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  • Scenario Two: An Optimistic view of the United States future

    This is the second in a two part series exploring a pessimistic and an optimistic future for the United States. Part One appeared yesterday.

    A positive assessment of US prospects rests on at least seven propositions. First, the current crisis is not inherently more threatening than many others, most notably the Civil War, the Great Depression, and two World Wars. Quality leadership, building on the resilient political and economic institutions of the country, will prove sufficient to bring about needed sacrifices and transformations. We have seen this many times in the past from the Progressive Era to the New Deal, the Second World War and the winning of the Cold War, which was a uniquely bipartisan triumph.

    Second, despite the ongoing problems of racial inequality and tensions about immigration, the United States has been uniquely successful in having peacefully achieved a truly multi-racial and multi-ethnic state. It has welcomed waves of diverse immigrants, and integrated them into a broader, ever changing society. This process has culminated symbolically and literally in the election of a multi-racial president, Barack Obama.

    Third, economic corruption and financial crises have been recurring phenomena, and the nation has emerged out of these because of the sheer magnitude of talent and natural resources. This has been aided by a deep entrepreneurial capacity and willingness to take risks, and, overall, a willingness of most to work hard to improve life for themselves and their families.

    Fourth is the existence of a large and literate population, willing to work, certainly the world’s finest university system and research establishment, over and over again engendering innovations that create future economies: e.g., the computer revolution. American secondary education is still in need of great improvement, but the US University remains a beacon to talent from around the world.

    Fifth, despite the noise and uproar, despite the continuing clash between the traditional and the modern or secular, the nation, through its independent courts and helped by governmental decentralization, e.g. the Federal system, the country remains the freest society in human history. Despite the appearance of power of the religious right under the Republicans since the 1970s, serious erosion in freedom of thought has been kept to a minimum. Similarly, the cult of political correctness, although annoying, has become, if anything, less potent and increasingly the butt of jokes.

    Sixth, and perhaps most important, we have to consider demography. Despite current unemployment and despite the imminent retirement of the baby boomer generation, the United States, alone among the richest economies, will continue to have a relatively favorable ratio of wage earners to the elderly. This will enable us to afford social security and Medicare. The new generation – known as millennials – will constitute a large source of new labor, innovation and entrepreneurs needed to propel our economy.

    Finally, there are a few positive trends, including modest recovery in housing and in auto sales, hints of some pulling back from the out-sourcing of services, and continuing innovation and marketing of new products and services. On the political side, although the current anti-incumbent mood will likely reduce Democratic margins in Congress and in several states in 2010, the sheer lunacy of the “tea party“ activists, many of them unreconstructed “know nothings” may actually hurt the Republican party more than the Democrats. People are constantly being reminded why, for all the failings of the Democrats, they tossed the Republicans from power in the first place.

    An optimistic scenario rests on the historical precedent of muddling through crises and then creating new waves of innovation in products and services, and on the presence of a large labor force willing and able to work. A vital question is whether the President and Congress will have the courage to ask voters to make short-term sacrifices: higher income taxes on the rich and reduced subsidies to entrenched interests across the board that will be needed to restore fiscal health. And finally there is the big question, are the American people ready to do with less today to build a better future for the next generation?

    Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist).

    Photo: elycefeliz

  • Scenario One: A Pessimistic Forecast for the United States

    This is the first in a two part series exploring a pessimistic and an optimistic future for the United States. Part Two will appear tomorrow.

    I’m an old (76) 1950s type liberal, and have lived to see the election on the nation’s first mixed-race president, as well as some remarkable social change in the general status of women and ethnic minorities. The United States has a remarkable heritage of entrepreneurship and resilience in its democratic institutions. Yet there are cogent reasons to be fearful and pessimistic about our capacity to maintain our preeminence, at least in the medium run (10-15 years). I obviously hope I’m wrong, and look forward to attempts to undermine my thesis – including, tomorrow, my own.

    Consider the numbers 17, 49 and 60. Seventeen is the real unemployment rate, not the “official” ten, when we take into account those dropping out of the labor force, or giving up. Forty-nine is the real percentage of home ownership, in our “ownership” society, not the 68 percent from the census. For mighty Los Angeles, the real number is 44 percent. The difference is the stupendous number of households whose equity in the house is less than they owe on the mortgage. This house of cards has increasingly been the engine of national growth. Sixty is the number of votes in the US Senate needed to stop a filibuster, and together with inept leadership, is responsible for the absurd failure of Congress and the effective collapse of collegial democracy.

    Economists say we are in a recovery. What recovery? The small increase in house sales is due to temporary incentives, but including speculators buying up homes, many foreclosed, for yet greater inequality. The main gains in jobs, not fully offsetting wider losses, are in temporary construction tied to government-funded projects. The growth in jobs and the economy in the last 20 years has been in services, stuff we do for each other, and the main fuel has been the pyramiding of house values. That is over. How can we restore growth through more consumption if the majority of the population no longer has the resources to invest or spend?

    By far the most destructive accomplishment of almost 30 years of restructuring has been the reestablishment of extreme inequality, the emergence and power of the ultra-rich, both “progressive” and conservative in orientation, to levels last seen before the Great Depression.

    But perhaps the greater root of our malaise, and perhaps the downfall of the American Empire, lies in excessive globalization and the loss of our capacity to make stuff, the outsourcing of, first, manufacturing and now even of services. It is instructive that this is the same story of imperial Rome, although long dependent on its empire, by the time of its collapse it imported virtually everything from its tributary states. Its finances could no longer pay the Army which was largely made up of people from outside Italy.

    I’d agree that the main hope in the economic arena is via the small entrepreneur, but they face the immense monopolistic power of ever-larger global capital. I’m proud to live in Seattle, which at least dared to fight back, as in the one and only US general strike, in 1919, and in the WTO protests in 1999. Perhaps this is not so surprising since Seattle still makes things: planes (Boeing), ships (Todd) and trucks (PACCAR).

    The saddest irony is that even as maybe half of us celebrate a Black president, we have utterly failed to follow up on the political civil rights gains on the 1960s to incorporate Black Americans into the mainstream economy. The status of the Black male is, relatively, worse in 2009 than it was in 1969. I would not be surprised to see a reprise of the 1960s race riots. But it is also relevant to reflect on the declining state of the white male, suffering increased drop-out rates from high school, declining enrollments in college, all in the face of reduced job opportunities for the less skilled and educated, plus competition from immigrants, legal and illegal. Is it any wonder that both nativism and populism is rising anew?

    One might dare to believe that large Democratic majorities in Congress would give us hope for effective responses to this national malaise. But I’d say the current Congress rivals the infamous 80th congress that Harry Truman excoriated, for its “do nothingness”. On the surface we can correctly observe that the Republican party, increasingly conservative, is more than willing to wreck the country in order to regain power.

    But part of the problem is that we no longer have a conservative and a liberal party, in an economic sense. We have two bourgeois parties, with the “new” Democratic Party increasingly dependent on the wealthy educated elite as well as well-paid public workers, it long ago abandoned the working class and did nothing to constrain globalization and the rise of the toxic financial practices. Thus we should not be surprised that the populist know-nothing uprising could bring to power large numbers of proudly uneducated folks.

    In the final analysis for this pessimistic scenario, the underlying culprit is the inexcusable failure of the US educational establishment, the astounding incapacity of our public and private schools to teach people to think and reason. And part of the reason for this incapacity is the excessive power of religion, which values belief over reason, in our culture. And this is why decadent Europe – aging and tax-burdened – could come out of this recession and malaise better than the United States. Perhaps we’ll see a reverse migration of surplus underemployed young Americans returning to their aging historic motherlands!

    Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist).

    Photo: hz536n

  • Deconstruction: The Fate of America? – The Changing Landscape of America

    America is at a crossroads. Its current path is unsustainable. The deficit for fiscal year ending Sept. 30, 2009 was $1.42 trillion. The National Debt is $12.5 trillion with the debt ceiling just raised to $14.9 trillion. The National Debt has increased $4 billion per day since September 28, 2007. The Obama Administration projects trillion dollar deficits for years to come. It has bailed out GM and Chysler, the banks “too big to fail” , and state governments that cannot manage their budgets. They have given away billions for clunkers and caulkers, and rewarded homeowners who bit off more than they can chew. We owe China $894 billion, Japan $764 billion and the Oil Exporters another $207 billion. It is uncertain how long foreigners will continue to finance our debt.

    There comes a breaking point at which the financial model is unsustainable and can no longer continue. For you and I, it is called bankruptcy. If we screw up financially, we are forced to declare bankruptcy. The courts offer protection until we can get our house in order but we are forced to stop spending. We solve our problems under Chapter 7 (liquidation) or Chapter 11 (reorganization).

    DECONSTRUCTION

    Cities can also be forced into Chapter 9 municipal bankruptcy. The City of Vallejo, California, population 120,000, filed for bankruptcy in 2008 after its politicians went fiscally berserk, paying the city manager $400,000 per year and its fireman an average annual wage of $175,000. Cleveland, Ohio declared bankruptcy in 1979 after defaulting on $15 million of bonds. (Seems trivial in this era of trillion dollar deficts). New York City avoided bankruptcy in 1975 when the teachers union forked over $150 million at the eleventh hour. These cities were forced to remedy their reckless spending.

    States cannot declare bankruptcy. Nor can they print money like the federal government. The Legislative Analyst’s Office estimates California has unfunded pension obligations of $237 billion. California is flirting with junk bond status. If it loses its credit rating, it will no longer be able to fund its bloated operations. The Golden State then will become the first failed state. They will be forced to dismantle their regulatory bureacracy. California has over 500 agencies and many are overlapping. They have 250,000 state employees. Thousands will lose their jobs as the financial community imposes cuts the legislature will not make. Such down-sizing will become known as deconstruction. California may be the first state to deconstruct its government services but it will not be the last. The Pew Center for the States reported that state governments have more than a trillion dollars in unfunded pension obligations.


    There is no better example than the City of Detroit. Once the home of Henry Ford and the American automobile industry, Detroit has fallen on hard times. Its population has fallen from nearly 2 million residents to less than 900,000 today. With a budget deficit of $300 million per year, Detroit can no longer provide basic services to its own residents. There are 33,500 empty homes and 91,000 vacant residential lots. More than 300,000 buildings are vacant or in shambles. It is estimated that 40 square miles of Detroit lies abandoned.

    Twelve years ago, British urban historian Sir Peter Hall wrote in “Cities in Civilization” that Detroit “has become an astonishing case of industrial dereliction; perhaps, before long, the first major industrial city in history to revert to farmland.” Hall may have been prescient. This week, Mayor David Bing released the “Neighborhood Revitalization Strategic Framework,” a landmark document that suggests that vast sections of Detroit be razed and returned to farmland, open space and nature. The report suggests the first organized and orderly deconstruction of a major American city.

    The report envisons replacing entire neighborhoods with “Naturescapes” (meadows), “Green Thoroughfares” and “Village Hubs” that require fewer city services. But, it will require hundreds of millions of federal aid to finance such a major transformation, money the federal government no longer has to give.

    In an era of trillion dollar federal deficits, there are no longer easy solutions. The shift of tectonic plates caused by the Great Recession have exposed hopelessly unsustainable city and state budgets. Swollen payrolls, duplicative agencies and inefficient municipal services can no longer be afforded. The deconstruction of government services seems inevitable.

    In five years, will Detroit remain a cratered landscape of vacant buildings, broken promises, and smashed dreams? Or will a smaller, safer, more efficient city evolve out of its ruins? If deconstruction is successful in Detroit, it could serve as a model for many other governments as well, from City Hall to state capitols and all the way to the most bloated disaster of all, Washington, DC.

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    During the first ten days of October 2008, the Dow Jones dropped 2,399.47 points, losing 22.11% of its value and trillions of investor equity. The Federal Government pushed a $700 billion bail-out through Congress to rescue the beleaguered financial institutions. The collapse of the financial system in the fall of 2008 was likened to an earthquake. In reality, what happened was more like a shift of tectonic plates.

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    This is the eighth ninth in a series on The Changing Landscape of America written exclusively for New Geography

    Robert J. Cristiano PhD is a successful real estate developer and the Real Estate Professional in Residence at Chapman University in Orange, CA.

    PART ONE – THE AUTOMOBILE INDUSTRY (May 2009)
    PART TWO – THE HOME BUILDING INDUSTRY (June 2009)
    PART THREE – THE ENERGY INDUSTRY (July 2009)
    PART FOUR – THE ROLLER COASTER RECESSION (September 2009)
    PART FIVE – THE STATE OF COMMERCIAL REAL ESTATE (October 2009)
    PART SIX – WHEN GRANNY COMES MARCHING HOME – MULTI-GENERATIONAL HOUSING (November 2009)
    PART SEVEN – THE FATE OF DETROIT: GREEN SHOOTS? (February 2010)
    PART EIGHT – THE FAILED STATE OF CALIFORNIA (March 2010)

  • Transit Oriented Development: If Not San Francisco, Where?

    “The Great Transit Oriented Development Swindle?” reads the headline in the Fog City Journal, one of the growing number of internet newspapers providing serious, professional web-based journalism as an alternative to declining print newspapers (and their often less than effective web sites).

    The article does not directly answer the question in the headline, but certainly provides enough ammunition to what has become a commonly accepted mantra among planners and urban boosters. It reveals how transit oriented development (TOD) is often based upon fragile foundations that amount to an ideological swindle. It is important to recognize that the Fog City Journal is no right wing or libertarian organ. There is little market for that in the city of San Francisco. The leftish bent of the Fog City Journal, combined with author Marc Salomon’s unusually incisive (and footnoted) analysis makes this article noteworthy. It also seems clear that the author is a proponent of more transit service and funding, not less – even though he is highly skeptical about the current TOD craze.

    Transit Oriented Development: The idea behind transit oriented development is that, in new, higher density developments, people use transit more and cars less. Transit oriented development has become a first principle of some, who seem to believe that cities can become vibrant in part by strangling new suburbs out of existence. Transit oriented development is at the very heart of the Obama Administration’s “livability agenda,” and is frequently cited admiringly by Secretary of Transportation Ray LaHood.

    Eastern Neighborhoods: Salomon’s subject is San Francisco’s Eastern Neighborhoods, where transit oriented development is proposed. From the beginning Salomon identifies a fundamental problem: “Transit Oriented Development is predicated upon the notion that existing transit infrastructure is attractive enough such that residents of new units will take transit to work instead of drive. He continues: “The existing transit system, both regional and local, is not capable of handling existing demand.”

    Salomon correctly notes that “San Francisco is not the regional employment center.” In fact, nearly 90% of employment in the San Francisco-San Jose area is not in downtown San Francisco. Indeed, Silicon Valley, not downtown San Francisco, has long been the largest employment center in the area and there are also major job concentrations in the suburban belt east of Oakland.

    No Better Place for Transit Oriented Development: Yet, there are few places in the world better served by transit than the Eastern Neighborhood transit oriented development. The project is no more than a long walk from downtown San Francisco (Figure 1). Residents will be able to access frequent “Muni” bus services. The development would be well served by BART (the regional metro), midway between two stations, both of which access four routes. There are few places in the world where a non-transfer station serves that many routes. Salomon analyzes transit from the center of the development, the corner of Mission and 20th Streets.

    Transit Oriented Development: Forcing Longer Commutes: Salomon’s concern starts with the recognition that these systems are already overcrowded. However there is more. Even with their heavy (and highly subsidized) loads, the virtually unparalleled level of transit service available from Mission and 20th cannot compete with the automobile. Salomon’s analysis shows that, on average, transit oriented development residents working at jobs at the 30 largest firms in the San Francisco Bay area would spend nearly 3.5 as much time traveling to work by transit than if they drove themselves. The best transit travel time would be more than double the auto travel time, while the worst would near five times (Figure 2).

    Transit Oriented Development: Making Traffic Congestion Worse: Mirroring the research on the association between higher densities and greater traffic congestion, Salomon suggests that without substantial additional transit spending, transit oriented development “in San Francisco will most likely diminish transit reliability by increasing auto trips–the precise opposite of transit oriented development’s stated goals.” On this point, however, it is well to remember that no transit system has ever been seriously conceived, much less proposed or implemented that could provide competitive mobility between Mission and 20th and the dispersed employment throughout the San Francisco Bay Area. A transit system that reaches all of the dispersed employment in a modern American or European urban area at travel times competitive with the car could require annual expenditures that approach or even exceed the gross domestic product of the area.

    Unaffordable Transit Oriented Development: But Salomon is not through. Insufficient transit service is only part of the problem. There is a fundamental problem with the thesis that “cities need to densify their urban cores to support greater densities of development.” But, he says, “this is predicated upon the assumption that housing in the urban core and periphery are fungible, that the core and periphery compete interchangeably for buyers.”

    Unlike most urban advocates and the Secretary of Transportation, it is apparent that Salomon understands the first principle of “livability.” Livability requires affordability. In San Francisco suburb of Brentwood, for example, Salomon notes that the median house price is $298,000. Brentwood is located in eastern Contra Costa County, approximately 50 miles from downtown San Francisco. But there is no need to travel that far, since there is an abundance of jobs much closer.

    This compares to a median price of $627,000 for an apartment/condominium near the proposed transit oriented development in San Francisco. Further, the house in Brentwood will be more than double the size of condo in the transit oriented development, as data from zillow.com indicates. Thus, the new home buyer will pay less than one-fourth the cost per square foot in Brentwood compared to the transit oriented development (Figure 3). The Brentwood household will also enjoy a backyard that would not come with a 23rd floor flat.

    Lifestyles of the Few: None of this is to suggest that transit oriented development cannot be attractive. The mistake, however, is the outsized enthusiasm of its proponents. Like a Mini Cooper or sportscar, transit oriented development serves the needs and wants of a narrow niche market, but by no means anything close to the majority.

    Salomon concludes:

    In order for transit oriented development to check sprawl, prospective home buyers would be expected to make the choice between purchasing a $300K unit in Brentwood or a unit costing twice that much in San Francisco. Further, in order to check motor vehicle commutes, the assumption would be that someone paying that urban location premium would more than double their commute time by taking transit.

    Simply stated, many of the claims of transit oriented development proponents simply do not “pencil out.” TOD residents will have to drive, unless their jobs are within walking distance. Further, in the dynamic economy that has developed in US urban areas, few can assume that they will always work in the same place. Most importantly, however, very few suburbanites could afford the tony TODs. That’s not a problem, however, since most of them are probably not sorely tempted.

    Photograph: Market Street Toward the Ferry Building, San Francisco

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

  • Green Wash: The Church of Sustainability

    The term green-wash is used to describe something that has been promoted as ‘green’, but is not. Has the term ‘sustainability’ worn out its welcome as well?

    I am a long time adviser to the board of Sustainable Land Development International. Like many other organizations, they market themselves as producing sustainable land developments through new technologies and methods in design. We often use the term “sustainable” in relation to a concept called the “Triple Bottom Line”: People, Planet, and Profit, endorsed by the United Nations in 2007 for urban and community accounting.

    On March 11th, I will have the honor to be the keynote speaker at the California League of Cities conference in Anaheim. When I speak, it is typically on the topic of sustainable solutions. This time, I was astonished to learn that the term sustainability had become green-wash and that I should avoid using it!

    Individual perspectives (or goals or agendas) can easily color the meaning of sustainability. For example, an environmental engineer might want to promote elements of land development that makes his or her career more important and personally satisfying. All of us have personal agendas that make our brief existence on this planet more meaningful, sometimes at the expense of others or even the very thing we are trying to promote. Often we unwittingly become our own worst enemy.

    At one time our firm began a relationship with one of the largest environmental engineering firms. When we spoke to their engineers about reducing pollutants from rain run-off caused by development it became clear that their only agenda was to eliminate, not to reduce, pollutants. Eliminating pollutants on a land development certainly is possible, but would not be in any way financially feasible. This firm had built a reputation and won over some very large non-profit organizations that fueled their success. Surely the engineers had their self-esteem (egos) inflated. If the developments they designed had to be financially viable without huge non-profit subsidies, they surely would have failed — spectacularly. They were artificially sustainable. Our goal was to use their expertise to create methods that would not add a penny to land development costs compared to conventional construction. We believed pollutants could have been reduced somewhere between 10% and 30%, which would have a significant international impact. As we began to work together it became quite apparent that our agendas were much different, and the relationship withered. Their all-or- nothing approach was not a balanced one, nor was it sustainable.

    Nearly two decades ago when I developed “Coving” as a method to design projects, my own ego got in the way of progress. At the time, the New Urban momentum had begun to grow. I aggressively compared the advantages of Coving to the grid form of traditional development as well as to conventional subdivision design. Reducing streets — “Coving” — by 20% to 50% without reducing density in comparison to a traditional grid certainly had benefits, but the attempt to push an agenda by reducing the importance of others agendas does not win friends, and New Urbanism had already won many converts.

    Coving by itself is only a streetscape design method, nothing else. The efficiency of coving opened up new opportunities to create more functional and financially viable development. . Both coving and the traditional grid pattern rely solely on the performance of the developer and builders to construct to a high level of architectural and landscape standards. The New Urbanism expanded upon the traditional grid to include a strict standard that included many details. Coving remained only a streetscape design method, void of these details. In the hands of a substandard developer with builders who cut corners, both Coving and New Urbanism have resulted in some embarrassingly awful land developments, tarnishing both movements reputations. Coving, particularly because of its financial advantages, seemed to attract some of the worst culprits. Unfortunately, in land development the time from concept plan to enough of a built environment to see the “finished” product can be between two and five years. We had become our own worst enemy by focusing too much on the financial benefits of a design method and not enough on other aspects.

    There were still some spectacular developments that resulted, but there was no mechanism in place to assure great neighborhoods. By the end of the 1990’s it was clear that “our agenda” needed to be modified. In an attempt to achieve a more sustainable world, we had concentrated on a singular goal, not a balanced approach. This meant we needed to step back and look at all the elements of land development to create a balanced approach where no one agenda held the others hostage. Ultimately this led to the creation of a comprehensive approach to land development we coined as Prefurbia.

    Land planning today has become like a religion that requires unwavering devotion. But those who embrace only one approach as the ultimate utopian mega-metropolis design to solve all social ills are fools: There is no singular solution for land development. Not the New Urbanism, not Smart Growth, not Prefurbia. Good planning is not about pointing fingers. It is easy to blame the automobile, blame developers, and blame government. But it is up to those people responsible for growth — stakeholders such as the developer, builders, city staff and council — to determine the best possible path that will result in a legacy for future generations instead of a blighted project that served to fill the bank account of the developer.

    It is also up to the stakeholders to investigate and learn the various options available for growth. If a city planning commission or council member does not have the time to learn the different land development options available today, well, they should step down and be replaced by someone who cares.

    All of this brings us back to the term ‘sustainability’. The dictionary defines it as ‘Capable of being continued with minimal long-term effect on the environment’. Here is the problem: The dictionary does not include the long term affect on economics (affordability) and living standards. Did we create something great for the ducks, but an eventual blighted neighborhood, or a gentrified one exclusively for the wealthy?

    My view of how to be sustainable is simple: Do our best to create places that will still be wonderful, livable, affordable, and environmentally responsible for future generations. If we do, we will have created places that will be sustainable, no matter what planning religion we worship.

    Rick Harrison is President of Rick Harrison Site Design Studio and Neighborhood Innovations, LLC. He is author of Prefurbia: Reinventing The Suburbs From Disdainable To Sustainable and creator of Performance Planning System. His websites are rhsdplanning.com and performanceplanningsystem.com.

  • What Seneca Falls Can Learn from Toronto

    One of the most enduring myths in public policy is that local government consolidations save money. The idea seems to make sense, and most of the academic studies support the proposition. However, rarely, if ever, does the promised reduction in public expenditures or taxes actually take place.

    Residents will vote March 16 on a proposal that would merge the village government of Seneca Falls, New York into the more rural and adjacent town of Seneca Falls. Under state law, this can occur without the consent of the town into which the village would be merged.

    Paltry Savings and the Risks: A consultant report suggests savings that can only be characterized as pitiful. Out of a combined budget of $13 million, less than $400,000 would be saved, and even that figure is by no means sure, according to the consultant.

    Voters may want to consider the following specific risks that could make achievement of the expected savings and tax reductions impossible:

    Proponents expect to receive $500,000 annually in funding from a state program that seeks to encourage municipal consolidations. The state program is slated for cuts. Further, with New York’s serious budget difficulties, such a superfluous program could be a prime candidate for discontinuance. Thus, one of the principal factors expected to lower taxes might not survive in the longer run.

    Presently, the village has a police department, while the town does not. The new town government is not likely to be able to get away with providing a higher level of police protection in the former village than in the merged town. One of two outcomes seems likely: (1) The first is that the present police protection (and budget) would be spread throughout the merged town. This would dilute police protection in the former village area. (2) The second is that the higher level of police protection in the village would be spread throughout the merged town. This would mean larger expenditures that could easily erase the already minimal projected savings.

    The consultant proposes that a new town hall be built. The costs of this building could substantially erode the projected operating cost savings.

    A principal reason that municipal consolidations rarely save money is that the necessary “harmonization” of service levels and employee compensation costs inevitably migrate to the level of the more costly former jurisdiction. The police issue in Seneca Falls is a prime example of the service harmonization cost risk.

    Learning from Toronto: Seneca Falls does not have to look far to see how local government consolidation can lead to more spending and higher taxes. Less than 150 miles away as the crow flies, Toronto residents were glowingly told of the lower taxes and expenditures that would result from consolidating six jurisdictions into a “megacity” in the late 1990s. As we and others predicted at the time, things have not worked out. Toronto’s spending has risen strongly under the consolidated government. Despite its much smaller population, the risks are similar in Seneca Falls.

  • Jerry Brown: Machiavelli Or Torquemada?

    For more than one-third of a century Jerry Brown has proved one of the most interesting and original figures in American politics–and the 71-year-old former wunderkind might be back in office in 2010. If he indeed wins California’s gubernatorial election, the results could range from somewhat positive to positively disastrous.

    Brown is a multi-faceted man, but in political terms he has a dual personality, split between two very different Catholic figures from the 15th century: Machiavelli and Tomas de Torquemada. For the sake of California, we better hope that he follows the pragmatism espoused by the Italian author more than the stern visage of the Grand Inquisitor.

    Like a good Jesuit, Brown certainly can be flexible. Back in 1978, for example, he worked against Howard Jarvis’ Proposition 13, which capped real estate taxes. But once the measure was passed, Brown embraced it as his own. Indeed, he was so enthusiastic about the tax-cutting measure that Jarvis actually voted for Brown’s re-election late that same year. A month after the vote a Los Angeles Times poll revealed most Californians thought Brown actually supported 13.

    Brown also has shown his flexibility by throwing even loyal allies under the bus. Elected largely due to the electoral coalition constructed by his father, Edmund G. “Pat” Brown, Brown made a point of tweaking and restraining the expanding bureaucracy largely created by his father. He also took on the University of California and the welfare bureaucracy as well as agriculture, residential real estate and manufacturing giants.

    This Oedipal battle reflected Brown’s personal crankiness. He came into office, recalled top aide Tom Quinn, “questioning the values of the Democratic Party.”

    Ascetic and even monk-like, he rejected his father’s “build, build, build” philosophy and embraced E. F. Schumacher’s “small is beautiful” ideology. Like the 15th-century Florentine Catholic monk Girolamo Savanarola, he came to rid Sacramento of suberbia and luxuria.

    Brown was also ahead of his time. His early embrace of green politics–particularly energy conservation and renewable fuels–foreshadowed that of later Democrats, particularly Barack Obama. His strong outreach to Latinos and other minorities expanded his political base among California’s fastest-growing populations.

    Yet Brown understood that economic prosperity–not civil rights or environmental zealotry–was key to political ascendancy. Eastern journalists dismissed him as “Governor Moonbeam,” but they ignored his Machiavellian skill in recognizing and reaching out to rising economic forces, notably the high-tech entrepreneurs in the Silicon Valley and across Southern California. The growth of this sector, along with rising trade with Asia and the military boom after the Soviet invasion of Afghanistan, set the pace for the state’s strong rebound from its early 1970s doldrums.

    But Brown’s inquisitorial side surfaced again as he prepared a second run–he had made a charmingly eccentric assault in 1976–for the White House. Perhaps the prospect of facing a man of infinite flexibility, Bill Clinton, pushed him over the top, but Brown re-invented himself as a high-octane and, at times, shrill populist.

    After some years in the political wilderness, he reemerged in 1998 as Mayor of Oakland, a tough job even in good times. Although he remained predictably arrogant and aloof, the job of managing a working-class city seemed to have brought him to his senses. Like the ideal politician in The Prince, Brown governed with something approaching strategic precision, pushing economic development, embracing the police and supporting new infrastructure spending.

    Brown’s newfound reputation as a canny realist helped him win the election as attorney general in 2006. Yet once back in statewide politics, the inquisitorial side found expression. Convinced about the impending threat of global warming, Brown used his new powers to push the Gorite agenda with the passion of a Torquemada.

    Although Brown was not quite torturing heretics, he certainly applied the legal equivalent of thumbscrews to anyone–developers, cities, counties–who did not follow his prescriptions about “carbon neutrality.” Even proposals for sensible, relatively dense “in fill” development were turned aside in favor of utopian, economically unsustainable ideas about forced density and transit friendliness.

    Today, with California’s economy is in tatters–its unemployment well over 12%–and Brown’s crusade seems likely to make it worse. Onerous regulation threatens everything from the construction of new single-family homes to new employment tied to anything that releases demon carbon–including manufacturing, oil drilling and large-scale agriculture.

    All this has made Brown widely feared in much of California’s fractured, traumatized business community. Even worse, he has emerged as the standard-bearer of the public employee unions, the very force whose political power and pensions are bringing the state to the verge of economic ruin. The fact that Brown’s campaign is funded largely by these unions makes it, at least on the surface, unlikely to challenge the hegemony of our putative “civil servants.” They are said to be ready to spend up to $40 million on “independent” campaigns to help beat back any chance of a GOP victory.

    This is worrisome given Brown’s role in fostering the expansion of public-sector unions during his term, a group whose ascendancy has become arguably the single biggest factor in the state’s precipitous decline during his last gubernatorial reign. As author Steven Greenhut has pointed out, unfunded pension liabilities in excess of $50 billion are one key element driving the state toward ever more depressed bond ratings and possible bankruptcy.

    Under normal circumstances, Brown’s ties to the public sector, his fickle nature and his dubious accomplishments would spell political doom. But amazingly, Brown’s long, if mixed, record might actually prove an advantage against his most likely opponent, former eBay executive Meg Whitman, who is running as an outsider.

    The problem for Whitman or any GOP candidate lies with the miserable legacy of another nominally Republican outsider, Arnold Schwarzenegger. The Terminator’s record of ineptitude and empty blather stands as a mega-advertisement against inexperience. Compared to the former body builder’s amateurish blundering, Brown’s wealth of knowledge of government looks appealing.

    Whitman, or her main challenger Insurance Commissioner Steve Poizner, also must struggle with a Republican Party out of sync with an increasingly multi-racial and socially liberal state. As long-time political analyst Allan Hoffenblum notes, for the first time there is not one congressional, state senate or assembly district with a GOP majority.

    So in the end, California’s fate may end up resting on which Jerry Brown emerges after the election. If he continues on his inquisitorial assault on carbon-creators, you can pretty much expect California’s middle class to continue diminishing while the state’s aspirational appeal ebbs ever further. The state could end up resembling Kevin Starr’s description of his native San Francisco– “a cross between Carmel and Calcutta.”

    But given his history, Brown could still surprise us. Stuck with responsibility for a decaying economy and fiscally burdened by the voracious public unions, Brown could do a “Nixon in China,” imposing controls on pensions and salaries. He could recognize that “green jobs” can not save California from the abyss and that a new “era of limits” must apply to the public sector as well as the rest of us. With the passionate climate-change constituency shrinking, he might even decide to accept a modicum of carbon heresy as a necessary evil.

    Brown should heed Machiavelli’s advice for rulers to be “merciful and not cruel” and “proceed in a temperate manner with prudence and humanity.” If in his old age Brown adopts the Italian writer’s credo of tactical flexibility, reason and tolerance, the Golden State may yet revive itself, and with it restore the legacy of its most storied political family.

    This article originally appeared at Forbes.com.

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

    Photo: Troy Holden

  • Victor Kulkosky

  • Newspapers: The Search for A Killer Saviour

    The publishers and staffs of many daily newspapers would love to think of themselves as hip bloggers, tweeting to an eager and mobile public. But the reality is that newspapering came of age with railroads and steel mills, and the balance sheets of many companies are heavy with long-term debt, inflated valuations, unfunded pension liabilities, and the usual write-downs of smokestack America.

    It does not take a degree from Harvard Business School or a partnership at McKinsey to explain why newspapers and many magazines are struggling: readers don’t want to pay for anything, and advertisers, as was said of Chicago Bears owner George Hallas, “throw nickels around like manhole covers.”

    Newspaper companies cling to the illusion that Amazon’s Kindle reader or perhaps the Apple iPad will give the industry a killer technology that will allow readers to surf for news and the companies to collect money for providing it. But even charging four dollars a month to deliver an electronic file to subscribers probably does not cover the pension, salary, and real estate costs that are associated with old media. (The new headquarters of the New York Times has a birch forest in the lobby.)

    Which brings us to one of the more absurd suggestions of the recent stimulus debate: the consideration that newspapers might themselves be in line for some bailout money, in the interests of maintaining a free press and a vibrant democracy. Maybe taxpayers could check a box indicating whether they want to save the Detroit Free Press, the city of Detroit, or just General Motors?

    Everyone has their own theories on why newspapers are failing — internet pricing models, to postage rates, and the cost of paper — but mine center on the written content. Many daily papers have read for years like a variation on a collection of press releases.

    Too often, articles are self-serving political messages out of Washington, or based on anonymous and biased sources. For readers, there’s no recourse in the cases where the paper has got things wrong. Is it any wonder that they’ve migrated to vibrant, interactive Web sites?

    For models of editorial salvation, newspapers should look to the formulas that allowed them to prosper in the first place, and serve as showcases for lively local coverage and debates, with writing that comes from correspondents in the true sense of the word: letter writers.

    Many newspapers confine their opinion sections to two pages, and then fill up the rest of the paper with stale news which today’s readers know by the time they stumble to the front porch. Add to that the celebrity-driven features (“Dateline Bradgelina” or “Tiger Hunting”).

    Most newspaper readers of my acquaintance have reversed their reading habits, and now start with the opinion columns and the letters-to-the-editor, and then glance over the news headlines. Why not fill a newspaper with what the readers look for and enjoy? Would it not be a pleasure to read twenty columnists, not simply three or four?

    Needless to say, newspapers are run for their shareholders, and investors take more pleasure in full-page ads than in lively or argumentative columns. But in my mind, a newspapers run and financed by the readers, and not by corporate hierarchs, could succeed financially. If you are looking for a working model, think of a privately-funded university or even a mutual savings bank (one owned by its depositors).

    Under these models, a newspaper would have revenue (more like tuition) from subscribers, its own capital (assuming any is left), advertising (but it would not be the lifeblood, as is the case now), and contributions (fund raising campaigns).

    With whatever money is available annually to the editors, they would produce a newspaper that most closely matches the charter of the association or trust. It could report on local news, support Democrats or Republicans, devote itself to sports or foreign reporting, or cover the arts or fashion. That would be for the reader-members to decide.

    In the current market, readers own few newspapers. Since 1936 a trust has owned the Guardian (London), which may explain its consistent editorial independence and the high quality of its writing. That said, the Guardian loses money annually, and the trust needs third-party assets to make up the losses.

    Similarly, the ownership structure of The Economist, via several classes of its shares, insures that the magazine (technically it calls itself a newspaper) reports to a board of trustees, rather than to its shareholders, to insure editorial independence. In 2009, when the rest of the industry was looking for a handout, The Economist increased its worldwide circulation (by 6.4 %) to 1.4 million, its revenue (by 17 %), and its profits (by 26 %, to £56 million).

    Nor could anyone accuse The Economist editors of dumbing down the product, given the publication’s relentless coverage of foreign affairs, finance, business, and economics. By comparison, the New York Post reportedly loses about $50 million a year for Rupert Murdoch. So much for pandering.

    The problem for many large American newspapers—such as the New York Times—is that, while operating profits shrink, they are hoping to whistle past all sorts of electronic graveyards. In the last decade, for example, the Times squandered more than $2 billion to buyback its own overpriced shares rather than pay down debt or find a model that would sustain the paper in the age of what George W. Bush called “the Internets.”

    Now it faces falling advertising, dropping circulation, higher paper and delivery costs, unfunded pension liabilities, and convertible debt and warrants due to a Mexican oligarch. Meanwhile, its competition is the ethereal and cost-free World Wide Web.

    Regarding so called “pay walls” — the idea of charging Internet readers, lately embraced by the Times — columnist Michael Kinsley has written: “Every English-language paper published anywhere in the world is now in competition with every other. Competition is what has driven the price down to zero and kept it there.”

    The same points are made in “The Curse of the Mogul” by Jonathan A. Knee, Bruce C. Greenwald, and Ava Seave, authors affiliated with Columbia University who make the point that “the Internet may be somebody’s friend — most notably, the consumers of media — but it is not the friend of incumbent media companies.” They believe that only those print franchises with a locally dominate position will make it, writing “…if print newspapers are to survive, it will be through single-minded focus on the only area of coverage in which they have an advantage.”

    Their thesis on “what’s wrong with the world’s leading media companies” is that the dealmakers behind many companies made a string of terrible acquisitions that have wiped away $200 billion in shareholder value. (The Times contributed $1 billion to this figure, when it had to write down its investment in the Boston Globe.)

    Will I miss the morning newspaper as we knew it? Not very much, I confess. I grew up in a world of monopoly-voice journalism, where getting a letter to the editor of the New York Times printed was not unlike receiving a papal indulgence.

    As for regional or small town papers that only publish hints from Heloise or boosterism for local teams: have you ever spent a Saturday morning with the Bangor Daily News or the Kansas City Star? It strikes me that many American newspapers bailed out years ago.

    Does anyone out there have a formula that will save the traditional daily? I didn’t think so. If you did, instead of reading this online, you would be in a closed-door conference with the publisher of the New York Times or the Baltimore Sun, explaining how web-site hits or those Pulitzer Prizes from 1987 can be transmuted into gold.

    Matthew Stevenson is author of the recently published Remembering the Twentieth Century Limited. He lives in Europe.

  • The Harvard $7 Per Gallon Study: Missing the Point Completely

    A new study by researchers at the Belfer Center for Science and International Affairs at Harvard University suggests that President Obama’s greenhouse gas (GHG) reduction goal will require gasoline prices of from $7.15 to $8.71 per gallon by 2030. This is not only untrue, but also represents a “roadmap” to economic and environmental folly.

    The study begins with the assumption that the transportation sector would need to reduce its GHG emissions by the same 14% percentage as the overall goal for the economy, as proposed by President Obama (Note).

    “Across the Board Reductions” are Absurd: The Harvard assumption is flawed from the start. GHG emissions reduction is not about “across the board” reductions of the same percentages applied to economic sectors. Such an approach could result in serious misallocation of resources, as opportunities for less expensive GHG emissions reductions in some sectors are ignored, while more expensive strategies are implemented in other sectors.

    The Appropriate Price for GHG Reduction: The study itself assumes that the present GHG price is $30 and that the price will rise to $60 by 2030. Reports by the Intergovernmental Panel on Climate Change and McKinsey/The Conference Board say that sufficient GHG emission reductions can be achieved at below $50 per ton. It is fair to suggest, therefore, that any strategy costing more than the $50-$60 range must be rejected as being too expensive.

    The Harvard study notes that GHG

    …prices at their projected levels are far too small to create a significant incentive to drive less. Fuel prices above $8/gallon may be needed to significantly reduce U.S. GHG emissions and oil imports.

    This should tell us something. Achieving the proposed reduction is GHG emissions from the transportation sector is just too expensive. If the current market price for GHG emissions cannot significantly reduce gasoline usage, then strategies that can be achieved for the market price should be implemented (in other sectors). Such an approach would by no means interfere with the potential to achieve GHG emissions reductions, rather it would facilitate less disruptive achievement.

    $7 Per Gallon Gasoline: The Harvard study goes on to suggest that gasoline prices of $7.15 to $8.71 per gallon by 2030 might be necessary to achieve the overall GHG reduction goal in the transportation sector. These higher prices would be the result of significantly higher fuel taxes. The resulting cost of GHG emissions reductions could be more than $500 per ton (compared to the Department of Energy 2030 gasoline price projection). While the Harvard report “poo-poos” the economic impact of doubling gasoline prices, a Reason Foundation report (and previous research at the University of Paris by Remy Prud’homme and Chang Wong Lee) has found a strong relationship between mobility (driving more) and economic growth.

    Focusing on Ends, Not Means: No one should believe it will be easy to achieve any eventual GHG emission objective. Success will be greatly enhanced by focusing on “ends” rather than “means.” This means employing the least costly and least disruptive strategies, without regard to how much we drive, where we live, how much power we consume or any other peripheral (and irrelevant) consideration.

    At a price of $500 or more, the Harvard report’s price per ton could be nearly 10 times as much as the $60 GHG price assumed in the very same report. Such an increase in the price of gasoline would be both absurd and unnecessary.

    ——

    Note: There are multiple proposals for economy wide GHG emissions reductions. Congressional have been for 17% to 20% reductions by 2020.