’s attack on the carbon tax in these startling terms:

    … in this country, 80 per cent of people work in the tertiary economy, in services, in the industry like – as we are tonight, in the service economy. And, the new industries, the green industries, are service industries, not the old manufacturing. Manufacturing’s moved to the east [meaning East Asia]. It’s the service industries that are the new growth industries. So, to turn your back on the mechanism which allocates the capital out of the old industries and into the new ones is to turn your back on the future.

    If Gillard Labor cared about blue-collar and other routine jobs, not to mention the small business sector, they would switch to policy settings that spur growth in industries like manufacturing, retail, transportation and logistics, construction and forestry. Cutting spending, reducing company and other business taxes, junking green taxes and green tape, withdrawing from the debt market and liberalising industrial relations would hand employers more flexibility to cope with the high dollar and low cost competitors in Asia.

    Clearly, this isn’t the government’s priority. Instead they have introduced a carbon tax and a mining tax, and in last month’s budget dropped a proposed cut in company tax, they are throwing at least $2.7 billion at various green schemes, not including the “winner picking” $10 billion Clean Energy Fund, they have adopted a Renewable Energy Target of 20 per cent by 2020, they are pouring vast sums of money into higher education to the tune of $5 billion a year including an additional $5.2 billion in the budget, some of which will find its way into a maze of “sustainability institutes,” they have lifted the cap on university places and embarked on a radical plan to expand the proportion of 25 to 34 year olds with a bachelor’s degree to 40 per cent by 2025, they have re-regulated the labour market and imposed a system which, according to the chairman of BHP-Billiton, “is just not appropriate and doesn’t recognise today’s realities,” they have laid the groundwork for new multi-billion-dollar programs in aged, disability and mental health care, employing tens of thousands of new carers, and they have endorsed an industrial tribunal decision that boosts the pay of these workers by up to 65 percent.

    California here we come.

    John Muscat is a co-editor of The New City, where this piece first appeared.

    Photo of Australian Parliament House by BigStockPhoto.com.