New Geography

Tag: middle class

  • It Can Happen Here: The Screwed Generation in Europe and America

    In Madrid you see them on the streets, jobless, aimless, often bearing college degrees but working as cabbies, baristas, street performers, or—more often—not at all. In Spain as in Greece, nearly half of the adults under 25 don’t work.

    Call them the screwed generation, the victims of expansive welfare states and the massive structural debt charged by their parents. In virtually every developed country, and increasingly in developing ones, they include not only the usual victims, the undereducated and recent immigrants, but also the college-educated.

    Nowhere is this clearer than in the European Union’s Club Med of Spain, Greece, Portugal, and Italy, the focal point of the emerging new economic crisis. There’s a growing sense of hopelessness in these places, where debt is turning politics into an ugly choice between austerity, which reduces present opportunities, or renewed emphasis on public spending, which all but guarantees major problems in the bond market, and spending promises that can’t be kept.

    “We don’t know what to do now,” Jaime, a Madrid waiter in his late 20s told me last week. “My wife lost her auditor’s job, and I can’t support the whole family. Maybe we have to move somewhere like Dubai or maybe Miami.”

    Many young Greeks, Italians, Portuguese, and Spaniards already have made their moves, with a half million leaving Spain alone last year. But it’s not just Club Med youths who are contemplating greener pastures. Ireland, which in recent decades actually attracted new migrants, is exporting a thousand people a week. In recession-wracked Britain, nearly half of the population say they would like to move elsewhere.

    Driving this exodus is a growing perception that this collapse is not cyclical but secular. Increasingly, young Europeans are deciding not to start families—the key to future growth—in reaction to the recession. The stories about divorced Spanish or Italian young fathers sleeping on the streets or in their cars are not exactly a strong advertising for parenthood.

    Even in once-rigidly Catholic Spain, marriage and fertility rates have been falling for decades, and family structure weakening. Spaniards are having fewer children now than they did during the brutal civil war of the late 1930s. Alejandro Macarrón Larumbe, a Madrid-based management consultant, in his 2011 book, El Suicidio Demográfico de España, points out that the actual number of Spanish newborns has declined to an 18th-century level.

    This demographic implosion makes sense given the legacy left behind by the boomers, who have held on to generous jobs and benefits but left little opportunity for their children, not to mention a high tax burden on what opportunities they do find. For a generation academics have sold higher education—the more the better—as the cure for unemployment and the great guarantor of success. Yet rising education rates in places like Spain have not created jobs for the rising generation, but only expanded unemployment and falling wages among the ranks of the educated.

    Even America, traditionally a beneficiary of European woes, seems to have turned on its young. College debt is crushing many young people with degrees—particularly those outside the sciences and engineering—that are not easily marketable. The spiking number of people in their 30s working as unpaid interns reflects this erosion of opportunity. This has happened even as the price tag for college has shot up; 94 percent of students who earn a bachelor’s degree now owe money for their educations, compared to 45 percent two decades ago. Here’s a tribute to futility: today a majority of unemployed Americans age 25 and older attended college, something never before seen.

    Governmental priorities here continue to favor boomers and seniors over the young. For a generation, transfer payments have favored the elderly, a trend likely to accelerate as the boomers continue retiring and demand their due. According to Brookings, America spends 2.4 times as much on the elderly as on children. 

    Forced to take lower wages if they can find work at all and facing still-expensive housing in those markets where many of the jobs are, roughly one in five American adults 25 to 34 now live with their parents—almost double the percentage from 30 years ago. Increasingly both Wall Street and green “progressives” urge young people to abandon homeownership for a poorer, more crowded life in expensive, high-density apartment blocks.

    Across the developed world, wages are being cut for young Americans, Europeans, and Japanese as politicians prefer to offer less to the young than to take anything away from those already ensconced in employment, particularly if organized into unions. In the U.S., everything from government jobs to employment in auto factories and even supermarkets is now on a two-tier track, with older workers’ guaranteed pensions and higher salaries not shared by newer hires.

    Pensions represent a bigger generational issue than salaries do. The European welfare state makes America’s seem Scrooge-ish. Their lifetime guarantees are so extensive, and unsustainable, that even the über-frugal Germans are calling for a special tax on younger workers to fund their parents’ pensions.

    This generational transfer will likely be accelerated by an aging electorate. In Spain, notes Larumbe, voters over 60 now make up more than 30 percent of the electorate, up from 22 percent in 1977; in 2050 they will constitute close to a majority. The same patterns can be seen in other European countries and, although less dramatically, in the U.S. as well.

    As a result, boomer- and senior-dominated parties, both right and left, generally end up screwing young people. This occurs even as they proclaim their fulsome concern for “future generations.”

    Politicians on the right, in Europe and elsewhere, scapegoat immigrants in part to hold on to their share of older votes. Left-wing analysts rightly point out that the boomer- and senior-dominated Tea Party here is not likely to cut their own entitlements, preferring instead to push cutbacks in education and other disbursements that aid the young while fighting spending on job creation and productive forms of infrastructure investment.

    Politicians on the left, meanwhile, tend to favor redistribution and “sustainability” over the new wealth creation critical for youthful advancement. Many boomers seem to suspect economic growth itself, as when John Holdren, now President Obama’s senior science adviser, back in the 1970s called for the “de-development” of high-income countries. A cynic might conclude that since the progressive boomers already got theirs, it’s fine for the young to live in an era of limits.

    With the kind of tax and regulatory regime advocated by today’s regressive progressives—already largely adopted in my home state of California—greens and their allies many not have to worry about too much new growth. Only those connected with the government, or able to ride asset inflation, will do well in the new “progressive” order.

    In Europe, east Asia, and America alike, the left and the right have both proven unprepared or unwilling to address the fundamental growth crisis facing the next generation. Neither austerity nor a “progressive” focus on greater government spending and “sustainability” can create the jobs and new opportunities so sorely lacking on the streets of Athens and Madrid and increasingly in American cities as well.

    The developed world’s youth shouldn’t expect much help from an older generation that has preserved its generous arrangements at the cost of increasingly stark prospects for its own progeny. Instead the emerging generation needs to push its own new agenda for economic growth and expanded opportunity.

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

    This piece originally appeared in The Daily Beast.

    Unemployed woman photo by BigStockPhoto.com.

  • Midcentury Modern

    Midcentury modern tours now are taking place in cities all over the country. Renewed interest in this era capitalizes on the millennials’ interest in design from a time that seems almost impossibly optimistic compared to today’s zeitgeist. Most cities around the country boast a healthy building stock from this postwar period, nicknamed “the suburbs,” although these are ritually condemned – and designated for annihilation – by academics, urban land speculators and the urban clerisy.

    Yet the new interest in the mid-century modern form reflects its basic and enduring appeal. As the curious and the trendy take bus tours of these inner-ring neighborhoods, the forms of this era evoke a sense of great confidence and faith in the future, both of which seem to be lost in the obsession with neo-traditional forms that hearken to the pre-car era or to the cartoonlike, sculpture-as-architecture one sees in many urban centers.

    Suburban expansion after World War II reached out beyond the streetcar systems that created the traditional neighborhoods of the late 19thand early 20th Century. The returning GIs wanted something simple and affordable to begin their lives after serving their country. Confidence surged in America’s know-how and ability to solve even the deepest social problems. The triumph of science and technology was a palpable presence. The dark side, of course, was the atomic threat, restraining our enthusiasm but only a little.

    In this midcentury era, planning and design began to be car-based. Residences were designed to show off the car, putting it out front for display – and some home plans even had tailfinned beauties in the living room. 


    Living Garage, photo from Populuxe by Thomas Hine

    Consumer goods were no longer accessed on foot; a new form of luxury consisted of driving up to the front door of a shop with parking in front. Front-loading houses and stores became unquestionably more efficient as a means to accommodate the new American lifestyle.

    Yet despite the auto-orientation, the architecture of this era retained the pedestrian scale and intimate feel that marked Main Street before World War 2. This both/and aesthetic marks the form of the 1940s and 1950s, with streamlined design styles like Art Deco Revival and materials like glass and stainless steel. Gentle angles suggested motion, and the theme of mobility was everywhere in the architecture.  Wider streets and lower, longer horizontal lines accommodated this theme and even today the architecture reinforces a feel of motion when driving past these structures.

    Modernism also formed a certain ethic. To be modern was more than a lifestyle choice; it was an acceptance of science, knowledge, and technology, free from preconceptions.  At the time, modernism elevated architecture above the style debate, and was considered even a shedding of styles. The politics of the time was similarly marked by Truman’s “straight talk”, and there was a shedding of rhetoric and posturing that lasted up until Joe McCarthy began once again a divide-and-conquer campaign against people.

    Translated to the suburbs, modernism meant practical homes, without the adornment that marked Victorian architecture. Instead, modernist residences were marked by deep horizontals and large picture windows, providing a sense of openness that was a hallmark of modernist thought. Floor plans also were open, allowing free movement through space, rather than cutting the house up into cluttered little parlors, dining rooms, or nooks. 

    Today, midcentury modern design is fetishized for mass consumption in magazines like Dwell that emphasize acquisitiveness over ethics. But back then, the design meant something else, something cleaner and more powerful. In the 1950s, modernism meant consumption, but even more, the modernism defined the quest for the inner self and a new, forward looking outlook.

    By reducing modernism to a sofa style or wallpaper pattern, we risk losing all that this era stood for.  Buildings from the 1950s have sustained themselves through multiple recessions, the rise of the internet, cultural acceleration, massive city growth, and globalism. So perhaps they point towards a real definition of sustainability by having good bones and adapting through all these changes.

    The current millennial generation seeks a practical domestic situation, much like returning GIs. Most would prefer to reduce car-trips, but are realistic about this goal, given the range of their travel. Most in this generation see right through car-free living claims; more than one of my students, when discussing walkability, stated that “I’m not gonna lug my groceries even a block in this heat.” The battle with the car is chiefly about making the car more efficient, and less ubiquitous through the use of telecommuting and on-line shopping. It is not about removing it from the scene entirely.

    So as McMansions have swollen to represent a kind of architectural obesity, they have made many midcentury neighborhoods unfashionable, for typically these older homes have one parking space, often in a carport, not a true garage. They also are front-loaded, a much more efficient planning concept than alleys, but then the car becomes part of the front façade. Millennials have a hard time understanding what’s wrong with that. Again, as one 28-year-old student put it to me, “It’s just a house, after all…what’s the big deal?”

    Developers seeking first-time homebuyers, however, respond to the regulatory climate, which favors solutions like garages on alleys, big homes on tight lots, and neotraditional styling.  Bonus density and other zoning incentives rig the game in favor of this highly regulated development pattern, even in the exurbs.  Here in Central Florida, the development zone nicknamed Horizon West has been codified to enforce these form-based principles, with stiff permitting fees and a highly participatory government staff to keep things on the straight-and-narrow.

    Keeping prices low with all this overburden requires developers to cut the cost of the home drastically, likely reducing lifespan of components and systems. Ironically, the house meeting these tortured standards of today is less sustainable than the house built in 1953, with better bones and an adaptable floor plan.

    Meanwhile, these 1950s neighborhoods are under attack for their very form. Cities, persuaded by planners to heal the effects of the car, cannot do so in a granular manner, so ordinances are passed  forbidding front-facing garages, or garages set back arbitrarily from the house front. These 1950s homes, with their carports, couldn’t be built today, and so are reduced to the status of heritage sites from a bygone era. In Winter Park, garages are banished to the rear on new homes, and if you are adding a garage to your midcentury home, it must be arbitrarily set back at least four feet from your front wall whether or not your lot can accommodate this arbitrary, and seemingly pointless, ordinance.

    Of course mid modern tours allow people to rediscover the essence of the 1950s, and these overlooked neighborhoods could be the springboard for a new era in modern planning.  Front-loaded neighborhoods can be successful when the architecture is designed at a human scale, and fine-grained integration of residential and commercial uses point to a future of home-office, cottage-industry, people-based industry once again.

    The Victorian era ended rather abruptly in the 1890s with a series of economic catastrophes that changed America’s middle class. Architecture switched to a more streamlined, Edwardian style – simple, flexible, and utilitarian forms that quickly gave rise to modernist design.  This current economic transition may well bode a similar outcome – design styles, often labeled “contemporary,” reduce the amount of architectural gingerbread and fussiness, reducing cost and maintenance, and may be favored by the coming generation for its cleanliness and utility.

    A new era that manages the car at a human scale, forgives people for wanting mobility and efficiency, and allows for contemporary exploration of style and design can and should inform new neighborhood planning. Midcentury suburbs, rediscovered by popular interest, can point the way to a middle ground between mcmansion-style subdivisions and neotraditional fussiness, and maybe even help us rediscover our confidence and faith once again.

    This essay is a summary of Richard Reep’s talk “Populuxe and the Atomic Bungalow” given at the 3rd annual Colloquium on Historic Preservation, hosted by Friends of Casa Feliz, Winter Park, Florida in April 2012.  Richard and his wife, Kim Mathis, hosted a midcentury modern tour in their own 1950s home for the colloquium.

  • Right in the Middle: The Midwest’s Growth Lessons for America

    The Midwest’s troubles are well-known. The decline of manufacturing has resulted in job losses and dying industrial towns. The best and brightest have fled the flatlands for more exciting, sunnier, mountainous, or coastal places where the real action is. Even Peyton Manning has left the heartland for the Rockies.

    This narrative is so deeply embedded both in and outside of the Midwest that many people overlook the ways in which parts of the region are bouncing back. The Midwest’s story is important because it serves in significant ways as a regional microcosm of how growth and opportunity should look in America today.

    In a recent study we look at trends that upend the conventional wisdom about the Midwest. We find that it is neither doomed to a slow and dirty demise like an old house on an eroding slope, nor forced to reinvent itself Dubai-style in order to compete with Silicon Valley or Manhattan. The Midwest’s future is rooted very much in its past—but with some important updates.

    What do we mean? For starters, this means capitalizing on Americans’ desire to reside where the cost of living and doing business is favorable. As the last Census showed, Americans move in droves to regions where the cost of living is low, businesses face fewer obstacles, and workers have choices. As Wendell Cox and Joel Kotkin have shown, this goes for 25- to 35-year-olds as well as 55- to 65-year-olds. People want options and a good quality of life at a price they can afford.

    In the Midwest, these trends have favored placed like Columbus, Ohio, and Indianapolis, Indiana. When people hear “Midwest,” they are more likely to think of this kind of picture:

    The blue areas show destinations to which people from Detroit have moved between 2000 and 2010. The brown shades are the areas from which Detroit has drawn people. Given Detroit’s well-publicized decline, all the blue should be no surprise.

    But a respectable portion of the Midwest looks like this:

    And this:

    Like most parts of America, Columbus and Indianapolis have seen a net outmigration southward to Florida and Texas. No surprise there. But note how both cities are stealing population from Chicago, Detroit, New York, and even southern California and Miami in Indianapolis’s case. The maps also show how intense interstate competition within the Midwest is right now.

    One important measure of the cost of living is housing affordability, which is typically set at 3.0 as a measure of median housing price divided by median income. Compared to San Francisco at 7.2, New York at 6.1, Los Angeles at 5.9, and Miami at 4.7, Columbus stands at 2.8 and Indianapolis at 2.4. Charlotte, which has been an exemplary Sun Belt growth magnet for a while, stands at 3.9, a slight click above the Chicago area’s 3.8.

    Affordability and overall quality of life as measured by schools and greater disposable income matter a lot—even to technology entrepreneurs. Some Midwestern areas are outpacing coastal areas on this front. In a recent Forbes ranking of tech growth in the nation’s largest 51 metro areas, the Midwest had three cities within the top 15, with Columbus in third position, followed by Indianapolis and St. Louis.

    But it would be wrong for tech boosters to think the Midwest’s future rests in harnessing the power of this sector alone. Rather, it’s a combination of brains and brawn that signify the Midwest’s core strength. When we look at Midwestern areas that have experienced above-average growth in bachelor’s degrees, there are important overlaps with areas experiencing above-average growth in manufacturing, too.

    In the corridor from Madison to Milwaukee, or the outlying areas around Chicago, or the Indianapolis metro area, or even in the Quad Cities on the Iowa-Illinois border, we see higher educational attainment and manufacturing growth occurring together. Cedar Rapids, Iowa, had the highest GDP growth from 2000 to 2010 of any metro area in the Midwest. A new corridor has grown up between Cedar Rapids and Iowa City, home to the University of Iowa; it takes advantage of the region’s historical manufacturing capacity and blends it with new technology. Peoria, Illinois, is second to Cedar Rapids in GDP growth. Peoria is home to 200 manufacturing firms, and it is also a Midwestern leader in college degree attainment.

    Manufacturing continues to be part of the regional DNA in the Midwest. Trying to move away from it would be a fool’s errand, as this picture shows:

    The concentration of manufacturing in middle America is a real asset, especially when combined with higher levels of educational attainment, as we have seen. The Midwest is still home to much of the nation’s skilled labor force. And contrary to the declinist narrative mentioned at the outset, the region has added 50,000 “heavy metal” manufacturing jobs since 2009.

    The challenge for the region, actually, will perhaps be filling manufacturing jobs rather than creating them. A recent Deloitte survey found that 83 percent of manufacturers nationwide suffered a moderate or severe shortage of skilled production workers. The Midwest is poised to establish what we call a “new industrial paradigm,” characterized by a blend of heavy manufacturing, new technology, a more highly educated industrial labor base, and lighter labor restrictions (Indiana just became a right-to-work state, and the much-publicized debates in Wisconsin and Ohio over labor laws have only served to draw more attention to the need for reform, whatever the near-term effects). When you add to all of this the new energy sources discovered in some parts of the Midwest—such as new finds in Utica shale in Ohio—a new industrial paradigm in the region could end up being a large source of new wealth creation in the coming generation.

    So why might the Midwest be something of a microcosm for how growth and opportunity look in America as a whole, given its idiosyncratic reliance on manufacturing not shared by other regions? The main reason is that middle America is a clear picture of how much the basics matter: Cost of living, job quality, schools, and opportunities to develop the right skills for the best jobs. The areas within the Midwest that have gotten the basics right are poaching people and companies from the areas that haven’t. Any economic development strategy that ignores the basics in favor of a more stylized theory of growth will usually run off the rails before too long. Americans, at the end of the day, want the places they live to get the basics right so they themselves can build their lives, start their businesses, and raise their children as they wish.

    This piece originally appeared at The American.

    This peice was adapted from a recent report: "Clues from the Past: The Midwest as an Aspirational Region." Download the full pdf version of the report, including charts and maps about the Great Lakes Region.

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

    Mark Schill is Vice President of Research at Praxis Strategy Group, an economic development and research firm working with communities and states to improve their economies.

    Ryan Streeter is Distinguished Fellow for Economic and Fiscal Policy at the Sagamore Institute. You can follow his work at RyanStreeter.com and Sagamoreinstitute.org.

    Great Lakes Freighter photo by BigStockPhoto.com.

  • The Export Business in California (People and Jobs)

    California Senate President Pro-Tem Darrell Steinberg countered my Wall Street Journal commentary California Declares War on Suburbia in a letter to the editor (A Bold Plan for Sustainable California Communities) that could be interpreted as suggesting that all is well in the Golden State. The letter suggests that business are not being driven away to other states and that the state is "good at producing high-wage jobs," while pointing to the state’s 10 percent growth over the last decade. Senate President Steinberg further notes that the urban planning law he authored (Senate Bill 375) is leading greater housing choices and greater access to transit.

    This may be a description of the California past, but not present.

    Exporting People

    Yes, California continues to grow. California is growing only because there are more births than deaths and the state had a net large influx of international immigration over the past decade. At the same time, the state has been hemorrhaging residents (Figure 1).

    Californians are leaving. Between 2000 and 2009 (Note), a net 1.5 million Californians left for other states. Only New York lost more of its residents (1.6 million). California’s loss was greater than the population of its second largest municipality, San Diego. More Californians moved away than lived in 12 states at the beginning of the decade. Among the net 6.3 million interstate domestic migrants in the nation, nearly one-quarter fled California for somewhere else.

    The bulk of the exodus was from the premier coastal metropolitan areas. Since World War II, Los Angeles, San Francisco, San Diego and San Jose have been among the fastest growing metropolitan areas in the United States and the high-income world. Over the last decade, this growth has slowed substantially, as residents have moved to places that, all things being considered, have become their preferences.

    More than a net 1.35 million residents left the Los Angeles metropolitan area, or approximately 11 percent of the 2000 population. The San Jose metropolitan area lost 240,000 residents, nearly 14 percent of its 2000 population. These two metropolitan areas ranked among the bottom two of the 51largest metropolitan areas (over 1,000,000 population) in the percentage of lost domestic migrants during the period. The San Francisco metropolitan area lost 340,000 residents, more than 8 percent of its 2000 population and ranked 47th worst in domestic migration (New York placed worse than San Francisco but better than Los Angeles). Each of these three metropolitan areas lost domestic migrants at a rate faster than that of Rust Belt basket cases Detroit, Cleveland and Buffalo.

    San Diego lost the fewest of the large coastal metropolitan areas (125,000). Even this was double the rate of Rust Belt Pittsburgh.

    Exporting Jobs

    California is no longer an incubator of high-wage jobs. The state lost 370,000 jobs paying 25 percent or more of the average wage between 2000 and 2008. This compares to a 770,000 increase in the previous 8 years. California is trailing Texas badly and the nation overall in creating criticial STEM jobs and middle skills jobs (Figures 2 & 3) Only two states have higher unemployment rates than California (Nevada and Rhode Island) . California has the second highest underemployment rate (20.8 percent), which includes the number of unemployed, plus those who have given up looking for work ("discouraged" workers) and those who are working only part time because they cannot find full time work. Only Nevada, with its economy that is overly-dependent on California, has a higher underemployment rate.


    Business relocation coach Joseph Vranich conducts an annual census of companies moving jobs out of California and found a quickening pace in 2012. Often these are the very kinds of companies capable of creating the high-wage jobs that used to be California’s forte. Vranich says that the actual number may be five times as high, which is not surprising, not least because there is no reliable compilation of off-shoring of jobs to places like Bangalore, Manila or Cordoba (Argentina).

    To make matters worse, California is becoming less educated. California’s share of younger people with college degrees is now about in the middle of the states, while older, now retiring Californians are among the most educated in the nation (Figure 4).

    Denying Housing Choice

    It is fantasy to believe, as Steinberg claims, that there are enough single family (detached) houses in the state to meet the demand for years to come. More than 80 percent of the new households in the state chose detached housing over the last decade. People’s actual choices define the market, not the theories or preferences of planners often contemptuous of the dominant suburban lifestyle.

    In contrast, however, the regional plans adopted or under consideration in the Bay Area, Los Angeles and San Diego would require nearly all new housing be multi-family, at five to 10 times normal California densities (20 or more units to the acre are being called for). New detached housing on the urban fringe would be virtually outlawed by these plans. And, when Sacramento does not find the regional plans dense enough, state officials (such as the last two state Attorneys General) are quick to sue. If the "enough detached housing" fantasy held any water, state officials and planners would not be seeking its legal prohibition. To call outlawing the revealed choice of the 80 percent (detached housing) would justify the equivalent of a Nobel Prize in Doublespeak.

    At the same time by limiting the amount of land on which the state preferred high density housing must be built, land and house prices can be expected to rise even further from their already elevated levels (already largely the result of California’s pre-SB 375 regulatory restrictions).

    Transit Rhetoric and Reality

    Transit is important in some markets. About one-half of commuters to downtown San Francisco use transit. The assumptions of SB 375 might make sense if all of California looked like downtown San Francisco. It doesn’t, nor does even most of the San Francisco metropolitan area. Only about 15 percent of employment is downtown, while the 85 percent (and nearly all jobs in the rest of the state) simply cannot be reached by transit in a time that competes with the car. Even in the wealthy San Jose area (Silicon Valley), with its light rail lines and commuter rail line, having a transit stop nearby provides 45 minute transit access to less than 10 percent of jobs in the metropolitan area.

    A recent Brookings Institution report showed that the average commuter in the four large coastal metropolitan areas can reach only 6.5 percent of the jobs in a 45 minute transit commute. This is despite the fact that more than 90 percent of residents can walk to transit stops. Even when transit is close, you can’t get there from here in most cases in any practical sense (Figure 5).

    SB 375 did little to change this. For example, San Diego plans to spend more than 50 percent of its transportation money on transit over the next 40 years. This is 25 times transit’s share of travel (which is less than 2 percent). Yet, planners forecast that all of this spending will still leave 7 out of 8 work and higher education trips inaccessible by transit in 30 minutes in 2050. Already 60 to 80 percent of work trips in California are completed by car in 45 minutes and the average travel time is about 25 minutes.

    For years, planners have embraced the ideal of balancing jobs and housing, so that people would live near where they work, while minimizing travel distances. This philosophy strongly drives the new SB 375 regional plans. What these plans miss is that people choose where to work from the great array of opportunities available throughout the metropolitan area. These varied employment opportunities that are the very reason that large metropolitan areas exist, according to former World Bank principal planner Alain Bertaud.

    People change jobs far more frequently than before and multiple earners in households are likely to work far apart. Similar intentions led to the development up to four decades ago of centers like Tensta in Stockholm, which ended up as concentrated low income areas (Photo). It California, such a concentration would do little to improve transit ridership, even low-income citizens are four to 10 times as likely use cars to get to work than to use transit.


    Tensta Transit Oriented Development: Stockholm

    All of this means more traffic congestion and more intense local air pollution, because higher population densities are associated with greater traffic congestion. Residents of the new denser housing would face negative health effects because there is more intense air pollution, especially along congested traffic corridors.

    Self-Inflicted Wounds

    Worst of all, California’s radical housing and transportation strategies are unnecessary. The unbalanced and one-dimensional pursuit of an idealized sustainability damages both quality of life and the economy. This is exacerbated by other issues, especially the state’s dysfunctional economic and tax policies. It is no wonder California is exporting so many people and jobs. California’s urban planning regime under SB 375 is poised to make it worse.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”.

    Net Domestic Migration: 2000-2009
    Rank Metropolitan Area Net Domestic Migration Compared to 2000 Population
    1 Raleigh, NC         194,361 24.2%
    2 Las Vegas, NV         311,463 22.4%
    3 Charlotte, NC-SC         248,379 18.5%
    4 Austin, TX         234,239 18.5%
    5 Phoenix, AZ         543,409 16.6%
    6 Riverside-San Bernardino, CA         469,093 14.3%
    7 Orlando, FL         225,259 13.6%
    8 Jacksonville, FL         126,766 11.3%
    9 Tampa-St. Petersburg, FL         260,333 10.8%
    10 San Antonio, TX         177,447 10.3%
    11 Atlanta, GA         428,620 10.0%
    12 Nashville, TN         123,199 9.4%
    13 Sacramento, CA         141,117 7.8%
    14 Richmond, VA           75,886 6.9%
    15 Portland, OR-WA         121,957 6.3%
    16 Dallas-Fort Worth, TX         317,062 6.1%
    17 Houston, TX         243,567 5.1%
    18 Indianapolis. IN           72,517 4.7%
    19 Oklahoma City, OK           41,082 3.7%
    20 Denver, CO           66,269 3.0%
    21 Louisville, KY-IN           34,381 3.0%
    22 Birmingham, AL           26,934 2.6%
    23 Columbus, OH           34,204 2.1%
    24 Kansas City, MO-KS           31,747 1.7%
    25 Seattle, WA           40,741 1.3%
    26 Minneapolis-St. Paul, MN-WI          (19,731) -0.7%
    27 Memphis, TN-MS-AR            (8,583) -0.7%
    28 Hartford, CT            (9,349) -0.8%
    29 Cincinnati, OH-KY-IN          (17,648) -0.9%
    30 Virginia Beach-Norfolk, VA-NC          (20,005) -1.3%
    31 Baltimore, MD          (36,407) -1.4%
    32 St. Louis, MO-IL          (43,750) -1.6%
    33 Philadelphia, PA-NJ-DE-MD        (115,890) -2.0%
    34 Pittsburgh, PA          (52,028) -2.1%
    35 Washington, DC-VA-MD-WV        (107,305) -2.2%
    36 Providence, RI-MA          (49,168) -3.1%
    37 Salt Lake City, UT          (34,428) -3.5%
    38 Rochester, NY          (40,219) -3.9%
    39 San Diego, CA        (126,860) -4.5%
    40 Buffalo, NY          (55,162) -4.7%
    41 Milwaukee,WI          (74,453) -5.0%
    42 Boston, MA-NH        (235,915) -5.4%
    43 Miami, FL        (287,135) -5.7%
    44 Chicago, IL-IN-WI        (561,670) -6.2%
    45 Cleveland, OH        (136,943) -6.4%
    46 Detroit,  MI        (366,790) -8.2%
    47 San Francisco-Oakland, CA        (347,375) -8.4%
    48 New York, NY-NJ-PA     (1,962,055) -10.7%
    49 Los Angeles, CA     (1,365,120) -11.0%
    50 San Jose, CA        (240,012) -13.8%
    51 New Orleans, LA        (301,731) -22.9%
    Data from US Census Bureau

     

    —–

    Note:  2000 to 2010 data not available

    Lead photo: Largely illegal to build housing under California Senate Bill 375 planning

  • The New Class Warfare

    Few states have offered the class warriors of Occupy Wall Street more enthusiastic support than California has. Before they overstayed their welcome and police began dispersing their camps, the Occupiers won official endorsements from city councils and mayors in Los Angeles, San Francisco, Oakland, Richmond, Irvine, Santa Rosa, and Santa Ana. Such is the extent to which modern-day “progressives” control the state’s politics.

    But if those progressives really wanted to find the culprits responsible for the state’s widening class divide, they should have looked in a mirror. Over the past decade, as California consolidated itself as a bastion of modern progressivism, the state’s class chasm has widened considerably. To close the gap, California needs to embrace pro-growth policies, especially in the critical energy and industrial sectors—but it’s exactly those policies that the progressives most strongly oppose.

    Even before the economic downturn, California was moving toward greater class inequality, but the Great Recession exacerbated the trend. From 2007 to 2010, according to a recent study by the liberal-leaning Public Policy Institute of California, income among families in the 10th percentile of earners plunged 21 percent. Nationwide, the figure was 14 percent. In the much wealthier 90th percentile of California earners, income fell far less sharply: 5 percent, only slightly more than the national 4 percent drop. Further, by 2010, the families in the 90th percentile had incomes 12 times higher than the incomes of families in the 10th—the highest ratio ever recorded in the state, and significantly higher than the national ratio.

    It’s also worth noting that in 2010, the California 10th-percentile families were earning less than their counterparts in the rest of the United States—$15,000 versus $16,300—even though California’s cost of living was substantially higher. A more familiar statistic signaling California’s problems is its unemployment rate, which is now the nation’s second-highest, right after Nevada’s. Of the eight American metropolitan areas where the joblessness rate exceeds 15 percent, seven are in California, and most of them have substantial minority and working-class populations.

    When California’s housing bubble popped, real-estate prices fell far more steeply than in less regulated markets, such as Texas. The drop hurt the working class in two ways: it took away a major part of their assets; and it destroyed the construction jobs important to many working-class, particularly Latino, families. The reliably left-leaning Center for the Continuing Study of the California Economy found that between 2005 and 2009, the state lost fully one-third of its construction jobs, compared with a 24 percent drop nationwide. California has also suffered disproportionate losses in its most productive blue-collar industries. Over the past ten years, more than 125,000 industrial jobs have evaporated, even as industrial growth has helped spark a recovery in many other states. The San Francisco metropolitan area lost 40 percent of its industrial positions during this period, the worst record of any large metro area in the country. In 2011, while the country was gaining 227,000 industrial jobs, California’s manufacturers were still stuck in reverse, losing 4,000.

    Yet while the working and middle classes struggle, California’s most elite entrepreneurs and venture capitalists are thriving as never before. “We live in a bubble, and I don’t mean a tech bubble or a valuation bubble. I mean a bubble as in our own little world,” Google CEO Eric Schmidt recently told the San Francisco Chronicle. “And what a world it is. Companies can’t hire people fast enough. Young people can work hard and make a fortune. Homes hold their value.” Meanwhile, in nearby Oakland, the metropolitan region ranks dead last in job growth among the nation’s largest metro areas, according to a recent Forbes survey, and one in three children lives in poverty.

    One reason for California’s widening class divide is that, for a decade or longer, the state’s progressives have fostered a tax environment that slows job creation, particularly for the middle and working classes. In 1994, California placed 35th in the Tax Foundation’s ranking of states with the lightest tax burdens on business; today, it has plummeted to 48th. Only New York and New Jersey have more onerous business-tax burdens. Local taxes and fees have made five California cities—San Francisco, Los Angeles, Beverly Hills, Santa Monica, and Culver City—among the nation’s 20 most expensive business environments, according to the Kosmont–Rose Institute Cost of Doing Business Survey.

    Still more troubling to California employers is the state’s regulatory environment. California labor laws, a recent U.S. Chamber of Commerce study revealed, are among the most complex in the nation. The state has strict rules against noncompetition agreements, as well as an overtime regime that reduces flexibility: unlike other states, where overtime kicks in after 40 hours in a given week, California requires businesses to pay overtime to employees who have clocked more than eight hours a day. Rules for record-keeping and rest breaks are likewise more stringent than in other states. The labor code contains tough provisions on everything from discrimination to employee screening, the Chamber of Commerce study notes, and has created “a cottage industry of class actions” in the state. California’s legal climate is the fifth-worst in the nation, according to the Institute for Legal Reform; firms face far higher risks of nuisance and other lawsuits from employees than in most other places. In addition to these measures, California has imposed some of the most draconian environmental laws in the country, as we will see in a moment.

    The impact of these regulations is not lost on business executives, including those considering new investments or expansions in California. A survey of 500 top CEOs by Chief Executive found that California had the worst business climate in the country, and the U.S. Chamber of Commerce calls California “a difficult environment for job creation.” Small wonder, then, that since 2001, California has accounted for just 1.9 percent of the country’s new investment in industrial facilities; in better times, between 1977 and 2000, it had grabbed 5.6 percent.

    Officials, including Governor Jerry Brown, argue that California’s economy is so huge that it can afford to lose companies to other states. But for the local economy to be hurt, firms don’t have to leave entirely. Business consultant Joe Vranich, who maintains a website that tracks businesses that leave the state, points out that when California companies decide to expand, often they do so in other parts of the U.S. and abroad, not in their home environment. Further, Brown is too cavalier about the effects of businesses’ departure. As Vranich notes, many businesses leave California “quietly in the night,” generating few headlines but real job losses. He cites the low-key departure in 2010 of Thomas Brothers Maps, a century-old California firm, which transferred dozens of employees from its Irvine headquarters to Skokie, Illinois, and outsourced the rest of its jobs to Bangalore.

    The list of companies leaving the state or shifting jobs elsewhere is extensive. It includes low-tech companies, such as Dunn Edwards Paints and fast-food operator CKE Restaurants, and high-tech ones, such as Acacia Research, Biocentric Energy Holdings, and eBay, which plans to create 1,000 new positions in Austin, Texas. Computer-security giant McAfee estimates that it saves 30 to 40 percent every time it hires outside California. Only 14 percent of the firm’s 6,500 employees remain in Silicon Valley, says CEO David DeWalt. The state’s small businesses, which account for the majority of employment, are harder to track, but a recent survey found that one in five didn’t expect to remain in business in California within the next three years.

    Apologists for the current regime also claim that the state’s venture capitalists will fund and create new companies that will boost employment. It’s certainly true that in the past, California firms funded by venture capital tended to expand largely in California. But as Jack Stewart, president of the California Manufacturing and Technology Association, points out, a different dynamic is at work today: once a company’s start-up phase is over, it tends to move its middle-class jobs elsewhere, as the state’s shrinking fraction of the nation’s industrial investment indicates. “Sure, we are getting half of all the venture capital investment, but in the end, we have relatively small research and development firms only,” Stewart argues. “Once they have a product or go to scale, the firms move [employment] elsewhere. The other states end up getting most of the middle-class jobs.”

    Radical environmentalism has been particularly responsible for driving wedges between California’s classes. Until fairly recently, as historian Kevin Starr says, California’s brand of progressivism involved spurring economic growth—particularly by building infrastructure—and encouraging broad social advancement. “What the progressives created,” Starr says, “was California as a middle-class utopia. The idea was if you wanted to be a nuclear physicist, a carpenter, or a cosmetologist, we would create the conditions to get you there.” By contrast, he says, today’s progressives regard with suspicion any growth that requires the use of land and natural resources. Where old-fashioned progressives embraced both conservation and the expansion of public parks, the new green movement advocates a reduced human “footprint” and opposes cars, “sprawl,” and even human reproduction.

    The Bay Area has served as the incubator for the new green progressivism. The militant Friends of the Earth was founded in 1969 in San Francisco. Malthusian Paul Ehrlich, author of the sensationalist 1968 jeremiad The Population Bomb and mentor of President Obama’s current science advisor, John Holdren, built his career at Stanford. Today, more than 130 environmental activist groups make their headquarters in San Francisco, Berkeley, Oakland, and surrounding cities.

    The environmentalist agenda emerged in full flower under nominally Republican governor Arnold Schwarzenegger, who initially cast himself as a Milton Friedman–loving neo-Reaganite. On his watch, California’s legislature in 2006 passed Assembly Bill 32, which, in order to cut greenhouse-gas emissions, imposes heavy fees on using carbon-based energy and severely restricts planning and development. One analysis of small-business impacts prepared by Sacramento State University economists indicates that AB 32 could strip about $181 billion per year, or nearly 10 percent, from the state’s economy. At the same time, land-use regulations connected to the climate-change legislation hinder expansion for firms.

    Another business-hobbling mandate is the law requiring that 30 percent of California’s electricity be generated by “renewable” sources by 2020. The state’s electricity costs are already 50 percent above the national average and the fifth-highest in the nation—yet state policies make the construction of new oil- or gas-fired power plants all but impossible and offer massive subsidies for expensive, often unreliable, “renewable” energy. The renewable-fuel laws will simply boost electricity costs further. The cost of electricity from the new NRG solar-energy facility in central California, for instance, will be 50 percent higher than the cost of power from a newly built gas-powered facility, according to state officials. For providing this expensive service, NRG will pay no property taxes on its facilities. By some estimates, green mandates could force electricity prices to rise 5 to 7 percent annually through 2020.

    The renewable-fuel regulations are driving even green jobs out of the state. Cereplast, a thriving El Segundo–based manufacturer of compostable plastic, last year moved its manufacturing operations to Indiana, where electricity costs are 70 percent lower. Fuel-cell firm Bing Energy cited cost and regulatory factors when announcing its move from California to Florida. “I just can’t imagine any corporation in their right mind would decide to set up in California right now,” the firm’s CFO, Dean Minardi, told the Inland Valley Daily Bulletin. Still more rules, aimed at improving water quality and protecting endangered species, could have a devastating effect on the construction and expansion of port facilities, which tend to sustain high-wage blue- and white-collar jobs.

    The political class largely ignores the economic consequences of these policies. Indeed, Governor Brown and others insist that they will create jobs—upward of 500,000 of them—while establishing California as a green-energy leader. To turn Brown’s green dreams into reality, the state has approved enormous subsidies and tax breaks for solar and other renewable-energy producers to supplement those dispensed by the Obama administration. Yet for all this, California has barely 300,000 “green jobs,” many of which are low-wage positions, such as weather-stripping installers. And the solar industry, in California and abroad, is imploding.

    Bill Watkins, head of the economic forecasting unit at California Lutheran University, notes that California’s green policies affect the very industries—manufacturing, home construction, warehousing, and agribusiness—that have traditionally employed middle- and working-class residents. “The middle-class economy is suffering since there is no real opposition to the environmental community,” says Watkins. “You see the Democrats, who should worry about blue-collar and middle-income jobs, give in every time.”

    Progressives and many Occupy protesters mourned the death of high-tech innovator and multibillionaire Steve Jobs. They also tend to view social-networking firms like Facebook more as allies than as class enemies. This embrace of Silicon Valley is nearly as strange as the Occupy movement’s decision to target the ports of Los Angeles and Oakland—large employers of well-paid blue-collar workers. Activists portrayed the attempted port shutdowns as attempts to “disrupt the profits of the 1 percent,” but union workers largely saw them as impositions on their livelihood. As former San Francisco mayor and state assembly speaker Willie Brown wrote in the San Francisco Chronicle: “If the Occupy people really want to make a point about the 1 percent, then lay off Oakland and go for the real money down in Silicon Valley. The folks who work on the docks in Oakland or drive the trucks in and out of the port are all part of the 99 percent.”

    The explanation for the progressives’ hypocritical friendliness to Silicon Valley is simple: money and politics. Venture capitalists and highly profitable, oligopolistic firms like Google (with its fleet of eight private jets) invest heavily in green companies; they were also among the primary bankrollers of the successful opposition to a 2010 ballot initiative aimed at reversing AB 32. The digital elite has become more and more involved in local politics, with executives from Facebook, Twitter, and gaming website Zynga contributing heavily to the recent campaign of San Francisco mayor Ed Lee, for example. Lee has, in turn, been extremely kind to the digerati, extending a payroll-tax break to Twitter and a stock-option break to Zynga and other firms that may soon go public.

    Hollywood manages to outdo even Silicon Valley in its class hypocrisy. Former actor Schwarzenegger doesn’t let his green zealotry stop him from owning oversize houses and driving fuel-gorging cars. Canadian-born director James Cameron, who contents himself with a six-bedroom, $3.5 million, 8,300-square-foot Malibu mansion, talks about the need to “stop industrial growth” and applauds the idea of a permanent recession. “It’s so heretical to everybody trying to recover from a recession economy—‘we have to stimulate growth!’ ” says Cameron. “Well, yeah. Except that’s what’s gonna kill this planet.”

    According to the Tax Foundation, California residents already pay the nation’s sixth-highest state tax rates, and they are likely to keep rising. Three tax-raising measures have already been proposed for the November 2012 ballot. Governor Brown’s proposal, which would boost both income and sales taxes, stands a good chance of passage. Hedge-fund manager Tom Steyer, an investor in environmental firms, has floated a measure that would raise taxes on out-of-state companies that conduct any operations in California and use some of the revenue to subsidize green-friendly building projects. And Molly Munger, a civil rights attorney and daughter of Warren Buffett’s longtime business partner, is pressing a measure to raise income taxes to fund schools. The so-called Think Long proposal, financed by nomadic French billionaire Nicolas Berggruen and overseen by a committee including Google’s Schmidt and billionaire philanthropist Eli Broad, proposes a mild cut in income-tax rates for the highest earners (like themselves) but new taxes on services provided by architects, accountants, business consultants, plumbers, gardeners, and others—the sole proprietors and microbusinesses that represent the one growing element in the state’s beleaguered private-sector middle class.

    More money for social services or education might help alleviate some of the recession’s impact, but it cannot break the vicious cycle from which California currently suffers: weak growth leading to low tax revenues, government boosting taxes to make up the shortfall, and those higher taxes driving businesses and jobs away, resulting in continued weak growth. What California’s middle and working classes need above all is broad, private-sector job growth—and that, fortunately, is a goal still well within reach. The Golden State may be run stupidly, but it retains enormous assets: its position on the Pacific Rim, large numbers of aspiring immigrants, unparalleled creative industries, fertile land, and a treasure trove of natural resources.

    The most promising opportunity is in the contentious area of fossil-fuel energy, a mainstay of the state’s economy since the turn of the twentieth century. California still ranks as the nation’s fourth-largest oil-producing state. Traditional energy has long provided good jobs; nationally, the industry pays an average annual salary of $100,000. And elsewhere, from the Great Plains to eastern Ohio, an oil and gas boom is driving growth.

    But California has thus far excluded itself from the party. Even as production surges in other parts of the country, California companies like Occidental Petroleum report diminishing oil production. The drop-off proves, some environmentalists say, that “peak oil” has been reached, but the evidence shows otherwise: the last few years have seen a fourfold increase in applications for drilling permits in California, largely because of the discovery of the massive Monterey shale deposits—containing a potential 15 billion barrels of oil—and of an estimated 10 billion barrels near Bakersfield. The real reason for the reduced production is that California has rejected most of the drilling applications since 2008. “I asked Jerry Brown about why California cannot come to grips with its huge hydrocarbon reserves,” recalls John Hofmeister, former president of Shell Oil’s U.S. operations. “After all, this could turn around the state. He answered that this is not logic, it’s California. This is simply not going to happen here.”

    The anti-fossil-fuel stance, according to the Los Angeles County Economic Development Corporation, has placed some $1 billion in investment and 6,000 jobs on hold. The sense of wasted opportunity can be palpable. If you travel to Santa Maria, a hardscrabble town near the Monterey formation, you pass empty industrial parks and small, decaying shopping centers. As economist Watkins put it at a recent conference there: “If you guys were in Texas, you’d all be rich.”

    California doesn’t even need to abandon its progressive tradition to narrow the class divide. Homebuilding, manufacturing, and warehousing could expand if regulatory burdens other than those associated with fighting climate change were merely modified—not repealed, but relaxed sufficiently to make it possible to do business, put people to work, and make a profit. New energy production could take place under strict regulatory oversight. Future industrial and middle-class suburban development could be tied to practical energy-conservation measures, such as promoting home-based businesses and better building standards. California’s agriculture industry—currently thriving, thanks to exports—could be less burdened by the constant threat of water cutbacks and new groundwater regulations.

    Even from an environmental perspective, increased industrial growth in California might be a good thing. The state’s benign climate allows it to consume fossil-fuel energy far more efficiently than most states do, to say nothing of developing countries such as China. Keeping industry and middle-class jobs here may constitute a more intelligent ecological position than the prevailing green absolutism.

    More important still is that a pro-growth strategy could help reverse California’s current feudalization. The same Public Policy Institute of California study shows that during the last broad-based economic boom, between 1993 and 2001, the 10th percentile of earners enjoyed stronger income growth than earners in the higher percentiles did. The lesson, which progressives once understood, is that upward mobility is best served by a growing economy. If they fail to remember that all-important fact, the greens and their progressive allies may soon have to place the California dream on their list of endangered species.

    This piece originally appeared in The City Journal.

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

    Los Angeles aqueduct photo by BigStockPhoto.com.

  • California Declares War on Suburbia II: The Cost of Radical Densification

    My April 9 Cross Country column commentary in The Wall Street Journal (California Declares War on Suburbia) outlined California’s determination to virtually outlaw new detached housing. The goal is clear:    force most new residents into multi-family buildings at 20 and 30 or more to the acre. California’s overly harsh land use regulations had already driven housing affordability from fairly typical levels to twice and even three times higher than that of much of the nation. California’s more recent tightening of the land use restrictions (under Assembly Bill 32 and Senate Bill 375) has been justified as necessary for reducing greenhouse gas (GHG) emissions.

    It is All Unnecessary: The reality, however, is that all of this is unnecessary and that sufficient GHG emission reductions can be achieved without interfering with how people live their lives. As a report by the McKinsey Company and The Conference Board put it, there would need to be "no downsizing of vehicles, homes or commercial space," while "traveling the same mileage." Nor, as McKinsey and the Conference Board found, would there be a need for a "shift to denser urban housing." All of this has been lost on California’s crusade against the lifestyle most Californians households prefer.

    Pro and Con: As is to be expected, there are opinions on both sides of the issue. PJTV used California Declares War on Suburbia as the basis for a satirical video, Another Pleasant Valley Sunday, Without Cars or Houses? Is California Banning Suburbia?

    California’s Increasing Demand for Detached Housing? A letter to the editor in The Wall Street Journal suggested that there are more than enough single-family homes to accommodate future detached housing demand in California for the next 25 years. That’s irrelevant, because California has no intention of allowing any such demand to be met.

    The data indicates continuing robust demand. In California’s major metropolitan areas, detached houses accounted for 80 percent of the additions to the occupied housing stock between 2000 and 2010, which slightly exceeds the national trend favoring detached housing (Figure 1). If anything, the shift in demand was the opposite predicted by planners, since only 54 percent of growth in occupied housing in the same metropolitan areas was detached in 2000 (Figure 2).


    Watch What they Do, Not What they Say: It does no good to point to stated preference surveys indicating people preferring higher density living. Recently, Ed Braddy noted in newgeography.com (Smart Growth and the New Newspeak) that a widely cited National Association of Realtors had been "spun" to show that people preferred higher density living, from a question on an "unrealistic scenario," and ignoring an overwhelming preference for detached housing – roughly eighty percent – in other questions in the same survey. People’s preferences are not determined by what they say they will do, but rather by what they do.

    Off-Point Criticism: There was also "off-point" criticism, which can be more abundant than criticisms that are "on-point." Perhaps the most curious was by Brookings Institution Metropolitan Policy Program Senior Researcher Jonathan Rothwell (writing in The New Republic) in a piece entitled "Low-Density Suburbs are Are Not Free-Market Capitalism." I was rather taken aback by this, since none of these three words ("free," "market" or "capitalism") appeared in California Declares War on Suburbia. I was even more surprised at the claim that I defend "anti-density zoning and other forms of large lot protectionism." Not so.

    Indeed, I agree with Rothwell on the problems with large lot zoning. However, it is a stretch to suggest, as he does, that the prevalence of detached housing results from large lot zoning. This is particularly true in places like Southern California where lots have historically been small and whose overall density is far higher than that of greater New York, Boston, Seattle and double that of the planning mecca of Portland.

    Rothwell’s own Brookings Institution has compiled perhaps the best inventory of metropolitan land use restrictions, which indicates that the major metropolitan areas of the West have little in large lot zoning. Yet detached housing is about as prevalent in the West as in the rest of the nation (60.4 percent in the West compared to 61.9 percent in the rest of the nation, according to the 2010 American Community Survey). Further, there has been little or no large lot zoning in Canada and Australia, where detached housing is detached, nor in Western Europe and Japan (yes, Japan, see the Note below).  

    On-Point: Urban Growth Boundaries Do Increase House Prices: However, to his credit, Rothwell points out the connection between urban growth boundaries and higher house prices. This is a view not shared by most in the urban planning community, who remain in denial of the economic evidence (or more accurately, the economic principle) that constraining supply leads to higher prices. This can lead to disastrous consequences, as California’s devastating role in triggering the Great Recession indicates.

    The Purpose of Urban Areas: From 1900 to 2010, the urban population increased from 40 percent to 80 percent of the US population. Approximately 95 percent of the population growth over 100 years was in urban areas. People did not move to urban areas the cities for "togetherness" or to become better citizens. Nor did people move out of an insatiable desire for better urban design or planning. The driving force was economic: the desire for higher incomes and better lives. A former World Bank principal urban planner, Alain Bertaud stated the economic justification directly: "large labor markets are the only raison d’être of large cities."

    And for the vast majority of Americans in metropolitan areas, including those in California, those better lives mean living in suburbs and detached houses. All the myth-making in the world won’t change that reality, even if it pushes people out of the Golden State to other, more accommodating pastures.

    The performance of urban areas is appropriately evaluated by results, such as economic outcomes, without regard to inputs, such as the extent to which an area conforms to the latest conventional wisdom in urban planning.

    • Land use policies should not lead to higher housing costs relative to incomes, as they already have in California, Australia, Vancouver, Toronto and elsewhere. If they do, residents are less well served.
    • Transport policies should not be allowed to intensify traffic congestion by disproportionately funding alternatives (such as transit and bicycles) that have little or no potential to improve mobility as seems the likely outcome of radical densification. If they do, residents will be less well served.

    This gets to the very heart of the debate. The “smart growth on steroids” policies now being implemented in California are likely to lead to urban areas with less efficient personal and job mobility, where economic and employment growth is likely to be less than would otherwise be expected. The issue is not urban sprawl. The issue is rather sustaining the middle-income quality of life, which is now endangered by public policy in California, and for no good reason.

    Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris and the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life”

    —-

    Note: Despite its reputation for high density living, Japan’s suburbs have many millions of detached houses. In 2010, 47 percent of the occupied housing in Japan’s major metropolitan areas was detached (Tokyo, Osaka-Kobe-Kyoto, Nagoya, Sapporo, Sendai, Hiroshima, Kitakyushu-Fukuoka, Shizuoka and Hamamatsu).

    Photo: An endangered species: Detached houses in Ventura County (Photo by author)

  • How A Baby Bust Will Turn Asia’s Tigers Toothless

    For the last two decades, America’s pundit class has been looking for models to correct our numerous national deficiencies. Some of the more deluded have settled on Europe, which, given its persistent low economic growth over the past 20 years and minuscule birth rates, amounts to something like looking for love in all the wrong places.

    More rational and understandable have been those who have looked for role models instead in East Asia. After all, East Asia has been the world’s ascendant power for the better part of past 30 years. It is home to both China and Japan, the world’s second and third largest economies, as well as the dynamic “tiger” economies of Korea, Taiwan, Hong Kong and Singapore.

    Thomas Friedman, long enamored by authoritarian leviathan China, recently praised the tiger countries as exemplars of forward thinking. He traces their strong emphasis on “highly effective teachers, involved parents and committed students” as keys to turning their resource-poor countries into first world successes.

    Yet for all their laudably good school test scores, these tigers could turn somewhat toothless in the future. Already Japan, which fashioned the first great Asian model, is beset by a series of massive challenges including a lack of technological competitiveness and disastrously declining demographics. They also face competition from places like China and India, behemoths which may not equal the Tigers’ spectacular per-capita education numbers, but which can marshal overwhelming numbers of ambitious, educated and skilled people.

    Many in the tiger nations recognize this competitive plight far more than their western cheerleaders. Some even wonder if they may even have been too rational and credential-obsessed for their own good. Like Japan after the Second World War, they invested heavily in educating their young people to excel on tests and work long hours . But this also fostered high levels of stress and hyper-competition that discourages both family formation and child bearing .

    Singapore (where I serve as Senior Visiting Fellow at the Civil Service College) is arguably the best planned and most cleverly conceived of all the Tigers. Singaporeans live well — their per-capita incomes surpass those of Americans — but this edge is largely blunted by extremely high costs. As in all the Tiger countries, consumer goods like cars are extraordinarily expensive (a modest Korean model can run upwards of $75,000 or more in Singapore) and housing costs far higher than experienced by most Americans. In Hong Kong, notes researcher Wendell Cox, an average apartment, usually quite small, costs roughly twice as much as one  in New York or San Francisco, two most elite metro U.S. markets, relative to income.

    These conditions, observes Vatsala Pant, a former Nielsen executive and long-time Singapore resident, create what amounts to an accounting-like mentality about their lives. “Singaporeans seem to be born with a calculator in their heads,” she notes. “Every decision seems to weighed in a cost and benefit analysis, including such things as family. If it’s not perfect, they don’t want it.”

    This turn from family represents a sharp break in these countries. All the “tiger” economies flourished based on a Confucian culture that places kinship at the top of the value pyramid. Parents are still widely revered, but Li Lin Chang, an associate director of the Lee Kuan Yew School of Public Policy, suggests that Singapore’s “Confucian roots may not be as evident and some may argue that it may have disappeared.”

    Certainly increasing number of Singaporeans and others from Tiger countries are opting out of marriage. In 2000, 14% of women between age 30-39 chose to remain childless, according to demographer Gavin Jones of the National University of Singapore. By 2009, this figure has gone up to 20%. Jones estimates in some east Asian societies up to a third of all women will remain childless.

    Japan, the original model for all these countries, is now leading the way off the demographic cliff. In Japan, notes researcher Mika Toyota, 20% of 50-year-old males have never married, up from 12 percent just a decade ago. By 2030, she estimates nearly 30% of 50-year-old males will have never wedded. And unlike the U.S. and Europe, very few people have children out of wedlock in East Asia, so no marriage means no children.

    This plunge in marriage and family formation is not entirely voluntary. Few of the 40 or more Singaporean younger adults I have interviewed in recent months celebrated singleness like some of their Western counterparts. Most still wanted children and linked their reluctance to wed or to have babies on the high cost of living, intense competition in their workplace and even increasingly crowded mass transit.

    “Most of my friends are not married,” one 35-year-old female civil servant told me. “They don’t want to be single but they are too busy with their work commitment. My friends are consumed by work. Money, status, prestige, climbing the ladder. You expect things to change when you get older but it doesn’t. The calculation just doesn’t work out”

    For many of these people, not having offspring makes sense in terms of concentrating on career goals and reducing financial pressure. But it could prove a social disaster in the long run. All Tiger nations now suffer fertility rates roughly half the 2.1 children per household needed to replace the current population. By 2030 these countries could have fewer people under 15 than over 60.

    Not surprisingly, many Tiger country policymakers place a priority on producing more cubs. Most offer highly generous packages of support offered to those willing to take the nativity plunge. Some who have children cope with entrenched male reluctance to share in child-raising by relying on low-cost maids, often from the Philippines and other poorer countries. A recent move by the Singapore government to require giving maids the day off elicited howls of protests from female professionals, who, as authors Teo You Yenn and Vivienne Wee put it, regard “care of one’s own offspring as tedious, beneath oneself and rightfully the responsibility of a hired woman.”

    Some professionals who desire children consider taking their finely honed skills elsewhere. A recent survey by the MRI China Group showed that a majority of professionals surveyed in Taiwan and some forty percent in Singapore, as well as roughly one-third of those in Hong Kong, were actively looking to relocate to another city. Most covet a move to less high-pressure, lower-density Australia or New Zealand. Others, particularly from Taiwan, are attracted to greater opportunities in China.

    There may not be too much the bureaucracies can do immediately to address these problems. Clearly adding more degrees per capita or bringing in more foreign expertise, as is common in Singapore and Hong Kong, has not addressed looming baby shortage. Instead, as one one young University researcher put it, “we need a new mindset.”

    Most particularly, these countries need to change the incentives that, albeit unintentionally, create unsustainable levels of singleness, childlessness and the prospect of massive, rapid aging of their societies. They may have to consider more flexible work-styles, the promotion of home based business and better use of their limited space. Individual entrepreneurship, more rooted in each country and able to meld with family life, could be stressed as a counterbalance to employment in often fickle multinational corporations who can always move to greener, or at least cheaper, locales.

    More difficult still will be shaping attitudes that restore the primacy of family that propelled these societies in the first place. This is an existential challenge that would have seemed unimaginable 40 years ago when these countries fretted about overpopulation and widespread poverty. But success in the future can not be purchased by simply continuing what has worked so well for a generation. To avoid a toothless future, the Tigers need to unlearn some of the secrets of their past success.

    This piece originally appeared in Forbes.com.

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

    Singapore skyline photo by Bigstockphoto.com.

  • What Apple’s Supply Chain Says About US Manufacturing and Middle-Skill Training

    In January, The New York Times released a front-page report on the iEconomy, Apple’s vast and rapidly growing empire built on the production of tech devices almost exclusively overseas. The fascinating story created a wave of attention when it was published, and it’s back in the news after NPR’s “This American Life” retracted its story about working conditions at Foxconn, one of Apple’s key suppliers of iPhones and iPads.

    The end of the “This American Life” episode includes a discussion (audio | transcript) between host Ira Glass and Charles Duhigg, the NYT reporter who wrote the iEconomy piece, on Apple’s supply chain and the reason the tech giant doesn’t produce its insanely popular devices in the U.S. Perhaps you thought the main reason was labor costs; Apple would have to pay American workers much more than the estimated $17 a day (or less) many Chinese workers at Foxconn make. That’s part of it, but “an enormously small part,” Duhigg told Glass.

    Duhigg explained that, in terms of labor costs, producing the iPhone domestically would cost Apple an additional $10 (on the low end) to $65 (on the high end) more per phone. “Since Apple’s profits are often hundreds of dollars per phone, building domestically, in theory, would still give the company a healthy reward,” he wrote in the NYT piece.

    Instead, what matters is Apple’s intricate Chinese supply chain. Duhigg went into detail in his conversation with Glass:

    Compared to the cost of buying chips or making sure that you have a plant that can turn out thousands of these things a day or being able to get strengthened glass cut exactly right within, you know, two days of this thing being due, that’s what’s important. Labor is almost insignificant. What is really important are supply chains and flexibility of factories. You want to be able to be located right next to the plant that makes the screws so that when you need a small change to that screw factory, you can go next door and say, “Give it to me in six hours,” and they can say, “Here you go.” Because if that factory was in another state or on another continent, it would take two weeks. It’s the flexibility within the Chinese manufacturing system, that’s what you can do in Asia that you can’t do in the United States.

    Another major reason why Apple produces the iPhone and iPad abroad is the huge (and available) skilled workforce in China. When Apple needed 8,700 industrial engineers to oversee 200,000 assembly-line workers involved in making the iPhone, the firm looked at how long it would take to find that many workers in the U.S. Its answer: as long as nine months — compared to 15 days in China.

    This boils down, according to Duhigg’s report, to the lack of American workers with “mid-level skills that factories need, executives say.”

    Companies like Apple “say the challenge in setting up U.S. plants is finding a technical work force,” said Martin Schmidt, associate provost at the Massachusetts Institute of Technology. In particular, companies say they need engineers with more than high school, but not necessarily a bachelor’s degree. Americans at that skill level are hard to find, executives contend. “They’re good jobs, but the country doesn’t have enough to feed the demand,” Mr. Schmidt said.

    From Whose Bourn No Manufacturing Returns

    So, what does this mean for manufacturing in the U.S.?  For the most part there are no surprises here. These are known, core issues in the U.S. We’re well aware of the skilled worker drought. We’re aware that we’ve shipped much of our production process off-shore. But, we keep saying to ourselves, we’ve increased our productivity. We’re innovating and we’re keeping the profits, right? To answer that we can say “maybe” and “sorta.”

    There’s currently a debate raging about how we calculate our productivity. It’s a complex issue that we won’t get deep into here (check out this recent article in the Washington Post for more), but the gist is that our methodology for calculating productivity might be overstated. Like, a lot. Biases within this methodology have tended to convert a factory’s price savings through outsourcing into an increase in output. As Peter Whoriskey of the Post puts it:

    For example, suppose a U.S. factory decides to offshore the production of a part for which it used to pay $1. With the switch to an overseas supplier, it might pay 50 cents for the part. If U.S. statistics do not capture this drop in price, the savings by the U.S. factory can show up as a gain in output and productivity.

    Changes like these aren’t an increase in output due to innovation and greater productivity per worker. These are savings, which are certainly great for that factory, and certainly mean better profit margins, but which aren’t productivity increases that we get to point to as the silver-lining of our inky manufacturing cloud.

    That’s one element. The other element sits very near and dear to our heart here at EMSI. There’s a very basic theory at work in our impact studies and I/O model, and it’s that tight supply chains are good. The goal of any regional economy should be to develop complete supply chains. The less that an industry has to bring goods and services into the region from outside, the greater effects we see from increases in those industries. In other words, “Great job, China.” But this leaves the US at a disadvantage. Yes, low-cost Chinese manufacturing has facilitated growth in the US economy. However, this has happened at the expense of the US developing these complete supply chains.

    Maybe If We Ask Real Nice

    Now, this is an extremely complicated issue, and things have developed as they have for a reason. However, when we ask the question, “what would it take to manufacture iPhones in the US?” — a question tantamount to “what would it take to get all of those manufacturing jobs over here?” — if the supply chain is the deciding factor, then the answer might be something along the lines of “too late.” At this point, manufacturing supply chains are so thoroughly concentrated in China that bringing them back to US soil seems more or less impossible. There may be little we can do about manufacturing jobs leaving the US.

    The Data

    However, instead of simply offering some sound — albeit pessimistic — reasoning on the issue, let’s look at some data on manufacturing. Since jobs are in the spotlight, and productivity measures have received some heat, we’ll simplify the issue a little and just look at job growth in manufacturing.

    In terms of industry performance, 74 manufacturing industries saw growth from 2001-2006; 65 saw growth from 2006-2009; and 210 saw growth from 2009-2011. This is, of course, growth of any amount. This indicates a slight, recent uptick in the variety of industries experiencing some amount of growth.

    Typically, we look at net growth for industries. We combine growth and decline to show the overall growth and decline. Here’s net decline for manufacturing for three different periods:

    Net Change Average Annual Net
    2001-2006
    -2,211,513
    -368,586
    2006-2009
    -2,193,021
    -548,255
    2009-2011
    -99,250
    -33,083

    Job loss seems to slow in that 2009-2011 period.

    We’ll look at one more series of data, before we wrap up. What if we look at decline and growth separately instead of simply the net of both? This will allow us a discrete view of whether decline has slowed or growth has quickened, or perhaps a combination of both.

    First, decline:

    Decline Average Annual Decline
    2001-2006
    -2,481,385
    -413,564
    2006-2009
    -2,321,862
    -580,466
    2009-2011
    -300,690
    -100,230

    Manufacturing decline considered on its own appears to have slowed in the past few years.

    Now, growth:

    Growth Average Annual Growth
    2001-2006
    269,872
    44,979
    2006-2009
    128,841
    32,210
    2009-2011
    201,440
    67,147

    Gain in the manufacturing sector seems to have picked up pretty noticeably.

    This analysis is not nuanced. As other sources have made plain, this is a complex issue. However, it remains true here that job growth in manufacturing has picked up somewhat, and that decline has slowed. We’re still seeing net losses, so this isn’t evidence of recovery. However, it does mean that not absolutely every manufacturing job is moving offshore. At least not yet.

    Not to mention that there’s some support for the idea that we’re seeing some “reshoring” — manufacturing jobs coming back to the US. A recent report from The Boston Consulting Group claims that by the end of the decade we could see a reshoring of 600,000 to 1 million jobs. The report explores the seven broad industry sectors “most likely to reach a ‘tipping point’ over the next five years—a point at which China’s shrinking cost advantage should prompt companies to rethink where they produce certain goods meant for sale in North America.” Are we seeing the beginnings of this in our more recent industry data? Or do we stand to lose more manufacturing jobs to China? We’ll have to wait and see.

    Stevenson has worked at EMSI, an Idaho-based economics firm, since 2006. He’s a regular contributor to the EMSI blog. Contact him at josh@economicmodeling.com.

  • Inequality and Economic Growth

    There has been news and conversation about economic inequality and economic growth lately, mostly because the former is increasing steadily and the latter has been less than stellar.

    Of course, there is always a tension between economic growth and equality.  Economic growth implies at least some inequality.  That’s because most people need incentives to create things people value.  They need a reward.  Creating perfect equality necessarily eliminates incentives.

    The reward for innovation or effort doesn’t have to be the full value of an innovation or effort.  The person who invented the wheel did not collect the present value of the innovation.  Similarly, Bill Gates, rich as he is, or the late Steve Jobs, or George Mitchell, the man who helped developed “fracking” did not collect the full value of their innovations.  The fact that people voluntarily agree to pay income taxes demonstrates that they don’t have to consume the full value of their effort.  So, there is room for some redistribution.

    Still, there has to be some reward, some incentives to work or innovate.  That incentive naturally will create inequality. 

    Call incentive the supply side.  If there is a supply side, there must be a demand side.  There is, and that comes from people, but it is not what you might think.

    Economic theory is based on the concept that people are happier when they consume more or better products.  That turns out to not be true.  People are no happier than they were 100 years ago, and we consume a lot more than our great-great grandparents.

    The fact is that since the 1950s in America, and now in many parts of the world, people have been free of the worst Malthusian constraints.  We have plenty to eat and on some measures we don’t really need any more.  Especially with current low birth rates, not just in advanced countries but also in much of the developing world, consumption growth is unnecessary. 

    So, why do we need economic growth?

    We need economic growth because people need more than consumption.

    The great cartoonist Al Cap, the creator of Li’l Abner, understood this.  Li’l Abner, his wife Daisy Mae, and the other residents of Dogpatch sometimes benefitted from the presence of a creature called a Shmoo.  Shmoos bred prolifically, and could create or serve as anything humans wanted.  They were perfectly happy, ecstatic in fact, to be dinner.  With Schmoos around, all human consumption needs were fulfilled, with no effort on the part of the humans.  It didn’t work out so well.  The Shmoos were eventually killed by extermination teams to save humanity and the economy, except for two saved by Li’l Abner and returned to repopulate the Valley of the Shmoon.

    We have similar real-world examples, and it doesn’t work out so well here either.  It turns out that when all consumption needs are provided with little or no effort on the part of the recipient, something is lost.  Drug and alcohol abuse abounds in these populations.  Traditional families are destroyed.  Crime is high.  Violence, including domestic violence, is high.  Morals are abandoned.   Relationships are fluid, frequently violent, and always temporary.  Health is poor, even when healthcare is provided.

    It turns out that when people are provided everything they need, self-destructive behavior is the norm.  It’s almost as if they have no reason to live, and it is a terrible price to pay for consumption. 

    It turns out that a job costs less than dependency, and that’s why we need economic growth.  Jobs and opportunity provide us with some things that consumption can’t.  I think those are pride, dignity, and purpose.

    That doesn’t mean we should abandon the effort to provide a safety net.  People are different, and few of us would be comfortable with the how the least endowed would live without a safety net.  It is also true that the gods of chance can be cruel to even the most capable.  Most of us would like to see some protection provided the unlucky.

    A safety net reduces inequality, and is redistributive.  The trick is to maintain incentives.

    If we are to offer people jobs and opportunity, and we must, we need economic growth.  To realize economic growth, we need to maintain incentives for the most productive and innovative.  Punitive marginal tax rates are counterproductive.

    How support is delivered to the recipients is also extraordinarily important.  The incentive issue should be paramount.  We owe it to the recipients to provide the support in a manner that preserves dignity and pride and always provides a healthy incentive to work.  Far too many existing programs have effective marginal tax rates near, at, or exceeding 100 percent.  This easily happens on means-tested programs, where the next dollar in income could cost the benefit plus the taxes on the new income.  Here’s a quote from a report by the Employment Policies Institute:

    “As an example, in states with ostensibly generous welfare benefits, Professor Shaviro shows that a single mother with two children could increase her earned income from $10,000 per year to $25,000 per year and actually find herself with 2,540 fewer dollars once she accounts for lost tax credits and benefits. Though her earned income more than doubles, she is worse off financially.” 

    It makes no sense to have 100 percent marginal tax rates on high-income individuals.  It makes even less sense to have 100 percent effective marginal tax rates on the least advantaged.

    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

  • The Republican Party’s Fatal Attraction To Rural America

    Rick Santorum’s big wins in Alabama and Mississippi place the Republican Party in ever greater danger of becoming hostage to what has become its predominate geographic base: rural and small town America. This base, not so much conservatives per se, has kept Santorum’s unlikely campaign alive, from his early win in Iowa to triumphs in predominately rural and small-town dominated Kansas, Mississippi, North Dakota and Oklahoma. The small towns and rural communities of states such as Michigan and Ohio also sheltered the former Pennsylvania senator from total wipeouts in races he would otherwise have lost in a blowout.

    If America was an exclusively urban or metropolitan country, Mitt Romney would be already ensconced as the GOP nominee and perhaps on his way towards a real shot at the White House. In virtually every major urban region — which means predominately suburbs — Romney has generally won easily. Mike Barone, arguably America’s most knowledgeable political analyst, observes that the cool, collected, educated Mitt does very well in affluent suburbs, confronting President Obama with a serious challenge in one of his electoral sweet spots.

    Outside the Mormon belt from Arizona to Wyoming, however, sophisticated Mitt has been a consistent loser in the countryside. This divergence between rural and suburban/metro America, poses a fundamental challenge to the modern Republican Party. Rural America constitutes barely 16 percent of the country, down from 72 percent a century ago, but still constitutes the party’s most reliable geographic base. It resembles the small-town America of the 19th century, particularly in the South and West, that propelled Democratic Party of Nebraska’s William Jennings Bryan to three presidential nominations.

    Yet like Bryan, who also lost all three times, what makes Santorum so appealing in the hinterlands may prove disastrous in the metropolitan regions which now dominate the country. Much of this is not so much particular positions beyond abortion, gay rights, women’s issues, now de rigueur in the GOP, but a kind of generalized sanctimoniousness that does not play well with the national electorate.

    We can see this in the extraordinary difference in the religiosity between more rural states, particularly in the South, and the rest of country. Roughly half of all Protestants in Mississippi, Alabama and Oklahoma, according to the Pew Center on Religion and Public Life, are evangelicals, not including historically black churches. In contrast, evangelicals make up a quarter or less of Protestants nationally and less still in key upcoming primary states such as Pennsylvania, New York, California and Connecticut, where the percentages average closer to 10 percent.

    Let me be clear: Urbanity is not the key issue here. Cities have become so lock-step Democratic as to be essentially irrelevant to the Republican Party. Instead it’s the suburbs — home to a record 51 percent of the population and growing overall more than 10 times as fast as urban areas — that matter the most. Much of the recent suburban growth has taken place in exurbs, where many formerly rural counties have been swallowed, essentially metropolitanizing the countryside.

    What accounts for the divergence between the suburban areas and rural areas? A lot may turn on culture. Small towns and villages may be far from the isolated “idiocy of rural life” that Marx referred to, but rural areas still remain someone more isolated and still somewhat less “wired” in terms of broadband use than the rest of the country.

    Despite the popularity of country music, rural residents do not have much influence on mainstream culture. Most Hollywood executives and many in New York still commute from leafy ‘burbs. Few of our cultural shapers and pundits actually live predominately in the countryside, even if they spend time in bucolic retreats such as Napa, Aspen or Jackson Hole.

    Until the recent commodity boom, much of rural America was suffering. And even today, poverty tends to be higher overall in rural areas than in urban and especially suburban countries. Some areas, notably in North Dakota and much of the Plains, are doing very well, but rural poverty remains entrenched in a belt from Appalachia and the deep South to parts of west Texas, New Mexico and California’s Central Valley.

    Rural areas generally do not have strong ties to the high-tech economy now leading much of metro growth. This remains a largely suburban phenomenon, urban only if you allow core cities to include their hinterlands. All the nation’s strongest tech clusters — Silicon Valley, Route 128, Austin, north Dallas, Redmond/Bellevue in Washington, Raleigh-Durham — are primarily suburban in form. High tech tends to nurture a consciousness among conservatives more libertarian than socially conservative and populist. Not surprisingly, libertarian Ron Paul often does best in these areas and among younger Republican voters.

    Another key difference: a lack of ethnic diversity. There are now many Hispanics living in rural areas, but they are largely not citizens and most are recent arrivals, attracted by jobs in the oil fields, slaughterhouses and farms. Many small towns, unlike suburbs, remain more homogeneous than suburbs, emerging as the most heterogeneous of all American geographies. Ethnic cultural cross-pollination occurs regularly in metropolitan suburbs; this is not so common in rural America.

    Equally important, environmental issues spin differently in rural areas than in suburbs. Energy development and agriculture drive many rural economies. In some areas, like Ohio and western Pennsylvania, shale oil and gas is bringing long moribund regions back to life. In the Dakotas, parts of Louisiana, Texas and Wyoming, it is ushering in a potentially long-term boom. In contrast, there aren’t many oil and gas wells located next to malls and big housing tracks.

    This does not mean that suburban voters share the anti-fossil fuel green faith of the urban core. But for them “drill baby drill” represents more a matter of price at the pump than a life and death issue for the local economy. Suburbanites feel the energy issue, but do not live it the way more rural communities do. One of the great ironies of American life is that those who live closest to nature are often less ideologically “green” than those, particularly urbanites, residing in an environment of concrete, glass and steel.

    Rural America, of course, is changing, with many areas, particularly in the Plains, getting richer and better educated. These areas are growing faster than the national average and attracting immigrants from abroad and people from other U.S. regions. Yet the influence of newcomers, new wealth and new technology is still nascent. The political pace in rural America today still is being set by an aging, overwhelmingly white and modestly educated demographic.

    Until the Republican nomination fight is settled, the party’s pandering to the sensibilities of such conservatives in rural areas could prove fatal to its long-term prospects. A Santorum nomination almost guarantees a replay of the Bryan phenomena; no matter how many times he runs, he will prove unlikely to win, even against a vulnerable opponent. Even in losing, his preachy, divisive tone — on contraception, prayer, the separation of church and state — has opened a gap among suburban voters that Obama will no doubt exploit.

    The suburbs, with its preponderance of white, middle income independent voters, gave the 2008 election to Obama, and that’s where the next contest will be decided. The countryside will rally to a GOP standard bearer like Romney, albeit somewhat reluctantly, for both economic and social reasons. The battle will then shift to the suburbs, including those urban areas, common in the vast cities of the South and West, that are predominately suburban in form.

    Most of the urban core, meanwhile, will vote lockstep for Obama. But the president, as thoroughly a creature of urban tastes and prejudice as to ever sit in the White House, could prove vulnerable in the suburbs, if the Republicans can deliver a message that is palatable to that geography’s denizens.

    This piece originally appeared in Forbes.com.

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

    Rick Santorum Image by Bigstockphoto.com.