Articles on this Page
- 10/12/12--22:38: _A Geographer Who Na...
- 10/14/12--22:38: _Thoughts on Chicago...
- 10/15/12--22:38: _A Planet of People:...
- 10/16/12--22:38: _CERF's Economic Pol...
- 10/17/12--22:38: _The Land Premium Th...
- 10/18/12--06:58: _Demographic Dead En...
- 10/20/12--07:39: _It’s Mormon in America
- 10/21/12--22:38: _Is College Worth It?
- 10/22/12--22:38: _The Swaps of Damocles
- 10/23/12--14:37: _Decline Of The Asia...
- 10/24/12--05:12: _The Rise of the Gre...
- 10/24/12--22:38: _Local Government in...
- 10/25/12--22:38: _Postwar Prefabs: Br...
- 10/26/12--22:38: _Deep in the Heart o...
- 10/28/12--22:38: _The GOP’s Hispanic ...
- 10/29/12--08:53: _Obama’s Base and Po...
- 10/30/12--18:47: _Superstorm Sandy & ...
- 10/31/12--22:38: _Cities Flying Too C...
- 11/01/12--08:07: _Despite the Great R...
- 11/02/12--11:01: _The Suburbs Could S...
- 10/12/12--22:38: A Geographer Who Navigated the Globe
- 10/14/12--22:38: Thoughts on Chicago’s Tech Scene
- 10/15/12--22:38: A Planet of People: Angel's Planet of Cities
- 10/16/12--22:38: CERF's Economic Policy Plan
- 10/17/12--22:38: The Land Premium That's Punishing Property
- 10/18/12--06:58: Demographic Dead End? Barack Obama's Single Nation
- 10/20/12--07:39: It’s Mormon in America
- 10/21/12--22:38: Is College Worth It?
- 10/22/12--22:38: The Swaps of Damocles
- Of the 398 total Dodd-Frank rulemaking requirements:
- 131 (32.9%) have final rules
- 135 (33.9%) have proposed rules
- 132 (33.2%) have not yet been proposed
- Of the 247 rulemaking deadlines that have passed:
- 145 (61.2%) have been missed
- 31 (13%) have not even had proposals
- 10/24/12--22:38: Local Government in Ohio: More Accessible and More Efficient
- 10/25/12--22:38: Postwar Prefabs: Britain's Factory-Made Palaces
- 10/28/12--22:38: The GOP’s Hispanic Political Malpractice
- 10/29/12--08:53: Obama’s Base and Politics of Disappointment
- 10/30/12--18:47: Superstorm Sandy & The Beachfront Bailout
- 10/31/12--22:38: Cities Flying Too Close to the Sun
- 11/02/12--11:01: The Suburbs Could Save President Obama From Defeat
Many people ask, “What do geographers do?” I would suggest that Marvin Creamer’s life story is all you need to know about the practical application of geography, even though most of us will never be stuck in a horizonless Indian Ocean on a “sea of glass”, or try to navigate the ferocious Drake’s Passage. Ancient mariners may have been able to sail long distances without instruments, but it is difficult, tricky, and can be extremely hazardous. Only one person, New Jersey’s Marvin Creamer, has ever attempted to circumvent the globe this way. I had the distinct honor of interviewing Marvin Creamer for the thirtieth anniversary of his historic achievement. The 96 year old sailor and geographer also founded Rowan University’s geography department, and taught there for over three decades.
At 66 years old in 1982 (five years after his retirement), Creamer became the only person ever to sail around the world without any navigational aids, not even a watch. He had spent three years thinking about it, two years making practice runs and doing research on the possibility, and 18 months accomplishing it. Instead of a compass and sextant, his only navigational tools were his extensive knowledge of geography, an hourglass, and a lot of optimism.
Creamer and his crewmates braved all manner of conditions over an 18 month period to accomplish the truly historic feat. He became an expert at celestial sailing, designating a “North Star” and triangulating his position off of it. Using this method he could keep within 1 degree of latitude and longitude, but this would not help him during the daytime or cloudy conditions.
For navigation during daytime or overcast conditions, he needed to find other ways to determine latitude. He studied ocean currents, marine life, water color and temperature. These skills would be critical not only in stormy conditions, but also in calms under slate skies.. He used his encyclopedic geographic knowledge to — for example — glean vital information from a squeaky hinge by determining where a desiccating wind (that caused the squeaking) would originate from. Sailors can become disoriented the same way pilots become confused when they have no visual cues to reference. More than once Creamer found himself fogged in on a shipping lane, and shaken by the blaring fog horns of massive tankers nearby.
The biggest planning problem was how to get around Cape Horn. Scientists who had worked in Antarctica advised that maybe once a month clear skies would exist on the Cape. He would have to be able to navigate the world’s most treacherous waters blind. Not only were the currents savage, the winds were often gale force, with high waves and icebergs. It’s no surprise that the Drake Passage is known as a sailor’s graveyard.
The southern sky is also much cloudier on average that the northern hemisphere’s, which would add to the difficulty of navigating without instruments there. But Boy Scouts in New Zealand taught him how to use the Southern Cross and only a thin sliver of sky to find the Polar Point.
Marvin Creamer departed Cape May, NJ on December 21, 1982 under overcast skies with temperatures in the teens and an advancing cold front. He arrived in Cape Town South Africa on March 31st , 1983, and spent 8 weeks there fixing the boat and getting rest. The next leg was crossing the Indian Ocean in winter time to get to Tasmania. Upon arrival in Hobart, the fishermen there were so impressed that he could make landfall in such harsh conditions on the dark and desolate coast that they threw him 36 parties in the 6 weeks he stayed. Heading back down the Derwent River, 90 mph winds tossed the Globe Star upside down. His steel hulled boat with its shortened mast, built for this trip., sustained only minor physical damage, but an ill crew member needed to be dropped off in Sydney.
On the way he was trapped for two days by Bomboras — dangerous eddies over hidden reefs of rocks — crashing around him (he described them as 'going off like geysers' all around him), in one of the journey's most terrifying episodes. Finally, after navigating through a minefield of rocky outcrops, he made it through to the East Australian Current and Sydney. After stopping in New Zealand, it was off to Cape Horn and Drake’s passage.
Sailing through the Drake was a wild adventure with winds and currents so strong that the boat could never be turned more than 15 degrees without it feeling and sounding like it was being hit with mortar fire. During the 600 mile passage his tiller broke and his shoulder was dislocated. Creamer worked furiously to cut loose his camera mount and build a makeshift steering shaft.
After the near catastrophe he turned north towards the Falklands, which are notoriously difficult to sail, due to their remoteness and constantly changing conditions. In addition to the geographic challenges, he had entered a sensitive area that had seen war only months before. The British were still on high alert. When Creamer saw British fighters overhead (and they spotted him as well), he looked for a place to make port, and unknowingly chose a top secret British base, where he immediately found himself under house arrest. But after a little dialogue his captors treated him royally, and provisioned him for the final leg of his incredible journey. Marvin arrived in Cape May, NJ safely on May 17, 1984.
Photos by Ralph Harvey
Chuck McGlynn is an assistant professor at Rowan University in Glassboro, New Jersey. The university is planning a series of major events next spring to commemorate Creamer's achievement, including a planetarium experience where attendees will be able to “travel with Marvin and the Globe Star” around the world. An interactive map experience will allow, users to select any point along the journey for a display of the Globe Star journey's date, time, longitude, average air and water temperatures, prevailing winds and sea-current.
I’ve said before that I don’t think Chicago is well positioned to become some type of dominant tech hub, but should only seek to get its “fair share” of tech. However, as the third largest city in America, Chicago’s fair share on tech is still pretty darn big. If you look at what’s been happening in the city the last couple of years, I think you’d have to have to say it’s something real. Built in Chicago lists 1145 companies in its inventory, and that’s definitely something. I’ll give a bit of a mea culpa by admitting that the tech community has done better than I probably thought it would a couple years ago, though I still stand behind the statement I made at the beginning of the paragraph.
Part of what has happened in Chicago is the general decentralization of technology in America. It used to be that tech in America was heavily concentrated in the Bay Area and Boston. In an era when pretty much literally anybody can start a company, you simply don’t need to be in any particular place to be successful these days.
Mark Suster made this point in his Tech Crunch post, 12 Tips To Building A Successful Startup Community Where You Live:
I would point out that these days there are really talented tech developers and teams everywhere. And I really mean everywhere. Ever play Zynga’s “Words with Friends” or any of their “with Friends” games? Didn’t come out of the SF facility. It came from an amazing small startup in McKinney, Texas (30 miles North of Dallas) called NewToy, which they acquired.
Think the next big startup can’t come from Dallas? Think again. Angry Birds? From startup Rovio in Finland.
Think USV is only invested around Union Square in NYC? How about in the last 12 months deals were announced with Dwolla (Iowa) and Pollenware (Kansas City). I met the Pollenware team myself – they were KILLER.
In this environment, it’s possible for lots of cities to find success. This is why places like New York and Chicago have been table to reboot their tech ambitions, and why some of those hot startups Suster mentioned are in smaller Midwest cities. Strong tech/startup scenes have been emerging all over the country. Being a startup hub isn’t what it used to be in terms of joining a highly exclusive club.
This is a case where there aren’t of necessity winners and losers. It isn’t like the Midwest can have just one tech center, for example, and thus the battle for Chicago is to be the winner, while everyone else gets to be a loser. The good news here is that Chicago can win and other places can win too. This might be one economic change that really can start rebranding a region.
Not only has there been legitimate strength in the Chicago tech community of late, it is also starting to get some good press. For example, just this week the New York Times ran a story on tech businesses moving into the Merchandise Mart. (An unfortunate subtext of this piece appears to be a serious decline in Chicago’s vaunted design community, however). This is one of a number of positive pieces that have appeared recently.
The city has really put on the full court press for tech, with Mayor Rahm Emanuel in effect making it the signature economic development cluster of his administration. I cannot think of any other sector of the economy in which Emanuel has so put his personal imprimatur. He has repeatedly stood up to endorse Chicago tech and its ambitions, and I think it’s fair to say he’s got a lot riding on it being successful – and not just successful, but an outsized success compared to peer cities.
Rahm has also put city action behind the marketing. For example, making an open data push, and also the recent broadband deployment initiative to underserved areas.
The trendlines certainly appear positive for Chicago at this point, but I want to highlight a few areas I find lacking and/or risky to the future.
The Booster Club Society
I’ll lead off a video from last year’s Chicago Ideas Week. This is JB Pritzker’s keynote at the Midwest Entrepreneur’s Summit. (If the video doesn’t display for you, click here).
This is a pretty good talk, but thinking about it a bit, a few things jumped out at me.
First, this is a talk in the finest tradition of “the sun is always shining on Chicago.” I’ve noted many times that under the Daley administration there was in effect a gag rule against saying anything that could be construed as even slightly negative about the city. I’ve noticed a change in that under Emanuel, but there’s one big exception, and that’s the tech sector. In Chicago tech pretty much everybody is pretty much 100% on the rails of the marketing message all of the time.
Listening to this, you’d think Chicago basically is tech nirvana, with the exception of a central gathering place for techies, something that Pritzker conveniently has a plan to create. Strong as Chicago may be, I can’t believe everything could possibly be this rosy. Similar sentiments from various members of the tech community are prominently on display in pretty much every article out there.
There’s nothing wrong with being a champion for your city, but when you become too much the booster club society, it’s not healthy. A little more paranoia and a little less spin would probably do the city good. Chicagoans would clearly recognize the excess earnestness that characterizes such rhetoric if they saw it in another city – I see it all over the place, as all kinds of cities make the case for why they too are one of the next great tech hubs by closing ranks and presenting a unified, totally positive marketing front to the outside world – so I’d suggest they think about how they’d evaluate the statements they make if those same statements were being made by boosters of another place like say Kansas City.
Here’s another example. Announcing some additional protected bike lanes, Rahm Emanuel had this to say:
It’s part of a planned bike lane network that Mayor Rahm Emanuel on Sunday said will help Chicago to attract and keep high tech companies and their workers who favor bicycles.
“By next year I believe the city of Chicago will lead the country in protected bike lanes and dedicated bike lanes, and it will be the bike friendliest city in the country,” Emanuel said Sunday at Malcolm X College.
“It will help us recruit the type of people that have been leaving for the coast. They will now come to the city of Chicago. The type of companies that have been leaving for the coast will stay in the city of Chicago.”
I like protected bike lanes. I applaud Chicago’s protected bike lane program. But this is a bit over the top. I got unsolicited email from as far away as the West Coast mocking this.
I think Emanuel’s media savvy and willingness to sell Chicago is a big plus for the city. But he has had a tendency to sometimes step over the line and make extravagant statements that just don’t pass the sniff test. I think this comes from his days in Washington where that sort of thing is expected, understood, and discounted by everyone. It’s just the way the game is played there. But for mayors there’s a different standard of judgement. Yes, everyone expects you to make the aggressive case for your city. But mayoral statements that seem un-moored from reality – like the various claims that have been made about crime and shootings, for example – end up calling into question the truth of everything else you say. This in my view is a danger for Rahm or anyone else who has been overly steeped in Beltway style communications.
So I would suggest that Chicago continue to be aggressive on marketing, but tone down some of the orgasmic rhetoric and take care that they don’t end up believing too much of their own press. This can be a fine line to walk. I hope that in private at least the city’s tech community has a huge punch list of things that need to be better they are actively working on.
Better Tech Media
Another aspect of Pritzker’s talk that jumped out at me immediately at the time he gave it (I attended the event), was his failure to mention that Chicago already had a very successful version of his own 1871 incubator called Tech Nexus. Tech Nexus is a self-described “clubhouse” for Chicago’s tech community, a co-working space, and an incubator (ranked one of the top ten in the United States by Forbes) that has served over 100 companies. Tech Nexus also hosts tons of meetups and other events, and through the affiliated Illinois Technology Association has been an instrumental booster of the Chicago tech scene the last few years.
Now Pritzker did mention them in passing in a long list of institutions he gave in the talk. But to claim Chicago lacked the central gathering place for tech until he, JB, rode to the rescue with 1871 is a) not true and b) pretty obviously a deliberate snub of Tech Nexus.
I certainly don’t think everybody needs to be on the same page in a city’s tech community. I actually think that would be a weakness. I think it’s healthy to have different groups of people with different visions each pushing them. Building a space like 1871 is a positive. The more the merrier I say. But this type of talk smells to me like pretty much just a political power play in the Chicago tech community.
Speaking of which, Pritzker may be a venture capitalist, but he’s also an heir to the Pritzker family fortune and one of the richest men in America. (Oh, the irony of having as the keynote speaker for your entrepreneurship conference a guy who inherited over a billion dollars – that tells you a lot about how Chicago works). The Pritzkers have long been power players in Chicago and a key part of what I’ve called the Nexus. So being on the executive committee of World Business Chicago is not so far a leap as he may have us believe. (I also wonder if perhaps Pritzker is the guy who convinced Emanuel to make the very risky move of piling all those chips on the tech square, as he’d appear to be one of the few guys with an interest who would have the clout to do it).
My point here isn’t to bash JB Pritzker, but rather to wonder why no one is asking questions or talking about stuff like this in the press. There are lots of very rich guys with no doubt big egos involved Chicago tech. There’s bound to be lots of interesting politics and personality clashes and maneuverings going on behind the scenes. I want to be able to pop some popcorn and follow the drama. But it doesn’t get covered. I think the local media is basically out of their depth when it comes to covering Chicago tech.
My believe is that Chicago needs a new, independent media source covering the local tech market. This would not be part of the marketing machine of Chicago tech, though like TechCrunch would of course be institutionally favorable to the industry, but instead would provide real, credible coverage of the what’s what and who’s who of the community. As Mark Suster said in the post I linked to earlier, “Local press matters.”
In my review of Enrico Moretti’s book, I noted how he took a face value some mainstream media reports on how tech giants like Facebook were acquiring startups just to get their talent while shutting down the actual companies. He apparently didn’t read Gawker, which gave a fuller story. New York tech community also benefits from other sites, such as the irreverent Betabeat from the New York Observer. Suster mentions sites like GeekWire in Seattle and SoCalTech as well but I don’t know them personally so can’t say they’d be the models to replicate.
In any event, I believe Chicago needs a first class tech media site. A site like Technori does a good job, but it strikes me more as a “how to” site than a media property. Chicago needs a someone asking tough questions, and looking at the people and politics around tech, not just the bits and the bytes. Because IMO the traditional Chicago media hasn’t really shown any interest in pursuing this.
I’m also a bit puzzled as to why Chicago is leading its marketing with the digital/social media/consumer space. Obviously Groupon (which seems to be in the process of getting airbrushed out of the Chicago tech politburo photo) played a role in this. But this seems like a shaky place to stake a claim. I don’t see consumer type brands as Chicago’s strong suit, and the digital market seems weak in any case. Even juggernaut type companies like Facebook and Groupon have struggled financially. There’s a big question mark over the whole space. What’s more, it seems like lots of places, ranging from San Francisco to New York, are rushing to tell basically the same story in digital and are frankly ahead in the space.
By contrast, Chicago has a long and successful history of business to business and information technology. Flip Filipowski’s Platinum Technology was a great example of this. These types of companies might not have the sexiest brands, but they deliver value and make money. What’s more, because of the support demands of corporate clients, these businesses often employ a material amount of highly skill, highly paid people, unlike most digital startups.
Also, Chicago has been a major center of corporate IT for a long time. This is often not valued by the pure tech crowd, but is a huge source of value and good paying jobs. Terry Howerton (who runs TechNexus) said of State Farm:
“State Farm has 12,000 employees in IT in Bloomington,” Howerton said. “I’m sure many of those employees are really smart people, but how innovative can you be with 12,000 IT workers in your bureaucratic corporate environment in an industry as historic as insurance?”
Well, to start with, 12,000 IT employees is likely more than the total local employee count of every digital startup in Chicago combined. And that’s just one company. Howerton is the best advocate out there for a B2B vision for Chicago tech, but I would also add the IT part to the equation as well.
Chicago’s IT shops have a long track record of innovation going back to before a lot today’s digital folks were even born. Walgreen’s Intercom system, for example, linked all their pharmacies nationwide together back in the 1980s so that you could get your prescription refilled anywhere you needed it. And they didn’t have today’s open systems and frameworks to make life easy. They had to use a proprietary satellite system and a specialized high volume, 24×7 uptime mainframe operating system called TPF (originally developed for airline reservations). I’m not sure most of today’s digital coders could figure out how to build and support a TPF application if their lives depended on it.
Given Chicago’s heritage as a center for professional and business services, and corporate headquarters, I believe its natural strengths in technology are in B2B tech companies, technology consulting, and corporate IT. If you can get digital/consumer startups that’s great, but I wouldn’t make that the public face of the city. Instead, take all that corporate services mojo and embed it in tech.
The Big Risk
If you look at what I’ve written about changes so far, most of them are tweaks around the margins. They don’t indicate core weaknesses. Frankly they are sort of nit-picky. That should tell you something. As I said, I think the Chicago market has been doing well – better than I thought it would. I’m not even concerned about the so-called “developer drought” of which I’m extremely skeptical (see more here).
But there’s one thing that is a clear risk to Chicago, one that could undo all its effors – and it’s one that the city can’t do anything about. That’s the risk of another tech crash.
Technology is very cyclical. Every so often, Silicon Valley has had a major crash. I believe it is these crashes that have actually helped to keep the tech industry concentrated in its major hubs. That’s because when crashes come, industries retrench and reconsolidate. For example, Joel Kotkin has said that it was actually the 1980’s energy crash, the one that devastated Houston, that actually helped trigger the industry consolidation there. We’re seeing something similar in media, where financial pressure is consolidating it into NYC and to a somewhat lesser extent DC while secondary markets get wiped out.
So too in tech. Think about the dot com era. Lots of cities had their startup dreams back then too, and it seemed like parts of the country outside the major hubs would be able to get their bite at the apple. Chicago had its “Silicon Prairie” and New York its “Silicon Alley.” All of them got blown up by the dot com crash. But Silicon Valley and Boston survived. Chicago and New York tech eventually came back, but it was on a totally new basis.
There’s a tendency locally in Chicago to now talk about the flaws of the city’s tech ambitions in the Silicon Prairie days in contrast to how it now has its act together. The idea is that Silicon Prairie collapsed because people didn’t get along, or because they chased away their entrepreneurs, etc. But the reality is that it most likely collapsed simply because the market did, not because of flaws or mistakes. I’m not convinced there’s anything the city could have done to survive that shakeout. And if another crash hit, the same thing might easily happen all over again.
We’re seeing the early part of the cycle repeat again today. We’ve had a frothy investment climate with a spread of tech around the country to a whole slew of me-too places. But as I said, the whole digital startup thing has questions marks. It’s not clear that there’s a lot of sustainable, cash generating businesses out there. Many of them (e.g. Groupon) are not even really tech companies. A lot of them are basically media type entities, and like much media in the world have more eyeballs than profits.
Regardless of whether the digital wave crashes soon, another tech crash would appear to be inevitable at some point. If it happens at a time when Chicago hasn’t built some sort of a sustainable franchise, that would be bad. Right now, I don’t believe the Chicago tech scene as currently conceived would survive a major crash. I’m somewhat skeptical New York’s would either. That’s not because the city is doing anything wrong, but because of where it is in the maturity cycle.
That is really the key weakness in the Chicago story. It’s not the fortress hub that Silicon Valley is. I believe it is benefiting from a general decentralization of tech along with a boom cycle investment climate. That can be very good for Chicago, but unless and until it can turn the corner into something that can survive the next big crash, there will continue to be a major question mark over its viability.
This is what I find most interesting about Rahm’s all-in bet on tech. The last go round ended badly. There’s lots of reasons to believe Chicago can be a strong player in the current market, but the city doesn’t have intuitive structural advantages that would make it a slam dunk candidate to become a fortress hub in tech. The digital market is looking somewhat questionable, as the stock charts on Groupon and Facebook show. This was a risky bet. Not to say a bad one, but a risky one. That’s why I think it would be a very intriguing story to find out how it came to be.
In the meantime, while we wait for the judgement of history, Chicago should enjoy where it’s at, build on the present success, and look to shore up those addressable areas of weakness around an excessive booster club mentality, the need for stronger media, and getting away from an overly digital based marketing approach to Chicago tech.
Downtown Providence photo by Bigstock.
Photo by Doug Siefken
Professor Shlomo Angel's new book, Planet of Cities, seems likely to command a place on the authoritative bookshelf of urbanization between Tertius Chandler's Four Thousand Years of Urban Growthand Sir Peter Hall's Cities and Civilization and The Containment of Urban England. Chandler produced the definitive volume of gross population figures for urban areas (cities) over millennia. Angel, takes the subject much further, describing detail how urban areas have grown over the last two centuries, both in population and continuous urban land area. The book focuses principally on population growth, urban spatial expanse, and density. Moreover, Professor Angel develops both a statistical and analytic framework that complements the voluminous work of Peter Hall. Planet of Cities is liberally illustrated, which greatly aids understanding the trends.
Urban Population, Land Area & Density Evolution from 1800
Planet of Cities looks at the urbanization trend from various dimensions. A sample of 30 urban areas was used to gauge urban expansion and density changes from 1800 to 2000.
At the same time, he describes the well documented urban density declines in the United States as well as the similar trends in Western European urban areas often been missed by analysts who imagine that spatial expansion is limited to America.
He goes further, showing that the rapidly growing urban areas of the developing world are also declining in urban density, with spatial expansion rates far exceeding those of population growth. This has been evident in New Geography’s Evolving Urban Areas series (such as Mumbai, Jakarta, Manila, Ho Chi Minh City and others).
Angel uses examples, such as Cairo and Accra, Ghana to illustrate both longer term and recent expansions of urban land area and the consequent drastic declines in urban density. In Cairo, the urban land area increased 16 times from 1938 to 2000, well in excess of the approximately 10 times population increase. In Accra, a 50 percent population increase from 1985 to 2000 was dwarfed by a 150 percent increase in urban land area.
The analysis also includes a larger number (3600) with populations greater than 100,000. He estimates that all of the world's urbanization covers no more than 0.5 percent of the world's land. Angel suggests that the world the urban footprint could double or triple in the next few decades. However, he concludes that, even with this expansion, there are "adequate reserves of cultivatable land sufficient to feed the planet in perpetuity."
Taking note of the slow growth or even population declines in the more developed world, he reminds readers that that nearly all of future population growth will occur in the urban areas of the less developed world. Angel strongly contends that this urban expansion is necessary. This, of course, places him "swimming upstream" against the prevailing doctrines of urban planning. The title of his first chapter "Coming to Terms with Urban Expansion" gives fair warning of his challenge to current planning doctrines. Throughout the volume, Angel expresses the view that declining urban densities are "inevitable," based upon his historic analysis, review of current trends and perceptions of the future.
A Mumbai slum
The Prime Concern: Housing
Angel’s "primary policy concern" as "that in the absence of ample and accessible land for expansion on the urban periphery, artificial shortages of residential land will quickly extinguish any hope that housing will remain affordable, especially for the urban poor..."
Angel expresses concern that the urban containment policies that so dominate American and Western European planning could be damaging to less developed nations, cancelling out much of the economic rewards of rapid urbanization. He expresses surprise that the attempt to impose Western planning models on the developing world raises so little objection (see China Should Send the Western Planners Home).
Consistent with his "primary policy concern," Angel offers a "decent housing proposition," countering the present one-dimensional focus on environmental issues. In contrast, Angel suggests a more rounded approach to urban planning. He surmises \ the very purpose of cities: to improve the economic lot of those who are attracted there. People are not generally attracted to cities because of the quality of their planning or the uniqueness of their architecture. In short, as he puts it, "few move to the city for its fountains." Unless they perform their economic task, cities stagnate or die, as so often happened before the modern age. The near exclusive draw of cities is household economics. Beyond the unprecedented value of the quantitative data and analysis provided, Planet of Cities is rooted in the reality of that measure.
At the same time, Angel is himself is unabashedly a planner. He is an adjunct professor of urban planning at the Robert F. Wagner School of Public Service at New York University, a lecturer at the Woodrow Wilson School at Princeton University and a senior research scholar at the urbanization project at the Stern School of Business at New York University.
Restoring a Genuine Focus to Planning
Angel expresses a strong interest in the most fundamental of planning issues: the provision of infrastructure that allows the urban area to better serve its residents and those it attracts. He is thus simultaneously for both more and less planning. He would curb the excesses of intervention in land markets that are now rife because they compromise the ability of cities to perform their primary function of improving affluence. He would expand the focus of planning to facilitate the organic urban expansion associated with growing cities. This means that sufficient available land must be available for development without materially increasing land and house prices. It also requires making provision for the basic infrastructure such as an arterial grid of dirt roads on the expanding fringes of developing world cities.
Abandoning Destructive Planning Doctrines
Angel calls for abandonment of artificial limits on urban expansion and population growth (such as urban growth boundaries and housing moratoria) and instead seeks economic development and improvements in the quality of life.
Professor Angel does not mince words about the consequences of relying of urban containment policy ("smart growth," "growth management," "compact cities,") as a strategy for reducing greenhouse gas emissions. The consequence would be that the "protection of our planet would likely come at the expense of the poor." He adds that strict measures to protect the natural environment by blocking urban expansion could "choke the supplies of affordable lands on the fringes of cities and limit the abilities of ordinary people the house themselves." He decries the notion that "cities should simply be contained and enclosed by greenbelts or impenetrable urban growth boundaries as "uninformed and utopian" because it makes sustainability "an absolute end that justifies all means to attain it." This policy approach sacrifices such imperatives as the quality of life and full employment.
A Planet of People
Angel's treatment is consistent with the urban scaling research of West et al at the Santa Fe Institute, which found that as cities increased in population they become more productive (As we indicated in a previous article, the Santa Fe Institute research did not deal with urban densities, despite misconceptions of some analysts).
Angel's concern about the impact on low income households is consistent with the focus of the international sustainability movement, which , declared at the recent Rio +20 conference:
Eradicating poverty is the greatest global challenge facing the world today and an
indispensable requirement for sustainable development. In this regard we are committed to
free humanity from poverty and hunger as a matter of urgency.
Angel's Planet of Cities is about urban areas that serve their residents instead of theoretical, often utopian notions.
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.”
Shlomo Angel, Planet of Cities (2012) Lincoln Institute of Land Policy
Photo: Cover: Planet of Cities. http://www.lincolninst.edu/pubs/images/2094_Planet_of_Cities_Cover_web.jpg
Here at California Lutheran University's Center for Economic Research and Forecasting, we think that each presidential candidate does have an economic plan. But it is a bit difficult to discern the policy under all the campaign noise. Then there is the problem of the truth. When out of office, each party claims to be the protector of the public purse. Each accuses the other of running deficits, and both are right about this. Except for a brief respite at the end of the 1990s, deficit spending has been the norm since the 1974 oil crisis. Of course, the current administration has embraced deficit spending with unprecedented enthusiasm.
We think the Democrats’ plan is to increase spending and increase taxes, particularly on “The Rich,” anyone making more money than you. We think the Republicans’ plan is to cut taxes for everyone and cut spending that goes to anyone but you.
These plans won’t work.
To our Democratic friends, we say: You can’t tax and spend your way to prosperity. Governments may be different than people, but they still cannot avoid a budget constraint. The tax and spend policy eventually leads to Spain or Greece. Besides, the government is taking that money from someone. We haven’t seen anything to suggest that, at current spending levels, the government can more productively employ the money than the person they are taking it from.
To our Republican friends, we say: You can’t cut the budget enough to fix it, and cutting taxes won’t fix either the economy or the budget. The deficit is about 10 percent of gross domestic product. That’s about the sum of defense and social security spending. We know you are not ready to get rid of every soldier and kick Granny out onto the street.
Unfortunately, there is not enough fat and waste to argue that efficiency is the solution. The deficit is just too big. Besides, democracies are extremely poor at cutting government spending; witness Europe. We also saw what happened in Wisconsin when the state budget was cut a trivial amount when compared to ten percent of gross product.
The problem is that hard government costs, non-transfers, are just too small to allow the cuts of the size that would be required to eliminate the budget. Transfer payments would have to be cut, but each transfer payment comes with a constituency. Those constituencies will doom spending cuts.
Since your plans won’t work, we’ve come up with our own:
Spending: Total government spending (federal, state, and local) in the United States represents about 37 percent of gross domestic product. It is actually a bit higher than what we saw in World War II. We believe that at this level, government spending is hurting growth. So, government, measured as this percentage, needs to become smaller.
We can't cut government spending significantly. We can stop its growth. We propose capping real per-capita spending at current levels. This would allow budget growth due to inflation and population growth. No one loses anything. So, while larger-government proponents would object to the plan, the lack of losers would minimize resistance.
Once spending was capped, we recommend some compositional changes that would improve economic outcomes. Because this would create losers, there would be resistance. However, for every dollar reallocated, there is also a winner. The political outcome is uncertain.
Our recommended changes would reallocate government funds away from uses that retard or distort economic growth. This would help minimize future budget challenges, and it would increase economic growth. Still, these changes are not as important as capping spending.
Our first change would be to eliminate all subsidies in the budget. These include subsidies for businesses, farms, and consumers. Government's place is to provide the environment for economic growth, not pick the winners or losers. There is abundant evidence that government is not better at market decisions than are market participants. Let the markets work.
This is not to say that we would eliminate the safety net. Modern economies need a safety net, one that provides a socially approved standard of living while maintaining incentives for productive work. We would let recipients decide how best to allocate their funds.
We would also raise the retirement age. Official retirement ages have failed to keep up with advances in life expectancy and health. The result is that we are losing, in some cases, forcing out, incredible amounts of human capital. Given the economy and the demographics, we need that human capital working for us.
Finally, we would concede defeat on the War on Drugs. No doubt, drugs impose a heavy price on users, their families, and society. The impacts are tragic. However, the War On Drugs has failed to eliminate drug use. It's not even clear if the war has reduced drug use. Drugs are not only readily available, it's easier for a high school student to obtain drugs than alcohol.
The costs of prohibition, even if partially effective, are high. The costs include higher crime rates, gangs, prisons, direct police costs, and the costs of police being diverted from more productive uses. If we were to take all the resources currently spent on the War on Drugs and use those funds to provide education, counseling, and treatment the economic costs of drug use would go down.
Taxes: Our recommended changes to the tax code would increase revenues and improve economic outcomes. So called "spending in the tax code" reduces government revenues and creates effectively distortionary subsidies. We need to get rid of this, for all the same reasons that we need to get rid of subsidies in the budget. We would eliminate all tax deductions, including individuals' mortgage deductions and employers' healthcare deductions.
We would keep existing individual income-tax rates, neither lowering marginal tax rates nor increasing marginal tax rates. However, we would eliminate the differential tax rates that capital gains and dividends enjoy. That is, we would tax dividends and capital gains as ordinary income.
Taxing dividends and capital gains would allow us to eliminate corporate taxes, removing the double taxation of capital, putting capital and income taxes on an equal footing. By taxing capital and labor at the same rate, we would eliminate distortions and improve economic outcomes.
Economic Policy: If real per-capita spending is fixed, the only way to reduce government's share of the economy is to have real per-capita economic growth. While real per-capita economic growth has been the norm since the industrial revolution, achieving it has been a problem in the past few years. Policy has been part of the problem. Fixing the policy will result in an immediate robust recovery.
Most people would not suspect that immigration policy is the first policy we would change. Specifically, we would initiate a massive increase in legal immigrations. The benefits would be far-reaching and immediate. An increase in population would drive up housing prices. This would restore Americans' balance sheets by offsetting the losses from the bust. It would immediately increase activity in the construction sector and in all sectors that benefit from increased home construction.
There would be other benefits. Legal immigrants are educated risk takers with a lot to gain. Far from taking jobs from Americans, they create new businesses at higher rates than the domestically born. The talents, creativity, and drive they would bring would hit all sectors like a power drink.
By itself, changing immigration policy would change our economy's trajectory in a dramatic way, but there is more that could be done. Removing all trade barriers is an obvious option, but decreasing regulation offers the most gains after changing immigration policy.
Bad regulation is a bipartisan activity. Sarbanes-Oxley and Dodd-Frank are two of the worst regulations to come along. They need to be repealed.
Sarbanes-Oxley, passed under George Bush, fixed a problem that did not exist. It was passed in response to the Enron scandal, even though everyone involved went to jail under pre-existing law. It imposes a huge and unnecessary burden to small business in particular.
Dodd-Frank was passed in response to the 2008 financial crises, but it does nothing to prevent another crises. In fact, it imposes huge costs to financial institutions, even as it enshrines the concept of too-big-to-fail into law, guaranteeing another crisis. It needs to be repealed, and too-big-to-fail needs to be addressed directly.
Finally, we would require a cost-benefit analysis of all existing and proposed legislation. Those provisions that failed the analysis would be rejected or repealed.
That's CERF's proposed economic policy. It would result in an immediately robust economy. It would change lives, especially the lives of young people just entering the workforce. We put it out in the hopes that it advances our national economic debate.
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.
Flickr photo by s_falkow
High land prices have all but killed the Australian housing industry.
Lower housing starts has led to lower GST revenues (house construction attracts full GST) and lower stamp duty receipts are crippling state budgets and cruelling the chances of low and middle income earners to get a start in the housing market.
What has caused this slump in housing starts? Land prices.
Raw land for new housing developments should be close to its agricultural value – in other words, around $10,000 per hectare. But land released for residential development fetches up to $1 million per hectare – 100 times the agricultural price.
Government land management agencies and private land developers may well argue a lot of land has been released for residential development, but clearly it is not enough.
Only when urban growth boundaries are removed will we know a piece of land’s true value. It will then be a trade-off between price and distance. People may be prepared to travel another 10 or 15 minutes by car (10 to 20km) to get a cheaper block.
To highlight the “‘X’ years supply of land available” argument, I heard a state bureaucrat say recently that the government had released enough land for 15 years supply. I raised my hand and asked “15 years supply - at what price?” He didn’t know what I meant. I said “at $200,000 a block it may well take 15 years to sell. So why don’t you double the price and then you’ll have 30 years supply?”
These points highlight the fact that, as with most central planning, housing planning is based on a fundamental flaw – that price does not matter. But as we know, price does matter. Imagine the demand for housing if land was $100,000 per block cheaper. Think LCD, LED and plasma TVs over the past five years.
Australia does not have, and never has had, a housing affordability problem, it has a land affordability problem. The cost of building a new house has hardly moved in 20 years. Land prices however have skyrocketed. By restricting the amount of land available on the urban fringes of our cities, state governments have sent the price of entry-level housing through the roof.
The reasons state governments give for these restrictions all centre on urban planning. They have persisted with their policies of urban densification (squeezing more and more people into existing suburbs), an idea that has failed all over the world.
Whether it's traffic congestion, air pollution, the destruction of bio-diversity or the unsustainable pressure on electricity, water, sewage or stormwater infrastructure, urban densification has been a disaster. The evidence is overwhelming; urban densification is not good for the environment, it does not save water, it does not lead to a reduction in motor vehicle use, it does not result in nicer neighbourhoods, it does not stem the loss of agricultural land, it does not save on infrastructure costs for government and, worst of all, it puts home ownership out of the reach of those on low and middle incomes.
State governments use urban planning laws to restrict the amount of fringe land available and then drip feed it through their land management agencies to a land- starved housing industry at inflated prices. Hmmm. After a change of state government a few years ago, a former cabinet minister was asked why her government didn’t release more land to kick-start the housing industry. She replied: “We needed the money.” So much for urban planning.
And of course land developers with massive land banks on their books urge state governments to maintain the scarcity to maintain the ‘value’ of the developers’ inventory. Developers would be better off if they supported the removal of urban growth boundaries and allowed more broadacre land to come onto the market which they could buy at greatly reduced prices. With land prices significantly lower than they are today it wouldn’t take long for the industry to recover. Until land prices fall, there will be no recovery.
The Australian housing industry is building 40,000 fewer homes a year than it should be. That’s more than $10 billion worth of work a year the industry is missing out on. That’s a lot of bricks, concrete, timber, tiles, steel and, of course, labour.
Governments and industry associations have known for years this was coming but just played footsies with each other – read US economist George Stigler’s book Regulatory Capture to understand how and why this happens.
Australia’s economy has been seriously distorted due to a massive overinvestment in household debt. We have a housing industry on its knees. Getting all this back into alignment with reality will take time but it is a realignment that is necessary.
We cannot continue to deny the next generation a home of their own merely to satisfy the indulgences of urban planners and state government treasury officials.
This piece originally appeared in Business Spectator.
Bob Day AO is managing director of national homebuilder Home Australia.
Brighton Beach bathing box photo by Bigstock.
President Obama brought up Planned Parenthood three separate times at Tuesday’s town hall debate. It was an appeal aimed directly at a key part of his base: If he is reelected, it will be because of the Single Nation.
Democrats have woken up to the huge political rifts that have emerged over the past 30 years—between married and single people, and people with kids and those who don’t have them. And save African Americans, there may be no constituency more loyal to the president and his party than the growing ranks of childless and single Americans.
In the short term at least, the president and his party are seizing a huge opportunity. Since 1960, the percentage of the population that is over age 15 and unmarried increased by nearly half, 45 percent from 32 percent. Since 1976, the percentage of American women who did not have children by the time they reached their 40s doubled, to nearly 20 percent.
And even as the president has slipped in the polls, the fast-growing Single Nation has stayed behind him. Unmarried women prefer Obama by nearly 20 points (56 to 39 percent), according to Gallup, while those who are married prefer Romney by a similarly large margin.
Unmarried women (along with ethnic minorities, the poor and the workers in the public bureaucracy) are rapidly becoming a core constituency of the Democratic party, in a sense replacing the ethnic white working class.
And while single women have long been ignored (or at least not courted directly) by national politicians, Democrats are now taking direct aim—as in the Life of Julia campaign, where every milestone in her life is marked by the government benefit she’d receive under President Obama’s hubby state. Democratic strategists such as Stanley Greenberg also urge targeting singles, particularly “single women,” whom he calls “the largest progressive voting bloc in the country.”
Even among the married, children have become less of a priority. A 2007 Pew Research Center survey found that the number of adults who said that children are very important for a successful marriage had dropped by a third, from 65 percent in 1990 to 41 percent in 2010. Over that same span, financial considerations, and the willingness of a spouse to share chores and even political beliefs all became important to a greater share of adults.
The rise in both childlessness and singlehood parallels developments already evident in other cultures, notably in East Asia and Europe. Many of these countries have experienced declining marriage and birth rates for decades. In Germany and Japan, the demographic results of this—fewer workers to support more retired people—has led to difficult tax hikes to allow the remaining young workers to maintain the funding for a growing number of aging boomers. This is the Europe’s screwed generation: “the victims of expansive welfare states and the massive structural debt charged by their parents.”
In America, by contrast, birth rates rose somewhat over the past two decades. But since the recession, the number of new children has plummeted, and it’s dropped the most precipitously for new mothers. The number of households with children today is 38 million, about the same as a decade ago, even as the total number of households has shot up by nearly 10 million.
There are now more houses with dogs than houses with children.
Singles don’t always show up at the polls, but Democratic party strategists see their numbers as simply too large to ignore, especially in close elections. Singletons almost elected John Kerry: red states had fertility rates 12 percent higher than those than blue ones.
In 2008, singles helped put Obama over the top, something widely recognized by party leaders. This summer’s surge in Obama’s ratings also derived largely from his growing appeal to single voters, and particularly women.
This reliance on single and childless voters could transform the Democratic party in the years ahead. Singlism, a term coined by psychologist Bella De Paulo, embraces the idea that far from undeserved subjects of derision or pity, the unattached represent a bridge to a more evolved humanity. De Paulo sees them as more cyber than the married set, and “more likely to be linked to members of their social networks by bonds of affection” rather than blood. Unlike families, who, after all, are often stuck with each other, singles enjoy the linkage to “intentional communities” and are thus more likely “to think about human connectedness in a way that is far-reaching and less predictable.”
A singleton approach to public policy, notes Eric Klinenberg, author of the widely celebrated Going Solo, notes, favors a high density, urban “new social environment.” This is particularly true in the central cores of social-media hubs such as Manhattan, San Francisco and, most of all, Washington D.C. In many dense urban areas now, 70 percent or more of households are childless. In contrast, the largest growth in families with children are found in places such as Dallas-Ft. Worth, Houston, Raleigh, and the Salt Lake area, which have relatively little impact on the national culture.
The new post-familial politics departs in many ways from the old urban politics. In the past, urban voters focused largely on issues concerning neighbourhood, public safety, schools, ethnic enclaves and churches. The new childless class, notes the University of Chicago’s Terry Nichols Clark, identify less with these mundane issues and more with cultural preference and aesthetics.
Clark also suggests the new singles-dominated electorate will have transcended the barriers of race and even country, embracing what he hopefully calls “a post materialist” perspective that transforms the baser considerations of those embroiled in raising children and maintaining kinship ties. No longer familial, as people have been for millennia, he predicts they could be harbingers not only of a “new race, but even a new politics.”
The emerging “new politics” of the rising Single Nation could impact elections for decades to come, particularly in Democratic strongholds like Chicago, New York or San Francisco. These areas will be increasingly dominated by a vast, often well-educated and affluent class of voters whose interests are largely defined around their own world-view, without overmuch concern with the fate of offspring, along with the urban poor and the public workers who tend to both groups. Since the childless frequently lack the kinship networks that are obliged to provide for them in moments of trouble, they tend to look more to government to care for them in hard times or old age.
But the Single Nation’s grip on power may not be sustainable for more than a generation. After all they, by definition, will have no heirs. This, notes author Eric Kauffman, hands the long-term advantage to generally more conservative family-oriented households, who often have two or more offspring. Birth rates among such conservative populations such as Mormons and evangelical Christians tend to be twice as high than those of the nonreligious.
As a result, Kauffman predicts that inevitably “the religious will inherit the earth” and ensure that conservative, more familial-oriented values inevitably prevail. Even among generally liberal groups like Jews, the orthodox and affiliated are vastly out-birthing their secular counterparts; by some estimates roughly two in five New York Jews is orthodox, including three quarters of the city’s Jewish children. If these trends continue, politics even in the progressive nirvana of Gotham may be pulled somewhat to the right.
But in the here and now, and especially this November, these long-term trends will not yet be evident. The tsunami of Chasidic and Mormon children are not yet eligible to vote, and won’t be for a decade or two. So even as the president loses among the married, the growing ranks of the Single Nation could still assure his reelection, and propel his party’s ascendency for a decade or more before the whole trend crashes against a demographic wall.
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.
Barack Obama Photo by Bigstock.
Whether or not Mitt Romney makes it to the White House, his candidacy signals that Mormons have arrived in American political life. Just as President Obama’s nomination and election marked a sea change in the country’s tortured racial history, so Romney’s nomination has changed religious boundaries that have persisted for more than 160 years. No religious group has been more persecuted by the U.S. government, or more derided by other faiths present in the country, than the Church of Jesus Christ of Latter-day Saints (or the LDS Church, as many Mormons refer to it). Indeed, it was to seek a secure home to practice their heterodox beliefs, including polygamy, that Mormons moved from upstate New York to Ohio, Missouri, Illinois, and finally the Salt Lake Valley in present-day Utah. Led by the irrepressible organizer Brigham Young, the Mormons did more than settle open land. They created a unique blend of communalism and capitalism, industriousness and religious faith, that withstood threats from Native Americans and, later, from the U.S. Army.
Today, some religious fundamentalists continue to rail against Mormons, while coastal sophisticates scoff at their earnest approach to life, religion, and family. Yet the methodical Mormon way, which stresses education, ambition, and charitable giving, has succeeded in ways equaled by few religious groups. Mormons enjoy levels of education and wealth higher than the national average, for example. Some 54 percent of LDS men and 44 percent of women have secured postsecondary education; the numbers for the general American population are 37 percent and 28 percent, respectively. Mormons also enjoy the nation’s highest rate of charitable giving.
And while many religious groups in the United States—including the Catholic and mainline Protestant churches, along with most non-Orthodox Jewish denominations—are struggling with declining numbers, the LDS Church is one of the nation’s fastest-growing. Its American membership jumped from 4 million to 6 million between 2000 and 2010. Its global growth over the same period was 45.5 percent, and today, most of its total membership of 14 million resides outside North America. The fastest growth is occurring in Brazil, the South Pacific, and Central America.
The best advertisement for Mormonism, though, is the kind of society that it seems able to create. Utah, 60 percent of whose population belongs to the LDS Church, has enjoyed one of the fastest job-growth rates in the nation over the past decade, taking a strong lead in a host of industries, from energy and software to composite manufacturing. It has also seen the highest population growth rate of any state, aside from neighboring Arizona and Nevada—and unlike those “bubble” states, Utah survived the housing bust in strong shape.
The Beehive State’s success is less about low taxes—Utah is not a tax haven like Texas, Nevada, or Florida—than about support for wealth-creating industry. Utahans have a great interest in promoting business growth. Though they revere their state’s handsome landscape, they suffer little from the antigrowth “progressivism” common to the East and West Coasts. Whether backing the creation of a vast mixed-used project in downtown Salt Lake City or encouraging new building for the area’s swelling population, the LDS Church tends to be pro-development.
That applies to residences as well. Unlike such rival states as California, Utah continues to build affordable single-family houses. Many newly minted housing tracts run along the corridor from Ogden in the north to Provo. A handful of tall condo towers dot downtown Salt Lake City as well. A median-price home in the Salt Lake City region, according to an affordability survey by Demographia, costs roughly three times the median family income—much less than in Los Angeles, New York, and the San Francisco Bay area. Not surprisingly, the New York metropolitan area and California have become the largest net senders of migrants to the Salt Lake City region.
Such cost advantages, plus the presence of an educated population, appeal to global companies. Goldman Sachs, for example, has set up its second-largest American operation in downtown Salt Lake City. “We consider Salt Lake a high-leverage location,” says Goldman managing director David Lang. “There’s a huge cost differential, and you have a huge, talent-rich environment.” Drive through Provo, and you’ll see office buildings, often just finished, for some of Silicon Valley’s signature companies, including Intel, Adobe, Twitter, eBay, and Fairchild Semiconductor. Over the past decade, the number of Salt Lake–area employees in STEM jobs (those relating to science, technology, engineering, or math) has increased 17.5 percent. The number of such jobs actually declined in Silicon Valley and stagnated in New York, Boston, and Los Angeles.
Few of the non-Mormon Salt Lake City residents with whom I spoke—“Gentiles,” as LDS members call them—found the city’s atmosphere oppressive. A 2012 Gallup survey ranked Utah first among the states in quality of life. Two decades ago, Gentiles often expressed frustration with Salt Lake City’s dearth of decent restaurants, bars, and even coffeehouses, as Mormons drink neither alcohol nor caffeine. These days, though it’s hardly a party town, the city offers reasonable restaurants and coffee shops, along with plenty of available alcohol. When Kayvan Esfarjani, co–executive director of a Flash Technologies semiconductor plant south of Salt Lake City, first got his assignment there, he thought that he would commute weekly from Silicon Valley. “I had a misconception that this place was somewhere you can’t get a drink, people have multiple wives,” he laughs in his office at the plant, which employs 1,600 workers. But after a short while, the Iranian-born engineer decided to settle down in the Wasatch foothills: “It turns out to be a very good place to raise a family and run a business.”
Mormons aren’t the wide-eyed, naive people of stereotype; they’re increasingly cosmopolitan and sophisticated. Indeed, Romney may represent only a first move toward the apex of influence in America. We may well hear from former Utah governor Jon Huntsman, a candidate for the Republican presidential nomination this year, or from such engaging newcomers as congressional candidate Mia Love, an exemplar of the new LDS Church (she is of Haitian descent; the church banned black men from its priesthood until the late 1970s). Whether he wins or loses, Romney’s candidacy represents the beginning of the Mormon moment, not its culmination.
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 City Journal.
Mormon Church Photo by Bigstock.
Is college worth it? The question almost seems ludicrous on its face. The unemployment rate for people with a college degree is only 4.2% versus 9.1% for people with a college degree and 13.0% for people with less than a high school education. In this economy, that should be an open and shut case.
Yet in an uncertain world, many are questioning the value of college. There’s significant talk of a “higher education bubble.” Skyrocketing tuition rates and the correspondingly high levels of student debt has driven a lot of this. Tuition has been rising at a much faster rate than inflation overall. Total student loan debt is now at $1 trillion. And unlike other forms of debt, student loans can’t be easily discharged in bankruptcy.
In many ways college finance does mirror the housing bubble. You’ve got an asset everyone believes will only go up in value, a multi-party transaction, a situation where the seller of the product (the college) gets their money up front and so is indifferent to the student’s ability to repay, third parties insured against loss by the federal government, a non-transparent market where each student is in effect charged a unique price, young and unsophisticated consumers who are told they “have to get” a college degree, financial products without any income requirements, and even worse the asset (a degree) doesn’t have a secondary market.
All of these factors create a situation ripe for exploitation and abuse. Indeed, it isn’t hard to see that the massive increases in tuition cost are heavily driven by the ability of students to get huge loans with few questions asked. And as with the housing crisis, outright fraud by educational institutions is likely more widespread than commonly believed. The University of Illinois law school falsified its admissions data, for example, by inflating its students LSAT scores. The “cockroach theory” (if you see one, there’s probably a lot more you don’t see) suggests that this type of behavior is probably rampant.
Students and their parents are starting to wise up to the game, and the amount of student loan debt they think appropriate is plummeting. For example, in 2011 only 21% of people felt $20,000 in college debt was too much. Just a year later that percentage increased to 42%. In 2008, 81% of adults thought a college degree was a good investment. In 2012 that had dropped to 57%. That’s a stunning decline in the number of people who think college is worthwhile, though it might suggest that the problem is less with the value of a degree itself than in how much is paid for it. But there are anecdotes to suggest that some feel college (especially graduate school) isn’t worth what it used to be.
Why is that? In part it is surely the economy. Though degreed adults as a whole have lower unemployment, youth unemployment and probably more important underemployment remains high for college grads. A shocking 53% of recent graduates are jobless or underemployed. This has fed through into popular culture, with student loan debt relief being part of the grab bag of demands made by the various “Occupy” movements. When you graduate from college with huge, non-dischargeable debts, and you can’t find a job, particularly in your chosen field, you no doubt complain loudly about this to your friends.
But there’s also good reason to believe college is worth less today in many cases. Back in the 1980s and 90s the value of college was clear. Manufacturing was in decline. If you didn’t have a degree, you would probably struggle. In contrast, a college degree was like a golden ticket to success.
Today, in the age of globalization, it’s not so simple. Those without degrees are still hurting, but so are plenty of people with degrees. The emerging new separation is not between those with degrees and without, but those in jobs that are subject to international competition (tradeable) vs. those that aren’t (non-tradeable). High skill, white collar workers like computer programmers suddenly found themselves in competition with much lower paid people in places like India. This upended that entire job market. Today you might be better off as an ironworker or welder whose job has to be done on site than as an accounting manager whose entire department can be sent to the Philippines. A college degree is no longer a guaranteed passport to prosperity.
Also, today’s technology driven world is changing so rapidly that skills learned in college can prove obsolete by graduation. At the same time, open source frameworks and cloud computing have dropped the cost of starting a tech business to almost literally zero. In the dot com era, it took millions of dollars to buy servers and database licenses if you wanted to start a company. Today anybody can start a technology business in his bedroom.
So if you’ve got a good idea, why wait around for graduation to get started? The role models here are Bill Gates and Mark Zuckerberg, who dropped out of Harvard but both got rich starting companies. This dropping out of college to start companies is actively being encouraged by some folks like Peter Thiel, who is actually paying people to do it.
What these modern day Timothy Learys overlook is what Bill Gates and Mark Zuckerberg already had in common. Namely, they had already gotten in to Harvard. If you make it to Harvard, you already probably come from a privileged background. Thus you’ve got a family safety net in place if things go south. Those from working class backgrounds aren’t so lucky. Indeed, I’m struck that many suggesting that college isn’t the answer are presently an upper-middle class or better situations.
For a limited number of people, dropping out of or skipping school to start a business might make sense. But trend setters may manage to convince a significant numbers of kids from marginal backgrounds to forgo the college education ---perhaps in a needed skill -- that would provide necessary credentials and culturally acclimate them to the new economy world. Many of those kids don’t have a family cushion to fall back on. For them, turn on, tune in, drop out is not the answer.
The real answer isn’t to skip education, but to be more judicious about the decisions being made. Racking up large amounts of debt probably isn’t the right answer. The marketing promises of especially for-profit colleges should be heavily discounted. For some, getting education through going into a skilled trade may be a good choice. College majors that don’t deliver skills in demand in the marketplace or that aren’t considered valuable credentials by employers ought to be scrutinized. But getting an education remains one of the single best decisions any person can make.
Graduation photo by Bigstock.
"Privileged people don't march and protest; their world is safe and clean and governed by laws designed to keep them happy...." Michael Brock in John Grisham's The Street Lawyer (Doubleday, 1998).
"There can be nothing happy for the person over whom some fear always looms…” Cicero, Tusculan Disputations 5.62, via Wikipedia.com
If you were fearful after Wall Street decimated your life-savings in September 2008 then you should know that the sword of Damocles remains above your head.
Absolutely nothing of any significance has changed. Not rules, laws or regulations. Not government oversight or external auditing. Nothing. What happened to our financial well-being in the Fall of 2008 can happen again tomorrow. If anything is being done, it is being expertly designed to make things worse for Main Street and better for Wall Street. When the tech bubble burst in March 2000, the Federal Reserve dropped dollar bills from helicopters and inflated the housing market. At least that time around, it was obvious where the next bubble would come. In an effort to hide the inflation this time around, the Fed is pumping money into dark corners of finance where it will eventually impact everything everywhere.
First, a quick recap: During 2007, mortgage-backed bonds began failing faster than actual mortgages. Wall Street wrote bonds faster than Main Street needed mortgages – two bankruptcy judges estimated that one-third of the bonds didn’t have mortgages backing them.
Meanwhile, insurance companies like AIG were writing credit default swaps even faster – some say there were as many as 15 swaps for every bond (by value). In 2008, AIG was unable to pay off on the credit default swaps (like insurance contracts) they wrote for the Wall Street bankers. The bankers had named themselves beneficiaries and they began cashing in – again – when the whole thing went up in flames.
Then-Secretary of the Treasury Hank Paulson went to Congress and said the world would end if taxpayers did not give him $750 billion to bailout the banks. Congress said, “Sure, why not, you seem like a nice guy” and the Wall Street Bailout was signed into law by George W. Bush on October 1, 2008. In the months that followed, we learned that the Federal Reserve topped off the Wall Street tanks with trillions more dollars – a lot of which went to foreigners and private companies not under their regulatory purview. Since then, Federal Reserve Chairman Ben Bernanke has been dropping dollar bills out of helicopters by buying more and more mortgage un-backed bonds from Wall Street because – well, no one is quite sure why he is doing this.
Eventually, Senator Chris Dodd (D-CT) and Representative Barney Frank (D-MA) got their names attached to a new public law, which President Obama signed on July 21, 2010 – about two years after the bailout – that was supposed to reform Wall Street and protect Consumers. Five months after the signing, Sen. Dodd announced his retirement (not long after it was made public that he and several Senators received very friendly terms on a mortgage from sub-prime mortgage bond King Angelo Mozilo of Countrywide). Rep. Frank will not seek reelection in November 2012. Neither Dodd nor Frank planned to be around when the bill is actually effective. You see, a lot of Dodd-Frank was only to require that someone else do studies, write reports and propose rules. Less than half of the rules were required to be written before Rep. Frank leaves office – Dodd left office before any action was required under the public law with his name on it.
Both Dodd and Frank are retiring with full pensions, but the same cannot be said about the public law with their names on it. As of September 21, 2012, about as many Dodd-Frank rules have been proposed as there are mortgages backing those mortgage-bonds the Fed is buying. According to a review by New York law firm Davis Polk (as of September 4, 2012):
So far as I was concerned, the only actual success of Dodd-Frank came from an amendment which required the Federal Reserve to disclose exactly to whom they gave the bailout money – information on 21,000 transactions valued at $16 trillion that Fox News, Bloomberg and Rolling Stone Magazine sued to get after the Chairman and Vice Chairman of the Fed refused to reply to questions from Congress. Turns out the Fed officials went from sins of omission to sins of commission – Bloomberg reported in December that they hid billions of dollars in loans from the mandated reports. Despite now knowing that the Federal Reserve is giving money to unregulated companies with no means of retrieving it, the U.S. public – outside of a faithful few Occupy Wall Street protestors still out there – have failed to notice or react. Hence, nothing has changed that would prevent a repeat of the events that precipitated the 2008 bailouts from occurring again tomorrow.
“But wait! That’s not all!” as they say in late-night TV infomercials. More than ignoring the law, more than delaying the reforms, Wall Street is now actively working to get new laws written to exempt themselves from Dodd-Frank – which, we thought, was specifically written to reform their activities. On September 19, H.R. 2827 was passed by Congress to exempt from any Dodd–Frank rulemaking the very activity that is bankrupting some US cities and states and counties.
The law they are now exempted from is the one that would require them to accept legal responsibility for putting the best interests of the municipalities and taxpayers first – a blanket requirement for fiduciary duty that already exists but is consistently ignored by the “survivors of Wall Street survivors of the financial crisis” as they are called by William D. Cohan, author of the New York Times bestseller House of Cards: A Tale of Hubris and Wretched Excess on Wall Street. Cohan emphasizes that bribing clients like Jefferson County is not new – although it seems evident that the problem may be more wide spread now than ever before in US history. Jefferson County (AL) may be the best known – bankruptcy followed on the heels of bribes and billions of dollars worth of toxic swap deals. The Wall Street banks not only bribe officials to commit municipal taxpayers to financial obligations they can never repay, they also pay competing banks so they can charge higher fees and interest rates. This breaches the simple trust you are entitled to expect even from used car salesmen (in states with “Lemon Laws”) – but no such protection is afforded anyone who has to deal with Wall Street.
In the end, we are all required to deal with Wall Street. This is a danger more real, and more imminent, than anything the world may ever have faced. It is as if we have been told that an asteroid the size of Texas is barreling toward Earth and Ben Bernanke hit the button that launched the nuke --- that missed. It’s still coming. Wall Street remains unreformed and consumers of financial services remain unprotected.
Susanne Trimbath, Ph.D. is CEO and Chief Economist of STP Advisory Services. Dr. Trimbath’s credits include appearances on national television and radio programs and the Emmy® Award nominated Bloomberg report Phantom Shares. She appears in four documentaries on the financial crisis, including Stock Shock: the Rise of Sirius XM and Collapse of Wall Street Ethics and the newly released Wall Street Conspiracy. Dr. Trimbath was formerly Senior Research Economist at the Milken Institute. She served as Senior Advisor on United States Agency for International Development capital markets projects in Russia, Romania and Ukraine. Dr. Trimbath teaches graduate and undergraduate finance and economics.
In the last half century, East Asia emerged as the uber-performer on the global economic stage. The various countries in the region found success with substantially different systems: state-led capitalism in South Korea, Singapore and Japan; wild and wooly, competitive, entrepreneur-led growth in Taiwan and Hong Kong; and more recently, what Deng Xiaoping once described as “socialism with Chinese characteristics.”
But these countries shared one common element: a strong Confucian family ethos. Three of Confucianism’s five key relationships are familial, led by the all-important father-son tie. In East Asia, business has often been driven by familial concerns. Hard-driving “tiger Moms” or workaholic Dads sacrificed all for the benefit of the next generation. But now that foundation is beginning to crumble, and if the trend is not reduced, the 50-year-long ascendency of the region could be threatened.
The signs of an emerging Asian malaise can be seen in slowing economies — in Japan’s case an almost two-decade-long stagnation. South Korea and Singapore may grow this year at levels approaching that of the United States — mediocre by their historic standards. The notion of assured further progress is fading, as populations age and domestic markets seem unlikely to expand much.
This malaise is reflect in declining birthrates, which now rival southern Europe for the world’s lowest, as demonstrated in a new report by myself and colleagues at the Singapore Civil Service College. Equally troubling, up to a quarter of all East Asian women, estimates the National University of Singapore’s Gavin Jones, will remain single by age 50, and up to a third will remain childless. Since few Asian women, unlike their North American or northern European counterparts, have children out of wedlock, the overall effect on already poor demographics could be catastrophic.
The reasons for this decline in marriage and family are complex. Demographers such as Austria’s Wolfgang Lutz see a reinforcing pattern in which singleness becomes normative and child-rearing more difficult, and less widely supported by society. This creates, as my Singaporean colleague Anuradha Schoff puts it, “an ecosystem where childlessness is the preferred option.”
Interviews and survey data from various East Asian countries show that part of the problem is extremely high housing costs — roughly twice or more as a percentage of income as in the United States, according to demographer Wendell Cox — and often pitiably small space. No surprise, then, that Asians coming to the United States flock to suburbs, increasingly in the more affordable parts of the country.
The extremely competitive work environment, which now includes growing numbers of well-educated females, is having a negative impact on birth rates. In 1970, less than half of women in Japan and Korea were working, and only one-fifth in Singapore. By 2004, that number had increased to three-quarters in Japan, and roughly three in five in South Korea and Singapore, notes NUS’ Gavin Jones. As one researcher in Singapore explained, how could it be possible for her to start a family when she has to compete with other women who are not so encumbered? It made no sense to her to have children, even if the state provided her with as much as a million dollars.
Huge time commitments at work, notes demographer Phil Longman, often work against potential parents. “As modern societies demand more and more investment in human capital,” he suggests” this demand threatens its own supply.”
Then there are distinctly cultural issues, such as the perceived unwillingness of many East Asian men to share child-raising duties with their wives. And among parents, the much-celebrated obsession with achievement and education — also generally favored by Mandarins around the region — tends to make child-bearing seem ever more onerous and expensive. In this sense, the Confucian ethic on education undermines its paramount familialistic values.
Japan represents the cutting edge of this lurch into what may in a decade be the general East Asian pattern. By 2010, a third of Japanese women entering their 30s were single, as were roughly one in five of those entering their 40s. That is roughly eight times the percentage in 1960, and twice as many as in 2000. By 2030, according to sociologist Mika Toyota, almost one in three Japanese males may be unmarried by age 50.
Lacking the innovative energy of new entrants into the workplace and the economic stimulus of expanding households, Japan’s economy has become ever more stagnant and inward looking. And most Japanese view the future as far from bright; the Japanese, according to Gallup, are now among the most pessimistic people on the planet. Not too far behind them are, surprisingly, the Singaporeans.
In Japan, the demographic clock is already ticking toward a kind of demographic doomsday. It’s been over two decades since the number of Japanese over 65 exceeded the number of those under 15, and the trajectory points to a time — by 2050 – when Japan will have 3.7 times as many people 65 and older as 15 and under, according to U.N. estimates. In 2050, the number of people over 80 will be 10% greater than the 15 and under population.
Even Tokyo faces Japan’s emerging demographic winter. Given current trends away from family formation, Tokyo, now the world’s most populous metropolitan area, may see its population drop from its current 35 million to roughly half that in 2100. By then Japan’s overall population could fall to 48 million, according to Japan’s National Institute of Population and Social Security Research. And what will be left of the Japanese will be very urban, very old, and at some point, probably well before, bereft of savings.
The other East Asian countries could face a similar fate, albeit a decade or two later. In Taiwan, 30% of women aged between 30 and 34 are single; only 30 years ago, just 2% of women were. In three decades, “remaining single and childless” merged from a rarity to a commonplace, and appears to be picking up momentum. In a 2011 poll of Taiwanese women under 50, a huge majority claimed they did not want children.
For its part, Singapore has been able to keep itself going largely by importing talent from abroad. But the mass migration of newcomers, who have increased tremendously as a portion of the population, has also sparked widespread resentment among Singaporeans faced with ever greater congestion, crowding, high property prices and ever-greater competition for good jobs.
Unlike intrinsically multicultural Singapore, Korea, Taiwan and China will struggle with the notion of tapping immigration to forestall their problems. As China progresses and urbanises, its demography increasingly mimics that of the Tigers, just as they now resemble Japan. Most of the world’s decline in children and young workers between 15 and 19 will take place in China; the People’s Republic will lose 60 million people under 15 years of age by 2050, approximately Italy’s population. It will gain nearly 190 million people 65 and over, approximately the population of Pakistan, which is the world’s fourth most populous country.
In the longer run, these countries will have to reconsider their priorities. In order to restore a sense of a prosperous future, they must first consider what factors would encourage families and child-bearing in their societies. This may, among other things, require “tiger Moms” and workaholic Dads, as well as the bureaucracy, to change their ways. As my Japanese mentor Jiro Tokuyama used to say, East Asia will have to unlearn the secrets of its past success.
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 Forbes.
Happy Baby Photo by Bigstock.
This is the introduction to a new report on the future of the American Great Plains released today by Texas Tech University (TTU). The report was authored by Joel Kotkin, Praxis Strategy Group, and Kevin Mulligan of TTU. Visit TTU's page to download the full report, read the online version, or to check out the interactive online atlas of the region containing economic, demographic, and geographic data.
For much of the past century, the vast expanse known as the Great Plains has been largely written off as a bit player on the American stage. As the nation has urbanized, and turned increasingly into a service and technology-based economy, the semi-arid area between the Mississippi Valley and the Rockies has been described as little more than a mistaken misadventure best left undone.
Much of the media portray the Great Plains as a desiccated, lost world of emptying towns, meth labs, and Native Americans about to reclaim a place best left to the forces of nature. “Much of North Dakota has a ghostly feel to it," wrote Tim Egan in the New York Times in 2006. This picture of the region has been a consistent theme in media coverage for much of the past few decades.
In a call for a reversal of national policy that had for two centuries promoted growth, two New Jersey academics, Frank J. Popper and Deborah Popper, proposed that Washington accelerate the depopulation of the Plains and create “the ultimate national park.” They suggested the government return the land and communities to a “buffalo commons,” claiming that development of The Plains constitutes, “the largest, longest-running agricultural and environmental miscalculation in American history.” They predicted the region will “become almost totally depopulated.”
Our research shows that the Great Plains, far from dying, is in the midst of a historic recovery. While the area we have studied encompasses portions of thirteen states, our focus here is on ten core locations: North Dakota, South Dakota, Nebraska, Kansas, Oklahoma, Texas, New Mexico, Colorado, Wyoming, and Montana.
Rather than decline, over the past decade the area has surpassed the national norms in everything from population increase to income and job growth. After generations of net out-migration, the entire region now enjoys a net in-migration from other states, as well as increased immigration from around the world. Remarkably, for an area long suffering from aging, the bulk of this new migration consists largely of younger families and their offspring.
No less striking has been a rapid improvement in the region’s economy. Paced by strong growth in agriculture, manufacturing and energy — as well as a growing tech sector — the Great Plains now boasts the lowest unemployment rate of any region. North Dakota, South Dakota and Nebraska are the only states with a jobless rate of around 4 percent; Kansas, Montana, Oklahoma and Texas all have unemployment rates below the national average.
A map of areas with the most rapid job growth over the past decade and through the Great Recession would show a swath of prosperity extending across the high plains of Texas to the Canada/North Dakota border. Rises in wage income during the past ten years follow a similar pattern. The Plains now boasts some of the healthiest economies in terms of job growth and unemployment on the North American continent.
Of course, this tide of prosperity has not lifted all boats. Large areas have been left behind — rural small towns, deserted mining settlements, Native American reservations — and continue to suffer widespread poverty, low wages and, in many cases, demographic decline.
In addition, the region faces formidable environmental and infrastructural challenges. Most prominent is the continuing issue of adequate water supplies, particularly in the southern plains. The large-scale increase in both farming and fossil fuel production, particularly the use of hydraulic fracking, could, if not approached carefully, exacerbate this situation in the not so distant future.
Inadequate infrastructure, particularly air connections, still leaves much of the area distressingly cut off from the larger urban economy. The area’s industrial economy and rich resources are subject to a lack of sufficient road, rail and port connections to markets around the world. Yet despite these challenges, we believe that three critical factors will propel the region’s future.
First, with its vast resources, the Great Plains is in an excellent position to take advantage of worldwide increases in demand for food, fiber and fuel. This growth is driven primarily by markets overseas, particularly in the developing countries of east and south Asia, and Latin America.
As these countries have added hundreds of millions of middle class consumers, the price and value of commodities has continued to rise and seem likely to remain strong, with some short-term market corrections, over time.
Second, the rapid evolution and adoption of new technologies has enhanced the development of resources, notably oil and gas previously considered impractical to tap. At the same time, the internet and advanced communications have reduced many of the traditional barriers — economic, cultural and social — that have cut off rural regions from the rest of country and the world.
Third, and perhaps most important, are demographic changes. The late Soichiro Honda once noted that “more important than gold or diamonds are people.” The reversal of outmigration in the region suggests that it is once again becoming attractive to people with ambition and talent. This is particularly true of the region’s leading cities — Omaha, Oklahoma City, Tulsa, Kansas City, Sioux Falls, Greeley, Wichita, Lubbock, and Dallas-Fort Worth — many of which now enjoy positive net migration not only from their own hinterlands, but from leading metropolitan areas such as Los Angeles, the San Francisco Bay Area, New York and Chicago. Of the 40 metropolitan areas in the region, 32 show positive average net domestic migration since 2008.
Together these factors — resources, information technology and changing demographics — augur well for the future of the Great Plains. Once forlorn and seemingly soon-to-be abandoned, the Great Plains enters the 21st century with a prairie wind at its back.
Visit TTU's page to download the full report, read the online version, or to check out the interactive online atlas of the region containing economic, demographic, and geographic data.
Praxis Strategy Group is an economic research, analysis, and strategic planning firm. Joel Kotkin is executive editor of NewGeography.com and author of The Next Hundred Million: America in 2050. Kevin Mulligan is Associate Professor of Geography at Texas Tech University and Director of TTU’s Center for Geospatial Technology.
There is general agreement that smaller units of government are more responsive and accountable to their electorates. However, proponents of larger governments often claim that this advantage also creates higher spending and tax levels. On this basis, bigger-is-better proponents often suggest consolidating local governments to save money. Such calls have increased in recent years, with the unprecedented fiscal difficulties faced by governments from the federal to local level. However, more often than not, nothing more underlies consolidation proposals more than an interest in reducing the number (count) of local governments. It is largely taken as an article of faith that larger governments save money relative to smaller governments.
Ohio has had more than its share of local government consolidation proposals. The Ohio Township Association asked us to review local government financial performance in the state. We were able to confirm that Ohio's smaller governments are, on the whole, more responsive and accountable. However, the analysis clearly showed that smaller local governments have materially better financial performance.
We analyzed per capita financial measures for all reporting local general purpose governments in the state, using Auditor of State data (Note). Ohio has three types of general purpose governments. Cities are incorporated municipalities with 5,000 or more population in the last federal census. Villages are incorporated municipalities with less than 5,000 population. The balance of the state is made of townships, which have virtually the same powers as municipalities.
The Efficiency of Smaller Local Government
The data indicates that smaller units of local government have median spending per capita that is less than larger local governments. Local governments with more than 10,000 population spent an average of at least twice that of smaller governments. The lowest per capita spending was in local governments with between 1,000 and 4,999 population (Figure 1).
The smaller government advantage extended to debt. The median debt service per capita for local governments with fewer than 5,000 population was zero, while the median debt service per capita for local governments with 10,000 to 25,000 population was under $10 annually (Figure 2).
The incidence of debt was also less among smaller local governments. Fewer than one-half of the local governments under 5,000 population had any debt. In contrast, all of the local governments with 50,000 or more population had debt (Figure 3).
Smaller Governments Excel in Metropolitan Areas
It might be thought that this smaller-is-better relationship stems from the more rural setting of some smaller local governments. However, an analysis of local government spending and debt per capita within metropolitan areas indicates the same conclusion: smaller governments spend less and borrow less per capita (Figure 4).
Townships: Even Less Costly
Townships have been a particular target of "bigger-is-better" consolidation proposals, perhaps because of their smaller average population. Yet, despite their much larger average service areas (in square miles), townships represent a far smaller share of local government spending than their population share. Townships account for 11 percent of local general purpose government spending (excluding counties), yet have 35 percent of the state's population.
Townships have lower current expenditures per capita than villages and cities in all but one population category. In metropolitan areas, townships spend less per capita in all population categories (Figure 5). In addition, townships have lower per capita debt service payments than cities and villages
The lower per capita spending of townships is attributable, at least in part, to lower administrative costs and lower labor costs per capita. Further, as with smaller municipalities, taxpayers often do not often demand the same level of service that is provided in the larger cities.
Small Government: Less Likely to Enter Fiscal Distress
Smaller local governments have experienced financial distress less. After the city of Cleveland bankruptcy in the 1970s, the state established the Local Government Fiscal Distress, which identifies local governments in serious distress and aids them in returning to normal fiscal health. The smallest cities and villages entered the Fiscal Distress program at a rate less than one-half that of the largest governments. The townships did even better. Only two of the state's more than 1,300 townships were placed in the Local Government Distress Program (Figure 6).
Why Larger Local Governments are Less Efficient
One of the reasons that larger governments spend and borrow more is that they are less accessible to taxpayers and more accessible to interests which benefit from higher spending. This can lead to a vicious cycle that drives taxes so high that governments borrow more, followed by proposals to consolidate when the borrowing capacity becomes more constrained. Further, the very size of some larger governments can make them "too big to fail," like large financial institutions in the Great Financial Crisis. This can lead to "bailouts" by state taxpayers. Ohio's Local Government Distress Program is an attempt to avoid these difficulties, by providing technical assistance and guidance.
Smaller governments that consolidate face two critical challenges likely to increase costs. The first is that labor costs tend to be "leveled up" to the compensation levels in the higher cost jurisdiction. The other problem is that services and service levels also tend to be "leveled up."
Proponents of consolidation sometimes assume that a large number of governments results in duplication of services. However, each of the local governments have exclusive service areas. For example, garbage is not collected by multiple jurisdictions to the same addresses. Smaller jurisdictions also tend to employ more part time staff, and even volunteers, especially in fire departments. Another advantage of smaller governments is that their elected officials are able to more directly manage the business of a smaller jurisdiction, because they do not have to rely more on intermediate staff.
The performance of Ohio's smaller governments shows that there is no need to choose between accessible government and efficient government. Ohio's smaller local governments deliver both.
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: These do not include counties, school districts or special districts.
Illustration: Great Seal of the State of Ohio (from http://www.netstate.com/states/symb/seals/images/seal_ohio2.jpg)
After the financial crisis of 2008, much of Great Britain's construction industry capacity was wiped out. Now, in 2012, there is much fear that the “traditional” construction industry is too weak to rapidly increase the rate of housing production, even if the administrative planning system wanted it to. Which it doesn’t. Yet there is also no suggestion by Local Authorities or the national government that the present lack of construction capacity could be addressed by the manufacture of housing by new businesses in other industrial sectors — the creation of factory made homes — as was done post-World War II.
Between 1944 and 1949 the British Government organised the production and installation of two bedroom prefabricated bungalows as emergency housing. The Prefabs were a popular success, but have never been repeated.
As the Second World War was concluding, Clement Attlee, the Labour Party’s Deputy Prime Minister in Winston Churchill's wartime coalition Government, told the House of Commons,
‘The Government have reviewed the potential building capacity of the country, and have come to the conclusion that it will not be possible, for some years, to build enough permanent houses to meet the urgent demands for separate homes. We shall therefore need, in addition, emergency factory-made houses.’
A budget of £150,000,000 was sanctioned in the Housing (Temporary Accommodation) Act, 1944, and increased to £220,000,000 by 1947. By the time the financial account was closed in 1957 a total of 156,623 prefabricated bungalows of a few types were built on Local Authority Land for £207,309,000. They were all rented out by 1949, popular as suburban “prefabs”.
Many of of the Prefabs were manufactured by the aircraft industry using aluminium as the production of war-planes wound down. Others were constructed with steel and timber. The aluminium bungalows were road-delivered as sectional buildings. All the Prefabs were built round a central core of a kitchen, toilet and bathroom. The fitted kitchen had a fridge and cooker, running hot water, and a wash (laundry) boiler There was built-in storage, electric lighting, and sockets. For many residents the Prefabs offered a huge advance in their quality of life.
They were supposed to last 10 to 15 years, but many were so popular that their residents successfully campaigned to save them from demolition. They proved as permanent as any other housing.
A few of the Prefabs still exist today, but they are gradually being cleared by Local Authorities keen to arrange the redevelopment of the often well-located land that can now be occupied with far denser housing, mostly for a lucrative sale. In today's model, space inside and outside the home are both sacrificed. Buyers hope that expensive mortage payments might result in equity in an inflating housing market, where rents have also become unaffordable.
Of course, new housing is needed, but it begs the question of who can afford it. Not the residents of the homes that are being demolished, that is certain. The Prefabs were built during a time when the aim was to keep rents low, while producing spacious homes with gardens for working class people.
The best example of this Prefab demolition is to be seen at the Excalibur Estate in Catford, South East London, which is Britain’s largest and last surviving post-war prefab estate. It consists of 186 homes built by Italian and German prisoners of war in 1945 and '46 to house returning servicemen and their families. For many years, a long and bitter battle between the residents and Lewisham Council has continued. The Council plans to develop the site with up to 400 new homes. Some residents continue to fight against the plan. Six Prefabs are listed by English Heritage and saved from demolition; 180 are to be pulled down in phases within the next few years, starting this month.
Photographer Elisabeth Blanchet has long studied the way these surviving “Palaces for the People” have been lived in by residents. She was struck by the way the Prefabs did not look like British brick, semi-detatched or terraced houses, but more like American homes, with a garden and more space and privacy. “Prefab estates around the country were designed with a sense of community,” says Blanchet, “… sometimes around a green and connected by footpaths, giving them the feel of holiday villages.”
Speaking of the way the Excalibur Estate has been lived in over the many decades after it was supposed to be demolished, she says, “Apart from slight modifications, the Catford Estate remains virtually unchanged. Some residents have added new doors and windows, painted walls… Some have even given their home mock-Tudor makeovers, or added fake beams to the outside. The sense of community, a rare thing in today’s society, is in danger… I met wonderful people, mainly in their 60s, 70s, 80s and even 90s." One resident, Eddy, who had been living there since 1946 told Blanchet, “I wouldn’t swap the place for Buckingham Palace, even if it included the Queen!”
Over more than a decade Blanchet collaborated with Greg Stevenson on a book, Palaces for the People, that includes her unique archive of photographs and interviews with residents. She is now recording stories from people who once lived in the Prefabs, and planning a documentary film, all aiming to answer a simple question: Why do people love these homes so much?
It is almost impossible to imagine any British Government initiating such an ambitious and popular manufacturing effort today. Even while the rate of “traditional” house building is at an historic low, there appears little willingness by the planning system to increase construction industry capacity. No one is arguing for it in Parliament, but Prefabs 2014-2019 would be great for the public, and a boost to the construction and manufacturing industries.
Photos by Elisabeth Blanchet
Ian Abley is a Project Manager for audacity, an experienced site Architect, and is co-author of Why Is Construction So Backward?, as well as co-editor of Manmade Modular Megastructures. He is planning 250 new British towns. Elisabeth Blanchet's current project, “The Prefabs Tour of the UK”, will show how the homes produced in an emergency turned out to be enduring and well liked. You can get involved here.
When Americans think of oil executives, they tend to conjure up the image of J. R. Ewing: slick smile, sharp suits, cowboy boots, and a 10-gallon hat packed with bluster, vanity, and greed. According to Gallup, no industry is more widely reviled than oil and gas—not even banking, real estate, or heath care. The poll found that 64 percent of Americans disapprove of its activities. Only the federal government fared worse.
The image is unfair in many ways. It’s true that the energy sector can be brutal; the business of pulling hydrocarbons from the earth seems to attract more than its share of ruthless personalities. But there’s a more nuanced character to the oil and gas industry. At heart—and yes, it has a heart—it’s an industry with a surprisingly charitable nature. And nowhere is the pulsing heart of the industry more evident than in Houston, where the fortunes generated by profits from energy companies have fueled some of the most impressive personal giving in the world.
Take, for instance, the massive Texas Medical Center (TMC). Based in Houston, it is by far the world’s largest center for healing the sick. Among its 52 member institutions are world-famous research and treatment facilities like the M. D. Anderson Cancer Clinic, Methodist Hospital, St. Luke’s Episcopal Hospital, and the Texas Children’s Hospital. Every year, the TMC serves as a campus where some 34,000 full-time students work toward degrees in the healthcare professions. It’s also home to smaller nonprofits like a Ronald McDonald House (a comfort home for families of children getting treatment), a Fisher House (a comfort home for families of hospitalized service members and veterans), the Institute for Spirituality and Health, and St. Dominic Village (a Catholic retirement community). All in all, it represents “probably the biggest confluence of philanthropy in the world,” says TMC chief executive officer Richard Wainerdi, “and a lot of it is oil money.”
West Campus of the Texas Medical Center
All of that oil money has fueled a massive experiment in private, voluntary initiative—a major healthcare system that is more private than public, more charitable than profitable. Its scale can only be described as Texan. The campus is equal in size to the Inner Loop of Chicago. It currently has over 28.3 million square feet of office space—more than downtown Houston, even more than all of downtown Los Angeles. (By the end of 2014, its square footage is expected to exceed 41 million square feet, which would make the medical campus the nation’s seventh-largest business district of any sort.) Every day, 160,000 people enter the area, which has grown into Houston’s largest employer. Every year, TMC hosts about 7.1 million patient visits, including 350,000 surgeries and 28,000 newborns delivered.
Houston’s real philanthropic achievement, however, is not just the scale of the TMC. It’s the extraordinary quality of its institutions. In the 2013 U.S. News & World Report hospital rankings, TMC-affiliated institutions topped the charts. Methodist Hospital was a nationally ranked leader in 13 of 16 adult specialties. (Of the 4,793 hospitals included in the rankings, only 148 facilities—roughly 3 percent of the total—were considered a nationally ranked leader in even one of the 16 specialties.) St. Luke’s Episcopal Hospital, likewise on the TMC campus, earned national ranking in 10 adult specialties. The Texas Children’s Hospital was ranked fourth among all U.S. children’s hospitals. M. D. Anderson has been named the best cancer center in America for 9 of the past 11 years, including 2012.
None of it would be possible without private philanthropy. M. D. Anderson, for instance, began a capital campaign in September 2006, with a goal of raising $1 billion within six years. Donations poured in from across the Lone Star state. From San Antonio, Clear Channel co-founder Lowry Mays and his wife, Peggy, donated $20 million. From Dallas, H. Ross Perot kicked in another $20 million. T. Boone Pickens contributed $50 million, with one condition. Before putting the funds to use, M. D. Anderson was required to turn the gift into a $500 million corpus within 25 years. Anderson hit the target within three years, and used the funds to establish the Pickens Research Endowment. Two years ahead of schedule, the capital campaign passed the $1.2 billion mark. There were more than 630,000 individual gifts, and a staggering 127 donors gave at least $1 million.
It’s testimony to an extraordinarily generous culture—one that’s driven by energy profits. Of the top 10 corporate foundations in the region, for instance, eight are directly tied to the energy industry. As Federal Reserve Bank economist Bill Gilmer notes, Houston’s economy rests on the energy sector—not only drilling and exploration, but also downstream industries like refining, finance, and petrochemical production. It is there that much of Houston’s wealth has been generated, and from which much of the funding for good works like the TMC is likely to continue coming.
“The people who founded the Texas Medical Center believed that for Houston to thrive, the city had to have a great medical establishment,” explains Ann Stern, president of the $1.5 billion Houston Endowment, the charitable legacy of Houston patriarch Jesse Jones and his wife, Mary Gibbs Jones. “There’s a long history of generosity and a healthy peer pressure among people in the energy business—and other civic leaders—to contribute. They may have not gone to college, they may have made their money in the oil fields, but the Texas Medical Center has become in large part their legacy.”
Deep in the Heart of Texas
To be sure, the extraction of sweet, light crude from deep in the earth is hardly animated by sweetness and light on the business side. The energy business is capital-intensive and very competitive. It requires leaders who can adapt and make things happen.
Anthony Petrello fits that bill. Petrello is the chief executive officer of Nabors Industries, the world’s largest land-based drilling contractor. Nabors is hired by oil companies to drill oil and gas wells. Like many other leaders in the energy industry, Petrello is competitive and looking for ways to differentiate his company. His pedigree is perhaps a bit unusual for the industry: it includes bachelor’s and master’s degrees in mathematics from Yale—and a law degree from Harvard.
Petrello is a Newark native. He left his job in New York as managing partner of Baker & McKenzie, arriving in Houston in 1991 to become president of Nabors. “The first five years I was in Houston,” Petrello recalls, “I worked six or seven days every week, and with my wife’s work schedule, we did not have much time to socialize.” He and his wife, Cynthia, a former New York actress, focused on their careers and kept mainly to a small group of close personal friends.
Anthony and Cynthia Petrello (Photo courtesy of Longines)
Then in 1997, Anthony and Cynthia had a baby girl at Houston Women’s Hospital. Carena Francesca was born at 24 weeks, weighing only 20 ounces, and experienced PVL (periventricular leukomalacia), a disorder in premature infants caused by a lack of oxygen to the brain. First came a rash of operations to save her sight and heart. Then it became clear Carena would suffer from cerebral palsy. Despite having financially successful parents, she was entering life with enormous challenges. “It changed everything,” Petrello says. “It was the turning point in our lives.”
As Carena matured, she started to lose abilities. She gained language, but lost it at age five. Today, she cannot get around without a wheelchair. She can’t speak or feed herself. “It caused a major change in our perceptions,” Petrello recalls. “My wife thought we’d have a dancer. I thought we’d have a mathematician. Instead, we had to adjust our expectations.”
Carena’s difficult circumstances impelled the Petrellos to rethink their priorities. “You realize that your time here on earth is short and you want to make a difference,” Petrello says. “You don’t have time to feel sorry for yourself.” By instinct and training a problem-solving mathematician, Petrello wanted to understand what caused Carena’s condition—and find out if there were better ways to treat it. In 2000, he consulted with a team of specialists at a prestigious eastern hospital; they held out little hope and less understanding. “The doctor told us he couldn’t do anything for her,” Petrello says, his voice showing clear disappointment. “He just said we needed to get a good estate planner for her.”
Petrello looked for serious research into childhood neurological diseases. He was shocked to find how little of it actually was taking place. Particularly troubling was the lack of research into what he calls the “DNA arithmetic” of these disorders, which range from mild forms like ADHD to cerebral palsy and Down syndrome. “The lack of knowledge about this problem is astounding,” says Petrello. “And the lack of resources is sinful.”
He found kindred spirits at the Texas Children’s Hospital. He conceived of an institute dedicated to exploring the causes of neurological afflictions for children. In 2006, he made a commitment of $7 million. “I had lunches with friends—many, when judged by my weight gain—and they were eager to hear more,” says Petrello. “My wife and I were overwhelmed by the support of friends and energy industry colleagues who came on board to help.”
And in the process he found some impressive allies, like Dan Duncan, the now-deceased chairman and director of Houston-based Enterprise Products, a leading North American provider of midstream energy services. A self-made man who grew up in rural east Texas, Duncan turned a small business with one truck, two partners, and $10,000 in cash into a multi-billion dollar energy company that today ranks among the nation’s most successful.
Duncan and his wife, Jan, were among Houston’s most generous healthcare philanthropists. In 2006, they donated $100 million to Baylor College of Medicine to establish the Dan L. Duncan Cancer Center; two years later, they gave M. D. Anderson $35 million to create the Duncan Family Institute for Cancer Prevention and Risk Assessment, which addresses the risks—genetic, lifestyle—that can lead to cancer. In 2007, the Duncans made news with a $50 million gift, earmarked to create a collaborative institute that would research and treat pediatric neurological disorders. The Jan and Dan Duncan Neurological Research Institute opened in 2010. Today, it occupies 300,000 square feet at Texas Children’s Hospital. The center has more than 130 researchers led by Huda Zoghbi, a renowned Lebanese neurogeneticist.
Petrello sees the center as a leading-edge institution that can change the odds for millions of children with neurological disorders. “Everyone needs a dream to keep them motivated,” he explains. “It may not help our daughter, but we cannot accept her fate for so many others. We have to do something.”
The Great Equalizer
Ever since he left his small hometown of Wharton, Texas, Lester Smith has lived, from a strictly economic point of view, a rather charmed life. At age seven, he knew he wanted to be a wildcatter; to his nose, oil “just smelled like perfume.” Today, he heads up Smith Energy, a Houston-based firm that specializes in the exploration and production of oil and gas reserves.
In Smith’s social circles, nobody looks down on making money and living well—even lavishly. But it’s not all big cars, big houses, and big hair. Like Petrello, Smith was brought down by disease, and has chosen to dedicate much of his fortune to fighting it. Smith struggled for 17 years with prostate and bladder cancer. He has undergone some 40 surgeries at the Baylor College of Medicine—“no fun,” he recalls—until 2001, when both organs were removed. “I’m a bladder and prostate cancer survivor,” he reflects. “My wife’s sister died at 50 from breast cancer. My former wife was diagnosed with breast cancer eight years ago, but she is doing well because of what they did at Baylor. This sticks with you.”
Lester and Sue Smith with Gloria Gaynor (AP photo / Dave Rossman)
These personal tragedies have driven much of his philanthropy, $40 million of which has gone to Baylor’s medical school, where it supports research into and treatment for breast cancer, urology, and oncology. Smith also serves on the board of M. D. Anderson and Baylor College, and has donated an additional $20 million to the cancer center at Texas Children’s Hospital. “I never considered giving away so much,” he admits, “until cancer affected me and my loved ones personally.”
Cancer, adds Smith, is “a great equalizer,” one that doesn’t respect class or wealth. For that reason, he has donated $15 million to the Harris County hospital district to set up a clinic to treat poor families, like many of those that he grew up around in rural Texas. It now treats some 160,000 underserved people annually. “Illegal aliens, the indigent—they should get the same care that my wife gets,” he insists.
Smith also raises money for cancer causes by hosting social events—most notably, ballroom dancing. The galas that he and his wife put on have become highlights of Houston’s social season. In February, the Smiths hosted 1,100 guests at the Legends Event for Texas Children’s Cancer Center, featuring Gloria Gaynor, the Pointer Sisters, and Nile Rodgers. The evening raised $32 million. It was again heavily underwritten by Houston’s oil-and-gas philanthropists.
“It’s the oil guys who give the most money to things that matter in people’s lives,” he suggests. “They may be tough people to deal with, but they are very philanthropic.”
A Culture of Leadership
David Wolff is not one of Houston’s oilmen, but he has made his fortune selling land to the energy corporations and developers who serve them. He left Philadelphia in 1970. Once he landed in Houston, he started his own company—at age 29. “This was not considered crazy in Houston,” he recalls, “but back in Philadelphia it would have been. What I liked about Houston is people didn’t just think about doing things. They really did them.”
Over the next three decades, Wolff did quite a lot of things. His real estate firm has office parks all around Houston and led the development of what is widely known as the “energy corridor” along Interstate 10 in the western part of town—now home to a working population of 80,000 people. “It was all cows and rice fields back then,” he recalls. All the while, he was involved in the city’s philanthropic community, serving as chairman of the Houston Parks board, as well as Metro, the regional transit agency, and on the board of the Houston Grand Opera.
But these days Wolff’s great passion is medical philanthropy. He donated 10 acres of prime land for the new TMC West Campus, which now includes Texas Children’s Hospital, Texas Methodist, and others. He is now working, largely through additional land he has acquired, to aid the expansion of the TMC toward Beltway 8 (Houston’s outer-loop freeway) and the surrounding suburban communities.
David and Mary Wolff
The idea, Wolff explains, is to bring the hospitals closer “to where the patients are.” For generations, Houstonians—particularly those with children—have been moving to the city’s periphery. As the TMC’s main campus has expanded, traffic and parking have become more difficult for people coming from the communities surrounding Houston. The market is certainly there: Texas Children’s CEO Mark Wallace estimates there are 400,000 children within a 10-minute drive of the new campus. In 20 years, says Wallace, the west-side hospital will be as large as the original site.
“We are making it easier for the medical center to serve people,” Wolff says, beaming with pride in the bright new lobby of Texas Children’s Hospital–West Houston. “For those coming from the suburbs, or for the folks coming from the smaller towns in central and southeast Texas, this is an easier place to get to, and one where they can still find the same quality health care you would get in the city.”
That sense of service reflects the spirit that made the Texas Medical Center possible in the first place. In a state where the proportion of uninsured is higher than the national average, the TMC provides critical services for the poor—and is sufficiently well funded to deliver them at the highest level. “Like other cities, Houston has its challenges,” observes Houston Endowment’s Ann Stern. “But Houston is exceptional in that philanthropy makes up for a lot of it. It’s kind of a calling here. It’s a culture of leadership—of getting things done.” And it has made Houston perhaps the most philanthropic city in America today.
This piece first appeared at The Philanthropy Roundtable.
Houston skyline photo by Bigstock.
One of the more curious developments in American politics over the last two decades is the political malpractice of Republicans in dealing with Hispanic-Americans. Indeed, it now appears that the 2012 election may well be determined by the share of the Latino vote that Governor Mitt Romney is able to keep from falling into President Barack Obama’s column.
According to the Investor’s Business Daily tracking poll, Hispanics prefer Barack Obama by a greater than 2:1 margin (61% to 29% on October 25). Hispanic-Americans have tilted toward the Democrats for decades, so it is hard to blame the Republican Party’s current predicament on just the political tactics of this year’s campaign.
But unlike the African-American vote since the 1960s, which has remained rock solid Democratic, history indicates that on occasion the GOP has competed for and won a significant share of the Latino vote. Hispanics tend to be family oriented and somewhat entrepreneurial, which should make them potential Republicans.
But deliberate, conscious decisions by Republican leaders focused on the short run gains from immigrant bashing have done severe damage to the long term health of their party. Attacks on immigrants have caused Hispanics to desert the GOP in droves, particularly in the two most recent presidential elections. And, because the Latino population is relatively youthful, if this concern is not dealt with, it may become even more acute for the Republican Party in the years ahead. Among Millennials, America’s youngest adult generation, about one in five is Latino as compared with about one in ten among Baby Boomers and one in twenty among seniors. Among the even younger Pluralist generation (children 10 years old and younger) between a quarter and 30% are Hispanic. Between these two up-and-coming generations, it’s likely that Hispanics will represent nearly 30% of the nation’s population within the next few decades. This suggests that the Republican Party has little hope of winning national elections in the future unless it reverses its current policies to bring them more in alignment with the attitudes and beliefs of this key voter group.
Some have estimated that Ronald Reagan won 37% of the Hispanic vote in his successful 1984 re-election campaign. Since then the presence of Hispanic voters in the electorate has grown by 400%, but the Republican share of their votes has risen above the level at which Latinos supported Reagan only once. That occurred in 2004 when Karl Rove’s strategic focus on Latinos enabled President George W. Bush’s re-election effort to win upwards of 40% of the Hispanic vote. In every other presidential election since 1984, Republicans have struggled to win the votes of even one out of three Hispanics.
Recent data from Pew Research demonstrates that the Hispanic rejection of the GOP was not pre-ordained. Their recent survey showed 70% of Hispanics now identify themselves as Democrats, but that this percentage falls to just 52% among Evangelical Hispanics, a fast growing group whose cultural attitudes are more conservative than those of the overall Hispanic population. In 2004, President Bush actually won a majority of the Hispanic Protestant vote even as his support among Catholic Hispanics failed to improve from his showing in 2000.
Catholic Hispanics, who comprise about 60% of all Latinos, are more likely to vote based on perceived loyalties to their social-economic class than their attitudes on social issues. Bertha Gallegos, who is Catholic, pro-life and the Vice President of the Colorado Society of Hispanic Genealogy, a nonprofit and nonpartisan organization that researches the state’s Latino history, typifies the attitude among members of her faith toward the Republican Party. “I still don’t get how Hispanics can be Republicans. The only time they’re nice to us is when they want our vote. Republicans work to make the rich richer. They don’t care about the poor.”
Since the virulently anti-immigrant campaign in favor of Proposition 187 in California that attempted to bar immigrant access to basic social services the Republicans have continued to play exactly the wrong tune for Hispanics. In this year’s Republican primary, there was much emphasis on removing undocumented immigrants from American soil through self-deportation or other more draconian means, Republicans have allowed economic resentment and cultural fears to get in the way of positive voter outreach to America’s fastest growing minority population. After all, many Latino legal residents and citizens also have relatives and friends who are undocumented.
Yet studies as far back as the 2000 presidential election have shown that when properly engaged, Hispanics have an open mind on which party deserves their support. Latinos in that election were statistically more likely to support Bush over Gore if they were contacted by Latino rather than Anglo Republicans. Clearly the election in 2010 of Latino Republican governors, Susana Martinez of New Mexico and Brian Sandoval of Nevada, suggests that the community remains open to such appeals in the future.
Before such efforts can be successful however, Republicans will have to reverse course on their attitudes toward comprehensive immigration reform, a cause which traces its historical lineage to Ronald Reagan and which was a key part of Karl Rove’s re-election strategy for George W. Bush. Only when the Republican Party’s message changes will their messengers deserve and be able to gain a respectful hearing from America’s Hispanics.
Morley Winograd and Michael D. Hais are co-authors of the newly published Millennial Momentum: How a New Generation is Remaking America and Millennial Makeover: MySpace, YouTube, and the Future of American Politics and fellows of NDN and the New Policy Institute.
Polling place photo by BigStockPhoto.com.
There may be no better illustration of President Barack Obama’s appeal than his ability to hold onto voters — minorities, single moms and young people — who have fared the worst under his presidency. But the bigger question as we approach Election Day may be whether these constituencies, having been mauled by the economy, show up in sufficient numbers to save the presidential bacon.
Welcome to the politics of disappointment. Much has been said about the problems facing the middle class, who have been losing out since the 1970s. But the biggest recent losers have been groups like African-Americans. In the current economic downturn, middle class African-Americans have lost virtually all the gains they made over the past 30 years, according to the National Urban League. Median annual household income for blacks decline by more than 11 percent between June 2009 and June 2012, according to the Census bureau, twice the loss suffered by whites.
African-Americans as well as Latinos have also borne much of the pain from the housing downturn. In fact, according to the Census, Latinos suffered the biggest loss of net worth, largely based by housing, in the recession of any ethnic group. The weakness in the housing market, which is now only beginning to recover, hurts many Latinos, who represent a large part of the nation’s construction industry workforce.
Latinos have been doing so poorly under Obama’s tepid recovery that, by some estimates, more are headed back to Mexico than coming here. Many voters who might make a difference in November could be lounging in Michoacán or Oaxaca rather than Michigan or Ohio.
As for the young, even those with college education, they still suffer high unemployment rates and constricted job opportunities. More than 15 percent of all workers between 18 and 24 are unemployed.
A college degree does not assure success. More than 43 percent of recent graduates now working are doingso at jobs that don’t really require a college education according to a recent report by the Heldrich Center for Workforce Development. Not surprisingly, the stress levels among college freshman are the highest since data started to be collected, a quarter-century ago.
Ironically the one group that has thrived under Obama — the affluent, including the dreaded “1 percent” — is also the class that has mobilized most aggressively against him. In 2008 Obama split the vote among those making more than $100,000 a year; this year. According to Gallup, the wealthier have shifted heavily to GOP presidential nominee Mitt Romney, with those making over $180,000 favoring him by slightly more than 9 percent.
Arguably the biggest change has taken place among those at the highest elevations. These include many of the executives of largest banks, who accepted federal bailouts and then helped themselves to huge bonuses in the ensuing years, largely due to the market impact of the Bernanke Monetary spigot. For example, both JP Morgan and Wells Fargo this month announced record profits.
The top 1 percent of earners gained more than 90 percent of the benefits from the TARP-powered 2009-2010 recovery while the top 0.01 per cent by themselves garnered more than one-third. They all but avoided serious investigations for their misdeeds; in fact, no major Wall Streeter has yet to go to jail for sending the world economy into disarray.
Yet the very institutions like Goldman Sachs, who tilted heavily toward Obama in 2008, now favor Romney. Wall Street has sent Romney $37 million this year, and only $4.8 million to the president. For his big business money, the President relies instead on Silicon Valley and Hollywood.
In contrast, the president continues to dominate his less affluent 2008 core constituencies. But it’s increasingly likely that the poor economy — particularly for these same groups — could depress turnout. In 2008, the record turnout of minorities, single women and young voters propelled the Obama near landslide. A weaker showing this year could make the election far close, as we are seeing in polls today, and could even allow Romney — the candidate of predominately white, married, middle class voters — to overcome his party’s chronic demographic shortcomings.
Let’s start with Obama’s most loyal base, African-Americans. Though certain to turn out overwhelmingly for the president, Gallup reports that the number “likely” to vote has decreased somewhat from 2008. A recent Urban League report suggested that a diminished African-American turnout could cost the president in such key swing states as Pennsylvania, Florida and even Ohio. A recent poll by Politico and George Washington University found that while 82 percent of whites are “extremely likely” to vote only 71 percent of African-Americans, and 70 percent of Latinos, expressed the same intention.
Ominously, registration levels in many key African American areas such as Chicago have dropped precipitously, by more than 12 percent compared to increases in some of the heavily white outer suburbs. Although Obama will still win his home state in November, prospects for Democratic house pick-ups have dimmed.
More critical still has been a massive reduction in voter registrations in heavily black and Democratic Cuyahoga County, Ohio (Cleveland). Recent attempts in many states to monitor voting could further reduce minority turnout.
Latino voters are particularly affected by this move to monitor voting, since many may lack the right paperwork. But even so, there is a real enthusiasm gap, demonstrated by the unexpected decline in registrations among Latinos. Twelve million Hispanics were registered in 2008 and the number was expected to rise to 14 million by this election. Instead the total, as of the last election in 2010, was only 11 million, something that some experts link to Mexicans moving or returning home due to poor economic conditions.
Arguably decisive in the swing states of Florida, Colorado and Nevada, mobilizing Latinos may pose the greatest challenge for the Obama campaign. In 2008, they voted two to one for Obama, and they seem likely to repeat that feat again this year.
Even worse for the President, Latinos, like the other core constituencies, don’t appear to be as enthusiastic this year. With Latino unemployment well above the national average, support for the president has waned a bit from 2008 levels. If turnout also decline, this could prove decisive.
This lack of enthusiasm appears among younger voters as well. Though Romney is winning white voters under age 30, particularly men, he is being hammered among both female and minority millennials. But the real issue may prove to be turnout. Growing alienation seems to have depressed enthusiasm among the young, with barely half of all under 30 pro-Obama voters now planning to turn out to the polls. If this persists, the youth vote will be less important this year from the record turnout that cemented the 2008 victory.
As he loses ground among middle class whites and families, Obama will need for his core constituencies to show up. This where his “ground game” will be critical. If the key groups come out to the polls, forgetting or at least forgiving what has happened over the past four years, they can renew their faith in the gospel of hope and change for the next four.
This piece originally appeared at Reuters.com
Barack Obama photo by BigStockPhoto.com.
Deadline reporters, especially in weather broadcasts from the surf line, have been wailing about “this enormous storm” or “the unfolding tragedy.” What they might also say is that hurricanes are a munificent windfall for newspapers, television stations, the federal government, construction unions, and politicians seeking reelection. In addition to classifying storms from one to five on the Saffir-Simpson scale, going forward it might also be possible to grade hurricanes as profit centers, or by the surge levels that they generate in reelection campaigns.
By all (usually breathless) accounts, Hurricane Sandy delivered a wide band of damage and destruction to areas stretching from North Carolina to Maine. Along with a death toll now approaching 50, a 13 foot storm surge in New York harbor inundated parts of lower Manhattan and Brooklyn, and millions of residents around New York, New Jersey, Maryland, and Pennsylvania lost power in their homes. The aftermath, unlike the legacy of Hurricane Katrina, however, is that the waters which flooded Manhattan's streets, tunnels and subways are receding with ebb tides, although the damage from surging waves and fallen trees is widespread, especially across New Jersey.
Although the storm will have cost the Mid-Atlantic region some $45 billion in cleanup costs, not to mention the loss of work days for many, even this perfect storm not seen in “a millennium” did not rack up the apocalypse that was predicted as Sandy “barreled” up the coast on its “rendezvous with destiny” in Atlantic City. From the teeth of the storm in New Jersey, my sister reported only an epic loss of cable and Internet.
The reasons storms rarely appear as they are cast on television is because, instead of acts of nature with a lot of wind and rain, hurricanes are now best understood as political spectacles, somewhere between nominating conventions and state lotteries.
Take the federalization of the disaster business. Previously storm damage and the costs of clean up were the responsibilities of states and municipalities, who in the first place made the decisions to allow homeowners to build houses and businesses on barrier islands, sand dunes, and low-lying waterfront property.
For much of the twentieth century, insurance companies refused to write flood or hurricane policies for stilted houses perched precariously on Cape Hatteras or wherever, which angered wealthy political donors, who equate their life successes with owning beachfront property.
Enter the federal government into the realm of disaster indemnification, when Congress passed the National Flood Insurance Program in 1968, to mandate that vulnerable home owners in potential flood zones purchase adequate insurance that private companies were refusing to cover. Think of it as Obamacare for beachfront homes.
Although the legislation was designed to cover the undue risks of shore properties, it also gave the political parties a mechanism that would allow (for all those waterfront contributors) a building boom on hurricane-exposed barrier islands.
At a time when global warming has increased the intensity and frequency of major storms and hurricanes (which are nature’s teapots blowing off steam), we are living with the fallout of an earlier era, when the federal government doubled down by writing insurance for beachfront condos from Maine to Texas.
After the 2000 recount election came the transformation of Florida into a swing state in presidential elections, insuring that claim adjusters would reach hurricane damage zones as fast as FEMA’s first responders. Before the 2004 election arrived, four more hurricanes had passed over Florida. In their wake came billions in federal aid relief, just to insure that neither awnings nor chads would be floating in the wind.
As powerful as hurricanes may be, they are no match for the construction lobbies, something I learned in the 1980s when writing about the National Hurricane Center in Coral Gables, Florida.
The then-director, Neil Frank, a man of ebullience and integrity, showed me a slide show on the back of his office door, explaining that it was folly to allow construction on Gulf and Atlantic barrier islands. That was thirty years ago, and since then cities of flimsy beachside construction have risen along the dunes.
What I admired about Frank was his passion for hurricane preparedness. He had walked the beaches of Biloxi, Mississippi in 1969, after Hurricane Camille, and measured that surge at 25 feet—something he then extrapolated to other beaches around the United States, including Atlantic City. But in urging a ban on beachfront buildings, he was shouting into an ill wind.
Not only was the federal government complicit in allowing places like Myrtle Beach to become housing projects (the poet Robert Watson called it “white Harlem by the sea”), it also assumed that its job performance could be measured by the number of blankets and water bottles that reached those crazy enough to “ride out” a major storm in their seaside mobile homes.
No doubt this is the Katrina Effect in American politics: The truism that if a big storm hits, the best place for the president probably isn’t dockside in San Diego, playing Otis Redding tunes on a guitar. Nevertheless, it means that the federal government (not exactly a profit center these days) is on the hook for the rescues, the clean up, and the insurance claims.
The sad reality of Hurricane Sandy is that, despite all the Weather Channel epithets that it was “the storm of the century,” a lot of it was ordinary. It wasn’t even technically a hurricane when it came ashore near Atlantic City. What made it destructive was its size, and that it arrived late in the hurricane season and, by chance, merged with other Atlantic and Canadian storm systems. Imagine, however, if it had been one of Neil Frank’s dreaded Category 4 storms?
Undoubtedly, President Obama would love to turn Hurricane Sandy into a backdrop for reelection spots that show him compassionate to his fellow Americans in times of need. The problem is that neither Wall Street underwater nor the flooded roulette tables in Atlantic City makes an ideal photo op or headline (“President Vows: We Will Not Let This Stop Us From Gambling!”). And I doubt he wants to campaign as the Claims-Adjustor-in-Chief.
Photo: MTA New York City Transit, Bus on the Move. Morningside Heights, 125th and Broadway, October 28, 2012, as Hurricane Sandy approached New York City.
Matthew Stevenson, a contributing editor of Harper's Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His next book is "Whistle-Stopping America".
I was honored to speak at a conference in Milwaukee over the summer called Milwaukee’s Future in the Chicago Mega-City. Chicago and Milwaukee are about 90 miles apart on I-94. There’s an Amtrak link that makes the journey in about 90 minutes. The two cities have been sprawling such that there’s now more or less continuous development along the lakefront between the two cities. Milwaukee has been a challenged city economically and demographically. Chicago has had its own serious problems, but has seen its already muscular core boom in terms of residents and investment. High end business seems to be doing well in Chicago, and the city gets pretty good press nationally.
If you are Milwaukee, the idea of somehow tapping into Chicago naturally presents itself. Local leaders clearly see Milwaukee’s future as, if not a giant suburb of Chicago, at least a city for which Chicago’s cachet and prosperous zone somehow provides them with a leg up. As Richard Longworth put it, “Once an independent economic power of its own, Milwaukee now belongs to Greater Chicago.”
The notion that proximity to Chicago or another mega-city* represents an unambiguous good seems nearly universal. While the mechanics and value basis of greater collaboration are often illusive, it’s assumed that such value must be present and such collaboration desirable. Not just Milwaukee, but places like South Bend, Indiana and Grand Rapids, Michigan look towards Chicago as an economic engine for them.
But what if it this is actually backwards? What if proximity to Chicago or another mega-city is actually a curse, not a blessing?
My friend Drew down in Indy has a model of this, clearly targeted as his own city but relevant to the discussion. He says that the Midwest is like a solar system with Chicago as the sun. As he see is it, Indianapolis is Earth – it’s the perfect distance from Chicago. A place like Cleveland is too far away – it doesn’t get enough heat and light. But Milwaukee is like Mercury – it’s too close to the sun and gets burned up.
I suggested at the conference that one reason Milwaukee should want to active engage in shaping the interaction between the two regions is that the natural development could actually be negative. I had in mind here Providence, which is in a similar situation. Providence is 50 miles from Boston – that’s closer than Milwaukee is to Chicago, but Boston is also smaller than Chicago. Like Milwaukee, there’s a rail connection between the cities, with commuter service taking a bit over an hour.
Providence, like Milwaukee, has struggled. In fact, it’s struggled far worse. Sticking with solar system thinking, my immediate gut take here has been that Providence is a brown dwarf of a city. Maybe at one time it generated real economic life force, but today is a shell of a metro region in many ways.
Another similar example is New Haven, Connecticut, which is about 80 miles from NYC, and is a notoriously troubled city. And even being in the same state hasn’t helped Springfield, Mass at 90 miles from Boston. It too has struggled.
Is this actually the pattern? Is proximity a negative indicator not a positive one? Does proximity drain vitality instead of creating it? Let’s consider further.
I believe a lot of the thinking that being close is positive comes from the example of two very successful twin cities: Dallas-Ft. Worth and Minneapolis-St. Paul. Two things jump out at me about these, however. One, in both cases the cities are significantly closer than Milwaukee and Providence are to Chicago and Boston. Dallas is about 35 miles from Ft. Worth. Minneapolis and St. Paul actually abut each other, and the downtown-downtown trip by freeway is 14 miles. These actually are part of the same metro area by any standard.
Two, the cities in these cases are reasonably balanced in size. Dallas is bigger than Ft. Worth and Minneapolis bigger than St. Paul, but it doesn’t have the feel of the vast disparity of say a Chicago vs. Milwaukee. Indeed, the difference is clear in how we compare the cities. With a Chicago and Milwaukee, metro area seems the way to go, but with the others municipal population seems a reasonable proxy.
Another positive example might be Washington-Baltimore. The distance here is about 40 miles. These are separate metros, but overlap considerably and could potentially be combined. Also, Washington is only about twice as big as Baltimore, which is pretty hefty in its own right at 2.7 million people. Contrast Chicago at over six times as big as Milwaukee and Boston at almost three times as big as Providence, a number I think is understated since part of Southern Massachusetts that’s in Providence metro arguably has a strong Boston orientation as well. In any case, while the city of Baltimore remains infamous in many ways, the overall metro area has done well.
So the idea that proximity is a positive could have originated in models that aren’t applicable. Being close works: but only if you are really, really close – say about 40 miles or better – and your size ratio is no more than about 2:1.
Or maybe the latter might not even be necessary. There are a few examples of old industrial cities turned into suburbs in Chicago – Aurora (41 miles), Elgin (42 miles), and Joliet (44 miles) being the prime examples. These were once independent cities of sorts, and now are clearly suburbs. They aren’t nirvana yet, but proximity to Chicago has clearly invigorated them to a certain extent. The size ratio vs. the overall Chicago region or even just the city would obviously be huge. So perhaps the only question is whether you could plausibly be a true suburb.
Interestingly, Detroit and Ann Arbor fit this and are only a bit over 40 miles apart, so also follows this rule. It may seem ludicrous to credit Detroit with injecting life into Ann Arbor, but I don’t think it would be as successful if it were isolated in the middle of the state. (Madison, Wisconsin succeeded on its own, but is a bit bigger and also the state capital).
But it may even be worse than this. Back to my provocation a few paragraphs back, is it possible that not only does anything other than true suburban style proximity not help you, it might even hurt you? The examples of Milwaukee, Providence, New Haven, and Springfield suggest it’s at least possible. Now all of these are post-industrial cities that have clearly struggled for reasons other than proximity to a mega-city. Many similarly situated places (or even more badly troubled ones) are not near a much bigger city. But it’s worth considering the point.
I hypothesize about it in terms of attempting to reboot a high value economy. If you are a high value business – say a biotech startup or some such – looking to locate in New England, why would you ever pick Providence over Boston? You wouldn’t – not unless they paid you a ton of money a la 38 Studios (a Curt Schilling backed video game company that went bankrupt after receiving $100 million in loan guarantees from Rhode Island). Not only is Providence itself an expensive place to live and do business, it’s talent and ecosystem disadvantaged. Why subject yourself to that when you can move 50 miles up the road to one of the world’s premier innovation areas? The kicker is that this applies to business ideas in Providence as well. You can launch your business in Boston and still basically stay where you live.
I’m not a believer in the oft-repeated claim that these tier one cities are sucking all the talent out of smaller places. The numbers don’t back it up. Chicago has the second highest college degree attainment among large Midwest cities, but at 34.2% hardly towers over other regional cities, most of which are at least in the 30s, including Milwaukee. And Chicago’s growth in population with degrees is actually in the bottom half of large Midwest metros.
However, perhaps there is a “dead zone” of sorts around mega-cities. This zone extends from the edge of their suburbs to some unknown outer radius. In that zone, perhaps black hole like, high value functions really are sucked into the mega-city. Or perhaps negative aspects of the mega-city like traffic and pollution act like kryptonite on the economy of cities in this zone. I don’t know for sure. It’s just a hypothesis to consider based on a few observations. I would love to see some research done into this. In the meantime, small cities near a very large one shouldn’t be too quick to celebrate their location as boon.
Milwaukee photo by Bigstock.
The middle class, we’re frequently told, decides elections. But the 2012 race has in many ways been a contest between two elites, with the plutocratic corporate class lining up behind Mitt Romney to try and reclaim its position on top of the pile from an ascendant new group—made up of the leaders of social and traditional media, the upper bureaucracy and the academy—that’s bet big on Barack Obama.
As recently as 2008, the Wall Street plutocrats were divided, as Obama deftly managed to run as both the candidate of hope and change and the candidate of the banks. But this year, the vast majority of the corporate ultra-rich have backed Romney, who after all is one of their own, his top five sources of donors all financial giants: Goldman Sachs, Bank of America, Morgan Stanley, Credit Suisse, and Wells Fargo. As The Wall Street Journal memorably noted, in 2008, no major U.S. corporation did more to back Obama than Goldman Sachs—and in 2012, none has done more to help defeat him. Those titans, along with the powerful and well-heeled energy sector, have placed most of their bets on the Republican.
But don’t mourn too much for Obama, who’s held his own in the cash race by assembling a new, competing coalition of wealthy backers, from the “new hierarchies of technical elites” that Daniel Bell predicted in 1976 in The Coming Of Post-Industrial Society. For that group, Bell wrote, nature and human nature ceased to be central, as “fewer now handle artifacts or things” so that “reality is primarily the social world”—which, he warned, “gives rise to a new Utopianism” that mistakenly treats human nature as something that can be engineered and corrected by instruction from their enlightened betters. This approach, although often grounded in good intention, can easily morph into a technocratic authoritarianism.
Along with Hollywood, Obama’s big donors have come from the tech sector, government, and the academy—with his top five made up of the University of California, Microsoft, Google, the U.S. government, and Harvard. Tech heavyweights such as Craigslist founder Craig Newmark and Facebook COO Sheryl Sandberg have given maximum donations to the president, as have Eric Schmidt and four other top executives at Google.
These idea wielders make fortunes not through tangible goods but instead by manipulating and packaging information, and so are generally not interested in the mundane economy of carbon-based energy, large-scale agriculture, housing, and manufacturing. They can afford to be green and progressive, since they rarely deal with physical infrastructure (particularly within America) or unions or the challenges of training lower-skilled workers.
There is a growing synergy between science, academia, and these information elites. Environmental policies pushed by the scientific community not only increase specialists’ influence and funding, but also the emergent regulatory regime expands opportunities for academicians, technocrats, and professional activists. It also provides golden opportunities for corporate rent seeking, particularly among those Silicon Valley figures involved in a host of heavily subsidized “green” ventures, most famously Solyndra.
In many senses, we are seeing a “progressive” version of the unlamented John Edwards’s two Americas. Much of the U.S. is struggling, but the Clerisy has thrived. Between late 2007 and mid-2009, the number of federal workers earning at least $150,000 more than doubled.
As government has grown even while the economy staggers, the direct and indirect beneficiaries of that growth have hitched their carts to the administration. Many professors have been protected by tenure, even at hard-hit public institutions. Foundation and NGO heads, financed by philanthropy—much of it from often left-leaning Trustifarian inheritors—have remained comfortably secure, as have their good workers. And Federal Reserve chair Ben Bernanke’s money policies have funneled cash from return-starved investors into the coffers of tech and social-media companies.
There’s an old name for this new group of winners: the Clerisy, which British poet Samuel Coleridge defined in the 1830s as an enlightened educated class, made up of the Anglican church along with intellectuals, artists, and educators, that would school the rest of society on values and standards.
But in many ways the New Clerisy most closely resembles the First Estate in pre-revolutionary France, serving as the key organs of enforced conformity, distilling truth for the masses, seeking to regulate speech and indoctrinate youth. Most of Obama’s group serves, as Bell predicted, a “priestly function” for large portions of the population.
This post-industrial profile has shielded the post-industrial elite from the harsh criticism meted out to Wall Street grandees and energy executives by green activists, urban aesthetes, and progressive media outlets. Steve Jobs, by any definition a ruthless businessman, nevertheless was celebrated at Occupy Wall Street as a cultural icon worthy of veneration.
There are of course libertarians and even traditional conservatives in academia, the media, the think-tank world, Silicon Valley, and even Hollywood. But they constitute a distinct minority. For the most part, the members of the groups that make up Obama’s Clerisy, like any successful priestly class, embrace shared dogmas: strongly secular views on social issues, fervent environmentalism, an embrace of the anti-suburban “smart growth” agenda, and the ideal of racial redress, of which Obama remains perhaps the most evident symbol.
As befits a technological age, the New Clerisy also includes now orthodox portions of the scientific community—figures such as President Obama’s science adviser John Holdren, NASA’s James Hansen, and the board of the U.N.’s Intergovernmental Panel on Climate Change. These secular clerics have been extraordinarily influential about global warming, primarily advocating limited consumption by the lower orders.
Energy marks the clearest demarcating issues between the plutocrats and the Clerisy. The regime of ever higher energy prices with its inevitable immediate impact of slower growth—long preferred by environmentalists and openly espoused by Energy Secretary Steven Chu—represents no real threat to the Clerisy and presents a boon to the “green” capitalists. Yet the rising hyper-regulatory state threatens to slow the overall economy, as it has in California, and to wreak havoc on the largely suburban, exposed middle and working classes.
But energy is not the only issue dividing the two elites. The Clerisy—as can be seen clearly in the secular mecca of California—also seeks to impose mandates on more and more of private decision making, whether shaping college admissions and the composition of corporate boards, as well as basic choice in everything from housing types to food consumption.
The Clerisy often employs populist rhetoric, but many of its leading lights, such as former Obama budget adviser Peter Orszag, appear openly hostile to democracy, seeing themselves as a modern-day version of the Calvinist “elect.” They believe that power should rest not with the will of the common man or that of the plutocrats but with credentialed “experts,” whether operating in Washington, Brussels, or the United Nations.
This authoritarian tendency, often perceived as arrogant, has fueled revulsion among large parts of the nation, as evidence by the Tea Party 2010 sweep. The continued hostility of the bourgeois masses to the Clerical agenda appears to be helping Romney solidify his support in the countryside, the suburbs, and smaller cities.
Of course, Romney himself is the very opposite of a populist. As president, he would offer four years of technocratic, corporate power. Yet at the same time, a Romney administration—contrary to the claims of Democratic operatives and at times also the mainstream media—would not embrace the savage worldview of Pat Buchanan, Sara Palin, or even Rick Santorum. It would be establishmentarian in a “sensible shoes” kind of way. Mormonism, as an old friend raised in the faith told me, combines “a Pentecostal theology with an Episcopalian mentality.” Expect something like George H.W. Bush, with a religious twist.
The prospect of four years of plutocratic rule under Romney is no cause for celebration for those who would like to see greater social justice and reduced inequality. But it may prove less damaging to the country than allowing Obama’s new, secular priesthood to wreak damage on the economy that could take decades to unwind.
This piece originally appeared at The Daily Beast.
Barack Obama photo by BigStockPhoto.com.
President Obama’s disdain for suburban America has been well-documented. Yet, ironically, the current revival in housing, largely in those same suburbs, might be the one thing that could rescue his floundering campaign. Unlike the Democrat-dominated central cities and the rock-red Republican countryside, the suburbs remain the country’s primary contestable territory.
With manufacturing facing global headwinds and Wall Street stagnating, the housing recovery is helping keep the still weak economy moving forward. Housing starts are at the highest level in four and a half years. Sales and prices are on the rise, and the vast majority of the action — despite the media’s focus on multi-family developments — is taking place among single-family homes that predominate in the suburban rings of our metropolitan area. Over the past two years, 76% of the new privately owned housing units completed were single-family homes, according to Census Bureau figures. In existing home sales, last year over 4.3 million single-family homes were purchased, compared to 520,000 condos.
This trend is being driven by such factors as rental costs, which rose with the recession, a decline in foreclosures, low interest rates and, particularly in some markets such as Phoenix, investors who see long-run demand in single-family markets. Demand has sparked a nascent revival of homebuilding, now at the highest level since the Great Recession, although still half its historic rate.
The housing recovery could make a particularly important difference in the election in key swing state suburban communities on the outskirts of Cleveland, Detroit, Pittsburgh, Philadelphia and Denver, and in the northern Virginia suburbs of the capital. In these areas, homes — not stocks and other financial assets — are the primary measure of wealth, and the most critical weathervane of economic wellbeing. Single-family home sales also spur other sectors of the economy, such as financial services, construction and the home furnishing industries in ways far greater than denser developments. The good feelings about the auto recovery have helped the president in industrial states; similarly the improved housing market gives him a lift in these critical suburban areas.
Some Clinton-era Democrats, like former U.S. Deputy Treasury Secretary Robert Altman, recognize that expanding housing markets makes for stronger, broader-based economic growth. This is why historically Democrats favored single-family housing, from Roosevelt and Truman to Bill Clinton. Altman predicts a full-scale housing boom by 2015; if he’s right, and Democrats are in power, and on board, this could propel their ascendency for another generation.
Of course from an ideological point of view, this emerging boom may not be much welcomed in the current administration. Most Obama backers in places like the Department of Housing and Urban Development, including Secretary Shaun Donovan, have long predicted that suburbs are entering their death throes, predicting a massive movement of people from the suburbs to inner city areas. Where possible, HUD has tried to encourage “smart growth” by providing grants for projects aimed at greater densification.
Yet these widely lauded efforts are swimming against the fundamentals of market demand, and at a cost to both the budget and longer-run economic growth. Despite misleading press reports, inspired in part by Census Bureau epistles focusing on increasing downtown populations, the vast majority of population growth has continued to take place far away from the urban core.
Indeed over the last decade, while some downtowns have grown, they accounted for 1.3% of the overall population increase in the country’s largest metropolitan areas. At the same time, areas two to five miles from the central cores lost population while areas beyond 10 miles out grew by more than 20% and accounted for more than 60% of growth. Overall Americans have continued to vote with their feet for suburbs — overwhelmingly.
Some urbanists, including some close to the current administration, claim that the realities of the last decade are now passé, a permanent victim of the housing bust. Yet in reality these claims appear largely off the mark. Recent Census estimates for last year, for example, were widely reported to show greater growth in core cities than suburbs, but turned out to be based on unsupported assumptions that all county growth occurred equally across geographies, making it impossible to judge the widespread claims of a massive movement “back to the cities.”
At the same time, a new analysis by Trulia.com chief economist Jed Kolko, based on postal data, shows that growth rates were about the same. But in an attempt to discover actual preferences, Kolko then analyzed the growth rates by densities. Much of the “urban” growth, particularly in Sunbelt cities like Phoenix and throughout the Midwest, actually takes place in largely suburbanized, relatively low-density areas.
Kolko found that the populations of “more suburban” neighborhoods grew 0.73% in the past year, more than twice as fast as the “more urban” neighborhoods, where growth was 0.35%. In fact, urban neighborhoods grew faster than suburban neighborhoods in only five of the 50 largest metro areas — Memphis, New York, Chicago, San Jose and Pittsburgh — and often by a really small margin. In the other 45 large metros, the suburbs grew faster than the more urban neighborhoods. Overall, Kolko concludes, household growth in most metropolitan areas was greatest the further from the core, and less closer to it.
The movement of people into lower-density areas jibes with one of the biggest reasons for the current nascent housing recovery: the preference by roughly four in five Americans for a single-family house — usually but not always found in the suburbs — over an urban apartment. In a sense, then, the hostility to suburbs among the administration and the Democratic Party is both profoundly anti-democratic and anti-growth.
Recovering housing prices provide a lifeline for our beleaguered middle class. A recovery provides greater employment to the very people — construction workers, manufacturers of home furnishings and real estate agents — who were among the biggest victims of the Great Recession. Some progressives might celebrate the diminishment of such jobs and prefer they now service the post-industrial uberclass, but it’s hard to see how a large part of our middle and working classes can maintain, much less ascend, without a strong housing sector.
Signs of recovery, of course, extend beyond housing. Even malls, also long suffering, and under digital assault, are beginning to recover. Meanwhile rental apartments, once the darling of the speculative class, have begun to lose their momentum, in part due to improving home affordability. Massive overbuilding in some markets could lead to a new gusher of real estate tears. Something is happening here.
Contrary to conventional wisdom, if the economy strengthens, the suburban and single-family market will do likewise in the years to come. First-time homebuyers will provide a strong source of demand for an increasingly scarce product. Rather than rejecting the ideal of owning a home, 84% of today’s renters still intend eventually to purchase their residence, according to a recent study by TD Bank.
Homeownership and the white picket fence might be out of fashion among the cognoscenti, but not among new Asian immigrants, who are heading to the suburbs, or the rising number of 30-somethings, three quarters of whom, according to a recent Better Homes and Gardens survey, see homeownership as a “key indicator of success.”
Although still in its early phases, President Obama would be wise to use the suburban housing recovery to help portray himself as the savior of the middle class. The most notable gains made by Romney in the polls recently have been in the suburbs. It may be too late for the president to make better strategic use of the incipient recovery for this election, but if he is victorious and can swallow his anti-suburban mindset and embrace what most Americans regard as their preferred emblem of success, he could help consolidate a strong Democratic hold on the suburbs that could play a deciding role in our politics for the decades ahead.