Blog

The Looming Political Battle of the Ages

The old issues of class, race and geography may still dominate coverage of our changing political landscape, but perhaps a more compelling divide relates to generations. American politics are being shaped by two gigantic generations – the baby boomers and their offspring, the millennials – as well as smaller cohorts of Generation X, who preceded the millennials, and what has been known as the Silent Generation, who preceded the boomers.

Both the boomers and the Silents gradually have moved to the right as they have aged. Other factors underpin this trend, such as the fact that boomers are overwhelmingly white – well over 70 percent compared with roughly 58 percent for millennials. People in their 50s and 60s have seen their incomes and net worth rise while millennials have done far worse, at this stage of their lives, than previous generations.

Although millennials are more numerous than boomers, the elderly are a growing portion of the population, and they tend to vote in bigger numbers. Voters over age 65 turn out at a rate above 70 percent, while barely 40 percent of those under 25 cast ballots. That may be one factor in why this presidential campaign is dominated not by youth, but by aging figures like Donald Trump (69), Hillary Clinton (68) and Bernie Sanders (74).

The Silent Generation

Leading generational analysts – Neil Howe, Morley Winograd, Mike Hais – have suggested that the experiences people have growing up shape political beliefs throughout their lives. This does not mean that people do not change as they age, but where they started remains a key factor in determining how far these changes spread within a generation.

The now-passing Greatest Generation – the group that survived the Depression and the Second World War – were largely shaped by the experiences of the New Deal and the boom of the postwar era. This has made them consistently less conservative than successor generations, and they have retained their Democratic affiliations.

Read the entire piece at the Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo: driki

October 28, 2015
The Houses Americans Choose to Buy

The US preference for detached housing remains strong, according to the newest data just released in the 2014 American Community Survey, by the United States Census Bureau. In 2014, detached house and represented 82.4 percent of owned housing in the United States. This is up 1.8 percentage points from the 80.6 percent registered in the 2000 census. The increase may be surprising, given the efforts of planners to steer people into higher density housing, especially apartments.

The US Situation in 2014

Among owned housing, mobile homes ranks second only to detached housing. Attached houses, which are ground oriented units with common walls, such as townhomes and semi detached homes (also called duplexes) are the third most popular form of owned housing, accounting for 5.7 percent of units in 2014. Perhaps surprisingly, the apartments planners prefer ranked fourth preference among households buying their own homes. Apartments, which include lower rise, midrise and high-rise condominiums account for 5.5 percent of owned housing. (Figure 1). The fifth, and by far the smallest category of owned housing is "Boats, RVs, Vans, Etc., which represented 0.1 percent of owned housing.

Trend Since 2000

There were approximately 4.7 million more detached houses in 2014 than in 2000. This means that 114 percent of the new owned housing stock was detached housing. Despite their second ranking among housing types, there were substantial losses in the number of mobile homes. In 2014 there were approximately 1.1 million fewer mobile homes and continuing losses could drop mobile homes below attached homes and apartments over the next decade. Mobile homes are often transitional for households aspiring to afford detached or even attached housing. Attached homes enjoyed a strong increase of approximately 410,000 units. The strong detached and attached housing increase could reflect, in part, the realization of those aspirations.

Apartments, which were within 15,000 of attached houses in 2000, dropped to approximately 270,000 behind, while adding only 160,000 owned units. In view of the strong condominium construction rates in some cities, this may be surprising. On the other hand, it could be indicative of the "dark and empty" thesis that many of the new units have been purchased for only occasional use and not as primary residences, some rented out by owners (Figure 2).

There was an 18,000 unit loss in "Boats, RVs, Vans, Etc."

Owned Housing by Metropolitan Classification

The preference for detached housing was pervasive, even in the metropolitan areas with the largest pre-World War II urban cores (identified using the City Sector Model). Nearly 71 percent of owned housing is detached in these metropolitan areas, which include New York, Los Angeles, Chicago, Philadelphia, Washington, Boston and San Francisco. The detached housing percentage rises to 85 percent in the other 46 metropolitan areas with more than 1 million population and is similar for the 53 metropolitan areas between 500,000 and 1 million population. Among the 106 metropolitan areas with more than 500,000 population, the percentage of detached housing increased in 86.

The detached housing share is a smaller 80 percent outside these largest metropolitan areas.

The defining difference between the metropolitan areas with the largest cores is in owned apartments, which represent 15 percent of owned housing. This is more than three times the rate of owned apartments in the other 46 major metropolitan areas and the 53 metropolitan areas with between 500,000 and 1,000,000 population (Figure 3).

Housing Types by Metropolitan Areas

Among the 106 metropolitan areas, 86 have detached percentages of owned housing of 80 percent or more. The highest detached housing percentage is in Omaha, at 94.8 percent. Modesto trails closely at 94.4 percent. This may not be surprising, since so many households have been driven away from close enough-for-a-long-commute San Francisco Bay Area by its exorbitant house prices and severely constrained housing choices. Detached housing is now a luxury in the Bay Area well beyond the resources of middle income households who did not buy their homes in the past, when prices were lower.

The gap between second and third is much larger, with Dayton having a detached housing percentage of 92.8 percent, followed closely by Kansas City (92.7 percent), Memphis (92.6 percent) and Wichita (92.4 percent). Stockton, at 92.3 percent has attracted so many San Francisco Bay Area residents that it is now a part of the San Francisco Bay combined statistical area ranks eighth, (Figure 4).

The lowest rates of detached owned housing are in Miami (63.8 percent), Philadelphia (63.9 percent), New York (65.4 percent), Baltimore (65.4 percent), and Honolulu (66.0 percent).

Philadelphia and Baltimore compensate substantially for their low detached housing percentage by leading in attached housing, which is widely dispersed in both the core municipalities and the suburbs. More than 30 percent of Philadelphia’s owned housing is attached, and 27 percent of Baltimore’s. In Washington and Allentown more than 20 percent of owned housing is also attached (Figure 5).

Honolulu has the largest percentage of owned apartment housing, at 26.6 percent. New York (24.1 percent) and Miami (23.6 percent) follow. Only two other metropolitan areas, have more than 15 percent of their owned housing in apartments, Boston and Chicago (Figure 6).

All of the metropolitan areas with the 10 highest percentages of mobile homes are in the South, with the exception of Tucson. Lakeland, Florida has by far the largest mobile on percentage, and over 20 percent. McAllen, Sarasota, Baton Rouge and Tucson complete the top five, ranging from 12.6 percent to 14.5 percent (Figure 7).

As noted above, the percentages of owned housing in the "Boats, RVs, Vans, Etc." category are much smaller. McAllen has the largest share at 1.2 percent. The top 5 is rounded out by Bakersfield, Phoenix, Portland (OR-WA) and Tucson (Figure 8).

The Detached House: Still King

Three decades ago, historian Robert Fishman wrote: "For the first time in any society, the single-family detached house was brought within the economic grasp of the majority of households" (Note). The US may have been first, but it is not alone. The same observation can be made for other nations, such as Japan, Canada, Australia, New Zealand and Norway. The detached house is alive and well in the United States and may even be increasing its domination.

Note: This quotation is from Fishman’s "Bourgeois Utopias: The Rise and Fall of Suburbia" (page 183). The subtitle should not be interpreted to suggest that this is another superficial anti-suburban screed. In fact, Fishman’s point can be interpreted as indicating that suburbia has been replaced by a new type of city, even less connected with the former dominant (monocentric) core.

Photo: Minneapolis-St. Paul suburbs (author)

Wendell Cox is Chair, Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), is a Senior Fellow of the Center for Opportunity Urbanism (US), a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California) and principal of Demographia, an international public policy and demographics firm.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.

October 27, 2015
How Big Government and Big Business Stick It to Small U.S. Businesses

From the inception of the Soviet Union, transformation was built, quite consciously, on eliminating those forces that could impede radical change. In many ways, the true enemy was not the large foreign capitalists (some of whom were welcomed from abroad to aid modernization) but the small firm, the independent property owner.

“Small scale commercial production is, every moment of every day, giving birth spontaneously to capitalism and the bourgeoisie … Wherever there is business and freedom of trade, capitalism appears,” noted the state’s founder Vladimir Lenin. He understood that while larger firms could be manipulated to serve the state, “capitalism begins in the village marketplace.”

Later on, this drive to eliminate grassroots capitalists—notably the “rich peasants” or kulaks—took on a particularly deadly form. In 1929 Stalin decided on the “liquidation of the kulaks as a class.” Millions of small rural entrepreneurs were imprisoned, murdered, or starved to death, until by the end of the ’30s independent business in the Soviet Union was largely eliminated, giving the state free rein.

Who are America’s Kulaks?

The United States, fortunately, is not the Soviet Union and even the most “transformation” oriented politician does not—at least yet—have power to create a gulag or openly appropriate the wealth or lives of citizens. Yet lately there is nevertheless a powerful trend to limit and largely disempower the country’s small business community—our kulaks—from a host of antagonists, including the Obama administration, the large financial institutions, and the ever-expanding regulatory apparat.

In the 19th century, the small farmer epitomized the national ideal: independent, hard-working, frugal and engaged in his community. Later, as agriculture’s share of the economy dropped, the “yeoman” farmer gave way to the Main Street business owner, whose conflicts, particularly in the late 19th and early 20th centuries, were more with oligopolistic corporations—notably utilities, oil companies, and railroads—than the government.

Kulaks are not just people with some money and capital. They tend to be engaged in the private sector, where risk is an everyday concern. There are other parts of the affluent middle class who are not Kulaks but actually beneficiaries of the intrusive state, such as academics, parts of big business and, of course, elite members of the ever-expanding governmental nomenklatura. These professionals, as well as corporate executives, have helped make the Democratic Party, as the New York Times’ Tom Edsall suggests, the “favorites of the rich.”

The Decline of a Class

In the ascendance during the Reagan and Clinton booms, our kulaks—the roughly 10 million businesses under 500 employees that employ 40 million people—are clearly in secular decline, with grave implications for the economy, employment, and the future of democracy.

Rather than a new age of democratic capitalism imagined by Reagan era conservatives, we increasingly live in a world dominated by large companies. The overall revenues of Fortune 500 companies have risen from 58 percent of nominal GDP in 1994 to 73 percent in 2013. At the same time, small business start-ups have declined as a portion of all business growth, from 50 percent in the early ’80s to 35 percent in 2010. Indeed, a 2014 Brookings report (PDF) revealed that small business “dynamism,” measured by the growth of new firms compared with the closing of older ones, has declined significantly over the past decade, with more firms closing than starting for the first time in a quarter century. Only 35 percent of small business owners, according to a recent survey by the National Small Business Association, express optimism about the economy.

This decline in entrepreneurial activity marks a historic turnaround. Start up rateshave fallen for young people in particular, dropping to the lowest levels in a quarter century. At the same time the welfare state has expanded dramatically to the point that nearly half of all Americans now get payments from the federal government, notably through Medicare and Social Security. At the same time, the lack of grassroots economic activity may contribute to labor participation rates, now the lowest in almost four decades.

The Obama administration’s progressive-sounding rhetoricmay offend some of the thinner-skinned members of the oligarchy, but his economic policies—the bank bailouts, super-low interest rates, and growing federal power—have also improved the balance sheets of the corporate hegemons and the super-rich. In contrast, these policies do little, or less than little, for the yeoman class. Money today is made far more easily today by playing games with the market than making or selling on Main Street.

High business costs, some related to the rising tide of regulation under President Obama—including Obamacare—have become a huge burden to smaller firms. Indeed, according to a 2010 report (PDF) by the Small Business Administration, federal regulations cost firms with fewer than 20 employees more than $10,000 each year per employee, while bigger firms paid roughly $7,500 per employee. The biggest hit to small business comes in the form of environmental regulations, which cost 364 percent more per employee for small firms than it does for larger ones. Small companies spend $4,101 per employee, compared to $1,294 at medium-sized companies (20 to 499 employees) and $883 at the largest companies, to meet these requirements.

Nowhere has consolidation of power under the current regime been more obvious than in the financial sector. Goldman Sachs’ Lloyd Blankfein has described his firm as “among the biggest beneficiaries of reform.” The new regulatory environment has created huge barriers to any potential competitors and places smaller firms at a distinct disadvantage.

In contrast these regulations have hastened the rapid decline of community banks, for example, down by half since 1990, particularly hurts small businesspeople who depended on loans from these institutions, leaving them, as even Ben Bernanke admits, with major obstacles at achieving credit.

The large banks also benefited from the Obama administration’s steady refusal to prosecute any Wall Street grandees. Their get-out-of-jail-free card is a testament to the pilfering lobbyists of Washington’s K Street and the greed of politicians in both parties.

Resisting the New Duopoly: Big Government and Big Business

Under Lenin and Stalin, the threat to the kulaks was explicit, and in the end genocidal. Here in America, to be sure, the process is far less extreme. And not all the assault on Kulaks can be traced to government.

Technology and globalization often work against small firms. In the past, technology promoted competition whereas now it increasingly works to foster the consolidation of a new oligarchy dominated by such quasi-monopolies as Microsoft, Amazon, Apple, Google, and Facebook.

Indeed, the future being envisioned in the media and by the oligarchs is one dominated by automated factories and computer-empowered service industries. This will reduce opportunity for both middle-class jobs and small business in the future. To some, the American middle and working classes are becoming economically passé. Steve Case, founder of America Online, has even suggested that future labor needs can be filled not by current residents but by some 30 million immigrants. In this he reflects the cosmopolitan notions favored by the oligarchs. But likely not so much by the Kulaks and the bulk of the populace.

Rather than a republic of yeoman, we could evolve instead, as one left-wing writer put it, to live at the sufferance of our “robot overlords,” as well as those who program and manufacture them, likely using other robots to do so. The financial community seems to have little problem with this tendency, as we can see in its support for companies such as Uber, which, however convenient, is growing at the expense of what had been thousands of full time workers. And former top Obama aides are leading Uber’s defense against threatened taxi drivers.

Politicians on both the right and left seek to appeal to middle class voters and small business owners, but neither party can be said to have the interests of these groups at heart. The large corporations and banks have enjoyed an unprecedented surge in profits, but few small business have crashed that party. Republicans and their leading lobbyists generally have no interest in doing anything, such as equalizing capital gains and income rates, that would offend those who support their campaigns and fund their ongoing political activities.

In the past, Democrats may have appealed to Kulaks, but that seems to have died with the end of Bill Clinton’s second term. Whereas the first Clinton accepted limits on government largesse, the newly emboldened progressives, citing inequality, are calling for more transfers to the poorer parts of society. They even plan to hit the kulaks where they live—largely suburbia—as part of an effort to social engineer American communities.

This trend has almost universal support in the mainstream media, the campuses, and some corporations, who can better manipulate the regulatory and tax system. There is even a role model: to become like Europe. As The New York Times’ Roger Cohen suggests, we reject our traditional individualist “excess” and embrace instead continental levels of modesty, social control, and, of course, ever higher taxes.

Trump, Sanders, and the future of the Kulaks

The assault on the kulaks has had significant political consequences, although the endgame remains very much in question. Certainly there’s widespread dissatisfaction towards the Obama administration: in 2012, small business ownersranked as the least approving group for the current regime.

Yet it is not just Republicans or Tea Partiers who are upset with the rising plutocracy. Americans, according to Gallup, greatly favor small companies over big business. Indeed most large institutions—government and media as well as large corporations—now suffer some of the lowest rankings in recent history, with only small business and the military doing well.

Given these attitudes, it’s not surprising that the rising candidates of 2015 were those—Trump, Carson, Sanders , and even Fiorina—who have tried to position themselves in opposition to the status quo. The candidate most feared by Wall Street isn’t the folksy socialist Bernie Sanders but Donald Trump, whose candidacy, reports Politico, is setting off “a wave of fear” among the investor class. This is not just concern over Trump’s xenophobia, but his essential populism.

Both Trump’s support and that of Ben Carson come from Republicans who do not oppose higher taxes on the ultra-rich; they might not be far right culturally but they tend to the left on issues of economic security. These issues are critical toboomers, the group that dominates the small property owning class and the largest share of voters, and have been turning more conservative.

The kulaks may agree with Bernie Sanders on the dangers of corporate power, but they are likely no fans of redistribution. They also may suspect, rightly, that they, and not the grandees at Apple or Goldman Sachs, will be the ones to pay for the Democrats’ increasingly extravagant redistributionist demands.

Overall the kulaks do not seem impressed with candidates, such as Hillary Clinton and Jeb Bush, who are essentially creatures of dueling oligarchies. The kind of acceptance of corporate leadership that dominated Republican politics through much of the past half century is now fading, and the results are a GOP fractured not only by ideology but also by class. The big money may be on the corporate side, but there are a lot more Kulaks than grandees when it comes to voting.

In Russia, the forces of the state managed to destroy the kulaks, cementing a legacy of economic stagnation, particularly in the countryside, that remains today. America’s war on the kulaks may be less bloody-minded, but if it is not somehow halted, both our economy and the country’s intrinsic entrepreneurial spirit will fade. We may end up looking all too much like contemporary Russia, an oligarch-dominated kleptocracy that holds out increasingly little promise to its own people, and provides no real role model to the rest of the world.

This piece first appeared at The Daily Beast.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

Photo: Main Street America Russell, Kansas by http://www.cgpgrey.com [CC BY 2.0], via Wikimedia Commons

October 25, 2015
How Urban Planning Made Motown Records Possible

I’m reading Once in a Great City: A Detroit Story by David Maraniss, a book I plan to review for City Journal. But I want to highlight something briefly that really caught my eye about Motown Records. It’s no secret Detroit punches above its weight in musical influence, and the Motown sound was clearly a big part of that. Maraniss asks “Why Detroit? What gave this city its unmatched creative melody?” He lays out his theory of the case with regards to Motown Records.

The family piano’s role in the music that flowed out of the residential streets of Detroit cannot be overstated. The piano, and its availability to children of the black working class and middle class, is essential to understanding what happened in that time and place, and why it happened, not just with Berry Gordy, Jr. but with so many other young black musicians who came of age there from the late forties to the early sixties. What was special then about pianos and Detroit? First, because of the auto plants and related industries, most Detroiters had steady salaries and families enjoyed a measure of disposable income they could use to listen to music in clubs and at home. Second, the economic geography of the city meant that the vast majority of residents lived in single family homes, not high-rise apartments, making it easier to deliver pianos and find room for them. And third, Detroit had the egalitarian advantage of a remarkable piano enterprise, the Grinnell Brothers Music House. [emphasis added]

Like most things, the rise of Motown Records was multifactoral. Maraniss keys in on the prevalence of pianos in black homes. Note his factors creating this, to which one could also add the first rate musical education available to public school students at places like Cass Tech that he refers to multiple times throughout the text.

But of course I highlight: “the vast majority of residents lived in single family homes, not high-rise apartments, making it easier to deliver pianos and find room for them.”

It’s no secret that Detroit, like most Midwest cities, is a city of single family homes. Detached houses have a bad rep in planning circles today, but in this case the space they afforded allowed black families to have a piano – and in Motown Records founder Berry Gordy, Jr.’s case, a baby grand at that. This would be much more difficult in a microapartment to say the least.

Let’s not get too carried away. As Gordy was founding Motown, Jane Jacobs was pointing out the trouble with Detroit’s “gray belts” of single families that were already being abandoned. Pete Saunders has highlighted Detroit’s housing stock as one of the nine key urban planning reasons Detroit failed (ironically, in part because today these houses are too small).

Nevertheless, no preponderance of single family homes, no widespread pianos in black Detroit homes, and likely no Motown Records either. The history of American music was literally shaped by the single family housing character of Detroit. If we can acknowledge its flaws, it’s only fair to acknowledge it’s unique strengths too.

What this suggests is that cities shouldn’t despair too much about their existing built form, even if in many cases they are struggling with it. The question might be, what does that form enable that you can’t get elsewhere? Grinnell Brothers Music figured out that auto money + under-served black households + single family homes meant a potential market for pianos. And the rest is history. What other market opportunities exit right before our urban planning eyes that we have not yet noticed?

Aaron M. Renn is a senior fellow at the Manhattan Institute and a Contributing Editor at City Journal. He writes at The Urbanophile, where this piece originally appeared.

October 24, 2015
Conferences and Progress

Californians attend innumerable conferences on housing and economic growth. Year after year, in counties across California, the same people show up to say and hear the same things. Mostly what they say and hear is naive, and nothing ever changes.

I was reminded of this when I saw a report on what appears to have been a typical conference at the Harris Ranch on Growing the Central Valley Economy.

There is no doubt that the Central Valley economy could use some economic growth. After years of paying a disproportionate share of the costs of California’s coastal-driven energy, environmental and water regulations, the Valley’s economy is suffering. Poverty is rampant, as California leads the nation with a three-year average poverty rate of 23.4 percent according the Census Bureau’s most recent comprehensive poverty measure.

The Valley and some other inland areas are the primary reason California leads the nation in poverty and inequality. Throughout the Valley, economic growth is anemic. It’s negative in some areas. Some counties are seeing declining populations.

Conferences, at least the typical California conference, won’t help. They only serve to provide a low-cost means to salve the participants’ consciences, allowing them to feel that they are doing something.

Consider the recommendations that came through the report:

Creative thinking from the public policy sector

You can bet your net worth that you will hear about creative thinking or thinking outside the box at every California housing or economic development conference. At best, it doesn’t mean anything. If it does mean anything, creative thinking from the public policy sector is the worst thing that could happen.

Public policy sector creative thinking is what has created the San Joaquin Valley’s stagnant economy and California’s poverty and inequality in the first place. California’s ruling elite are proud of California’s regulatory quagmire. No one could have imagined 20 years ago how successful they would be in putting it in place. Today, it remains unduplicated by any state, but Oregon is trying.

The public sector does not create jobs or wealth, although it can provide preconditions through infrastructure development or contracts. But government is not the source of innovation or wealth creation. That comes from entrepreneurs, whether in the once-dominant aerospace industry or the early days Silicon Valley’s world-leading tech sector. It won’t create any in the future.

The best that government can do is to get out of the way of innovators—that means stream-lining the regulatory process and protecting property rights, in order to provide a predictable business environment.

Let’s hope we don’t see more creative thinking from the public policy folks.

Putting a “face” on the Valley and individual lives affected, emphasizing the continuing drought, pending fracking legislation, and burgeoning trade and logistic sectors in the seven-county region known as the San Joaquin Valley

I think the idea is that if the coastal elite could just see the impacts of their policies, they would change those policies to allow more economic vigor in the Valley. The naivety is touching, and shockingly naive.

Let’s face it, California’s coastal elite likely care more about some Minnesota dentist’s shooting a lion than they care about the lives of Valley residents. Their policies are there to save the world. If they cause some inconvenience for people in the Valley, well that’s just the cost of progress.

It might be different if they thought their policies would impact their own incomes. Their policies don’t. Tech sector people know their incomes come from all over the world, and they just relocate plants, call centers, tech support and even development outside of California if costs become too high. There is a reason that the Silicon Valley no longer is building more of the chip factories for which it was named.

The retired coastal elite’s income is mostly independent of California’s economy. Once again, the checks come from someplace else.

Accessing and employing the most effective tools from science, engineering and technology to responsibly advance technological applications

Yep, and motherhood is a wonderful thing. Technology and applications will advance, regardless of what happens in the San Joaquin Valley. How is this supposed to help the Valley? California has priced itself out of competitive tradable goods production. That’s why Intel, Apple, Facebook and others are spending billions expanding outside of California.

Technology will benefit Valley residents, but it won’t be a source of economic growth until the Valley has a competitive cost structure. And that cannot happen until the state takes its foot off the valley’s neck.

Building coalitions to ensure adequate resources and investment in the Central Valley during what is likely to be a dramatic transition period

Coalitions are another topic that comes up in every California conference. We’ve heard this for decades, and nothing has happened.

All that coalitions, at least as they materialize in California, can do is advocate. Most often, they advocate to the government. Since governments are the source of the problem and not the source of economic growth and wealth, this not an effective strategy. The coalitions might extract some wealth from someone else, but they are not going to create economic vigor.

Focusing locally on training and retaining that will help boost opportunities for employment and contribute to an improved quality of life as the region continues its transformation to a progressively more sustainable future

This is another thing you hear constantly California conferences. Education and training are something that we have chosen to do for our young people. It can be an economic development tool. In California today, though, education is not an economic development tool.

San Joaquin Valley graduates of high school or college can’t get jobs in the Valley. The Valley’s unemployment rates are way above the State’s even in good years. More individuals with degrees won’t change this. All it means is that Texas, Arizona, Utah, and other states will have a better pool of California workers to supply their economies. We may feel a moral obligation to educate, but it’s not a local economic development tool.

What Could Work?

The California Environmental Quality Act (CEQA) was originally enacted to protect California’s pristine natural environments. Since then it’s evolved into a tool which allows almost anyone to stop or delay just about any project. In fact, the threat of a CEQA case is often wielded by project opponents in order to extort concessions from companies.

CEQA dramatically increases the uncertainty and costs associated with California projects. It needs to be rewritten to achieve its original purpose while limiting its use as a tool for maintaining the status quo.

California’s other regulations that most hurt economic growth are either environmental or are designed to bring in “stakeholders .” All need to be evaluated on a cost-benefit basis.

Chapman University researchers have presented compelling evidence that California’s greenhouse gas regulations have almost no impact on global carbon levels, but we know they have considerable costs.

Regulations designed to bring in “stakeholders” effectively grant almost everyone veto power over most projects. You could hardly design a more effective method to slow or stop growth.

Politically, there is no chance of making necessary regulatory revisions anytime soon. There is hope, though. California’s minority caucus recently stopped proposed regulation mandating a 50 percent decrease in California’s use of gasoline. The minority caucus’ constituents are California’s primary regulatory victims. It was good to see them stand up for their constituents. I hope to see more of it in coming years. That will be far more effective than another conference.

Bill Watkins is a professor at California Lutheran University and runs the Center for Economic Research and Forecasting, which can be found at clucerf.org.

October 23, 2015
The Candidates’ Other Demographic Challenge
It is massively larger than 11 million illegals.

Hans Rosling, co-founder of Gapminder, calls it “the biggest change of our time”. It is Africa’s population growth from 1 billion people today to 2.5 billion by 2050 and 4 billion by 2100.

You could say that a close “second biggest change of our time” is the aging and stagnation of the population in rich countries. The combined population of North America, Europe, Japan and Australia/New Zealand is now at 1.3 billion and it will remain at 1.3 billion by 2050 and 2100 with small gains in North America and Oceania offset by declines in Europe and Japan.

This boom and bust present an unprecedented challenge to policy makers in every country of the world. Poor countries in Africa and Asia are ill-prepared for a boom that will last for decades. And rich countries must adapt their economies to a new reality of flat or falling domestic demand. In addition, the West also faces an increased flow of migrants from Africa and the Middle East fleeing poverty or war.

If a candidate wishes to seriously address the demographic emergency, he might turn his attention to the much larger global picture, not just what happens at the US-Mexico border. Without an improvement in local conditions in Africa and Asia, millions will try to move to the West. The numbers we now see crossing the Mediterranean at great risk will pale in comparison to those of twenty or thirty years from now.

In the same week that Donald Trump announced his immigration plan, there was news that Germany could accept as many as 750,000 refugees this year. If they end up remaining in Germany, this would amount to 0.9% of the German population, a higher annual rate of immigration than the US has had in over a century. By way of comparison, the current US rate is at 1 million green cards per year, equal to 0.3% of the US population. The post war average is 0.25% per year.

The migrant crisis is putting Europe’s openness to the test. Not all countries are as welcoming. Sweden is more open than others and has been accepting the equivalent of 1%+ of its population every year. Other countries only agree to take in very small numbers or reserve the right to be selective.

Of course, it is not as easy to move from Africa to North America. The Atlantic and Pacific Oceans will deter millions of desperate migrants who will instead try their luck with Europe.

In fact, barring the unexpected, the Western hemisphere is relatively insulated from this century’s population boom. On current UN projections, the population of North and South America will rise by a relatively modest 225 million between now and 2050, less than 10% of the entire 2.4 billion rise in world population. Nonetheless we can assume that some millions, or perhaps tens of millions, out of a few billions, will find their way across the oceans.

This chart shows the scale of the expected changes. The first bar on the left, nearly invisible, is the current population of illegal immigrants in the US, estimated at 10 to 15 million. The next one, barely visible, are the future legal immigrants into the US between today and 2050 assuming the current run rate of 1 million per year. The next four bars are the increases in populations for the US, the Western hemisphere, Africa and the world in the next 35 years.

So you can see that our domestic concerns are minute in comparison to what is happening elsewhere in the world. It is true that close proximity to a crisis creates a greater sense of urgency. A small problem next door can be more pressing than a large problem a thousand miles away.

But the rapidly changing demographics of the West, and of Africa and Asia, are already having an impact on our lives. It is right therefore to discuss the following during a political campaign:
- Developed countries including the US, Canada, Europe, Japan, Australia, New Zealand are having fewer children than in the past. Their total fertility ratios (TFR) are below the replacement level of 2.1 average children per woman. This means that the populations of these countries are shrinking (Japan, Germany, Italy), plateauing (Europe in general) or growing slowly (North America, France, Great Britain).
- According to the latest UN estimate, the US population will increase from 322 million today to 389 million in 2050. This projection includes future immigrants and is equivalent to an annual growth rate of 0.5%, well below the 1.2% average of the last 100 years. The post war average is also 1.2%.
- Europe’s population will fall from 738 million to 707 million. Russia, Germany and Italy will shrink while France and the UK grow slowly.
- Several emerging markets including China and Russia also have TFRs below replacement. China’s population will be peaking then falling. It will be surpassed by India’s within the next ten years.
- All the above mentioned countries except India have aging populations. The median age in the United States is now 38 years and rising. In nearly all European countries, it is over 40. In Germany and Japan, it is 46. At the other end of the spectrum, in booming Nigeria, Ethiopia and Congo, it is less than 20.
- Dependency ratios (loosely the number of dependents per worker) are rising everywhere except in Sub-Saharan Africa, India and a few other countries.
- As noted above, the populations of Sub-Saharan Africa and of the Indian subcontinent (India, Pakistan, Bangladesh) are booming. Sub-Saharan Africa is estimated to grow from 962m today to 2.1 billion in 2050. India from 1.3 billion to 1.7 billion.
- And the world population is expected to grow by 2.4 billion additional people by 2050. But the Western hemisphere is expected to add only 225 million, less than 10% of the projected increase.
So what is to be done?

One of Mr. Trump’s proposals is to build a wall along the Mexican border. Beyond the near term, this may or may not prove effective. Certainly, the Southern border as it stands today is one of the softest points of entry for current and future illegal immigrants.

A more comprehensive and more robust solution is to improve conditions in the migrants’ countries of origin through trade, investments in infrastructure, health care and education, and assistance in building stronger institutions. (Such an effort may fly in the face of Mr. Trump’s other promise to repatriate jobs that have been outsourced to China and other emerging markets, but that is another topic.)

Contrary to some political discourse, an investment in the economies of poor countries is not just altruism. It is a win-win strategy and an investment in our own future. Bjorn Lomborg, founder of the Copenhagen Consensus, wrote recently about investing in the health and education of children in poor countries:

It is morally right that every child should be given the best chance to survive, eat well, stay healthy, and receive an education. Now we also know that it is among the best investments we can make. Healthy, well-educated kids grow into productive adults, capable of providing a better future for their own children, creating a virtuous circle that can help build a better, more prosperous world.

Our own work at populyst centers on the development of the populyst index™ which rates each country on three measures: innovation/productivity, demographics/health care, and institutional strength/governance. In recent years, the deteriorating demographics of the West have eroded their standing in the index. And the booming demographics of poor countries have given them an opportunity to make significant strides if they can implement the needed reforms.

A symbiotic solution that addresses the challenges of both rich and poor countries would involve the following:
- Emerging economies would benefit from western capital, technology and institutional expertise.
- Better health care in Africa and India would lower infant mortality, improve women’s health and accelerate the fall in TFRs, curbing the big population boom.
- Domestic demand is slackening in rich countries and would benefit from new sources of demand from rising populations. A rising standard of living in poor countries will add to the revenues of Western firms dealing with sluggish home markets.
- An improvement in emerging economies would relieve the migrant crisis we are now seeing in the Mediterranean and Europe.
In case of inaction, the political instability and economic dislocation the world may suffer because of the ongoing population boom will touch our own country in more undesirable ways than a few million unwanted immigrants have done so far.

How do we respond to the twin problem of stagnant demographics in the West and booming demographics in poor countries? This is the question that all candidates should be debating.

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 Architecture from UT Austin.
October 22, 2015
Planning has Become the Externality: New Zealand Deputy Prime Minister

One of the frequently cited justifications for urban planning is to mitigate negative externalities — detrimental impacts that people or organizations impose on others in society. While acknowledging this, New Zealand Deputy Prime Minister Bill English charged that urban planning itself has become the externality, by virtue of its impact on house prices, equality and the economy in New Zealand.

In a speech to the Victoria University Business and Investment Club in Wellington, the Deputy Prime described the government’s program to reverse the decline in housing affordability that have seen national prices relative to incomes (the median multiple) nearly triple, to 8.0, in Auckland, the largest metropolitan area. He outlined three motivations for the government’s policy:

Consequences of Planning: The Economy

English said: "The first is that a housing market that is not properly functioning can have a significant effect on the macro-economy."

"Over the last five years, the Auckland housing market has been the single biggest imbalance in our macro-economic system.

The point is that when the supply of housing is relatively fixed, shocks to demand – like migration flows increasing sharply as they have recently – are absorbed through higher prices rather than the supply of more houses."

He noted the destabilizing effect of strong land use regulation:

"What they’ve [economic researchers] found is that, across different markets subject to rules which vary by state, more-intense regulation of urban development is associated with higher house price volatility.

The effects of planning rules can extend to the macro-economy.

Research indicates that when planning rules prevent workers shifting to higher-productivity locations, then there is a cost in terms of foregone GDP."

It’s only relatively recently that economists and politicians have understood the scale of those effects.

So when we’re talking about something as apparently dry as the Auckland Unitary Plan [metropolitan land use plan], we’re talking about a set of rules that will have a major impact on the city, on current and future residents – but also on the wider economy."

Consequences of Planning: Increased Inequality

English went on to say: The second reason we focus on planning and its consequences is that poor planning drives inequality.

"Poor regulation of housing has the largest proportionate effect on the lowest quartile of housing costs and rents.

So when we’re having the debate about whether there is sufficient land available, we have to recognise that the people who lose the most from getting that decision wrong – and who stand the most to gain from fixing those decisions – are those on the lowest incomes."

Housing costs are becoming a larger proportion of incomes – and that matters the most at the bottom end of incomes among people who have few choices.

The new supply of lower-priced, affordable housing has dried up.

There are parts of Auckland where no new houses are entering the market priced at the affordable end of the market.

It is not surprising to see prices and rents rising disproportionately at the bottom end given this lack of supply."

The Deputy Prime Minister also said: "Planning is often seen a public good activity that must address the needs of those who are most-vulnerable and have the lowest income," and noted:

In fact there is a strong argument to say it does exactly the opposite.

Poor planning favours "insiders" – homeowners – on high incomes and who have relatively high wealth.

In particular he mentioned strategies that drive up prices:

Those rules include urban limits [urban growth boundaries], minimum lot sizes which prevent subdivision below a certain size, and maximum site coverage rules which prevent a house covering more than a certain proportion of the lot.

Working in combination, these rules reduce opportunities to develop affordable homes.

He has particular criticism for Auckland’s urban growth boundary and its impact on house prices:

"Another indicator relates to Auckland’s former Metropolitan Urban Limit, now called the Rural-Urban Boundary.

A study found that the value of land just inside the urban boundary was ten times higher than the value of land just outside it.

That huge price difference around an arbitrarily-selected line on a map indicates that there are housing opportunities outside that boundary that cannot be taken because of planning restrictions.

Consequently, first home buyers trying to access the housing market are being prevented by land prices inflated by an urban boundary."

English also cited the paradox that the higher house prices driven by excessive regulation lead to additional, more expensive requirements (called "inclusive zoning" in the United States).

Now that planners are recognising these consequences, they are now creating even more rules to offset these effects; for example by requiring some developments to include up to 20 per cent affordable housing.

That is implicit recognition that planning rules have driven the costs up so much that another rule is required to offset it.

Consequences of Planning: Higher Government Costs

English said that the third motivation is the fiscal cost to Government: "The impact of these rules on inequality, and on household incomes, leads to a third reason for why the Government is focused on the housing market."

"Today we spend $2 billion each year on accommodation subsidies. 60 per cent of all rentals in New Zealand are subsidised by the Government.

The state owns around $21 billion worth of houses.

One house in every 16 in Auckland is a Housing New Zealand property."

Planning as the Externality

The Deputy Prime Minister says that planning has, in effect, abandoned its public purpose:

"For those among you who are economists, I would go so far as to say that while the justification for planning is to deal with externalities, what has actually happened is that planning in New Zealand has become the externality.

It has become a welfare-reducing activity.

And as with other externalities, such as pollution, the Government has a role to intervene, working with councils to manage the externality.

We’re starting to get analysis that shows planning’s costs."

The Costs of Planning

It is not only in New Zealand that urban planning has become a negative externality. From London to Vancouver, San Francisco, Sydney and elsewhere (God forbid, even Liverpool) the land rationing strategies of urban planning policies have been associated with the losses in housing affordability, with an up to tripling of house prices relative to household incomes. These policies have lead to significant economic losses, including expanded inequality and labor market distortions. Important domestic goals shared by nations around the world, such as improving the standard of living and reducing poverty cannot be addressed efficiently or effectively in such an environment.

Wendell Cox is Chair, Housing Affordability and Municipal Policy for the Frontier Centre for Public Policy (Canada), is a Senior Fellow of the Center for Opportunity Urbanism (US), a member of the Board of Advisors of the Center for Demographics and Policy at Chapman University (California) and principal of Demographia, an international public policy and demographics firm.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: Auckland Harbour Bridge (by author)

October 21, 2015
Environmental Activists Turn up the Rhetorical Heat

What is the endgame of the contemporary green movement? It’s a critical question since environmentalism arguably has become the leading ideological influence in both California government and within the Obama administration. In their public pronouncements, environmental activists have been adept at portraying the green movement as reasonable, science-based and even welcoming of economic growth, often citing the much-exaggerated promise of green jobs.

The green movement’s real agenda, however, is far more radical than generally presumed, and one that former Sierra Club President Adam Werbach said is defined by a form of “misanthropic nostalgia.” This notion extends to an essential dislike for mankind and its creations. In his book “Enough,” green icon Bill McKibben claims that “meaning has been in decline for a long time, almost since the start of civilization.”

And you may have thought the Romans and ancient Chinese were onto something!

Rather than incremental change aimed at preserving and improving civilization, environmental activists are inspired by books such as “Ecotopia,” the influential 1978 novel by Berkeley author Ernest Callenbach. He portrays an independent “green” republic based around San Francisco, which pretty much bans fossil fuels and cars and imposes severe limits on childbearing. These measures are enforced by a somewhat authoritarian state.

Read the entire piece at The Orange County Register.

Joel Kotkin is executive editor of NewGeography.com and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism. His newest book, The New Class Conflict is now available at Amazon and Telos Press. He is also author of The City: A Global History and The Next Hundred Million: America in 2050. He lives in Orange County, CA.

October 20, 2015
Rural Industrialization: Asia’s 21st Century Growth Frontier

A World Bank report released earlier this year featured a jarring statistic: 200 million people moved to East Asia’s cities between 2000 and 2010. That figure is greater than the populations of all but five of the world’s countries. Commentators argue that the urbanization of Asia is inevitable, with one calling recent growth “just the beginning.” Considered alongside figures about urban migration, the fact that only 1 percent of Asia’s land is urbanized (a popular statistic) appears to validate predictions about the increasing densification of cities. However, growth in the capacity of cities to accommodate industrial growth seems to be flattening. With a rising middle class and booming demand for automobiles, Asian cities can expect no relief from congestion, and this may be a deterrent for businesses. Rural areas are increasingly prepared to absorb this potential shift in demand.

Urbanization patterns

In examining Asia’s economic growth through urbanization patterns, it is helpful to consider historic data spanning several decades. Figure 1 compares 54 years of urbanization in Southeast Asia’s five largest economies against India and China, both arguably the 21st century’s most dynamic growth stories and frequent subjects of urbanization research and commentary. Urban population share has been rising consistently in most countries of this study. Malaysia has long seen a population majority living in cities, and China and Indonesia both crossed the 50% threshold in 2011. Thailand has also rapidly urbanized since 2000, and will likely pass 50% this year. By contrast, Vietnam, India, and the Philippines have been slower to urbanize, with the latter declining since 1990. Part of this variation reflects differences in definitions and measurements of urbanization across countries and time, but the underlying pattern remains clear: the past several decades have seen an urban migration of historic scale.

Figure 1 (Data source: World Bank)

That urbanization correlates with economic growth is a point rarely overlooked. Indeed, the two have supported one another since the emergence of capital- and labor-intensive manufacturing during the industrial revolution. Borne of historic growth patterns, this logic has been used to support predictions of continued industrial urbanization and policies that promote it. However, remote penetration of connective infrastructure – including both transportation and communications – is replacing old growth models with a new rural industrialization. The following data support this claim.

GDP and urban growth

The urban growth-GDP quotient (Figure 2) represents urban population growth divided by GDP, and is effectively a measure of how much economic activity countries are extracting from their cities. It is not an absolute measure such as GMP (gross metropolitan product). Rather, it is a measure of how changes in GDP track changes in urbanization, providing a broader look at the relative role of cities in national economies. A time horizon of nearly three decades (1985 – 2014) is chosen to capture the high growth period after market reforms in China (1979) and Vietnam (1985). The indexing approach is necessary to normalize the scale of variables for more meaningful graphical visualization, essentially “controlling” for vast differences in numeric values (e.g. the GDPs of China vs. the Philippines). It also creates a common reference point to compare longitudinal performance across countries.

Figure 2 (Data source: World Bank)

In this metric, China outperforms comparator countries with a particularly rapid increase in the quotient since 2005; it has evidently been successful deriving GDP value from urban areas. By contrast, Indonesia has seen comparatively less urban-based GDP contribution, and Thailand’s contribution has remained roughly the same since outpacing all countries between 1985 and the Asian financial crisis.

Manufacturing and urban growth

One factor underlying these differences is the type of industries contributing to GDP growth, and in particular their location patterns (rural vs. urban). An examination of manufacturing value added (MVA) is necessary to sharpen this analysis, as manufacturing is historically an urban-based activity. Cities provide labor, infrastructure, business services, and global connectivity; their importance to manufacturing is undisputed. The raw MVA numbers (Figure 3) indicate that since 2005, China has far outperformed other countries in the study, most of which showed consistent but not transformative growth. Among the latter, India boasts the lone spike in MVA, and that only recently.

Figure 3 (Data source: World Bank)

To complete the analysis, Figure 4 compares historic patterns of manufacturing growth against growth in urbanization. The indexed quotient replaces GDP (Figure 2) with MVA and can be regarded as a measure of the extent to which countries leverage urbanization to support manufacturing growth. China’s statistical dominance in previous measures vastly diminishes here. Further, growth in the ability of many remaining countries to derive MVA from cities slows after initially rapid growth.

Figure 4 (Data source: World Bank)

The notable exception is India, and this is the critical point in this analysis. India’s competitive advantage is rooted in the country’s tech sector and other higher-value added activities. From call centers to technology R&D, India has developed a defensible regional position in knowledge-based industries, which are increasingly dependent on the by-products of urbanization: an educated workforce, global talent networks, and lifestyle amenities that appeal to higher-income residents. China maintains its position at the top due in part to its particular urban-based industrialization strategy (special economic zones and decentralization reforms empowering cities). However, China’s conversion of rural agricultural land into industrial facilities is an emerging phenomenon, and the line between urban and rural is fading. For example, in many provinces (e.g. Hebei) factory parcels stand alone, surrounded by farms.

Towards rural industrialization

In Southeast Asia, as in parts of China, industrialization is not a fundamentally urban phenomenon. From the industrial estates of Thailand’s Eastern Seaboard to the suburban clusters of Vietnam and Indonesia, companies are now finding most everything they need outside of city centers. The advantages are numerous: cheaper land, lower labor costs, less congestion, and in some cases lucrative business incentives. These suburban and rural industrial clusters are even focusing on quality of life for families, looking beyond hard infrastructure to provide housing, education, and recreation facilities. Such amenities appeal to workers of all skill types, from manufacturing to research and development. As such, rural industrialization need not be only smokestacks and assembly lines; an educated workforce can be recruited if rural living standards match those of cities. This broadens the array and sophistication of industries capable of supporting a new kind of growth.

Hyper-urbanization visits significant inefficiencies on businesses, potentially making rural regions more attractive for operating. In many of Asia’s major cities, snarled traffic grinds life to a near halt and transit infrastructure has provided only modest relief. Aside from Singapore (a frequent statistical exception), Bangkok and Kuala Lumpur are leaders within Southeast Asia in developing urban rail. However, neither system offers the geographic coverage needed to loosen gridlock. Ho Chi Minh City is currently building its first metro line, but construction is delayed and completion appears to be years away. If hyper-urbanization is re-interpreted as a policy challenge rather than a sign of progress, the decentralization of industrial development can be one solution. Asia’s economic fate is not inextricably linked with the size of its cities, and fresh visions of decentralized growth are already proving their value. The potential is vast; for example, Indian Prime Minister Narendra Modi’s “digital push” and recent commitments to rural broadband represent a development path for the country’s remote regions. Technology, expertise, new funding sources, and emerging economic opportunities are ready to support the rise of rural industrialization across Asia.

Kris Hartley is a Visiting Lecturer in Economics at Vietnam National University – Ho Chi Minh City, and a PhD Candidate at the Lee Kuan Yew School of Public Policy, National University of Singapore.

Top Photo: Putrajaya, Malaysia: Seri Gemilang Bridge. Behind the bridge on the right side Ministry of Women, Family and Community and Ministry of Urban Wellbeing, Housing and Local Government © CEphoto, Uwe Aranas / , via Wikimedia Commons

October 19, 2015
Jessie: Over-The-Rhine, Cincinnati

This is Jessie. She’s a well educated thirty year old professional with a good income. She could live anywhere she wants. She was offered excellent positions with good companies in San Francisco. While she was excited by the opportunity to live in a top tier coastal city she was smart enough to actually run the numbers before taking a job. Her income would be comparable to what she was already making in Cincinnati, but her cost of living (particularly the astronomical cost of housing) in San Francisco meant that she would actually be accepting a massively lower standard of living in California compared to Ohio.

Cincinnati isn’t just affordable. It’s also a fabulous place to live. Ten years ago the cost of property in San Francisco was high, but still within the reach of people like Jessie. No more. And ten years ago the urban core of Cincinnati hadn’t yet revived sufficiently to reach a critical mass of livability. But today the scales are tipped decidedly in Cincinnati’s favor as San Francisco (New York, D.C, Boston, Seattle, LA, etc.) have gone off the charts in terms of cost while Cincinnati has matured and proven itself.

Last year Jessie bought this entire three family building in the Over-the Rhine neighborhood in Cincinnati for $279,000. She then spent $126,000 in renovations. So she’s in for a grand total of $405,000. She lives in the top two floors and rents two apartments on the lower levels. The rental income goes a long way to offsetting her monthly expenses. I just checked the real estate listings here in San Francisco. There’s a 300 square foot studio condo on the market for $399,999, but it will almost certainly sell for considerably more once potential buyers outbid each other. And the monthly HOA fees are ridiculous.

If you’d like a more detailed account of how older buildings in Cincinnati are being purchased and rehabbed by ordinary people, including Jessie, I encourage you to check out the “Owner Occupied OTR” episode of the Urban Cincy Podcast.

John Sanphillippo lives in San Francisco and blogs about urbanism, adaptation, and resilience at granolashotgun.com. He’s a member of the Congress for New Urbanism, films videos for faircompanies.com, and is a regular contributor to Strongtowns.org. He earns his living by buying, renovating, and renting undervalued properties in places that have good long term prospects. He is a graduate of Rutgers University.

October 17, 2015