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The US Census Digs Deeper: Where Were Your Ancestors From?

Over 45 million Americans identify their dominant ancestry as German and 22,000 identify theirs as Marshallese, from the Marshall Islands in the Pacific. But in the US Census proposed new form for 2020, both of these groups get their own box to check for the first time. In the previous 2010 form (shown below), German-Americans would simply check ‘White’ and Marshallese-Americans would check ‘Other Pacific Islander’.

In the 2020 form therefore, the US Census is seeking more disclosure and more granularity in the population data. This desire for more detail is not evenly spread however. The Marshallese, 0.01% of the US population, get as much real estate on the form as do German-Americans, 14% of the population. Germany being a country of many regions and Bundesländer, there would surely be more fragmentation in that 14% if anyone cared enough to know the percentage who claim for example Bavarian vs. Hessian ancestry.

This extra layer of detail would make sense if the US Census was agnostically gathering data about ancestry. The Census would then determine a certain hurdle, say 1% or 2% of population, beyond which a group would get its own check box. But as we will see below, the Census has specific policy-related reasons for gathering this data.

Fifty Shades

The proposed new form (shown below with annotations by Pew Research) has nearly tripled in size from 2010 and now includes a new section for Americans of ‘Middle Eastern or North African’ (MENA) ancestry who had been until now categorized as ‘White’. Notwithstanding this new privilege, the six national origins listed in the MENA section (Lebanese, Syrian, Iranian, Moroccan, Egyptian and Algerian) altogether add up to well below 1% of the population.

Of course, this is the percentage of people who ‘self-identify’ as Middle Eastern or North African. Their actual number is likely to be higher if you account for the fact that some still prefer to self-identify as white. Even with this adjustment however, the MENA groups probably don’t exceed 2% of the population.

A similarly sized section is reserved for ‘Native Hawaiian and Other Pacific Islander’ (including the Marshallese) but here again, the entire section and its six choices represent a small percentage that is less in total than 0.25% of the population. Here then are six choices to cover fewer than 0.25% of Americans, same as the six choices under the ‘White’ heading to cover 60%+ of Americans who are of European descent.

Because each major heading only includes six ethnic or national identifiers, many large groups of Europeans are not represented by the available choices. For example, Scottish and Norwegian are 5.5 million and 4.4 million, or 1.7% and 1.4% of the population, but are not on the form.

Even within a section, the inclusion of some countries and exclusion of others are not straightforward. For example, in the new ‘Hispanic, Latino or Spanish’ category, Guatemalan with a population of 1.38 million is left out to make room for Colombian with 1.08 million. This may come from a desire to have at least one South American country listed among the six in this category. By contrast in the 2010 census, most Americans of Hispanic, Latino and Spanish ancestry would check the ‘White’ box.

In its effort to obtain a comprehensive picture, the Census has to grapple with the complication of data that is is part race, part ethnicity and part national origin.

One solution is to do away with the headline categories (White, Hispanic, Black, Asian etc.) and to simply list the 40-odd subcategories. Yet this would still overweigh some and underweigh others.

Another solution then is to simply list all the countries of the world. But this in turn would not provide enough information on race. Is an American of South African ancestry black or white? To be thorough, an adjacent question could request this information. But then is an Argentinian of German ancestry ‘White’ or ‘Hispanic, Latino or Spanish’? Is the Paris-born son of Moroccan immigrants ‘French’ or a descendant of MENA ancestors?

The point here is that there is little racial or ethnic homogeneity in many countries, even if most Americans associate their own ancestry with one or two specific nationalities. The key phrase in this data collection is ‘self-identify’, meaning the way each American chooses to identify him or herself. The offered choices are in many cases convenient shortcuts rather than objective identifiers.

Data for Policy

A third solution in theory would be to opt for simplicity and to do away with this type of data collection altogether. Not all nations request this information in their censuses. Censuses in Italy, the Netherlands, Norway and other countries make no mention of race or ethnicity. France passed a law in 1978 that makes it illegal for the census to collect data on race or ethnicity. A Brookings Institution article explains:

Unlike many other West European countries, and very much unlike English-speaking immigrant societies such as the United States, Canada or Australia, France has intentionally avoided implementing “race-conscious” policies. There are no public policies in France that target benefits or confer recognition on groups defined as races. For many Frenchmen, the very term race sends a shiver running down their spines, since it tends to recall the atrocities of Nazi Germany and the complicity of France’s Vichy regime in deporting Jews to concentration camps. Race is such a taboo term that a 1978 law specifically banned the collection and computerized storage of race-based data without the express consent of the interviewees or a waiver by a state committee. France therefore collects no census or other data on the race (or ethnicity) of its citizens.

The article goes on to discuss some policies and laws that were adopted to fight racism and to improve conditions in economically depressed parts of the country.

The US however is different in many ways. It has several large groups of different ethnicities and a longer history of often difficult race relations. The US Census addresses the question of race data collection on its website:

Why does the Census Bureau collect information on race?

Information on race is required for many Federal programs and is critical in making policy decisions, particularly for civil rights. States use these data to meet legislative redistricting principles. Race data also are used to promote equal employment opportunities and to assess racial disparities in health and environmental risks.

Looking at each in turn,

Federal programs: It makes sense for the Census to identify the location of communities that receive some kind of government attention or assistance. Yet, when you consider the new form, it is not entirely clear why some programs should be tailor made for say Egyptian-Americans (represented on the new form, though only 0.08% of the population) but none for the numerous Scots-Irish (not represented, though 1% of the population) some of whom, according to this new book, have long endured a weak economy in Appalachia and would certainly welcome some assistance.

One explanation is that the Census is counting the groups that are more likely to experience discrimination rather than any group that happens to be suffering economic distress. But if this is the case, why then have the choices of German, Irish, English etc. instead of just White?

Redistricting:As often discussed elsewhere, redistricting that takes race or ethnicity in consideration can easily lead to gerrymandering, an undesirable way to define district boundaries.

Employment, Health, Environment:Here again as with Federal Programs, it is not immediately obvious why the Census needs more granularity than it already had in 2010.

Outside of the provision of government programs to specific groups, there seems to be no compelling reason for the Census to collect and distribute data on race, ethnicity or national ancestry. Of course, corporations also find this data useful in their effort to market their products to people of various cultural affinities. But private demographers could easily fill the gap if the Census did not collect the data with sufficient detail.

The big question is whether the Census should be asking this question in the first place. Could government programs be effective by targeting poorer parts of the country without any data on race or ethnicity? It may be a good idea to analyze the experience of France in this regard.

Politicians may like the fragmented information that helps them tailor their message specifically to the audience in every locality they visit. But on any given issue, a national politician should offer a consistent message whether he is speaking to a crowd in Minneapolis, San Diego or New York. And a local politician would already have a close knowledge of his district’s or state’s demographics.

This piece first appeared at Populyst.net.

Sami Karam is the founder and editor of populyst.net and the creator of the populyst index™. populyst is about innovation, demography and society. Before populyst, he was the founder and manager of the Seven Global funds and a fund manager at leading asset managers in Boston and New York. In addition to a finance MBA from the Wharton School, he holds a Master’s in Civil Engineering from Cornell and a Bachelor of Architect

Photo: Travelin’ Librarian

October 20, 2016
A Capital Improvement and Revitalization Idea for Detroit

You may have heard that Detroit is in the midst of a modest but enduring revival in and around its downtown. Residents and businesses are returning to the city, filling long-vacant skyscrapers, prompting new commercial development and revitalizing adjacent old neighborhoods. As a former Detroiter I’m excited to see the turnaround. After so many false starts, Detroit’s post-bankruptcy rebound seems very real.

However, there seems to be a growing awareness that the city’s current revival has its limits. On one hand, what’s happening now in Detroit could be considered a rather elongated recovery for the city instead of growth, as the city races to catch up with cities that have had a 20-year head start on urban revitalization. One could argue that the Motor City is slowing losing its taint, and the investment that’s coming to the city now is investment that never left, or never left at such a scale, in other cities. Maybe its reclamation rather than revitalization.

But more broadly speaking, there’s a sentiment that the city’s revival hasn’t been inclusive. In a majority-black city, startlingly few African-Americans appear to be involved in the rebound, either as developers, homebuyers or even consumers of new amenities. Because of this, two vastly different kinds of fears seem to trouble much of the city’s black community — the revitalization could burn through the city like a wildfire and lead to widespread displacement, or the rebound could peter out before it has a chance to transform even more of the city.

How can that be? Maybe because people and businesses are coming back not because of an economic change in the city, but a socio/cultural one. Detroit is still the Motor City, and that won’t change anytime soon. Detroit will remain the headquarters of American auto production and be a key manufacturing center for generations to come, and it will continue to ride the wave of manufacturing ebbs and flows. That’s why I say the economy is driving little of what’s happening in Detroit today. The Big Three are only eight years away from a true existential threat, and are still in the process of righting the ship. By my eyes, Detroit still hasn’t found a new economic raison d’etre that could vault it into the next phase of its development.

As the fears that drove white and middle-class flight from the city from the 1960’s onward recede into the distant memory, many people are willing to reconsider Detroit and return.

Detroit is at an interesting juncture in its history. After 125 years of focusing on its national and global economic prominence and leaving city-building behind, maybe now Detroit can focus on being a thriving, livable city. For everyone. There is an opportunity for Detroit to build on its rich urban design legacy to include more of the city, and more of its people, in its revival. There is an opportunity to set the stage for good — even innovative — urban development in the Motor City as the city continues to search for a new economic catalyst.

I believe the city should undertake a capital improvement/revitalization plan that utilizes its grand arterial streets — Gratiot, Woodward Grand River and Michigan avenues — and Grand Boulevard, the parkway necklace around the city’s inner core, as assets and foundations for growth. After that, the city could extend similar improvements to the locations where the arterial streets intersect with the defunct Detroit Terminal Railroad, further out from the city center. Finally, the improvements could be extended even further outward to Detroit’s other boulevard necklace, Outer Drive, near the city limits. Just as interstate highway development had the net impact of opening up outer bands of suburbia to city residents, this plan could open up languishing parts of the city for revitalization.

Here’s the five-phase process:

• Transform Gratiot, Woodward, Grand River and Michigan avenues into true boulevards — landscaped medians, streetscaping, wide sidewalks, bike lanes, etc. — from their sources in downtown Detroit to their intersections with Grand Boulevard.

• Establish public squares where each new boulevard intersects with Grand Boulevard.

• Develop a connected greenway along the path of the former Detroit Terminal Railroad.

• Extend boulevard treatment along Gratiot, Woodward, Grand River and Michigan avenues to a new terminus at Outer Drive.

• Complete and connect Outer Drive where necessary, and establish new public squares where the boulevards intersect with Outer Drive.

Each step of the plan would include zoning changes along the affected areas with the intent of increasing residential and commercial development choice, and send a signal that the city is ready for transformation.

Here’s how this project would look conceptually, looking at the entirety of Detroit:

First, please excuse my crude Microsoft Paint illustration. Hey, it serves its purpose. Second, let’s consider the broad areas of the city highlighted in various colors. The green areas are the downtown and downtown-adjacent areas that have been experiencing a pretty significant rebound over the last 5-10 years. In fact, you could say that revitalization took hold there with the opening of the Comerica Park baseball stadium in 2000 and the Ford Field football stadium in 2002. This area also includes the Midtown area north of downtown that includes Wayne State University and a host of city cultural institutions. The orange areas are the parts of the city that capture the dystopian imagination of Detroit. This area is quite — but not totally — abandoned, where much of the city’s older residential and industrial treasures have been lost. There’s still some intact neighborhoods that have a solid walkable foundation, but they’re often disconnected from each other by some serious abandonment. The yellow areas are the areas that might be described as imperiled; they could soon look like the orange zone if action isn’t taken, and in fact some parts of it (like the Brightmoor neighborhood, on the far west side, are quite abandoned already). The gray or uncolored areas on the far northeast and northwest edges of the city represent the most stable residential neighborhoods of the city, but they, too, are threatened by the challenges experienced by the rest of the city.

When you hear Detroiters expressing concern that downtown revitalization isn’t reaching the neighborhoods, they often come from the yellow and gray/uncolored areas, with fewer and fewer voices coming from the relatively open orange areas. Viewed this way it can be understood that people see the city’s rebound as having a low ceiling; there is a half-empty quarter that sits between them and the promise of revitalization.

My idea is to utilize strategic infrastructure investment and zoning reform to attract new development to key corridors, utilizing the city’s radial network. The radial blue lines on the map emanating from their intersection downtown represent (clockwise, from the left) Michigan, Grand River, Woodward and Gratiot avenues. The blue line that connects them, just outside the green revitalization area, is Grand Boulevard. The blue line that connects the radial streets further out is Outer Drive. The green stars represent public squares or plazas that could be built, and the light green circles indicate an approximate extent of impact outward from the squares or plazas. The green line that serves as the dividing line between the yellow and orange areas is the Detroit Terminal Railroad, and it would become a connecting trail.

Detroit was blessed early on with an excellent radial street system, but it quickly abandoned it as growth took hold in the early 20th century. Detroit missed an opportunity for grand public spaces at the same time that other cities were incorporating them into their urban fabric — and those public spaces became the foundation for their rebound. Consider this image, where Grand River Avenue intersects with Grand Boulevard:

Or, worse yet, where Gratiot Avenue and Grand Boulevard meet:

This was a missed opportunity for Detroit to have majestic entryways into neighborhoods beyond the city center. This was also a missed opportunity to develop areas that could become more mixed use and multifamily in character, as opposed to the dominant single-family home city that Detroit is today.

If Detroit had the foresight 100 years ago to make strategic infrastructure investments, it could have put in place something like Chicago’s Logan Square, located at Milwaukee Avenue and Logan Boulevard (also a radial street and boulevard intersection):

Or Logan Circle, in Washington, DC:

The public squares on the radial avenues could have the effect of drawing development and revitalization outward from the city center, as has happened in Chicago and DC. This could continue outward to the DTR trail and Outer Drive, if the city sees success in such a measure, finds the appropriate resources and desires to extend it further.

Detroit should certainly see the merits of such an investment. The city renovated and rededicated a new Campus Martius Park in 2004, and it has become a focal point for downtown revitalization.

Without a doubt, this would be a costly measure, maybe even a folly for a city just out of municipal bankruptcy and still struggling to provide basic city services. that’s why I would envision this as a long term proposal, perhaps a 10-year project.

That’s the basis of the idea. I’ll follow up with more details soon.

Top photo: detroit.curbed.com

Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years. He is also the author of “The Corner Side Yard,” an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

October 19, 2016
Today’s Orange County: Not Right Wing—and Kinda Hip

What comes to mind when you think about Orange County? Probably, images of lascivious housewives and blonde surfers. And certainly, at least if you know your political history, crazed right-wing activists, riding around with anti-UN slogans on their bumpers in this county that served as a crucial birthplace of modern movement conservatism in the 1950s.

Yet today, Orange County—or the OC, as locals call it—is becoming a very different place. Today close to half the population of this 3-million person region south of Los Angeles are minorities, primarily Latino and Asian, and the county’s future belongs largely to them.

These days you color the OC both ethnically diverse and politically purplish. The Republican share of the electorate has dropped from 55 percent in 1990 to under 40 percent today. Two of the seven people who represent the area in Congress are Latino, and a third is of Middle Eastern descent. Four of the 10 people the county sends to Sacramento are minorities, three Asians and one Hispanic. Asians, now 20 percent of the local population, represent the majority on the county Board of Supervisors. In 2012 Mitt Romney took the county with 53 percent of the vote; this year it may be far closer than that.

The cultural landscape is also changing. What was historically a land of hamburger dives (we still have some) and little Mexican restaurants (we have many) is now home to some of Southern California’s best restaurants—including two on the top 30 list ofLos Angeles Times food critic Jonathan Gold. The OC is also home to one of the country’s leading venues for new plays, South Coast Repertory. Alongside the ubiquitous malls have arisen some of the nation’s most innovative urban environments, some of them revived small town main streets, from Santa Ana’s 4th Street Market to Orange to Laguna Beach and Fullerton.

When urbanists talk about the future, they usually imagine an environment of dense buildings, connected by train transit and highly centralized workplaces. Yet the bulk of all the nation’s economic and population growth takes place in “post-suburbia,” a term first applied to the OC. Post-suburbia, noted two urban scholars in 1991, reflects a “decentralized, multi-centered area” that puts “into question the mainstream urbanist’s concept of central-city dominance.”

This new geography of urbanity—far more than the much-discussed recovery of the urban core—dominates our metropolitan life; since 2000 over 80 percent of all metropolitan area jobs and population have remained outside the urban core. Post-suburbia predominates among our most demographically and economically vital regions, including STEM-intensive regions such as Silicon Valley, the northern reaches of Dallas, the western suburbs of Houston, Johnson County west of Kansas City or virtually anything around Raleigh or Austin. Orange County’s STEM sector (PDF) has expanded at twice the rate of L.A. County, despite all the considerable hype about the emergence of “Silicon Beach.”

Post-suburbia was not designed to be a traditional commuter suburb, where people pile onto trains or the highways to get “downtown.” The vast majority of OC people work in the plethora of county worksites, and many others, particularly from the Inland Empire to the east, drive into the area for work.

What places like the OC sell is both work and quality of life. The area ranks 10th out of 3,111 counties in the U.S. for natural amenities, and even outpaces Los Angeles among cities for best recreation. The roads are less congested, and there’s more open space. Urban Los Angeles has 9.4 acres of parks and recreation areas per 1,000 residents; Irvine has 37 acres per 1,000 residents, meaning that over 20 percent of the city’s land is dedicated to parks, five times the national average. No wonder the Irvine city motto is “Another Day in Paradise.”

All changes are not for the better, of course, and one of the chief problems in today’s OC is the cost of housing. Irvine is a city of 236,000 people that was once a classic Anglo suburb and is now 40 percent Asian and less than half white. Housing, once distinctly middle class, now averages near $800,000, in large part due to purchases by Chinese investors. According to the real-estate information firm DataQuick, the 25 most common last names of homebuyers last year were Chen, Lee, and Wang.

The landscape has also changed, with massive rows of multi-family houses crowding the wide boulevards of the city, clogging traffic and making “paradise” a little less bucolic. Since 2000, Orange County’s prices have increased 3.5 times that of incomes, one of the highest rates of increase in the country. The middle class who came to experience a Disneyland urban existence now finds the county largely beyond their means.

These price increases have benefited many older property owners, particularly along the strip near the Pacific Ocean—now among the most expensive places to live in the country—but have sent rents soaring as well. Santa Ana, right next door to Irvine, is home now to much of the county’sgrowing homeless population, now estimated at 15,000, in large part reflecting rents increasingly out of reach to the working poor. If one full-time worker rents a two-bedroom apartment in Orange County they can expect to spend over 40 percent of their income (PDF) on rent.

High prices are making the OC increasingly unaffordable for young families. Despite the assertions by density advocates, most millennials remain deeply interested in home ownership and generally move to places they can afford a house, which is usually somewhere else. This is one reason why Orange County, once an epicenter of youth culture, is going grey—and quickly.

Orange County’s old folks feel little reason to move, short of being carried out feet first. The OC’s perfect weather, coupled with Proposition 13 protections, keeps seniors in their homes long after their offspring have left. With grey ponytails common even among surfers, the OC by 2040 is on track to be the oldest major county in California.

The big hope may be the aging of millennials who by 2018 will on average be over 30. With safe cities and exceptional schools, the OC is a great place for “grownup millennials” looking to raise a family. Kina De Santis, CMO of the Orange County-based tech startup Motormood, calls it “very family oriented,” and Lee Decker, CMO at IGNITE Agency praises it for having the right environment for those with families who still want to focus on their startups, explaining, “As I prepare to get married to my kick ass and ridiculously supportive fiancé, I’m deciding to firmly root myself here in OC.”

In a famous scene from the play Hamilton, the future treasury secretary and his friend, Marquis de Lafayette, celebrate America’s revolutionary victory with the words—“immigrants, we get the job done.” As the OC evolves in the coming decades, the fast-growing foreign born population, and their offspring, will play the leading roles.

In 1970, 80 percent of OC residents were non-Hispanic white. Many feared new immigrants, with the OC Grand Jury—a body of 19 to 23 members impaneled for one year to investigate and report on both criminal and civil matters within the county—in 1993 calling for a three-year ban on all immigration. Since 2000, the area’s Latino growth rate has been roughly 50 percent greater than Los Angeles’s. By 2014, the non-Hispanic white population dropped to 43 percent of the population, while the Hispanic share rose to 35.3 percent.

The growth of the Asian population has been, if anything, more dramatic. One critical turning point was the arrival of the Vietnamese after the 1975 fall of Saigon, which turned Westminster from a sleepy town to one of the largest settlements of Vietnamese outside the mother country. More recently, Koreans and ethnic Chinese have arrived in significant numbers.

Since 2000, Orange County’s Asian population has been growing at roughly 3 percent annually, roughly 50 percent faster than Los Angeles County. The OC’s rate is roughly equal to that of such Asian migration centers as Santa Clara, San Francisco, and New York. Overall, Orange County is the nation’s fourth most heavily Asian county over 1 million, at roughly 20 percent.

Although they differ in appearance from the old OC denizens, these new OC residents are attracted by many of the same things that brought earlier immigrants to the area—single family homes, parks, and good public schools. They have created a dazzling series of ethnic “villages” from the heavilyVietnamese band from Westminster to Garden Grove, to the expanding “Little Korea” in the same area, the “Little Arabia” in Anaheim and the El Centro Cultural de Mexico, located in Santa Ana.

These newcomers and their kids are reshaping the OC’s culture, which plays a huge part in the area’s economy, employing well over 50,000 people; overall, the county lags only New York and Los Angeles in terms of the role of creative industries. In the past much of this was tied to the surfer culture, most notably serving as the fashion capital of the surf wear world—known to some Boomer adepts as “Velcro valley,” built around surf wear icons Hurley, Quicksilver, and O’Neill. The creative sector is adding jobs across a range of other industries such as architecture and interior design. Orange County is increasingly proving itself capable to draw the talent and support the lifestyle to compete with other creative powerhouses such as Los Angeles and New York.

Immigrants provide much of the impetus. Much of the best food in Orange County is produced by newcomers and their children. The immigrant reshaping of the OC also is reflected in the bustling ethnic shopping malls that dot the county, packed with shops selling groceries, clothing, travel packages, and videos to the increasingly diverse population. Even more important is the growing cross-fertilization of ethnic styles and tastes. Urban amenities such as locally owned restaurants, bars, and retail shops at Huntington Beach’s Pacific City, keep things interesting as people are increasingly looking to spend their money on regionally tuned experiences (PDF), rather than typical suburban chains.

Perhaps the most influential figure here is Shaheen Sadeghi, a Persian-American and former CEO of the surf wear line Quicksilver. Sadeghi’s company has taken a dozen sites, many of them deserted industrial and warehouse spaces, and converted them into exciting urban spaces. Perhaps his most impressive is the Packing House in Anaheim, a gigantic food court located in a former fruit-packing facility, which teems with ethnic food vendors.

Critically, Sadeghi’s vision goes well beyond the usual urbanist dreamscape of a culture dominated by hip singles and childless couples. He wants to appeal to families, just in an updated way. “The international community tends to be more family oriented,” he notes, “on the weekend at the Packing House you’ll see a family from Asia putting all the tables and chairs together.”

Building this new vision for OC will not be easy, he realizes, given the regulatory vise exercised by California regulators on small business. Yet he sees the area’s decentralization—epitomized by the county’s 34 separate cities—as providing consumers with greater diversity and choice. “Each city has its own identity, brand, and culture,” he suggests. “It’s like there’s more cookies in the cookie jar.”

Sadeghi is bringing the old OC model to the future, proving that post-suburban “sprawl” can coexist with diversity and culture. Like the visionaries who created Disneyland, Irvine and other earlier iconic expressions of the county’s past, innovators like Sadeghi are willing to buck models, urban or otherwise, in pursuit of a unique sensibility. The OC should not aspire to become another Brooklyn, he suggests, but exploit all its natural advantages, as well as its efflorescent diversity to reinvent itself. “After all,” he says with an inner reassurance those of us who live here tend to have, “we still have a couple of things no one else has—ocean and good weather. And they aren’t going away.”

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

October 18, 2016
Two Cheers for NIMBYism

Politicians, housing advocates, planners and developers often blame the NIMBY — “not in my backyard” — lobby for the state’s housing crisis. And it’s true that some locals overreact with unrealistic growth limits that cut off any new housing supply and have blocked reasonable ways to boost supply.

But the biggest impediment to solving our housing crisis lies not principally with neighbors protecting their local neighborhoods, but rather with central governments determined to limit, and make ever more expensive, single-family housing. Economist Issi Romem notes that, based on the past, “failing to expand cities [to allow sprawl] will come at a cost” to the housing market.

A density-only policy tends to raise prices, turning California into the burial ground for the aspirations of the young and minorities. This reflects an utter disregard for most people’s preferences for a single-family home — including millennials, particularly as they enter their 30s.

In California, these policies are pushed as penance for climate change, although analyses from McKinsey & Company and others suggest that the connection between “sprawl” and global warming is dubious at best, and could be could be mitigated much more cost-effectively through increased work at home, tough fuel standards and the dispersion of employment.

Read the entire piece at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

October 17, 2016
Diedre McCloskey’s Trickle-Out Economics

Economics, history, English and communications Professor Diedre N. McCloskey, of the University of Illinois, Chicago offers a unique interpretation of economic history that is well summarized in the subtitle of her book, “Bourgeois Equality: How Ideas, Not Capital or Institutions Enriched the World.”

This is a magisterial volume, which Matthew Ridley praised in his Times of London review, saying “It is so rich in vocabulary, allusion and fact as to be a contender for the great book of our age.” That is not an exaggeration.

As would be expected of any economic history, McCloskey emphasizes the material advancement that has transformed human lives in so much of the world since 1800. Finding that that the cradle of this advancement was northwestern Europe, and in particular the Netherlands and Great Britain, McCloskey rejects notions of geographic or cultural determinism, suggesting it could have arisen from other parts of the world, especially China and India.

Not Capital Nor Institutions

Despite predominant theories to the contrary, neither capital accumulation nor institutions were pivotal in the substantially rising standards of living. McCloskey creatively illustrates the problem with institutions:

“You can set up British – style courts of law, and even provide the barristers with wigs, but if the judges are venal and the barristers have no professional pride and if the public disclaims them both, then the introduction of such a nice sounding institution will fail to improve the rule of law.”

She rejects the idea that the progress of the previous two centuries represented the continuation of progress already underway. Indeed, annual economic growth had staggered along at from less than 0.1 before 1800. McCloskey contrasts this with what she calls a “hockey stick” phenomenon, in which per capita incomes grew by factors of from 10 to 30 times — 1,000 percent to 3,000 percent per cent from 1800 to 2010.

The Problem

The problem was the bifurcation of society into a small privileged class and a far larger number of commoners, the bourgeoisie. Opportunity was largely limited to the privileged class.

“The former aristocratic or Christian or Confucian elites, then, had contempt for business, and taxed it or regulated it at every opportunity, keeping it within proper bounds. Such social regulation was the chief obstacle preventing the march to the modern, namely, the withholding of honor from betterment and dignity from ordinary economic lives.”

The result was a social structure characterized by “extortion, not protection,” what McCloskey calls the “Aristocratic Deal.”

The Great Enrichment

However, this was to change in the years leading up to 1800. McCloskey describes changing attitudes that encouraged participation of commoners and a “partial erosion of hierarchy.” The “Aristocratic Deal” was replaced by the “Bourgeois Deal,” which became “unevenly, the ruling ideology.”

“The deal crowded out earlier ideologies, such as ancient royalty or medieval struck aristocracy or early modern mercantilism or modern populism. The bettering society of liberalism which, when true to itself, was not led by the great king or the barons of the bureaucrats or the mob, all of whom took their profits from zero sum and the monopoly of violence.”

McCloskey refers to this advancement as the “Great Enrichment.” The key was what she calls “trade-tested betterment,” characterized as commoners joined a free market for ideas. All of this led to a radical improvement in the standard of living, the result of “allowing free entry to compete with the monopolies that the aristocrats or the plutocrats had arranged under the aegis of a captured government.”

This liberated ordinary people, who became generally equal under the law who were “freed from ancient suppression of their hopes.” The Great Enrichment, she says, is the most important secular event since the invention of agriculture,” adding that it “restarted history.”

Reversion

But for all the progress, there have been strong headwinds. According to McCloskey, the rhetoric took a decidedly negative turn about around 1848, the banner year of revolutions. It was led by the “clerisy,” artists, the intelligentsia, journals, professionals and bureaucrats, which “misled its earlier commitment to a free and dignified common people.” She attributes the attack to a “new and virulent detestation of the bourgeoisie.”

In more recent years, the clerisy has sought to replace the focus on equality of opportunity with equality of results. McCloskey objects, so much so that a chapter is entitled: “What Matters is not Equality of Outcome, but the Condition of the Working Class.” She effectively makes the case that poverty can be generally measured only absolutely, not relatively.” Otherwise there can be no eradication of poverty. “

Nonetheless, she is concerned about low income citizens, indicating the need to find effective ways to reduce poverty. She shares the concerns of the Left: “In our desire to help the poor, we bleeding heart libertarians stand in solidarity with our social democratic friends – if not usually agreeing with them on exactly which policies have helped the poor.” Her concern is that “we actually help the billion [the world’s remainingpoor], not merely indulge our indignation and our conviction of ethical superiority by supporting policies that in fact make them worse off.”

A Sampling of Observations

Throughout the book, McCloskey provides useful observations.

Importantly, she notes that an economy exists for the benefit of consumers, not producers. “After all the point of an economy’s production for production for consumption not protection of existing jobs using old tools – horses candles and control drill presses.”

She challenges much of “progressive” thought, noting that protection of trades and jobs is inappropriate and that government should not be in the business of choosing winners (or losers).

She discusses “first act, second act and third act” economics, which requires competent analysts to look beyond the immediate consequences to the ultimate consequences of policy. Henry Hazlitt made this the core of his best-selling book Economics in One Lesson, seven decades ago, though economists, often working for governments, have not always heeded this advice.

Finally, McCloskey colorfully dismisses much of the current politically correct thought: “…end-state egalitarians would argue that markets ‘enslave’ and therefore the people can be saved only by forced – march liberation, hopefully provided by the Brahmans now in power…”

High Density Economics

Bourgeois Equality is the second of two great volumes on economic history in just a year. The first was The Rise and Fall of American Growth: The U.S. Standard of Living Since the Civil War by Professor Robert Gordon of Northwestern University, a long ride on the Chicago El (Metro) from McCloskey’s University of Illinois, Chicago . Both volumes are yet more evidence of Chicago’s high density of ground-breaking economic analysis.

The setting of the two books is considerably different, with Gordon focusing on the United States and technological advancement. Gordon is somewhat more pessimistic about the future, which is understandable from his historic analysis. McCloskey’s view is more optimistic.

Nonetheless, my years have taught me a profound respect for the ability of entrenched institutions, to block achievement of better living standards, while professing the opposite. This makes me prone to pessimism (as I indicated in the Gordon review). Professor McCloskey would not agree:

"Pessimism on the basis of the most alarming of today’s trends is jolly good fun. … But since 1800 it has been a poor predictor."

Trickle-Out Economics

For decades there have been debates about “trickle-down economics.” More recently, Nobel Laureate Paul Krugman characterized the Obama stimulus programs as “trickle-up economics” (the effect of which is debatable). Professor McCloskey tells us that that economic growth comes from ordinary people not by the beneficence of those above. We could call it “trickle-out” economics.” To the considerable extent her analysis is right, McCloskey describes that may be the ultimate flowering of democracy.

Wendell Cox is principal of Demographia, an international public policy and demographics firm. He is a Senior Fellow of the Center for Opportunity Urbanism (US), Senior Fellow for Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), and a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California). He is co-author of the “Demographia International Housing Affordability Survey” and author of “Demographia World Urban Areas” and “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.” He was appointed to three terms on the Los Angeles County Transportation Commission, where he served with the leading city and county leadership as the only non-elected member. He served as a visiting professor at the Conservatoire National des Arts et Metiers, a national university in Paris.

Photo: Cover: Bourgeois Equality: How Ideas, Not Capital or Institutions Enriched the World.

October 15, 2016
California’s Attack on Rule of Law

Morris Brown, founder of Derail (a citizen group opposed to California’s high speed rail project) writes over at Fox and Hounds Daily that newly enacted California Assembly Bill 1889 is unconstitutional.

Brown could not be more on the mark. In 2008, the California legislature had placed a number of protections in a Proposition authorizing bonds for California’s high speed rail line. These were intended as enticements to voters to approve the proposition. The legislature and Governor promised. The people approved. And, now the legislature and Governor have gone back on their promise.

In short, the legislature and Governor have revised the conditions of the proposition, something that requires a vote of the people. With respect to high speed rail (and perhaps other propositions) California has replaced rule of law with rule of men (and women). That this should have occurred with respect to a voter approved proposition is particularly egregious, since such measures (such as initiative and referendum) were Progressive Era reforms, under Governor Hiram Johnson in 1911, intended to permit the people to take legislative authority from the legislature and governor when they felt it appropriate.

Meanwhile, the California high speed rail project has become a legendary “white elephant,” with costs going through the roof and little hope for achieving the promised travel time between San Francisco and Los Angeles.

Brown’s analysis can be accessed here….

October 14, 2016
America’s Next Great Metropolis Is Taking Shape In Texas

If you drive south from Dallas, or west from Houston, a subtle shift takes place. The monotonous, flat prairie that dominates much of Texas gives way to a landscape that rises and ebbs.

The region around Highway 35 is called the Hill Country, and although it does not seem so curvy to a Californian, it is some of the very nicest country in the state of Texas, attracting a growing coterie of wealthy boomers. It also turns out to be a growth corridor that is expanding more rapidly than any in the nation. The area is home to three of the nation’s 10 fastest-growing counties with populations over 100,000 since 2010.

In fact, there is no regional economy that has more momentum than the one that straddles the 74 miles between San Antonio and Austin. Between these two fast-growing urban centers lie a series of rapidly expanding counties and several smaller cities, notably San Marcos, that are attracting residents and creating jobs at remarkable rates.

Anchoring one end of the region is Austin, which has been the all-around growth champion among America’s larger cities for the better part of a decade. Texas Monthly has dubbed it the “land of the perpetual boom.”

Austin has been ranked among the top two or three fastest-growing cities for jobs virtually every year since we began compiling our annual jobs rankings. Since 2000, employment in the Austin area has expanded 52.3%, 15 percentage points more than either Dallas-Ft. Worth or Houston.

Comparisons with the other big metros are almost pathetic. Austin’s job growth has been roughly three times that of New York, more than four times that of San Francisco, five times Los Angeles’ and 10 times that of Chicago. Simply put, Austin is putting the rest of the big metro areas in the shade.

Nor can Austin be dismissed as a place where low-skilled workers flee, as was said about other former fast-growing stars, notably Las Vegas. Just look at employment in STEM (science-, technology-, engineering- and math-related fields). Since 2001, Austin’s STEM workforce has expanded 35%, compared to 10% for the country as a whole, 26% in San Francisco, a mere 2% in New York and zero in Los Angeles. And contrary to perceptions, the vast majority of this growth has taken place outside the entertainment-oriented core, notes University of Texas professor Ryan Streeter, with nearly half outside the city limits.

Austin has also been sizzling in the business services arena, the largest high-wage job sector in the country. Since 2001, employment in business services in the Austin area has grown 87%, more than any of the large Texas towns.

No surprise then that Austin has become a magnet for people. Its population has grown at the fastest rate among U.S. metro areas above a million in the nation since 2000, an amazing 60%. That’s more than twice as fast as Atlanta, three times more than hipster haven Portland, roughly six times San Francisco and San Jose, and more than six times Los Angeles or New York. Much of the growth is coming from migration rather than births, and it boasts the highest rate of net in-migration of all the big Texas cities. The biggest sources of newcomers, according to an analysis of IRS data by the Manhattan Institute’s Aaron Renn, are California, the Northeast and Florida.

San Antonio: The Emerging Upstart

During the decades of Texas’ urban boom, San Antonio has been considered a laggard, a somewhat sleepy Latino town with great food and tourist attractions and a slow pace of life. “There has been a long perception of San Antonio as a poor city with a nice river area,” says Rogelio Sáenz, dean of the public policy school at the University of Texas-San Antonio.

Economic and population data say otherwise. Since 2000, San Antonio has clocked 31.1% job growth, slightly behind Houston, but more than twice that of New York, and almost three times that of San Francisco and Los Angeles.

And many of the new jobs are not in hospitality, or low-end services, but in the upper echelon of employment. This reflects the area’s strong military connections, which have made it a center forsuch growth industries as aerospace, and cyber-security. Although slightly behind Austin, San Antonio’s STEM job growth since 2001 — 29% — is greater than that of all other Texas cities, as well as San Francisco’s, and three times the national average.

Similar growth can be seen in such fields as business and professional services, where the San Antonio area has expanded its job base by 44% since 2000. This just about tracks the other Texas cities, and leaves the other traditional business service hotbeds — New York, San Francisco, Chicago and Los Angeles — well behind. The city has also expanded its financial sector; the region ranked seventh in our latest survey of the fastest-growing financial centers. Once again, there is a military connection; much of the area’s financial growth has been based on USAA, which provides financial services to current and former military personnel around the country, and employs 17,000 workers from its headquarters in the city’s burgeoning northwest.

But perhaps most encouraging has been the massive in-migration into San Antonio. Long seen as a place dominated by people who grew up there, the metro area has become a magnet for new arrivals. Since 2010, its rate of net domestic in-migration trails only Austin among the major Texas cities. Significantly, the area’s educated millennial population growth ranks in the top 10 of America’s big cities, just about even with Austin, and well ahead of such touted “brain centers” as Boston, New York, San Francisco.

In the process, San Antonio is emerging as an attractive alternative for young professionals and families to an Austin that has become more congested and expensive. The cost of living in San Antonio is significantly lower than the other Texas cities, and less than half that of places like San Francisco and Brooklyn. As the vanguard of millennials moves into the family forming, childbearing and house-buying years in the coming decade, San Antonio, with its increasingly lively music, art and restaurant scence, is likely to grow in attractiveness.

Greater San Marcos: Whoa Nellie!

As impressive as San Antonio and Austin’s progress has been, the most dramatic locus for growth in the region is between the two cities. The San Marcos area, which lies at the center of the corridor, has clocked growth that is among the most rapid in the nation by several measures. Looking at population, two of the 10 fastest growing counties in the country since 2010 are located in this corridor — Hays and Comal. Their growth rate, 4% per annum since 2010, exceeds Austin’s 3% and is almost double the growth rate of Dallas-Ft. Worth and Houston.

As is usual in Texas, and most American cities, urban growth tends to expand outwards, not only for population but also for jobs. Over the past decade, Hays and Comal’s job growth rate has been an astounding 37%, outpacing Austin’s impressive 31% growth, the other Texas cities, and over six times the pace of the country overall.

Local boosters suggest that this growth will transform the San Marcos area into something like other suburban nerdistans, such as San Jose/Silicon Valley, north Dallas, Orange County and Raleigh-Durham. Certainly some of the same advantages those areas enjoyed are emerging, including the growth of Texas State University at San Marcos (now with over 38,000 students) as a major center of higher education.

Equally important, note researchers John Beddow and James LeSage, the central location of the San Marcos area allows families to choose from not only local jobs, but those located in both San Antonio and Austin. And to be sure, tech, education, business and professional services are all growing rapidly, but so far much of the development is lower on the food chain, such as food service and wholesale trade. Amazon, for example, just recently opened a sprawling, 855,000-square-foot warehouse in San Marcos, which is slated to employ upwards of 1,000 people.

Choices To Be Made

If you were to look for the next great American metropolis, there’s probably no better bet than the emerging San Antonio-Austin corridor. The elements are all there: major universities, including the Austin and San Antonio campuses of the University of Texas, job and population growth, low housing prices and a burgeoning tech community. Perhaps even more important, this part of Texas is only marginally tied to the energy industry, which has become a huge drag on the economy of the state’s largest city, Houston.

Yet there remain many challenges. One is transportation, particularly around freeway allergic Austin, although San Antonio has an excellent and largely free-flowing system. The Austin bottleneck is particularly troublesome because much of the city’s growth is to the north, which means commuters living in the San Marcos region have to navigate through painfully slow freeways. Another is education, despite the university presence. San Marcos and Austin may be above the national average in terms of the percentage of college-educated residents, but San Antonio and New Braunfels, a large town south of San Marcos, still lag.

To maintain the area’s natural beauty, steps must be taken to prevent development from overrunning the Hill Country.

But none of this should stop this region from coalescing into something that represents a Texas version of Silicon Valley — a little less dependent on the highest end of companies, less expensive and more diversified — providing a powerful new entrant among the nerdistans that increasingly dominate our national economy.

This piece first appeared in Forbes.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

October 14, 2016
The New War Between the States

In this disgusting election, dominated by the personal and the petty, the importance of the nation’s economic geography has been widely ignored. Yet if you look at the Electoral College map, the correlation between politics and economics is quite stark, with one economy tilting decisively toward Trump and more generally to Republicans, the other toward Hillary Clinton and her Democratic allies.

This reflects an increasingly stark conflict between two very different American economies. One, the “Ephemeral Zone” concentrated on the coasts, runs largely on digits and images, the movement of software, media and financial transactions. It produces increasingly little in the way of food, fiber, energy and fewer and fewer manufactured goods. The Ephemeral sectors dominate ultra-blue states such as New York, California, Oregon, Washington, Massachusetts, Maryland, and Connecticut.

The other America constitutes, as economic historian Michael Lind notes in a forthcoming paper for the Center for Opportunity Urbanism, the “New Heartland.” Extending from the Appalachians to the Rockies, this heartland economy relies on tangible goods production. It now encompasses both the traditional Midwest manufacturing regions, and the new industrial areas of Texas, the Southeast and the Intermountain West.

Contrary to the notions of the Ephemerals, the New Heartland is not populated by Neanderthals. This region employs much of the nation’s engineering talent, but does so in conjunction with the creation of real goods rather than clicks. Its industries have achieved generally more rapid productivity gains than their rivals in the services sector. To some extent, energy  and food producers may have outdone themselves and, since they operate in a globally competitive market, their prices and profits are suffering.

Despite deep misgivings about the character of Donald Trump, these economic interests have led most Heartland voters somewhat toward the New York poseur, and they are aligning themselves even more to down-ticket GOP candidates. In generally purple states like Missouri, Ohio and Iowa, where manufacturing is key, Trump still leads—at least he was before the latest spate of Trump crudeness was revealed, this time regarding women.

The Republicans’ strongest base is in the energy belt where Trump has suggested policies that call for greater domestic production. This naturally resonates with businesses and working people in states ranging from Texas, Oklahoma and Louisiana to West Virginia, Wyoming and Alaska, which have borne the brunt of nearly 100,000 layoffs so far this year. It’s no surprise that all of these states constitute increasingly a lock for the GOP.

Historical Precedents

The conflict of economic interests has long defined American politics. America’s revolution was largely started by New England merchants rebelling against colonialist policies that sought to strangle our nascent capitalism in its infancy. The great economic tensions of the early 19th century centered on a struggle between the Jeffersonian and Jacksonian yeomanry and the powerful merchant class in the great Northeastern cities. A major point of contention was around such issues as the establishment of a national bank and high tariffs, bitterly opposed in the nation’s interior and the South.

The biggest national crisis in our history underscored this clash of competing economic interests. Although the galvanizing issue on both sides of the Mason-Dixon line was slavery, the Civil War was also a war, as Karl Marx suggested, of competing economic visions: the agrarian, slave-fueled economy of the South vs. the rapidly industrializing Northeast and Midwest.

Post-war conflicts revolved about hostility between the urbanizing North and the more rural South and West. Finance and industrial capital, usually in cities like New York and Chicago, was largely Republican and protectionist. Democrats tried to cobble a coalition of Southern agriculturalists and the big city, ethnic working class. With the onset of the Great Depression, Democrats gained primacy by melding this coalition to a rising and increasingly progressive professional class.

In the past, Democrats competed in the Heartland and backed its key industries. Lyndon Johnson was a proud promoter of oil interests; Robert Byrd never saw a coal mine he didn’t like for all but the end of his career. Powerful industrial unions tied the Democrats to the production economy. Now those voters feel abandoned by their own party, and even are dismissed as “deplorables”

Increasingly few Heartland Democrats, outside of some Great Lakes states, win local elections. In the vast territory between Northeast and the West Coast, Democrats control just one state legislature, the financial basket case known as Illinois.

For their part, Republicans are becoming extinct in the Ephemeral states, a process hastened by the growing concentration of media on the true-blue coasts. Wall Street, Silicon Valley and Hollywood have been drifting leftward for a generation, and Trump has accelerated this movement. Joined by the largely minority urban working and dependent classes, progressives now have a lock on   the Northeast and the West Coast.

The New Battle Lines

The new conflict between regions reflects a conflict between different ways of making money. Ephemeral America’s media and academic adjuncts generally portray the New Heartland’s economy as exploitative and environmentally harmful. A massive oil discovery in Alaska may be welcome news there, but a horrific prospect in places like Seattle, New York, or San Francisco.

Climate change increasingly marks a distinct dividing line. Manufacturing, moving goods, industrial scale agriculture, fossil fuel energy all consume resources in ways many progressives see as harming the planet. Progressives threaten these industries with increasingly draconian schemes to reduce greenhouse gas emissions. Gone are the days of supporting moderate shifts — which could work with some Heartland economies — from coal to gas and improving mileage efficiency.

Instead the demand from the left is for a radically rapid de-carbonization, which will reduce jobs in the Heartland and lower living standards everywhere. In California, Jerry Brown  is fretting about ways to curb cow flatulence, an obsession that is unlikely to be popular in Kansas, Nebraska or Iowa.

These divergent politics between states are accelerating the gap between the two economies. Since 2010, as the recovery kicked off, the big industrial job growth took place mostly in the Heartland — in Detroit, Charlotte, Atlanta, Phoenix and Houston. New York, Los Angeles, Philadelphia and Boston all managed to lose jobs. Since 2000, Los Angeles and New York together have lost over 600,000 manufacturing positions.

As industry weakens in an area, opposition to radical climate mitigation declines. Someone representing an increasingly de-industrialized east Los Angeles or Brooklyn feels no pressing reason to advocate for industry. High energy and housing prices, both connected to draconian climate change policies, gradually empty out the middle-class families, the demographic bulwark of the GOP. Meanwhile, in their coastal bastions, the grandees of Silicon Valley and Wall Street increasingly disdain anything reliant on fossil fuels.

The New Heartland has reason to resist such policies, which could turn what have been burgeoning economies back into backwaters. Regulatory regimes that radically boost energy costs, as in California and New York, hasten de-industrialization. The rapid decline of areas such as interior California and upstate New York testifies what may be in store for the Heartland under a Hillary Clinton administration and a Congress controlled by the Democratic Party.

This conflict will deepen in light of the ongoing gradual decline of key tangible industries — durable goods like heavy equipment and car manufacturing, fossil fuel energy, agribusiness. Back in 2012, all these sectors were doing well, something that helped President Obama win much of the old Rust Belt. In the current economic climate Republicans could still make significant progress, even with Trump at the top of the ticket.

In the process, the GOP, to the horror of many of its grandees and most entrenched interests, is becoming transformed. It is becoming something of a de facto populist party, based in the New Heartland, while the Democrats remain the voice of the coastal oligarchies who almost without exception back Hillary

In the immediate future, given the likely trajectory of a Clinton presidency, things may get tougher times for the New Heartland and its industries. Federal regulators will ape their California counterparts, extending controls that seem sensible in San Francisco into dramatically different geographies.

But don’t count the New Heartland, or the GOP, out. Once Trump is gone, there will be enough political will and money to mount a counter-offensive against the Ephemerals. The new War Between the States will not end in November. It will have hardly just begun.

This piece first appeared in Real Clear Politics.

Joel Kotkin is executive editor of NewGeography.com. He is the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University and executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The Human City: Urbanism for the rest of us, will be published in April by Agate. He is also author of The New Class Conflict, The City: A Global History, and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

October 12, 2016
The Rival Future Visions of Peter Thiel and Scott Adams

Our mental model of the world shapes our behavior at fundamental levels in ways we often can’t even recognize. I was struck by this when reading two books almost back to back, Scott Adams’ How to Fail at Almost Everything and Still Win Big and Peter Thiel’s Zero to One.

Both authors lay out a schema for modeling the future and how to behave relative to it, but come to very different conclusions.

Scott Adams, creator of the Dilbert comic strip, has a simple model: systems over goals. That is, it’s better to have a good system with high odds of success vs. setting a concrete goal and working towards it. In other words, get your lifestyle right when it comes to diet and exercise, don’t focus on losing X pounds to reach Y weight.

This strategy implies a single worldview axis: goals-systems, with a preferred end of the axis on which one should align his personal decision making.

Thiel, founder of PayPal, has a more formal framework, but adopts the same axis of decision making. In his case, he labels it definite-indefinite. He then combines this with an axis of optimist-pessimist to produce the following 2×2 matrix:

Peter Thiel future model matrix. Image via Will Price’s Zero to One review.

Both Thiel and Adams are American, so reside in the top half of the chart, so let’s focus there. To Thiel, a goal is a definite view of the future. That is, you have an exact idea of what the future should be, and set about making it happen. A system would be an indefinite future. In this view, we can’t fundamentally control the future, so we put ourselves in the best position to benefit from the chance that comes our way.

Now these two don’t have perfect alignment. Adams’ systems are in many cases designed to achieve results that could be viewed as a goal (e.g., a ripped physique). As a serial entrepreneur, he’s not afraid of starting companies, but does not put everything at risk while doing so. Most of what Adams would call goals Thiel would still label indefinite because they present incremental improvement vs. revolutionary change (e.g., lose 15 pounds vs. “We chose to go to the moon.”) But there’s a rough correspondence.

Adams, as we saw, comes down firmly on the indefinite/systems side of the equation. Thiel says that the would be startup founder should be in the definite/goals quadrant, and believes that part of the reason America has gone off course is that we’ve shifted from a definite to indefinite view of the future.

In the 1950s, people welcomed big plans and asked whether they would work. Today a grand plan coming from a schoolteacher would be dismissed as crankery, and a long-range vision coming from anyone more powerful would be derided as hubris.

In addition to his more formal framework for thinking about the future, Thiel also tries to explain why people like Adams have an indefinite view of the future:

But perhaps you can’t understand Malcolm Gladwell without understanding his historical context as a Boomer (born in 1963). When Baby Boomers grow up and write books to explain why one or another individual is successful, they point to the power of a particular individual’s context as determined by chance. But they miss the even bigger social context for their own preferred explanations: a whole generation learned from childhood to overrate the power of chance and underrate the importance of planning. Gladwell at first appears to be making a contrarian critique of the myth of the self-made businessman, but actually his own account encapsulates the conventional view of a generation.

Adams is a baby boomer, putting him squarely within this generational psychoanalysis.

Is one of the two right? I think it’s more complex than that, and in part comes down to what you want, what your temperament is, and what your experiences have been in life.

Thiel obviously has gargantuan Silicon Valley ambitions and an ego to match. And he’s got over a billion dollars to show for it.

Adams’ success is much smaller scale – but still well into the millions of dollars, plus a significant amount of fame. He appears to be fully satisfied with his life.

So at the individual level, you can succeed either way. At a societal level, Thiel may have a point, though Robert Gordon and others posit different explanations for the economic growth slowdown.

In any case, the key is that how you think about the future, particularly the degree to which you can shape the future, determines a lot about the strategies you are going to use for your life. On the one hand perhaps a concentrated bet and effort to sculpt the future. On the other a more open or diversified strategy to try get the best result in in uncertain future. (I should note that Thiel says this kind of diversification is a myth, saying, “Life is not a portfolio”).

I also recently read and reviewed Antifragile by Nassim Taleb. While I’m not familiar with his full corpus, his high view of randomness suggests that he’s favors a more Adams-like approach. He advocates that people should adopt what he calls a “barbell” strategy. That is, on one end you try to derisk your core life as much as possible. And on the other you place multiple, small, high risk bets with a chance of a significant payoff. This sounds like a system to me. On the other hand, Taleb also says that entrepreneurs who risk the definite should be treated with honor as heroes, even if they fail.

In any case, it’s worth thinking about how we view the future. Is it something that’s primarily within our control or something that’s more dominated by outside forces or even chance? How we answer that question will determine a lot about how we go about living our lives.

Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian, Forbes.com, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

October 12, 2016
Welcome to Rosemont, IL

Millions of people pass through O’Hare, settle into the adjacent hotels, go to conferences and meetings in the nearby convention centers, shop in the nearby stores or drink and eat in the nearby bars and restaurants, and believe they’re in Chicago. But they’re not. In most cases, they’re in the small village of Rosemont, the tiny town that’s done more than any community I know to capitalize on its location.

Last week my wife and son flew out of town for a quick vacation on the West Coast. As for me, duty called and I was unable to join them. But I did drop them off and pick them up from Chicago’s main international airport, O’Hare. While I waited for their arrival, I drove around the area surrounding the airport. For reference, here’s Rosemont’s boundaries, courtesy of Google Maps. Rosemont is the area shaded in faint red (click on the map if you need to make it larger):

Here’s what many people don’t know. Yes, O’Hare International Airport is technically within the City of Chicago. The airport is owned and operated by the City; Chicago Transit Authority (CTA) “L” lines can take you directly from downtown Chicago to the airport within 30-40 minutes. But the airport is connected to the rest of Chicago by a sliver of property that follows the parcels fronting Foster Avenue for about a half mile, before connecting with the broad tarmac that is the airport. Immediately east of the airport, where all the highways meet that connect the airport to the region, stands little Rosemont.

But “little” hardly applies in any sense to Rosemont. The village is a dizzying mix of hotels, convention centers, restaurants, large and small-scale entertainment venues, tightly packed against the interstates that wind their way through the community. Those familiar with the area know that the area has almost a Vegas Strip feel to it, with a scale that can overwhelm. Here’s some screenshots from Google Earth:

What you see above are hotels, a convention center, office complexes, an outlet mall, and Allstate Arena, a venue for professional and collegiate sports teams. What have I not included? Myriad bars and restaurants, a performing arts center, even a field for a professional women’s softball team. There’s even a casino, but it’s in yet another suburb, Des Plaines, just feet from the Rosemont boundary. All of this within a 1.8 square mile area that holds only 4,200 residents.

How did this happen? Two words, one man — Donald Stephens.

Airplane construction had taken place on the site that is now O’Hare for many years prior to the airport’s official opening in 1963. The City of Chicago annexed the property for manufacturing uses in the 1940s, using the Foster Avenue sliver mentioned earlier to reach the site. Chicago, as well as neighboring suburbs Des Plaines, Park Ridge and Schiller Park, all passed on annexing the land just east of what was a major manufacturing hub. However, the Interstate Highway Act, which initiated the construction of the Interstate Highway system, was passed in 1956. That act opened up possibilities for the development of an airport and changed how the empty lands would be viewed. Donald Stephens, an insurance underwriter, led the effort to incorporate the community that same year.

Rosemont’s boom as a commercial center paralleled the growth and expansion of O’Hare. First came the hotels, and then smaller commercial uses like bars and restaurants. The Donald Stephens Convention Center and Allstate Arena opened in 1975 and 1980, respectively, and throughout much of the ’80s the entertainment district also grew and expanded. The airport-driven uses continue to gather in the community; the Rosemont Theater for the Performing Arts opened in 1995. The Fashion Outlet Mall of Chicago opened in 2013.

This extreme concentration of commercial, recreational and entertainment uses led to a unique development in Rosemont. In 1995, residents living within the small residential core of the community voted to enclose all portions of residential Rosemont as a gated community. Rosemont residents may fight major traffic when going to or coming home from work, but they have a sense of security that usually comes with living in upper class enclaves.

Rosemont’s growth didn’t come without controversy. Stephens, who was the only mayor of Rosemont from its founding in 1956 until his death in 2007, was often dogged with accusations of associations with Chicago organized crime. Twice he was brought up on political corruption charges, for tax fraud and bribery, but was acquitted. After Stephens’ death, his son Bradley assumed the position of mayor.

Rosemont’s unique location has led to a unique set of statistics about the community. The community’s residents are firmly middle- and working-class: the median household income for residents is about $46,000, just below the metro area’s median of $55,000. Demographically speaking, the community is about 57% non-Hispanic white and 35% Hispanic/Latino. Rosemont residents lag behind the metro area in terms of educational attainment by one measure 13.1% of residents over age 25 have a bachelor’s degree or more, compared to 35.3% in the metro area.

But none of that matters when the community has outsized economic numbers related to its location. In a region that averages about 1.1 jobs per household, Rosemont has 11.3. In a region that averages about $14,500 in general merchandise retail sales per capita, Rosemont has over $163,000. In 2014, Rosemont had an equalized assessed value, or a value for all property in the community, of nearly $260 million. Schiller Park, just to the south of Rosemont and nearly three times its size in terms of residents, had an equalized assessed value of $290 million.

So, in many respects Rosemont is less a community than a state-chartered commercial and entertainment district. Its successes cannot be replicated. But that doesn’t mean that its successes are enduring. On my brief visit there, I saw many pedestrians walking across Rosemont from one commercial or entertainment venue to another, in what is a challenging walkable environment. The network of interstates that meet in the village means that it is an environment for cars, and there’s currently no way around that. If Rosemont wishes to maintain its position as a commercial and entertainment venue, it may really need to consider improved walkability as a way to reach new and younger demographics travelling through Chicago.

As for me, I often wonder how the area would look if Chicago had the foresight and vision to annex the property prior to the development of O’Hare, If it had, the uses may have been quite similar but the look very different.

Top photo: The Hyatt Regency O’Hare, located in Rosemont, IL. Source: totsandtravel.com

Pete Saunders is a Detroit native who has worked as a public and private sector urban planner in the Chicago area for more than twenty years. He is also the author of “The Corner Side Yard,” an urban planning blog that focuses on the redevelopment and revitalization of Rust Belt cities.

October 11, 2016