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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    Photo by 3Ammo

  • Alice Bieszczat and Joe Schwieterman

  • Another Congressional Cut for High Speed Rail

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

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

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

  • A Most Undemocratic Recovery

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    FDR fireside chat statue photo by Tony the Misfit

  • A Divided Vietnamese Community in France and Its Political Repercussions

    Several countries with the largest Vietnamese populations today – United States, Canada and Australia – did not have such communities until after the Vietnam War. France, the largest non-English speaking community in the Vietnamese diaspora with about 300,000 strong, illustrates a much more complex tapestry of Vietnamese immigration that started well before the Fall of Saigon in 1975.

    The diversity among the migrant stock from Vietnam has led to a notably divided Vietnamese community in France. This has worked against attempts to develop a sense of ethnic solidarity in the community over the years.

    The Vietnamese first began immigrating to France in large numbers in the early 1900s as a direct result of French rule over Indochina from 1885 to 1954. With colonial ties to the West, the Vietnamese initially migrated to France as soldiers, workers and students long before the arrival of the refugees.

    As a result, there were already tens of thousands of Vietnamese immigrants living in France even before the onset of the Vietnam War. At least 20,000 Vietnamese workers had immigrated to France during World War II alone. These pre-war Vietnamese immigrants differed greatly from the post-war Vietnamese refugees that followed them.

    The older wave of Vietnamese immigrants did not share the same anti-communist fervor as the newer wave of Vietnamese refugees who had been forced to flee their homeland after 1975. In fact, some of the older immigrants openly supported the communist ideals and even desired to one day return to communist Vietnam.

    The existing pro-communist sector of French Vietnamese community in France soon fell into conflict with the staunchly anti-communist new wave of Vietnamese refugees after the Vietnam War.

    According to some sources, this division initially manifested through violence in the late 1970s with several Vietnamese on both sides being hospitalized after physical altercations. Today, the Vietnamese community in France is still divided, but the division no longer expresses itself through overt violence but instead through covert avoidance.

    Recent conversations with those in the community depicted much calmer relations involving the evasion of politics in Vietnamese public places such as cultural events. Yet separation within the community still exists. There are, for example, two completely separate events for holidays such as Tết (i.e. Lunar New Year); one for the pro-communists and one for the anti-communists.

    The apparent political division among the Vietnamese in France also has made it difficult to progress as one cohesive ethnic community with political influence. The Vietnamese in France have excelled in economic and educational achievements as individuals. However, at the community level, they have been unable to achieve any notable successes.

    The pro-communist vs. anti-communist division in France explains, to a certain extent, the lack of a Vietnamese voice in French politics. In the United States where most Vietnamese came after 1975 as refugees and are more politically homogeneous, the community has attained various political seats in several states. Former U.S. Representative Joseph Cao of Louisiana is just one of nine Vietnamese Americans who either had or currently have prominent political positions in the federal government.

    In contrast, Vietnamese representation in French politics has been largely absent. Some Vietnamese in France commented on how, unlike in the United States, there were no well-known Vietnamese politicians in their country.

    In an attempt to change the Vietnamese political track record in France or lack thereof, the Union des Vietnamiens Republicains (i.e. Union of Vietnamese Republicans) recently held an open debate in Paris to address issues concerning the Vietnamese community and the Asian population, in general, in France.

    The UVR, which was formed in the last couple years, seeks to act as a liaison between the Vietnamese community and the Union pour un Mouvement Populaire (i.e. Union for a Popular Movement), a center-right political party in France, which openly opposes the largest opposition group, the Parti Socialiste (i.e. Socialist Party) as well as the Parti Communiste Francais (i.e. French Communist Party), a party supported by the pro-communist Vietnamese.

    Given their challenging political situation, what does the future hold for the Vietnamese community in France? Although the relationship between the pro-communist and anti-communist Vietnamese in France has become less violent over the years, it is difficult to see any signs of ethnic solidarity in the community given the ongoing opposition between the two political camps.

    Only when this divide in the community is breached will the Vietnamese in France be able to achieve the political voice of their American cousins.

    Jane Le Skaife is a doctoral candidate in the Department of Sociology at the University of California, Davis. She is currently conducting her dissertation research involving a cross-national comparison of Vietnamese refugees in France and the United States.

    Photo by wakingphotolife.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    This piece originally appeared at Forbes.com.

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

    Official White House Photo by Pete Souza

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  • “Art, Design, Portland” District Offers Opportunities To Work, Play, and Profit in Portland’s New Economy

    In a dreary economy, with record numbers of Portlanders unemployed and underemployed, the shared work space is hoping to tap into the city’s DIY sensibility to foster innovation, creativity and a new connection to work. But similar projects have tried here before — and failed. Will ADX’s new approach pencil out?

    Located on the edge of Portland’s eastside industrial district, ADX (Art Design Portland) occupies a 10,000-square-foot warehouse once filled by Apex Manufacturing. The warehouse has since been gutted and renovated, with the letters ADX printed across its façade.

    Inside, the bright space smells of new paint and freshly cut wood. “It’s our first day” says founder Kelley Roy as we walk to the makeshift interview area — three wooden chairs set in front of the company’s gallery space. A slow-moving Labrador trails us and lies down at Kelley’s feet.

    Kelley ticks through her professional history as if one gig could only have led to the next: Program Manager for Metro, green building developer, founder of food source and prep company Get Fresh NYC, author of Cartopia: Portland’s Food Cart Revolution, and now founder of ADX. “Everything I’ve done is about bringing people together over something I cared about,” she says. “Bringing people back together and giving them a place to work, to make their own jobs, do meaningful work. It’s just important to me.”

    Her business partner, Eric Black, joins us a minute later. Trained as an architect, Eric spent the past seven years at the architecture firm Yost Grube Hall in downtown Portland. From there he moved on to found the first iteration of ADX, located in a 3,000-square-foot building on southeast 9th avenue. This first version of ADX was a shared workspace and shop for architects, with 1,000 square feet of gallery space.

    The pair met when Kelly needed space to show work for a visiting artist friend, and ended up leasing the ADX gallery. It was then that they began re-envisioning ADX as a true cross-disciplinary work space.  “We started to prototype the idea of what it could really mean within that space,” says Eric. “It was a nice test.”

    The pair secured a $145,000 loan from Albina Opportunities Corporation and Mercy Corps Northwest to lease, renovate and equip their new building. The nonprofit lenders stepped in to support ADX because they saw its potential as a jobs catalyst, an objective not lost on Kelley: “We’d really feel that sense of success in what we’re trying to create if those jobs really thrive here in Portland. Take the bad economy and the lack of jobs and turn it into an opportunity.”

    Shared builder spaces have popped up around the country throughout the last decade. 3rd Ward, a shared work space in New York’s Williamsburg’s neighborhood, was founded in 2006 by Jason Goodman and Jeremy Lovitt as a response to the city’s prohibitively expensive artist studio rates. The company has more than doubled membership in the past year, reaching1,250 members and bringing in over 200 instructors to teach everything from studio lighting to welding. It employs 20 full and part-time staff. 3rd Ward is currently expanding to the second floor of their building, adding 10,000 square feet of classrooms, a wood shop, tech and photo studios and more shared work space. The company has been growing throughout the recession, wrote Jessica Tom, director of marketing, “As people lose their jobs, we pick them up as freelancers who use our space as their company structure.”

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    Early interest in ADX, to the pairs’ surprise, came largely from local creative firms, as opposed to the casual hobbyist. The firms signed up for ADX membership include The Official Manufacturing Company, Factory North, Hand Eye Supply, Build Design and Kate Bingaman Burt.

    The success of these firms largely hinges on the fact that they actually make what they design. “I think people are so tired of the plastic nature of the way things are made” says Eric, “they want something better, and they see it can be better if people actually put their hand to it than if a machine makes it.”

    The Official Manufacturing Company was in the process of tooling up their own shop when they stumbled across ADX and decided to lease the attached office. For Official Manufacturing, the access to space and tools made sense. “If we weren’t subleasing from them we definitely would have a business membership, and use the tools we wouldn’t be able to afford on our own,” says founder Fritz Mesenbrink.

    For the weekend hobbyist or entrepreneur needing a little help realizing his or her concept, ADX has assembled a cohort of experts — designers, videographers, architects — dubbed the “Gang of Ten.” This group of experts pays for desks and access, and offers their consulting services at a 10 percent discount to other members.

    The model has allowed ADX to diversity revenue streams: one third from memberships, one third from classes and workshops, and one third from the Gang of Ten fees. Once the space has a healthy community of builders, says Kelley, they’ll begin selling pieces from individual members under the ADX label. “Sort of like Ikea,” she laughs.

    The numbers haven’t always penciled out for similar operations, however. TechShop, founded out of the Bay Area in 2006, opened several franchises across the country. One of these locations on the outskirts of Portland, in Beaverton, was forced to file for Chapter 7 bankruptcy in 2010 after low membership turnout.

    But, Kelley notes, TechShop was in the wrong location (suburban Beaverton) and with memberships starting at $99 a month, was too expensive for the casual hobbyist. Kelley hopes ADX, with its multiple revenue streams, central location and affordable rates (starting at $25 a month) can be profitable within a year.

    Rather than franchising, says Kelley, ADX is interested in partnering with existing maker spaces like 3rd Ward. “They did a lot of research to figure out what their community needs were, and they’re serving the needs of their community — that’s what we did here.”

    In a dreary economic climate, the community seems to be responding well: ADX’s open houses enjoyed healthy turnouts, and Kelley and Eric report they are on track to meet their yearly subscription goals. “I don’t know if it’s tied to the recession, but I do think that people are getting over modernism, from a design standpoint,” says Eric “People are actually recognizing high craft.”

    Kelley relates the rising consciousness around manufacturing to the organic and local food movement: “I think it’s the same thing with objects. It’s not mainstream yet, but there’s a certain sector of people who care, and care about the people who are making and designing things.”

    “Think about it,” says Eric “A hundred and fifty years ago, everything in your life was made by somebody that you knew; that wasn’t that long ago.”

    Written by Ilie Mitaru for Stake, a new business magazine set to launch this fall. You can read more and support thepremier issue here.