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Communities Need to Build Better Millennial Connections

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A remarkable, but mostly unnoticed, 2012 study found a powerful correlation between a community’s civic health and its economic well being. The analysis by the National Conference on Citizenship (NCoC) and its partners found that the density of non-profits whose purpose was to encourage their members’ participation within the community   correlated strongly with the ability of a locality to withstand the effects of the Great Recession. The same analysis revealed that those municipalities having the greatest amount of “social cohesion,” defined as “interacting frequently with friends, family members, and neighbors,” also showed greater resilience in ameliorating job losses during economic downturns, independent of the density of their non-profit sector.

The numbers are startling. States with high social cohesion had unemployment rates two percentage points lower than their less connected counterparts, even controlling for demographics and economic factors. A county with just one additional nonprofit per 1,000 people in 2005 had half a percentage point less unemployment in 2009. And for individuals who held jobs in 2008, the odds of becoming unemployed were cut in half if they lived in a community with many nonprofit organizations rather than one with only a few, even if  the two communities were otherwise similar. Given these results, every community interested in improving its economic vitality should be devising strategies to increase the civic health of their locality.

One way to accomplish this goal is to attract members of the hyper-connected but locally-focused Millennial Generation (born 1982-2003).  People in their thirties – a group millennials are just entering but will soon dominate – and early forties, the age when people are building families and careers, constitute the essential social ballast for any community, city or suburb. For the rest of this decade as well as the next, Millennials will comprise the cohort entering this key phase of life, contributing both economic stimulus and a new sense of community wherever they choose to live. Fortuitously, the same organization (NCoC) that produced the original report has just released a new study suggesting several strategies cities could use to attract America’s most community-oriented generation.

According to this year’s study, more densely populated communities face a major challenge in attracting civic-oriented Millennials. This is contrary to much of the conventional wisdom about both millennials and “community”.  It found that members of the generation who reside in denser urban communities are less likely to engage in the type of service activities that nonprofits are designed to encourage. Except in the South, Millennials living in suburbia or more rural settings were more likely to engage in service activities with their peers than their urban counterparts. In fact, the worst community participation rates by far were found among Millennials in the country’s Northeastern cities.

A recent analysis by demographer Wendell Cox of Millennial living patterns validated these findings. He found that those major metropolitan areas with the least density gained the lion’s share of increases in populations of 25 to 34 year olds in the first decade of this century. Another, as yet unpublished study by Cox, has found that the same holds true for 20-24 year olds. 

To fix that problem and increase their economic resiliency, more densely populated communities should actively encourage the formation of military veteran’s groups and other nonprofits that foster citizen participation and leadership skills. Other types of nonprofits that the earlier NCoC study suggested would help improve a city’s civic and economic vitality are sports clubs, labor unions and those that offer job-training opportunities. By providing such nonprofits with the space and resources to attract and engage America’s largest and most diverse generation, communities can gain the economic benefits that service organizations, such as Kiwanis and the Elks, brought to their communities in the past.

A recent review of the seven best cities for Millennials to obtain an initial foothold for their economic future placed greater Seattle at the top of the list. It was followed by Dallas; Minneapolis; Athens, Georgia; Ithaca, New York; Oklahoma City; and Phoenix.  () Most of these communities combine relatively lower levels of density with lower rates of unemployment making them especially attractive to Millennials.  

One way for denser urban centers to compete with such localities is to gain a broad mix of educational attainment among their younger populations, thereby increasing their social cohesion and, ultimately, economic resiliency. This is because Millennials without a high school diploma are least likely to trust their neighbors but most likely to help those very same neighbors on a regular basis. Meanwhile, Millennials who attend college become more trusting of their neighbors wherever they end up settling, but less likely to help them out. In order to build both a trusting community and one where friends and neighbors help each other out, communities need to provide a broad range of jobs requiring various levels of education and encourage Millennials to stay in the place where they grew up or return there upon graduation.

Communities interested in enhancing their social cohesion should take a close look at the example set by the civic leaders of Kalamazoo, Michigan. Under its Kalamazoo Promise program, families that enroll their children in the local school district get help with college tuition on a sliding scale based on how many grades of education the child completes in the city’s schools. The strategy, which has led to greater demand for housing within the school district’s boundaries as well, encourages the development of a community with a wide range of educational success among its residents.  

The most recent study also found that once Millennials complete their schooling and begin to settle down their civic engagement increases. In fact, those 29 and under who are married and have children are more likely than those over thirty who do not have a family to participate in activities, such as helping neighbors, that in turn lead to greater social cohesion.

One strategy for encouraging college educated Millennials to settle in the community where they grew up, may lie with making the cost of college locally more affordable. For example, in contrast to many states that are shortsightedly reducing their subsidies of in state tuition, North Dakota is using some of its increased tax revenue from the state’s explosion in energy production to limit tuition increases for their residents and increasing the amount of needs-based tuition aid and scholarships for those who decide to attend any college in the state.

Building better communities requires encouraging the human interaction and connectivity that make a municipality more resilient in times of economic difficulty. Building this type of social capital comes naturally to Millennials, the nation’s most connected generation.   Non-profits that attract younger people should be actively encouraged to set up shop in cities and localities across the country. Programs that support educational attainment and employment opportunities for Millennials should be viewed as another essential element of economic strategy.  Today, community’s economic health is inextricably intertwined with the type of civic vitality that local Millennials can generate.  

Morley Winograd and Michael D. Hais areco-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.

Homes image by BigStock.


The Real Winners Of The Global Economy: The Material Boys

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Something strange happened on the road to our much-celebrated post-industrial utopia. The real winners of the global economy have turned out to be not the creative types or the data junkies, but the material boys: countries, states and companies that have perfected the art of physical production in agriculture, energy and, remarkably, manufacturing.

The strongest economies of the high-income world (Norway, Canada, Australia, some Persian Gulf countries) produce oil and gas, coal, industrial minerals or food for the expanding global marketplace. The greatest success story, China, has based its rise largely on manufacturing. Brazil has been powered by a trifecta of higher energy production, a strong industrial sector and the highest volume of agricultural exports after the United States.

Things are really looking up for the material boys here in North America. Over the past decade, the strongest regional economies (as measured by GDP, job and wage growth) have overwhelmingly been those that produces material goods. This includes large swaths of the Great Plains, the Gulf Coast and the Intermountain West, three regions that, as I point out in a recent Manhattan Institute study, have withstood the great recession far better than the rest of the country.

Today virtually all the “material boy” states now boast unemployment well below the national average; the lowest are the Dakotas, Wyoming and Nebraska. Texas, the biggest of the U.S. material boys, boasts an unemployment rate around 6%, well below California (nearly 10%) and New York (8%). One key reason: While Texas has created over 180,000 generally well-paid energy jobs over the past decade, California, with abundant energy reserves, has generated barely one-tenth as many. New York, despite ample potential in impoverished upstate areas, largely has disdained developing its energy sector.

These realities contrast greatly with the conventional wisdom that with the rise of the information age, the application of “brains” to abstract concepts, images and media would come to trump the “brawn” of producers, a thesis advanced influentially in 1973 by Daniel Bell in The Coming of Post Industrial Society. More recently Thomas Friedman has cited the East Asian countries such as Taiwan and Japan as suggesting that a lack of natural resources actually sparks innovation and economic health, while too great a concentration generally hinders progress.

So how is it that the rubes, with their grease-stained hands, reeking of the smell of manure or chemical fertilizers, have outperformed the darlings of the information age? The answer lies largely in the forces that are reshaping the world. This includes, most portentously, rising demand for fuel, food and fiber in developing countries, notably in East Asia and Latin America.

In the past commodity-based economies suffered frequent cyclical recessions whenever a handful of wealthy consuming countries — the EU, Japan and North America — experienced a recession or slow growth. Now a set of new consumers are fuelling strong demand even when high-income countries tank; this is keeping prices up far more reliably than in the past. Of course, a major global economic catastrophe, or some new breakthrough in energy or agricultural technology, could bring prices down precipitously, but for the most part demographic trends seem likely to favor commodity producers over the coming decade or two.

Arguably the biggest surprise has been the United States’ strong advantages in the resource race. America has a far richer endowment of raw materials than its primary competitors, including the European Union, India, China and Japan. Only the Russian Federation is equally well-endowed: The Siberian periphery that was first conquered in the great period of Russian expansion between the 16th and mid-19th centuries remains one of the greatest resource regions on the planet and the base of that country’s economy.

Agriculture is perhaps the least appreciated of the new drivers of the U.S. economy. Farm exports have been surging; in 2011 the U.S. exported a record $135 billion worth of agricultural goods, with a net favorable balance of $47 billion, the highest in nominal dollars since the 1980s.What accounts for this boom? One key driver is China, which consumes almost 60% of the world’s soybean exports and 40% of its cotton.

Perhaps even more transformative has been the energy boom, largely sparked by new technologies such as fracking and deepwater drilling. This has transformed the Great Plains alone into the world’s 14th largest oil producer, roughly on a par with Nigeria and Norway. Unless stopped by regulatory constraints, this expansion may only be in its infancy. We can expect large increases in production not only in North Dakota; Texas’ Eagle Ford shale oil is expected to quintuple its daily production by 2014 . New finds in the Wattenberg Field north of Denver alone could contain more than a billion barrels of recoverable oil and natural gas, essentially matching the huge Eagle Ford or the Bakken Field in western North Dakota. Another find, the Green River formation in Wyoming, could contain an astounding 1.4 trillion barrels of oil shale.

The energy revolution already has been transformative in the material states. Between 2010 and 2011, according to an analysis by EMSI, all six of the fastest-growing job classifications were related to energy development. Since 2009 the industry, according to EMSI, has added some 430,000 jobs, with the largest share going to Texas, Oklahoma, and Pennsylvania.

Perhaps even more important, the expansion of the energy sector is galvanizing manufacturing, hitherto the weakest link in the material boy economy. The energy boom could create more than a million industrial jobs nationwide over the decade both to supply the industry and as a result of lower energy costs, according to a recent PricewaterhouseCoopers study.This new industrial economy is already evident in those parts of the country embracing the energy revolution, notably Texas, Oklahoma, Louisiana, Pennsylvania, and Ohio.

Some see the rise of the material boys as just another “bubble” soon to collapse. Derek Thompson at the Atlantic suggests that the North Dakota boom may have already crested. And to be sure, labor and infrastructure limits may slow the rate of growth compared to past years, but projections by JPMorgan Chase suggest that North Dakota will continue to enjoy GDP growth two to three times the national average for the next few years. And as for the labor shortages, help is also on the way; North Dakota now boasts the highest rate of domestic in-migration in the country.

To be sure, the material boys will face real challenges in the years ahead. The need to train skilled blue-collar workers — something the country has neglected for generations — presents a major challenge in places like Louisiana and Texas, where education levels remain below the national average, as well as the more literate but less populous Dakotas. Infrastructure needs like pipelines and electrical transmission lines will become more evident as production increases.

But even the most effete coastal denizens should appreciate what the rise of the “material boys” means for America’s future. The growth of basic industries also creates demand for high-end business services — everything from architects and investment bankers to data-miners, advertising, and public relations firms — concentrated in such places as San Francisco, Seattle, New York, and Boston.

But clearly the biggest beneficiaries will be the cities of the commodity belt, starting with Houston, the epicenter of the energy industry, as well as Oklahoma City, Dallas-Ft. Worth, Omaha, Salt Lake City and Denver. Rapid growth is even evident in smaller places in the Dakotas such as Sioux Falls, Bismarck, and Fargo.

Most importantly, the rise of the material boys expands the nation’s geography of opportunity in ways rarely imagined just a decade ago. It is a process that all Americans should appreciate and encourage.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in Forbes.

Welder photo by Bigstock.

New York City's Revival: The Post-Sandy Apple

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Although its manufacturing jobs are gone forever, New York continues to ride the crests of its paper-profits prosperity. Housing in once-notorious slums now costs more than $1.5 million. The waterfront is getting a green-space makeover. The city’s future depends on Wall Street’s ability to attract capital, be it from clients or bailouts. And the jury is still out how the rise and rise of New York reflects on the legacies of former mayors Rudy Giuliani, Ed Koch, and (soon to be former) Michael Bloomberg.

While in New York for the last month, I took stock of the city (post Great Recession and post Hurricane Sandy) on a number of bicycle rides, in the company of city-pigeon friends, from Breezy Point in Queens to the northern reaches of the Bronx.

Biking around New York is a lot easier now than it was when I last lived in the city, from 1976 to 1991. Bike lanes were nonexistent in those days, the curbs were littered with broken glass, and many potholes were the size of Lake Erie.

Thanks to Mayor Michael Bloomberg (a riding friend said, “He’s not pro-bike; he’s anti-car”), the city now has a growing network of dedicated, at least with paint, bike lanes. One runs up First Avenue, another goes from Williamsburg to downtown Brooklyn, and a great one travels the length of the West Side.

One of the longer rides took us from midtown Manhattan out to Breezy Point, to see what remains of the beach community that Sandy flooded and burned. From the Queensboro Bridge, we took in Greenpoint and Williamsburg, two of Brooklyn’s hottest neighborhoods (“hot” means rents have tripled and Sunday brunch costs $29), and then meandered through Bedford Stuyvesant, another stop on the gentrification express.

In the 1980s, Bed Stuy meant vacant lots and high crime rates. Now it’s a neighborhood of elegant—million dollar plus—brownstones and a growing number of boutiques. At Atlantic and Flatbush avenues, the new Barclay Center, home to the Brooklyn Nets, looms over the tracks of the Long Island Rail Road.

I don’t believe in stadiums as anchor tenants in transitional neighborhoods: most of the time they are empty, and when in use they provide jobs only for ushers. Nor do I care much for the center’s rusted-iron exterior; Brooklyn has enough corroded steel. But if it helps to brand Brooklyn as a modern and dynamic city or bring a wine bar to our old Flatbush neighborhood, I will not complain.

At the southern end of the borough, Breezy Point is the tip of an Atlantic barrier peninsula. As we rode toward Sandy’s ground zero, we passed emergency services checkpoints and many police out on patrol, although the approach is along a desolate road and the community has the feeling of Appalachia-by-the-sea.

Breezy Point isn’t a summer beach colony so much as a year-round enclave of firefighters and police who like the location as a world apart. Even riding bikes along the main streets, we felt like trespassers. When we couldn’t find the blocks of houses that burned during the storm, I asked directions from one of the police officers. His answer was: “Are you kidding me? Get the fuck out of here.”

The bizarre rumor that I heard in the Rockaways is that some residents torched their own houses, as fire insurance covers more damage than that underwritten for hurricanes and floods. Such speculation is impossible to verify, although the media obsession with the beached whales from Sandy—and thus the need for disaster-relief millions—was at odds with what we saw: a beach community suffering after a bad storm but still mostly intact.

At the other end of the Rockaways, the more substantial houses came through the storm fine, although many had flooded to their first floors, alas, a hazard that comes from living near the beach and, again, not a national tragedy.

Uptown Manhattan neighborhoods never lost power during Sandy, although the Lower East Side, a mix of high-rise apartments and funky restaurants, had some buildings in the dark well into December.

Nor did the storm or, for that matter, the Great Recession, sidetrack Harlem’s latest renaissance, which can be seen on many of the area’s roughly 200 blocks. When I was a student at Columbia University in the 1970s, Harlem was overrun with arsonists and drug dealers. Morningside Park, which borders the university, was nicknamed Needle Park. The neighborhood’s proud history as a spawning ground for Jews, Italians, Latinos, and African-Americans was shrouded in the dark waters of abandoned buildings, graffiti, and nighttime sirens.

This time, I rode my bike, as if on a lawn mower, up and down the blocks between 110th and 145th streets and was charmed to find so many renovated apartments and brownstones, not to mention restaurants and trendy stores on the avenues. In his elegant history, Harlem, Jonathan Gill quotes Langston Hughes: “I would rather have a kitchenette in Harlem than a mansion in Westchester.” Ed Koch said the same.

Sadly, the jazz and night clubs are largely gone, and the Apollo Theater is among the last of its cultural generation still in use. Many longtime Harlem residents are now being priced out of the neighborhood. Nevertheless, the streets around Mount Morris Park (Fifth Avenue and 120th Street) and Striver’s Row (West 137th and 138th streets) are more elegant than many on Manhattan’s East Side. The only thing now being traded in Morningside Park appears to be Pampers.

Because I was in New York when Koch died, much of the handlebar conversation, especially as we rode around his Crotona Park birthplace in the Bronx, was about whether he or Rudy Giuliani deserved the most credit for New York’s return from the dead. Not part of the discussion was the mayoralty of David Dinkins, including the legendary three or four showers that he took each day in office.

I argued for Koch, as he became mayor at the city’s ebb tide in the late 1970s, when Howard Cosell said, during the World Series, “Ladies and gentlemen, the Bronx is burning,” and President Jimmy Carter visited the smoldering rubble of Charlotte Street (now a suburban-like development). Gill wrote: “Huge swatches of the neighborhood began to resemble the bombed-out European cities of World War II.”

The argument for Giuliani’s contribution is that he took on petty crime, which in turn got bigger criminals off the streets, although my revivalist heart is with Koch, who as mayor had accepted an invitation to lunch that my friends and I extended (in person he was more serious and very tall). More than Giuliani, he epitomized the city, as when he said: “If you agree with me on 9 out of 12 issues, vote for me. If you agree with me on 12 out of 12 issues, see a psychiatrist.”

Koch understood that cities rise or fall on questions of confidence or, as he asked rhetorically, “How’m I doin’?” Giuliani, despite his 9/11 heroics, always struck me as having the soul of a TV detective, although with less empathy than Kojak. Bloomberg is praised as being a grown up—competent and capable at managing city affairs, even if he sounds like a shoe salesman.

On one subfreezing, windy day I biked the length of the Bronx’s Grand Concourse, stopping to warm up in a hospital waiting room when no Starbucks appeared on the frigid horizon. I loved the Botanical Gardens, but loathed the pretentious new Yankee Stadium, whose $1.5 billion construction budget did little for the South Bronx (hand-lettered signs for game parking probably do not count).

The risk of the New York renaissance is that the era of good-feeling is a variation on the bonds for the new stadium. It's something that's funded on Wall Street, which may explain why Harlem brownstones cost $2 million, but the only new jobs in the neighborhood are for part-time clerks at CVS or Dunkin’ Donuts.

Photos by the author: A bike lane near Mount Morris Park in Harlem; Breezy Point; the author's former home in Brooklyn.

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.

New York Catholic Schools Take a Beating From Charters

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In a heart-breaking scene in the 2010 documentary Waiting for Superman, a young mother is crying in her Harlem apartment, which overlooks her daughter’s school. Bianca, her daughter, has been barred from attending graduation. The villain isn’t a union boss or a bureaucrat in Albany – instead, it's the Archdiocese of New York and its affable leader, Cardinal Dolan. Bianca hadn't misbehaved or been excessively tardy. But her mother owed the school a few hundred dollars in tuition and fees.

The Archdiocese’s schools cannot afford to be lenient with such hard-luck cases, because they are drowning in red ink, too. The solution has been to shutter uneconomical schools, even those where parents raised vast sums to keep them open. If the un-named Catholic school Bianca attended hasn't been closed already, it probably will be soon. In late January, the Archdiocese released a list of 26 schools slated for closure in June, on top of the 50 it closed in the two years previous.

Across the US, 167 Catholic schools closed in 2012, according the National Catholic Education Association, with 27 in the New York Archdiocese alone. If nothing radical is done, by this time next year parents at another two dozen Catholic schools in New York will be scrambling to find a new school for their kids.

The decline of New York’s Catholic schools has been dramatic. In 1961, the Archdiocese boasted over 414 elementary and high schools, and an enrollment of over 213,000 pupils. After the latest round of closings, the Archdiocese will have fewer than 250 schools and an enrollment of 70,000 students.

For decades, Catholic schools promised poor and urban communities rigorous academic and values-based education at a low cost. Catholic school alumni graduated high school, attended college, stayed out of jail and joined the middle class at staggering rates. Hardworking parents like Bianca’s mom recognized the value proposition of a high-quality education at a low cost.

But for many of New York’s neediest families that promise is going unfulfilled. Most parents sacrifice immensely to pay tuition, but it’s becoming prohibitively expensive. Catholic school costs are rising, as personnel costs balloon and dilapidated, century-old buildings need repairs. In the event of layoffs, teachers unions (yes, Catholic schools are closed shops in New York) insist the most senior (read: expensive) teachers be the first re-hired when an opening occurs.

Across the US, the Catholic school average annual per-pupil cost jumped from $5,600 in 1998 to $10,800 in 2010, and tuition costs for 9th graders doubled from $4,300 to $8,800 in the same period. Philanthropists have tried to make up the shortfall, but the waves of red ink keep swallowing up school budgets. Furthermore, Catholic schools are rarely transparent as to why tuition is rising twice as fast as inflation (because per-pupil costs are rising even faster).

Adding to Catholic school woes, new research by Albany Law School’s Abe Lackman suggests that competition with charter schools is partly responsible for the Catholic school enrollment decline. Although the future of charters in a post-Mayor Bloomberg New York remains unclear, the promise of charter schools – a high-quality education for no cost – has created an education marketplace where Catholic schools must compete to survive. Says John Eriksen, the former superintendent of Paterson, New Jersey’s diocese schools, “Charter schools are competition, and Catholic schools that don’t recognize that will be on the menu instead of having a seat at the table.”

Catholic schools should recognize that the rise of charters is an opportunity, not a threat. Charters borrowed Catholic schools' best practices (discipline, academic rigor, and uniforms), and now Catholic schools should return the favor and adopt the entrepreneurial and innovation-focused ethos of charter schools (you can see my report for the Lexington Institute, urging this approach, here.)

One such path is “blended learning” – an academic model that promises not only excellence but financial sustainability. At blended learning charter schools from Newark’s Merit Prep to San Jose’s Rocketship schools, instructors work in concert with online tools to deliver the right lesson to the right student at the right time. Students progress through lessons at their own pace toward subject mastery, while teachers use real-time data generated from students' online work to guide individual and small-group instruction to children's specific levels of mastery. The results have been impressive: Rocketship’s five schools are among California’s highest performing elementary schools.

On the brink of closure, a Catholic K-8 school in San Francisco, Mission Dolores Academy, adopted this innovative method. After one year, student scores jumped 16% in math and 6% in reading. By increasing class sizes and enrollment, per-pupil costs have fallen by an astounding 20% over the last two years.

Mission Dolores and its sister school in Seattle, St. Therese, were only able to innovate because their respective parishes granted the schools independence. Philadelphia’s Archbishop Charles Chaput recognized the need for independence to enact reform and ceded control of its 17 high schools to the Faith in the Future Foundation, led by longtime education reformer Casey Carter. Another 16 inner-city elementary schools joined the Independent Mission Schools consortium. Both organizations have committed to transparency, efficiency and major investments in academic excellence like blended learning.

Cardinal Dolan should follow Chaput’s lead. Excellent and efficient Catholic schools are sustainable and necessary.

Flickr photo by Joe Shlabotnik, Our Lady Queen of Martyrs School, Forest Hills, New York.

Sean Kennedy is a fellow at the Lexington Institute in Arlington, Va., and author of the recent study, Building 21st Century Catholic Learning Communities: Enhancing the Catholic Mission with Data, Blended Learning, and Other Best Practices From Top Charter Schools. Kennedy is a graduate of Catholic elementary and secondary schools.

Should California Governor Jerry Brown Take a Victory Lap?

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"Memento Mori"– "Remember your mortality" – was whispered into the ears of Roman generals as they celebrated their great military triumphs. Someone should be whispering something similar in the ear of Gov. Jerry Brown, who has been quick to celebrate his tax and budget "triumph" and to denounce as "declinists" those who threaten to rain on the gubernatorial parade.

Brown speaks about California's "rendezvous with destiny" and the state's "special destiny... more vibrant and more stunning in its boldness." His pitch certainly has persuaded much of the mainstream media to add their horns to the triumph.

Yet right now, despite its many blessings, our state remains more on a collision course with mediocrity – at best– than with any such manifest destiny. California may not be a "death-spiral state" as some conservatives suggest, but Brown's triumphs – the Proposition 30 tax increases, the marginalization of the GOP as well as his Democratic rivals – have been more political than substantial and have done little to address the state's major long-term challenges.

Let's check this out. Unemployment remains the third-highest among the states; we still have one-third of the nation's welfare recipients; the highest poverty rate in the country, with one in five of California's diminishing ranks of children living in poverty, including more than a third of children in Fresno. Our education system, with new dollars or not, continues to fail young people and our economy.

Critically, the three key elements typically invoked to promote the comeback meme – budget relief, the genius of Silicon Valley alchemists and "green" jobs – are themselves suspect. Even Brown, who suggested that we could create 500,000 jobs from his climate change agenda, isn't speaking much about it. In California, and across the nation, "green jobs" have failed to materialize enough to offset the higher costs imposed on the rest of the economy, the high public subsidies and parade of failed ventures associated with these policies.

Yet, Brown is so dogmatically loyal to this agenda that he remains committed to massive regulation of the economy, which is slowing growth. And he shows – despite his occasional bouts of fiscal sanity – no signs of backing away from his financially troubled bullet-train fantasy.

If green economics are failing, can Silicon Valley bail out the state? Reporters anxious to celebrate our deep-blue state's comeback almost always genuflect to the tech industry. They rarely bother to look at the fact that, even with considerable growth in the tech sector over the past two years, the valley has not even recovered the job levels of a decade ago.

More troubling still, Silicon Valley is becoming less an exemplar of capitalism than the beneficiary of an insider game that relies on access to capital and contacts more than on innovation. It is also becoming increasingly dependent on government largesse: No one bet more on subsidized "green" companies than the venture-capital elite. Prospects are also dimming for social media, the valley's latest signature industry. User interest in Facebook is slipping, notes Pew, and the industry now sees its next great opportunity, of all socially worthless things, in online gambling.

Even under the best of circumstances, Silicon Valley is neither robust enough nor predisposed to help solve the state's long-term fiscal challenges. In fact, the high-tech darlings of the progressives, such as Google and Apple, are turning out to be as adept in not paying taxes as are Mitt Romney or General Electric. For its part, Facebook now appears to have paid no income taxes at all last year.

In fact, the only thing bailing out California is not growing tech firms, but the enormous legacy of wealth, including inherited wealth, that has built up in our state over the past 30 years. California is still rich in rich people, whose stock and real estate holdings are gaining value. As long as Uncle Ben's printing press hands out free money, California could collect enough in state income taxes to perhaps balance its annual budget for a spell.

None of this places, to say the least, California on a firm footing. So at the risk of engendering some gubernatorial ire, here's my memento mori suggestions for restoring California's promise. This starts with the assumption that the elements of a true revival exist and that, if Brown would shed some of his dogma, he may end up deserving his current plaudits.

Get real on the budget.Asset bubbles may rescue the state from annual budget woes, but the state's long-term prospects remain cloudy, due largely to mounting government employee pension costs. Attempts to revise the game for new employees are not sufficient to scale the state's mounting "wall of debt"; Californians per capita now owe almost five times as much to Wall Street as residents of our chief rival, Texas. Analyst Joe Matthews suggests we need more drastic fixes, such as cutting off retirees' health benefits after they reach Medicare age.

Redirect the climate-change jihad. California can keep leading in conservation but needs to adopt a more pragmatic people-friendly approach, such as by encouraging telecommuting and energy-saving technologies. In contrast, the current high-density housing diktats and ultra-expensive "green" energy will force up prices for housing and electricity rates way out of proportion to national norms. This damages the middle and working class even if it won't impinge on the lifestyles of Brown's rich and famous friends.

Focus on basic industry. Tech and entertainment can never drive enough jobs or wealth to support this huge state. But California is blessed with the country's richest soil and huge fossil-fuel reserves. These could bring in new revenue to the state and create new jobs for a broad number of Californians, particularly in the hard-pressed interior. Particularly critical is the state of the water system, which once again faces large cutbacks because of pressure from environmentalists. Brown has spoken in favor of a peripheral canal; solving the water problem may leave him with a greater legacy than the dodgy bullet train.

Reform the education system. More money alone won't save the schools, but may be used only to prop up the pensions of teachers and administrators. Some kind of radical reform – perhaps school choice, vouchers, mass use of charters – must be the price of any increase in money to education. Brown has made some reformist noises with the University of California, but he remains tethered to the teachers unions on K-12 schools.

Invest in economically needed infrastructure. Besides the peripheral canal, Brown should look at expanding the state's energy supply by permitting the construction of low-polluting, economically efficient gas-fired power plants. Rather than waste money on a "train to nowhere," he should be looking at fixing roads, bridges, ports – the sinews of a modern economy – and improving existing inter-city trains (and buses), particularly in high-volume corridors in the Bay Area/Sacramento and across Southern California.

Prioritize blue-collar opportunities. California's greatest challenges lie with a widening class divide. Bolstering manufacturing, which is in a secular decline here, and restarting construction could create new opportunities for blue-collar workers. Port expansion would create lots of jobs in everything from warehousing to assembly and business services. This can be meshed with revitalized training programs for the skilled trades. In simple terms: California needs more skilled machinists, electricians and irrigation technicians and likely fewer marginally employable ethnic-studies or humanities grads from second- and third-tier schools.

One can understand why our governor, at age 74, wants to enjoy his triumph. But to deserve the laurel wreath, he first needs to make the major changes that can bring this greatest of states back to its historic potential.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the Orange County Register.

Jerry Brown photo by Bigstock.

The Psychology of the Creative Class: Not as Creative as You Think

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"Innovation distinguishes between a leader and a follower"
–Steve Jobs

Behind every sociological movement is a psychology. The ever-growing creative classification of America is no different. The following teases the psychology of the movement apart.

Why do this?

Because it is needed. The costs of blindly acquiescing to copycat community building are too great. These costs are not simply aesthetic, even economic, but are costs in the ability to distinguish creativity from repetition, and ultimately: truth from fiction.

Be Creative or Die

"Anxiety is the dizziness of freedom"
–Kierkegaard

You may think creative classification—or the commoditization of cities as products to be consumed by creative people with means in the name of economic growth—begins with happiness. It doesn’t. It begins with anxiety. Writes Richard Florida on page 12 in TheRise of the Creative Class:

[T]he September 11, 2001, tragedy and subsequent terrorist threats have caused Americans, particularly those in the Creative Class, to ask sobering questions about what really matters in our lives. What we are witnessing in America and across the world extends far beyond high-tech industry or any so-called New Economy: It is the emergence of a new society and a new culture — indeed a whole new way of life. It is these shifts that will prove to be the most enduring developments of our time. And they thrust hard questions upon us. For now that forces have been unleashed that allow us to pursue our desires, the question for each of us becomes: What do we really want?

By tapping the defining moment of a generation of young people—a moment, mind you, defined by terror, insecurity, and “what if”— Florida begins his path to individual and societal progress from a point common to thinkers since the beginning of time, i.e., what does it all mean?

In fact, if I was going to start a galvanizing societal theory, I’d begin there too, as uncertainty, if not fear, is a great motivator and catalyzer. Fearing failure, loneliness, meaninglessness, regret—it’s all fuel in the search for meaning, for life. And while this intrapersonal battle is stoked inside the individual, it becomes actualized in the world around us, not least in that relationship between a person and a place.

Hence, the creative class credo: if you want to “live” you need to go to where the “action” is, else succumb to missing out. Such existentially-fueled place-pedestaling is perhaps the driving tenant of creative class urbanism. Writes Frank Bures:

I know now that this was Florida’s true genius: He took our anxiety about place and turned it into a product. He found a way to capitalize on our nagging sense that there is always somewhere out there more creative, more fun, more diverse, more gay, and just plain better than the one where we happen to be.



Courtesy of kenfager.com

Of course many of us in “flyover country” can identify with this: our cities “suck”, and the lights of aspiration shine brighter elsewhere, particularly on the coast. And it’s a kind of self-loathing grown particularly virulent in the Rust Belt—that bastion of decay and anti-vibrancy. Regardless of the validity, the mesofact is out there: the Rust Belt is dead, go away to really live. Take this 2002 article entitled (aptly) “Be creative—or die”. Here, Florida, in a interview, states:

They [cool cities] created a lifestyle mentality, where Pittsburgh and Detroit were still trapped in that Protestant-ethic/bohemian-ethic split, where people were saying, “You can’t have fun!” or “What do you mean play in a rock band? Cut your hair and go to work, son. That’s what’s important.” Well, Austin was saying, “No, no, no, you’re a creative. You want to play in a rock band at night and do semiconductor work in the day? C’mon! And if you want to come in at 10 the next morning and you’re a little hung over or you’re smoking dope, that’s cool.” I went to the Continental Club — I was invited by Austin’s leading political officials — and we went to see Toni Price the singer-songwriter, and there were hippies smoking dope right there on the back porch.

Florida’s advice to city leaders? If you are uncool be cool, because cool nurtures a vibrant city, and a vibrant city attracts the crème de la crème who are different, unique, and anxious to suck the marrow out of life—and they will eventually spit it out into insights and innovation.

Freedom Can Be Frightening

One does not become fully human painlessy–Rollo May, existential psychologist.

Recently on Twitter, Florida brought out the virtual creative class conch to alert to his followers that Yahoo was yanking its work-at-home privileges due to concerns over worker productivity. In a series of Tweets that lasted most of two days, Florida lambasted the decision, in effect showing how the 10 am start time has been liberalized over the years to not having to come into the office at all:

1. Working from home = focus. 2. Office =distraction. 3. Innovation more a product of “urban” interaction than in-office interaction.

— Richard Florida (@Richard_Florida) February 25, 2013

Yahoo end game … Stars leave. Slackers go to office where they distract others. Result: Reduced overall productivity.

— Richard Florida (@Richard_Florida) February 26, 2013

Yahoo’s decision goes against, according to writer Charles Shaw: “‘the élan vital of the Creative Class [which] is “take me as I am and facilitate the use of my unique skills, but don’t expect me to buy into some corporate culture that requires me to change who I am’”.

Explicit in such discourse is the unusual levels of individuality that’s supposedly threaded in the DNA of the creative class. No doubt, the concept of “individuality” in creative class theory is important, as unique, free-thinking creative-types are said to be the engine of the innovation economy, with the thinking that such individuals aren’t saddle-bagged with conformity and convention in their pursuit for fresh ideas.

But is this true? Is the creative class really beyond the bounds of social conformity?

To examine this, we return to the building blocks of creative class theory; namely, fear and anxiety.

In Erich Fromm’s 1942 classic Escape from Freedom, the author takes pains to emphasize that freeing oneself from societal conventions is not a fun process, as “freedom can be frightening”. While his delineation of the lineage of modern man’s loneliness is spelled out extensively in the book, it is enough here to say that while market capitalism enabled a freedom in the pursuit of happiness through technological and democratic innovations, it also chained us because “the self” had become a commodity. Writes Fromm:

“Man does not only sell commodities, he sells himself and feels himself to be a commodity…If there is no use for the qualities a person offers, he has none…Thus, the self-confidence, the “feeling of self”, is merely an indication of what others think of the person…If he is sought after, he is somebody; if he is not popular, he is simply nobody. The dependence of self-esteem on the success of the “personality” is the reason why for modern man popularity has this tremendous importance.”

Fromm was damn prescient, as today more than ever there’s a tremendous amount of pressure to create a “false self” if you are interested in successfully navigating established social structures. This false self accepts not what it wants, but what it is supposed to want. To buck the system—that is, to emphasize the components of the “true self” that often have little value in a hyper-competitive society in which avatars compete in a virtual 24/7 spit-off so as to game a personal brand—we must, according to Fromm, realize that to know what one wants is not easy “butone of the most difficult problems any human being has to solve”.



Courtesy of Jeff Bullas

Of course many don’t solve this. We know this. We live it. Struggle with it, including this author. Instead, individuality is commonly sacrificed for the comfort in conformity. Writes Fromm:

“[We] become a part of a powerful whole outside of oneself, to submerge and participate in it…By becoming part of a power which is felt as unshakably strong, eternal, and glamorous, one participates in its strength and glory.”

It says here that one of these “powerful wholes” is to be able to self-identify with membership in the creative class. This is not a leap. Instead, the evidence of creative class conformity is increasingly clear in cities where creative class enclaves are thickest.

Uniquely Conforming and Creatively Monotononizing

In a time of deceit telling the truth is a revolutionary act–George Orwell

One of Florida’s greatest accomplishments was to imbue a sense of distinctiveness in the millions upon millions of individuals that make up the creative class. This in itself is a feat, as it involves convincing persons that it is their own uniqueness that makes them a special, if massive, group. Writes Florida (The Rise of the Creative Class, 2002, 315, 326) via Jamie Peck:

[The creative class] needs to see that their economic function makes them the natural — indeed the only possible — leaders of twenty-first century society . . .

…[W]e must harness all of our intelligence, our energy and most important our awareness. The task of building a truly creative society is not a game of solitaire. This game, we play as a team’.

Yet while preaching uniqueness to the self-believers as a galvanizing gimmick is clever, the problem for Florida is that those actually greasing the rails of creative classification on the ground are developers (Forest City’s Albert Ratner called Florida’s book the “playbook” for developers), and the only individuality they care about is the marketing kind, or the “you-are-so-special-you-deserve-this-condo” kind. Here, “individuality” and “diversity” aren’t meant to be taken literally, but as words to coax want so as to placate the shitty feeling of being a conformer, with of course conforming only placating the shitty feeling of loneliness.

From an article“How to Brand Your City”, which covered Forest City’s Alexa Arena’s recent presentation about her San Francisco development project called “5M”:

She said cultural diversity is a key ingredient in shaping a hub for innovation. Some of the best ways to promote diversity are restaurants, trendy corner shops and community events — all staples of 5M’s plan.

Courtesy of Bold Italic

Courtesy of Bold Italic

Of course uttering such nonsense is beyond laughable–somewhat terrifying even–and if Arena and her ilk really believe such then they got their vested heads in the sand, fantasizing about diversity while monotone forms around them.

Regardless, for others watching reality as it really happens they see creative class gentrification for what it is: a process of homogenization. In fact the sheer number of creative class = vanilla articles popping up everywhere of late may indicate that the jig is up (see here, here, here, and here), and those who actually moved to Big City for “the real”, or who grew up in Big City when it was in fact diverse before planned diversification, well, they are getting snarly. Writes Charles Hurbert in the “Homogenization of San Francisco”:

Take a walk down Valencia Street today and you’ll find yourself waiting in line at a Disneyland of pop-culture opulence. Oblivious of the stark irony, graphic designers and marketing managers frequent $50/seat old-time barbershops and shop at retail boutiques obsessed with the rugged appeal of working-class fashion. Simultaneously, the actual businesses and experiences the proprietors are emulating are unable to compete in the increased rental market. What we’re left with are stage props and costumes in an increasingly detached culture of disingenuous, blue-collar nostalgia.

This is not to say that the creative class movement will go down without a fight. Part of the fight is to acknowledge creative classification’s faults, with Florida himself–the “Urban Prophet” as he was recently donned in Property Week–out front and center owning the solutions to the consequences of his own policy. For instance, there is the Atlantic Cities“Class-Divided Series” which vividly demonstrates the extent the creative class forms enclaves in Global City space, thus exacerbating disparity. And there is a recentNPR Morning Edition interview that states “Urban scholar Richard Florida has found a problem with the way our cities are evolving”, ignoring of course the work of scholars like Jamie Peck who have been “finding” problems for the past decade.

And then there is the other part of the fight which simply means believing it doesn’t exist. Here, economic development types carry the pail largely through good, old-fashioned “nothing to see here” pieces that serve to obfuscate the truth. Like this one in the San Francisco Chronicleentitled“Gentrification is no longer a dirty word” that I just picked up from Florida’s Twitter feed, which basically smashes a happy face over the pain creative classification can make:

“Young people with talent are the new movers and shakers in the city,” says [30-year real estate veteran] Thompson, who says the city sells itself. “Last weekend I had some clients who were looking in the Mission. We drove by Dolores Park, and it was packed. They said, ‘Is there a street fair?’ “

Nope, just another afternoon in trendy town.

Again, the creative class movement will not walk gently into the art-festival-lit night. There is too much at stake. Too much money, and too much psycho-sociological comfort in being able to believe your part of a privileged group that has both force and uniqueness: a kind of snowstorm in which no two creative class snowflakes are alike.

Largely, this fight will be played out in a clash of ideas in which reality versus relativism takes center stage in a battle for meaning versus no meaning: an Orwellian sociological/psychological shit show to determine whether or not 2 plus 2 = 5, diversity = homogeneity, individuality = conformity, authenticity = fake, and a life of meaning = the deep existential loneliness occurring when the false self aches.

Nothing less than the integrity of creativity is at stake.

Richey Piiparinen is a writer and policy researcher based in Cleveland. He is co-editor of Rust Belt Chic: The Cleveland Anthology. Read more from him at his blog and at Rust Belt Chic.

Lead photo: The vibe in Cleveland. Courtesy of David Jurca

Chicago: Outer Suburban and Exurban Growth Leader

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Greg Hinz at Crain's Chicago Business congratulates Chicago for its nation-leading population growth. Heinz also notes that the far suburbs also gained population strongly, but there had been losses in the areas between the two. He asks: "the question now is whether the area can prosper with a thriving core but sinking neighborhoods and inner-ring suburbs around it."

The area within 2 miles of downtown gained nearly 50,000 people between 2000 and 2010. No other US metropolitan area equaled this urban core population increase.

The article cites a number of factors beyond population growth to indicate that the city of Chicago is outperforming the suburbs. Retail sales tax collections have increased faster in the city. However, Hinz also notes that there has also been a sizable proliferation of big-box stores (Target and Wal-Mart), which is made it possible for residents to shop in the city instead of the suburbs.

Empty Nesters Not Flocking to Downtown

Hinz notes that "empty nesters" are moving to the urban core. Yet this is not confirmed by the data. Between 2000 and 2010, the age cohort that was from 55 to 64 years old in 2000 dropped by 55 percent as a share of the population in the fast growing core census tracts of central Chicago. In contrast, in the city of Chicago overall, the loss was 25%, and the reduction was 24% in the entire metropolitan area (Figure 1). Our previous national research showed that the population losses in this cohort were the greatest in the core cities among the 51 major metropolitan areas.

The article goes on to quote Alan Ehrenhalt to the effect that an "inversion" of the city to suburban movement pattern is occurring, and "it's happening more in metropolitan Chicago than just about any other city in the country."

"Inversion" implies "turning upside down." For an inversion to have occurred, there would need to have been a reversal of the trend in movement from the core cities to the suburbs. The most important indicator of any such inversion would be that domestic migration would show a flow from a suburbs to cities. It does not. Domestic migration from Cook County, in which Chicago is located, was minus 740,000 between 2000 and 2011 (Note). Domestic migration in the suburban counties was a plus 139,000. Thus, there was no net migration from the suburbs to Cook County (Figure 2).  

The City of Chicago Outside Downtown

The story was much different outside the core area. The balance of the city, where 93 percent of the people live, lost 250,000 residents – a loss greater than that of any municipality in the nation over the period – including Detroit. The losses were pervasive. More than 80 percent of the city's 77 community areas located outside the core lost population.

Thus, the core area boom is far more than negated by the losses in the balance of the city. The losses that were sustained in the area between the urban core and the outer suburbs and exurbs were virtually all in the city itself.

Inner Suburbs

At the same time, the inner ring suburbs (between the city and 20 miles from the core for this analysis) grew only modestly, gaining less than 20,000 between 2000 and 2010. This is not unexpected, especially in a metropolitan area with slow growth, like Chicago. Urban areas tend to grow organically, with the greatest growth on the urban fringe. As the urban fringe moves further from the core, growth will be less in the established developed areas. 

An important exception is the small pockets of growth developing and occupying previously disused warehouse and commercial and even railroad yard areas. The core of Chicago is among these, along with Portland's Pearl District, the Washington Avenue corridor in St. Louis, the Third Ward in Milwaukee, and others. The exit of commercial activities permitted conversion to residential uses, often decades after the abandonment of previous uses.

Outer Suburban and Exurban Growth

The overwhelming reality of metropolitan growth in Chicago, however, is that the outer suburbs and exurbs continue to capture virtually all growth. Overall, areas outside 20 miles from the core of Chicago gained 573,000 residents between 2000 and 2010. By contrast, the entire metropolitan area gained only 362,000 residents. As a result, these outer suburbs and exurbs accounted for 158% of the Chicago metropolitan area's population growth between 2000 and 2010. The core gains, city and inner suburban losses are illustrated in Figure 3.

Approximately 52 percent of the metropolitan area population is now in the outer suburbs and exurbs. If Chicago's outer suburbs and exurbs were a separate metropolitan area, they would rank as the 10th largest in the nation, with a population of nearly 5 million, between Atlanta and Boston.

Chicago: Outer Suburban and Exurban Growth Leader

As significant as Chicago's core population growth has been over the last decade, it has been substantially overshadowed by outer suburban and exurban growth. Approximately 12 residents were added in the outer suburbs and exurbs for each new resident in the urban core. Like its urban core growth, Chicago's growth in the urban core led the nation. Only one other metropolitan area, St. Louis, exceeded 100 percent in its population growth outside a 20 mile radius from downtown (Figure 4).

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.

Photograph: Outer suburbs of Chicago (by author)

Note: Domestic migration data is not available below the county level.

Wall Street's Hollow Boom: With Small Business And Startups Lagging, Job Recovery Unlikely

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On Wall Street, even as layoffs mount, the upper echelons are clinking champagne glasses for good reason. The stock market is hitting new highs, propelled largely by Bernanke dollars and strong corporate profits. Big financial institutions like Wells Fargo and JPMorgan have announced record profits.

But on Main Street, for the most part, the mood is far more subdued. Big business may be flourishing, but small business is still in recession. The number of startup jobs per 1,000 Americans over the past four years fell a full 30% below the levels of the Bush and Clinton eras. The Ewing Marion Kauffman Foundation, a nonprofit that studies startups, estimates that the rate of new business formation in the U.S. has fallen to a record low. The number of startups in 2011 was lower than in 1994, when the economy was smaller, as was the workforce and population.

According to the BLS, smaller firms accounted for two thirds of all net jobs added between 1992 and 2007, a figure much cited by small business advocates. (This is hotly disputed by labor-backed economists, who have traditionally downplayed entrepreneurial ventures since they are not amenable to organizing.)

But whatever the actual percentages, the weakness of smaller, and particularly newer firms, is one key reason for our current, persistent job shortfall. This time around, as a recent Brookings study reveals, larger businesses came out of the recovery stronger, not their beleaguered smaller counterparts.

Big businesses often drive the economy but newer, smaller ones, historically, have created the jobs. If the U.S. had come out of the recession maintaining the same rate of startup formation as in 2007, notes McKinsey, we would today have almost 2.5 million more jobs.

The problem is that in many ways, the recession never ended for small business. The reductions in small business employment during the fourth quarter of 2008 and in 2009 were the largest ever recorded in the history of the National Federation of Independent Business data series. And now, as we enter the sixth year since the onset of the Great Recession, more than four years after the “recovery” officially began, small business remains in a largely defensive mode. Hiring and startup rates have been far less dynamic than in the aftermath of the downturns of 1976 and 1983.

Since big companies largely have recovered, and government employment has grown, at least at the federal level, clearly the real problem lies with the poor performance of smaller, and most critically newer, firms. In the past, young businesses bailed out the economy and spurred innovation. Yet today fewer than 8% of U.S. companies are five years old or younger, down from between 12% and 13% in the early 1980s, another period following a deep recession.

It’s difficult to predict a rapid turnaround. In sharp contrast to the Fed-inspired boomlet on Wall Street, Gallup polling has found that one in five small firms expect to drop their employee count, one in three expect to decrease capital spending and almost as many expect to be in more severe cash flow troubles by the end of the year.

Why is this small business recession persisting? The causes are diverse. Certainly the prospect of Obamacare scares some smaller firms, who lack the resources of larger companies to deal with the new health regime. This is leading some to reduce full-time staff to avoid new mandates. In states such as California, New York, Massachusetts, Minnesota and Illinois, higher taxes on incomes directly threatens the cash flow of smaller firms.

Another source of trouble could be the decline of community banks, which traditionally have focused on smaller businesses. New regulations and Federal Reserve giveaways to “too big to fail” financial institutions have fostered an unprecedented concentration of financial assets in the hands of a few banks. In 2013 the top four banks controlled over 40% of the credit markets in the top 10 states, up 10% from 2009 and roughly twice their share in 2000. At the same time, since the passage of Dodd-Frank, there are some 330 fewer small banks. In the four years following June 2007, the volume of business loans under $1 million fell 13%.

But perhaps most important has been the weak GDP growth that has kept consumer spending at a low level, a particularly rough condition for smaller, start-up businesses. A growing economy and marketplace is critical for newer firms; without a sustained economic expansion many will suffer or never even come into existence.

Small business’ future is further obscured by political shifts. The Obama years have been golden for “crony” capitalists with good connections in Washington or in the various statehouses. As larger firms readjust to the realities of the Obama-Bernanke regime, they seem more willing to accommodate themselves, for example, to the new health care law, and also have better opportunities to feed off the federal trough; federal subsidies for renewable energy , for example, largely benefit bigger firms or well-heeled investors. Absent real tax reform, they also have less to fear from higher income taxes than smaller businesses, which are often sole proprietorships.

The emerging alliance of the “bigs” — big business, government and labor — represents a return to a kind of dirigiste economy not well suited to smaller firms. Former Clinton Administration advisor Bill Galston openly urges Democrats to cement what he considers a a natural alliance with larger firms, including the financial industry, while denouncing small business lobbies as “a building-block of the Republican base.”

In the long run, this new corporatism threatens not only small business — less able to lobby for itself and adjust to regulations than giant firms – it also also represents something of a threat to the very justification for a capitalist economy. Today large banks and big companies have public approval ratings down around 20%, according to Gallup. In contrast, small business has retained positive ratings of over 60%, as it has for decades. Another survey, conducted by Frank Magid and Associates, found large businesses approaching “the netherworld” inhabited by Congress — almost two-to-one unfavorable. Wall Street fared even worse. Small business, in contrast, was viewed positively 10 times as much as unfavorably.

This is not just entrepreneurial romanticism. The notion of reasonably widespread entrepreneurial opportunity underpins basic faith in the free-market system. Small enterprises, and expanded business ownership, justify capitalism by showing it is still open to competition, and that anyone, however humble, can participate and gain from the system. “Wherever there is small business and freedom of trade,” noted V.I. Lenin, founder of the Soviet Union, “capitalism appears.”

Without the innovative and job-creating potential of new small businesses, capitalism devolves into a fixed game dominated by big money and insider influence, as long portrayed by socialists, before Lenin and since. And, if the economic picture does not change soon, they will have been proven right, at least about that.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at Forbes.com.

Wall Street photo by flickr user Manu_H.


The Value of a Liberal Arts Education in Landing a Job

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North Carolina Gov. Pat McCrory made waves last week when he said on syndicated radio that he wants to encourage the funding of four-year programs that align with the job market — not those, like gender studies, that do little to help a graduate’s employment prospects.

This was covered in a pointed column for The Wall Street Journal by Jane Shaw, the president of the John William Pope Center of Higher Education Policy in Raleigh, N.C. Shaw supports McCrory’s attempt to roil the higher education establishment and get students — heaven forbid — thinking about job prospects when they pick a major:

Referring specifically to North Carolina’s 16-campus state university system, Mr. McCrory wondered if state funding incentives should encourage areas of study that align with the job market. Other disciplines, such as gender studies, Mr. McCrory said, might be subsidized less. The funding formula, he said perhaps a bit indelicately, should not be based on the number of “butts in seats, but how many of those butts can get jobs.”

The education establishment immediately went bonkers. The pundits piled on. But Mr. McCrory raised a legitimate concern. And the solution he proposed, sketchy as it is at this stage, is not a bad one.

The truth is: Elite universities, such as the University of North Carolina at Chapel Hill, are doing a disservice when they lead students into majors with few, if any, job prospects. Stating such truths doesn’t mean you’re antagonistic to the liberal arts.

This discussion — and the one we contributed to last year after Viriginia Postrel’s column for Bloomberg — got us thinking: just how valuable is a liberal arts education in landing a job and contributing in the business world? Because EMSI works with so many community and technical colleges, we’re all for matching educational programs to in-demand fields. (In fact, we’ve developed a tool, Career Coach, that does just that.) For schools that specialize in offering associate’s and certificate programs, data-driven program assessment makes sense — and it helps students, colleges, and the regions that colleges serve.

But what about universities like the University of North Carolina, which McCrory chose to use an example? It’s much trickier to link gender studies, history, or some other liberal arts degree to an actual career. But these graduates — in theory — are getting a more well-rounded education than they would get at a vocational school, and they should have the critical thinking, analytical, and writing skills valuable in the marketplace.

Or do they?

In criticizing American higher education institutions, Shaw writes, “Many liberal-arts graduates, even from the best schools, aren’t getting jobs in large part because they didn’t learn much in school. They can’t write or speak well or intelligently analyze what they read.” If this is the case, these students are bound to get a poor education regardless of what they major in.

However, as Postrel mentioned in her column last year, the students who flow into well-regarded schools and the majors that result in well-paying jobs, like some STEM degrees, “have the aptitudes, attitudes, values and interests that draw them to those fields (which themselves vary greatly in content and current job prospects).” And as Anthony Carnevale at Georgetown showed in a study last year, the unemployment rate for graduates of certain scientific or technical fields isn’t any better, and sometimes it’s worse, than the rate for graduates who major in education or the humanities (see above chart).

We looked at completions data from the National Center for Education Statistics to get a sense of the top educational programs for graduates from 2003 to 2011 among all award levels. First, here’s the top 10 programs in the U.S. Liberal arts comes in second — just under 50,000 completions short of business administration — while psychology, cosmetology, and general studies are also hugely popular.

But what’s striking is to look at the same chart for North Carolina. Notice the huge growth in liberal arts degrees — from 4,111 in 2003 to 8,778 in 2011. And since the recession, the rate of students graduating in liberal arts fields has picked up, not slowed down like you might think.

Based on this data, perhaps McCrory has a point. North Carolina has far outpaced the nation in terms of the proportion of liberal arts degree it awards. But the real question in this debate is, what kind of education are these students getting? If it’s as lousy as Shaw depicts, and if they’re not aggressively pursuing internships and other career-advancing opportunities while in school, many of these graduates are in for a tough time no matter what.

Joshua Wright is an editor at EMSI, an Idaho-based economics firm that provides data and analysis to workforce boards, economic development agencies, higher education institutions, and the private sector. He manages the EMSI blog and is a freelance journalist. Contact him here.

Lead illustration by Mark Beauchamp.

Is Hawaii the Bellwether for California?

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California used to consider itself the leading state and the bellwether for the entire country. Now that the entrepreneurial initiative has mostly switched to Texas and other such places, and Texas’s infrastructure has pulled ahead of California’s in its quality (I lived in Texas in the 1970s, and it was not so then!), California is, at the very least, still thought of as a bellwether for the whole country, if perhaps a dystopian one. But there is a state that even Californians look to for popular cultural leadership, visit frequently, and admire. And, while it is often said that California became the first “majority-minority” state, it is not true. This other state, which lies far to the southwest of California, has always been “majority-minority.” It is, of course, Hawai’i. (The apostrophe is a letter in Hawaiian, and it is pronounced.) It has wrestled with “multicultural” issues for longer than it has been part of the United States. And one born in Hawai’i is now President of the United States.

The majority of the residents of Hawaii are Asian, the largest number being of Japanese descent with some Chinese and Filipinos and a few Koreans, though Koreans have mostly preferred California. President Obama is exceptional; people of African descent have never been numerous in Hawai’i. Five to ten percent of the people have some percentage of native Hawaiian blood, though there are almost no pure-blood Hawaiians.

On the mainland, whites and blacks are moving out of areas flooded by immigration; in Hawaii, whites (including retirees) and even a few minimum-wage Mexicans, are moving in on a net basis. It is important to note, however, that Hawaii’s Asians are not mostly recent immigrants; they are descended from people who came over in the late nineteenth and early twentieth centuries. Today’s immigrants have generally preferred California, which had a more vibrant entrepreneurial economy, and on some fronts still does. (The maker of computer chips is probably itching to move to Texas; less so the programmer.) The reason for all this is that Hawaii was so long dominated by the “Big Five” corporations.

The historical reasons for the Big Five, and for Hawaii’s other oddities, are interesting. In the 19th century, a large percentage of Hawaii’s land and economy fell into the hands of a few white (haole) families, like Bishop, Dillingham, Baldwin, and Parker, who sometimes did marry into the local noble (ali’i) caste. The corporations they founded were eventually known as the Big Five. (Some of this heritage is chronicled in the recent film The Descendants.) They brought large numbers of Asians in as contract labor to work the vast fields of pineapple and sugar cane. California had its counterparts, the Irvines, O’Neills, Bixbys, Millers, Hearsts, and more, but they only controlled part of the land and exercised little control of the commercial economy. The rest of the Mexican grants were broken up into smaller farms and ranches soon after the American conquest. (It is where the grants remained intact until recently, such as south Orange County, that you have the notorious “planned communities.”)

Japan was the first main source of Asian labor, but the Japanese came largely from the Ryukyus, Kyushu, and the less developed south of Japan, and were often part of the Eta undercaste that in Japan had butchered animals and cleaned toilets. China, the Azores, and later the Philippines were also sources of labor, but the majority of Hawaiian Asians are of Japanese descent.

In the 1940s and 1950s, culminating in 1954, there was a labor and political movement by which the predominantly Asian workers took control of the territory from the Big Five. They could regulate the Big Five, they could unionize the Big Five, but they did not have legal authority to break up the Big Five (only the federal government could have done that); so both right and left in Hawai’i retained a corporatist rather than an entrepreneurial mentality. The establishment had been Republican, so the workers were Democrats, and Hawai’i entered a long era of Democratic dominance, which continues to this day. The plantation experience is one major reason why most of Hawai’i’s Asians, unlike Asian Californians until recently, have been Democrats.

An interesting fact about Hawai’i is that there are only four functioning local governments, the counties.  There had been a fifth, the Hansen’s Disease (Leper) colony on Kalaupapa Peninsula, which was the lifework of Saint Damien, canonized in 2009. While the counties are divided into “judicial districts” that are marked on some maps, the judicial districts do not have governments. Each county has a “mayor,” but there are no incorporated cities as they are known in other states.

Another force influencing the Hawaiian culture and worldview is the Native Hawaiians. There are almost no pure blooded Native Hawaiians (other than on Ni’ihau), but up to ten percent of the population has some Hawaiian blood. The old pre-Christian culture had some brutal elements. While on the one hand there was premarital sexual freedom, on the other a woman could be killed instantly for eating a banana or a coconut, and a commoner could be killed instantly for letting his shadow fall on a chief. Infanticide was employed in population control and human sacrifices were offered to Madame Pele, the volcano goddess. They had no system of writing. In the days before it became unfashionable to distinguish between “civilized” and “uncivilized,” they were therefore considered “uncivilized.” However they did build permanent stone structures as temples and as “cities of refuge,” places where people who had broken, or were accused of breaking, a kapu (taboo) could go to save their lives. Also there was a vast lore of herbal healing, which survives.

Between 1790 and 1810, Kamehameha the Great united the islands into a single kingdom, and established a monarchy that lasted until 1893, long after Hawai’i had been modernized, Westernized, and largely Christianized, and had already received large numbers of immigrants. It was not any crowned head of Europe that was the first monarch to have his voice recorded, and to travel around the world, but King David Kalaka’ua of Hawai’i. All this is far different from how it was for American Indians of the mainland! Another uniqueness is that the Hawaiian language, spoken daily by hardly a thousand people, a tiny fraction of those who speak, say, Navajo, has nonetheless become part of the culture; a language which has left a long list of words in Hawaiian English, a language in which much locally popular music is recorded, and a tourist attraction in its own right. Its status is in some way similar to that of Irish Gaelic in Ireland. (By comparison, in Palm Springs I have never heard music sung in Cahuilla.)

What, then, of Hawai’i today? There is an active Christian minority, but Pele, the goddess who supposedly lives at Kilauea Crater, regularly gets offerings of flowers and gin. “Haoles” are wary of getting into fights with “locals.” The culture values the ohana, or extended family, but it is hardly Confucian. One might mention at this point Will Durant on later ancient Rome:

“But most of the inflowing peoples had literally been de-moralized by uprootage from their native surroundings, cultures, and codes; … and daily friction with groups of different customs had worn away still more of their custom-made morality.” (Caesar and Christ, p. 366.)

This sort of multiculturalism, however, had nothing to do with the fact that Hawai’i was the first state where same-sex marriage was seriously proposed? No, it was, I believe, a case of imperial judiciary, and same-sex marriage was voted down two to one in November of 1998. If democratic processes continue and are not overridden by judicial fiat, Hawai’i will be one of the last states outside the South to adopt same-sex marriage. And in California, it was the votes of people of color, who would never think of becoming Republicans, that won Proposition 8 and delayed same-sex marriage for some years. It makes me think that the Republican party should be replaced by two new ones; one socially conservative, pro-voucher, fiscally moderate to liberal, and led by people of color; the other, a more semi-libertarian party. Neither, preferably, should bear the name Republican Party.

Howard Ahmanson of Fieldstead and Company, a private management firm, has been interested in these issues for many years.

California Needs More Immigrants

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Southern California, just a few decades ago the fastest-growing region in the high-income world, is hitting a demographic tipping point. With a decade or more of domestic out-migration and a sharp fall in immigration, the region is morphing from a destination that attracts dreamers and builders into a place increasingly dominated by those born or bred here.

To some demographers, this transition from a magnet for migrants to a more native-born population represents something of a boon. As for migrants, one USC demographer wrote that California acts like "a gold pan that sifts through aspiring talent and keeps the best." Our new steady state is a good thing, the argument goes, since it offers a respite from the travails of rapid growth. All we need to focus on is spending more money on schools, and, not surprisingly, universities, and everything will turn out alright.

There may be some truth to all these points, but, historically, a decline in new migration also suggests something else: a picture oddly reminiscent of the kind of demographic stagnation long associated with places like Cleveland, Buffalo, N.Y., Pittsburgh and Detroit. A more native-dominated region may be both more socially stable but increasingly hidebound and lacking innovation.

For cities, demographic stagnation is not a recipe for success. Over the past decade, notes demographer Wendell Cox, the Los Angeles-Orange County area has seen the fifth-highest growth in the percentage of locally born people in its population, among nation's 51 largest metropolitan areas. The concern is not so much that people are leaving these places in droves; the real issue is that not enough new people, with new ideas and great ambition, are coming in.

Already, notes economist Bill Watkins, large parts of the state, particularly along the coast, are evolving into "geriatric ghettos" populated by aging, often-affluent baby boomers. And, as for keeping the "best," the steady decline in California's relative educational ranking, particularly in the younger cohorts, should convince us that we cannot reasonably rely on native-born residents to meet the challenges of the future.

Domestic Outmigration

Watkins also points out that California has been losing domestic migrants for 10 of the past 15 years. It's been worse in this region; over the past decade the Los Angeles-Orange County area suffered the third-highest rate in the country of net outmigration, slightly above New York's. Amazingly, on a per capita basis, people are leaving our sun-drenched metropolis more rapidly than from Rust Belt disaster areas such as Cleveland and Detroit.

In recent decades, this shortfall has been more than made up by foreign immigration. But in a stunning reversal of the trends in past decades, the number of foreign-born in our region has started to stagnate. Indeed, over the most-recent decade, the Southland has experienced the slowest rate of growth in its foreign-born population of any major region in the country. Los Angeles-Orange County gained 110,000 immigrants over the decade, one-sixth as many as New York City and only a quarter as many as Houston. Our immigrant population has grown less than that of much smaller regions such as Minneapolis-St. Paul, Austin, Texas, Atlanta and Dallas-Fort Worth.

These patterns suggest a dangerous shift in our demographic DNA and a decline in our historic archetype as one of the world's most culturally and economically innovative regions. Throughout history, the movement of newcomers has accented the rise of great cities at their peak, from ancient Athens, Rome and Baghdad to early 20th century London, Berlin, New York and Chicago. Similarly, the ascendency of the great cities of modern Asia – from Tokyo to Shanghai to Hong Kong and Singapore – resulted from mass migration, usually from the countryside to the urban centers.

Pioneering Migrants

Southern California's evolution into one of the world's premier urban regions has been, for the most part, propelled by outsiders, people who came to this place in search of a better life. Starting in the 1880s, these tended to be other Americans, including Los Angeles Times publisher Harrison Gray Otis (Marietta, Ohio), and railway magnate Henry Huntington (Oneonta, N.Y.), and, later, Walt Disney (Kansas City, Mo.), Howard Ahmanson Sr. (Omaha, Neb.) and Dr. Jerry Buss (Kemmerer, Wyo.).

For such newcomers – including James Irvine, a native of Ireland – Southern California provided an opportunity to create new things of every type. Everything distinctive developed in Southern California was created largely by outsiders. The creators of the movie business were mostly Jews from Eastern Europe, while the aerospace industry was largely populated by Midwestern emigres. Even the people who built our cities came from elsewhere. Consider Ahmanson, who funded much of it. Developers like Eli Broad, a native of Detroit, or Nathan Shapell, a holocaust survivor from Poland, built many of the region's suburban communities.

In recent decades, L.A.'s outsiders have come increasingly from abroad. Most have come from Mexico and Asia, but also from the Middle East, the former Soviet Union and, increasingly, Africa. Their influence is everywhere, from the food trucks to the ethnic malls, at the universities and in the music scene. A large number of the smaller banks in the region are tied to immigrant communities.

Nowhere is the influence greater than in the entrepreneurial arena. In the 1980s and 1990s, when Los Angeles-Long Beach frequently led in new immigration, newcomers from abroad fueled the rise of industries from garments to international trade and food processing. They are the primary creators of our food truck culture and often the chefs and owners of our finest restaurants.

Business Starters

Simply put, immigrants provided the critical oxygen for our economy, which, as a group, they are still doing. Even in the midst of the recession, newcomers continued to form businesses at a record rate, while the start-up rate for native-born entrepreneurs declined. The immigrant share of new businesses, notes a Kauffman Foundation survey, more than doubled, from 13.4 percent in 1996 to 29.5 percent, in 2010.

Nationally, immigrants are responsible for roughly a quarter of all high-tech start-ups. Asians, who constitute more than 40 percent of newcomers, now account for roughly 20 percent of tech workers, four times their percentage of the population.

How much is this dynamism, which once blessed the Southland, is now heading to Houston, Dallas-Fort Worth or even Charlotte, N.C.? It seems likely that, without the economic push from the immigrants and their countries, the reinvention of our economy will be far slower. Southern California natives seem far less likely to take the risks, and create the new industries, the region desperately needs.

Regaining our allure to newcomers is now arguably our biggest challenge. We have some fine assets, such as great weather, universities and a strong entrepreneurial legacy. Critically, despite the stagnant past decade, the Los Angeles-Orange County region still remains the second-largest repository of immigrants, at 4.4 million, behind only the greater New York area's 5.5 million. Virtually any ethnic group can find schools, shops and banks tied to their home countries; for some, like Chinese, Vietnamese, Mexicans and Iranians, Southern California remains a critical ethnic bastion and beacon.

Shift Focus

In this process, immigration reform could prove helpful, although most attention has been paid to legalizing undocumented immigrants already in the country. This may well be justified on moral ground but, in some ways, that debate is fighting the last war, as the flow of illegal immigration from Mexico has slowed, and may even be reversing. Legal immigration from Mexico also has declined markedly in recent years.

A far more strategic concern would be easing the flow of Asian immigrants, who, according to a recent Pew study, are generally better educated and affluent than other newcomers. Asian immigrants are also more likely to start business; a 2012 Kauffman study notes that close to 40 percent of immigrant entrepreneurs come from India or China. We should be looking to capture all such skilled and entrepreneurial newcomers, from any country and, hopefully, also from within this country.

To accomplish this we need to convince prospective migrants that this region, for all its faults, deserves to become, once again, a preferred destination for ambitious outsiders. It's a task that our local leaders, both in the business world and government, need to take seriously, rather than take comfort in the prospect of a more stable, and fundamentally stagnant, demographic future.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the Orange County Register.

Photo by telwink

America's Fastest- and Slowest-Growing Cities

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Since the housing crash of 2007, the decline of the Sun Belt and dispersed, low-density cities has been trumpeted by the national media and by pundits who believe America’s future lies in compact, crowded, mostly coastal and northern, cities. But apparently, most Americans have not gotten the memo — they seem to be accelerating their push into less dense regions of the Sun Belt.

An analysis of population data by demographer Wendell Cox, including the Census report for the most recent year released late last week, shows that since 2000, virtually all the 10 fastest-growing metropolitan areas in the United States are located in Sun Belt states. The population of the Raleigh, N.C., metropolitan statistical area has expanded a remarkable 47.8% since 2000, tops among the nation’s 52 metro areas with over 1 million residents. That is more than three times the overall 12.7% growth of those 52 metro areas.

Austin, Texas, and Las Vegas also expanded more than 40%, putting them second and third on our list. The populations of the other metro areas in the top 10 all expanded by at least 25%, or twice the national average. This jibes nicely with domestic migration trends and growth in the foreign-born population, both of which have been strongest in many of these same cities.

The most recent numbers, covering July 2011 to July 2012, also reveal some subtle changes in the Sun Belt pecking order. Over the 2000-2012 period, the growth winners   included places like Las Vegas, Riverside-San Bernardino and Phoenix, all of which suffered grievously in the housing bust. Although they all clocked population growth better than the national average over the past year, none, besides Phoenix, ranked in the updated top 10.

Growth momentum has shifted decidedly toward Texas. Austin’s population expanded a remarkable 3% last year, tops among the nation’s 52 largest metro areas. Three other Lone Star metropolitan areas — Houston, San Antonio and Dallas-Ft. Worth — ranked in the top six and all expanded at roughly twice the national average. The other fastest-growing metros over the past year include Raleigh, Orlando, Phoenix, Charlotte and Nashville. One unexpected fast-growth area has been Oklahoma City, which ranked 20th between 2000 and 2012, but notched the 12th spot last year, with a growth rate 60% above the national average.

What explains these subtle shifts? Some of it can be traced, of course, to the stronger growth in energy-rich areas such as Texas as well as Oklahoma City. The differences are particularly striking when looking at varying economic growth rates among the country’s largest regions. In 2011 the Houston metro area, whose population is up by 1.4 million since 2000, also enjoyed the fastest GDP growth, at 3.7%, of any of the nation’s top 20 regions. Dallas-Fort Worth clocked a respectable 3.1%.

In contrast, the GDP growth rates for the hip, dense metro areas lagged behind. Among the elite cities, the tech hubs of San Francisco , Seattle and Boston have done the best, posting GDP growth around 2.5%. But the economies of New York, Los Angeles, Philadelphia and, surprisingly, Washington D.C., grew at roughly half the rate of Houston.

But it’s not just economic factors at play. One remarkable similarity in all the fastest-growing areas is their relatively low population densities. Although Raleigh and Austin are held out as “hip” cities, they have very low-density urban cores. Not one of the top 10 growth cities for 2010 to the present, or last year, had urban core densities more than a half of those of places like Boston (40th for 2000 to the present), New York (41st),  Los Angeles (42nd) or Chicago (43rd).

At the same time, we have to consider the issue of housing affordability, something that rarely comes up among proponents of “cool” cities. In contrast to slower-growing San Francisco, New York and Los Angeles, most of the fastest-growing cities have lower housing prices relative to income. Particularly notable are the low prices in areas such as Austin, Raleigh, Houston and Dallas-Fort Worth, where housing costs are half or less than in the more highly regulated “cool” cities.

Lower housing costs also seem to impact another critical growth component: family formation. Immigrants and domestic in-migrants are important to population growth but equally critical is whether longtime residents in a region choose to have children. Virtually all the top 10 metro areas, both last year and since 2000, have also ranked among the fastest growing in terms of the population under 15; Raleigh’s child population alone has expanded by almost 45% since 2000, compared to 2% nationally;  Austin’s toddler population surged a remarkable, 38%. The child populations of Houston, Dallas-Fort Worth, Atlanta, Phoenix, Las Vegas and Orlando all  increased by 20% or more.

In contrast, none of the hip cities posted under 15 population growth better than 5%. The number of children has actually declined in many, including New York, Los Angeles, Boston, San Francisco and Chicago. Even with substantial influxes from abroad, particularly in New York, it’s difficult for these areas to sustain population increases when the number of children keeps dropping.

The problem may be even more intense in Los Angeles and Chicago, whose economies continue to lag further behind. But the demographic challenges of the Big Orange and the Windy City pale compared to those faced by many cities in the old industrial Rust Belt, which have either lost population or posted only weak increases.

Cleveland’s population is down 3.9% since 2000, the worst performance among the nation’s biggest metro areas apart from disaster-struck New Orleans. Cleveland lags in both family formation and has seen strong outmigration, but also attracts few foreign-born residents. Much the same can be said of Providence, R.I., Pittsburgh, Buffalo and Detroit. Nor do things seem to be improving with time; these areas continued to inhabit the nether regions in the most recent Census reports.

So what do these trends tell us about the demographic evolution of our major metropolitan areas? Certainly sustained economic growth, low density and more affordable housing all clearly continue to push the center of population gravity toward certain Sun Belt cities, primarily in the Southeast and Texas. It turns out that neither the Great Recession, the housing bust or a much hyped preference for dense urbanity is turning this around.






Major Metropolitan Areas (Over 1,000,000) Population
Ranked by Population Change Percentage: 2000-2012 (2013 Geography)
RankMetropolitan Area200020122000-2012 Growth2000-2012 %2011-2012 %
1Raleigh, NC          804,436        1,188,564        384,128 47.8%3.3%
2Austin, TX       1,265,715        1,834,303        568,588 44.9%3.1%
3Las Vegas, NV       1,393,370        2,000,759        607,389 43.6%3.1%
4Orlando, FL       1,656,835        2,223,674        566,839 34.2%2.5%
5Charlotte, NC-SC       1,729,023        2,296,569        567,546 32.8%2.4%
6Riverside-San Bernardino, CA       3,277,578        4,350,096     1,072,518 32.7%2.4%
7Phoenix, AZ       3,278,661        4,329,534     1,050,873 32.1%2.3%
8Houston, TX       4,716,964        6,177,035     1,460,071 31.0%2.3%
9San Antonio, TX       1,719,262        2,234,003        514,741 29.9%2.2%
10Dallas-Fort Worth, TX       5,239,149        6,700,991     1,461,842 27.9%2.1%
11Atlanta, GA       4,297,419        5,457,831     1,160,412 27.0%2.0%
12Nashville, TN       1,387,274        1,726,693        339,419 24.5%1.8%
13Jacksonville, FL       1,126,224        1,377,850        251,626 22.3%1.7%
14Sacramento, CA       1,808,442        2,196,482        388,040 21.5%1.6%
15Denver, CO       2,194,022        2,645,209        451,187 20.6%1.6%
16Washington, DC-VA-MD-WV       4,862,582        5,860,342        997,760 20.5%1.6%
17Salt Lake City, UT          942,666        1,123,712        181,046 19.2%1.5%
18Portland, OR-WA       1,936,108        2,289,800        353,692 18.3%1.4%
19Tampa-St. Petersburg, FL       2,404,273        2,842,878        438,605 18.2%1.4%
20Oklahoma City, OK       1,097,874        1,296,565        198,691 18.1%1.4%
21Seattle, WA       3,052,379        3,552,157        499,778 16.4%1.3%
22Richmond, VA       1,058,816        1,231,980        173,164 16.4%1.3%
23Indianapolis. IN       1,664,431        1,928,982        264,551 15.9%1.2%
24Columbus, OH       1,681,865        1,944,002        262,137 15.6%1.2%
25Miami, FL       5,025,806        5,762,717        736,911 14.7%1.1%
26San Diego, CA       2,824,987        3,177,063        352,076 12.5%1.0%
27Minneapolis-St. Paul, MN-WI       3,044,901        3,422,264        377,363 12.4%1.0%
28Kansas City, MO-KS       1,818,073        2,038,724        220,651 12.1%1.0%
29Louisville, KY-IN       1,123,966        1,251,351        127,385 11.3%0.9%
30Memphis, TN-MS-AR       1,216,293        1,341,690        125,397 10.3%0.8%
31San Jose, CA       1,739,669        1,894,388        154,719 8.9%0.7%
32Birmingham, AL       1,053,394        1,136,650          83,256 7.9%0.6%
33San Francisco-Oakland, CA       4,136,658        4,455,560        318,902 7.7%0.6%
34Baltimore, MD       2,557,501        2,753,149        195,648 7.6%0.6%
35Grand Rapids, MI          934,388        1,005,648          71,260 7.6%0.6%
36Virginia Beach-Norfolk, VA-NC       1,584,042        1,699,925        115,883 7.3%0.6%
37Cincinnati, OH-KY-IN       1,999,787        2,128,603        128,816 6.4%0.5%
38Philadelphia, PA-NJ-DE-MD       5,693,275        6,018,800        325,525 5.7%0.5%
39Hartford, CT       1,150,915        1,214,400          63,485 5.5%0.4%
40Boston, MA-NH       4,402,611        4,640,802        238,191 5.4%0.4%
41Los Angeles, CA     12,398,950      13,052,921        653,971 5.3%0.4%
42New York, NY-NJ-PA     18,976,899      19,831,858        854,959 4.5%0.4%
43Chicago, IL-IN-WI       9,117,732        9,522,434        404,702 4.4%0.4%
44St. Louis,, MO-IL       2,678,224        2,795,794        117,570 4.4%0.4%
45Milwaukee,WI       1,502,305        1,566,981          64,676 4.3%0.4%
46Rochester, NY       1,066,335        1,082,284          15,949 1.5%0.1%
47Providence, RI-MA       1,586,744        1,601,374          14,630 0.9%0.1%
48Pittsburgh, PA       2,429,023        2,360,733        (68,290)-2.8%-0.2%
49Buffalo, NY       1,169,159        1,134,210        (34,949)-3.0%-0.3%
50Detroit,  MI       4,457,471        4,292,060      (165,411)-3.7%-0.3%
51Cleveland, OH       2,147,948        2,063,535        (84,413)-3.9%-0.3%
52New Orleans. LA       1,336,795        1,227,096      (109,699)-8.2%-0.7%

Analysis by Wendell Cox, Demographia

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at Forbes.com.

Richard Florida Concedes the Limits of the Creative Class

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Among the most pervasive, and arguably pernicious, notions of the past decade has been that the “creative class” of the skilled, educated and hip would remake and revive American cities. The idea, packaged and peddled by consultant Richard Florida, had been that unlike spending public money to court Wall Street fat cats, corporate executives or other traditional elites, paying to appeal to the creative would truly trickle down, generating a widespread urban revival.

Urbanists, journalists, and academics—not to mention big-city developers— were easily persuaded that shelling out to court “the hip and cool” would benefit everyone else, too. And Florida himself has prospered through books, articles, lectures, and university positions that have helped promote his ideas and brand and grow his Creative Class Group’s impressive client list, which in addition to big corporations and developers has included cities as diverse as Detroit and El Paso, Cleveland and Seattle.

Well, oops.

Florida himself, in his role as an editor at The Atlantic,admitted last month what his critics, including myself, have said for a decade: that the benefits of appealing to the creative class accrue largely to its members—and do little to make anyone else any better off. The rewards of the “creative class” strategy, he notes, “flow disproportionately to more highly-skilled knowledge, professional and creative workers,” since the wage increases that blue-collar and lower-skilled workers see “disappear when their higher housing costs are taken into account.” His reasonable and fairly brave, if belated, takeaway: “On close inspection, talent clustering provides little in the way of trickle-down benefits.”

One group certain to be flustered by this new perspective will be many of the cities who have signed up and spent hard cash over the years to follow Florida’s prescription of focusing on those things—encouraging the arts and entertainment, building bike paths, welcoming minorities and gays—that would attract young college-educated workers. In his thesis, the model cities of the future are precisely those, such as San Francisco and Seattle, that have become hubs of highly educated migrants, technology, and high-end business services.

That plan, though, has been less than successful in many of the old rust belt cities that once made up much of his client base. Perhaps even more galling to these cities, Florida has turned decidedly negative in his outlook on many of those cities—now looking remarkably gullible—that once made up much of his client base.

The most risible example of this may have been former Michigan Jennifer Granholm’s “cool cities” campaign of the mid-oughts, that sought to cultivate the “creative class” by subsidizing the arts in Detroit and across the state. It didn’t exactly work. “You can put mag wheels on a Gremlin,” comments one long-time Michigan observer. “but that doesn't make it a Mustang.”

Alec MacGillis, writing at The American Prospect in 2009, noted that after collecting large fees from down-at-the-heels burgs like Cleveland, Toledo, Hartford, Rochester, and Elmira, New York over the years, Florida himself asserted that we can’t “stop the decline of some places” and urged the country to focus instead on his high-ranked “creative” enclaves. “So, got that, Rust Belt denizens?” MacGillis noted wryly in a follow-up story last year at the New Republic. Pack your bags for Boulder and Raleigh-Durham and Fairfax County. Oh, and thanks again for the check.”

One key constituency advocating “creative class” oriented development has been the grandees of urban real estate. Albert Ratner of Cleveland-based Forest City Enterprises, a major urban developer with a taste for subsidies, in New York and elsewhere, suggests Florida’s ideas provides the “playbook for developers.”

For Rust Belt cities, notes Cleveland’s Richey Piiparinen, following the “creative class” meme has not only meant wasted money, but wasted effort and misdirection. Burning money trying to become “cooler” ends up looking something like the metropolitan equivalent to a midlife crisis.

It would have been far more sensible, Piiparinen suggests, for such areas to emphasize their intrinsic advantages, such as affordable housing, a deep historic legacy tied to a concentration of specific skills as well as a strategic location. He urges them to cultivate their essentially Rust-Belt authenticity rather than chase standard issue coolness promoted by big developers like Forest City. Focusing on attracting the “hip cool” single set, Piiparinen maintains, simply sets places like Cleveland up for failure.

Geography of Hip Coolness

Perhaps the best that can be said about the creative-class idea is that it follows a real, if overhyped, phenomenon: the movement of young, largely single, childless and sometimes gay people into urban neighborhoods. This Soho-ization—the transformation of older, often industrial urban areas into hip enclaves—is evident in scores of cities. It can legitimately can be credited for boosting real estate values from Williamsburg, Brooklyn, Wicker Park in Chicago and Belltown in Seattle to Portland’s Pearl District as well as much of San Francisco.

Yet this footprint of such “cool” districts that appeal to largely childless, young urbanistas in the core is far smaller in most cities than commonly reported. Between 2000 and 2010, notes demographer Wendell Cox, the urban core areas of the 51 largest metropolitan areas—within two miles of the city’s center—added a total of 206,000 residents. But the surrounding rings, between two and five miles from the core, actually lost 272,000. In contrast to those small gains and losses, the suburban areas—between 10 and 20 miles from the center —experienced a growth of roughly 15 million people.

The smallness of the potentially “hip” core is particularly pronounced in Rust Belt cities such as Cleveland and St. Louis, where these core districts are rarely home to more than 1 or 2 percent of the city’s shrinking population. Yet the subsidy money for developers is often justified in the name of “reviving” the entire city, most of which has continued to deteriorate.

Nor has this dynamic changed since the onset of the Great Recession, as urban boosters such as Aaron Ehrenhalt have suggested. Ehrenhalt, citing the perceived preferences of millennials, envisions an urban future where more reject the suburban life, in part as a reaction to the wreckage of the last housing bust. To Ehrenhalt, places like downtown Chicago are emerging as the modern-day version of early-20th-century Vienna, central cores that attracted the elites while the working class and middle class dullards regress to the suburbs. Yet in reality, an examination of data between 2011 and 2012 by Jed Kolko at Trulia found despite a spike in downtown residents, population losses continue in surrounding close-in urban neighborhoods, while the fastest growth has continued to be located further out in the periphery.

Class Politics in the “Creative Age”

Investments in “cool” districts may well appeal to some young professionals, particularly before they get married and have children. But overall, as Florida himself now admits, it has done little overall for the urban middle class, much less the working class or the poor.

Indeed in many ways the Floridian focus on industries like entertainment, software, and social media creates a distorted set of economic priorities. The creatives, after all, generally don’t work in factories or warehouses. So why assist these industries? Instead the trend is to declare good-paying blue collar professions a product of the past. If you can’t find work in deindustrialized Michigan, suggests Salon’s Ray Fisman, one can collect “ more than a few crumbs” by joining the service class and serving food, cutting hair or grass in creative capitals like San Francisco or Austin.

These limitations of the “hip cool” strategy to drive broad-based economic growth have been evident for years. Conservative critics, such as the Manhattan Institute’s Steve Malanga have pointed out that many creative-class havens often underperform economically compared to their less hip counterparts. More liberal academic analysts have denounced the idea as “ exacerbating inequality and exclusion.” One particularly sharp critic, the University of British Columbia’s Jamie Peck see it as little more than a neo-liberal recipe of “biscotti and circuses.”

Urban thinker Aaron Renn puts it in political terms: “the creative class doesn’t have much in the way of coattails.”

Why Hipness Can’t Save New York

The sad truth is that even in the more plausible “creative class” cities such as New York and San Francisco, the emphasis on “hip cool” and high-end service industries has corresponded with a decline in their middle class and a growing gap between rich and poor. Washington D.C. and San Francisco, perennial poster children for “cool cities,” also have among the highest percentages of poverty of any major urban center—roughly 20 percent—once cost of living is figured in.

Nowhere are the limitations of coolness more evident than in New York, our country’s cultural capital and now one of Florida’s three residences, along with Toronto and Miami Beach. Manhattan suffers by far the highest level of inequality among the country’s 25 most populous counties, a gap between rich and poor that’s the widest it’s been in a decade. New York’s wealthiest one percent earns a third of the entire city’s personal income—almost twice the proportion for the rest of the country.

This geography of inequality is now extending to the outer boroughs. In nouveau hipster and increasingly expensive Brooklyn, nearly a quarter of people live below the poverty line. While artisanal cheese shops and bars that double as flower shops serve the hipsters, one in four Brooklynites receives food stamps. New York has seen the nation’s biggest rise in homelessness; the number of children sleeping in the shelters of Mike Bloomberg’s “luxury city” has risen 22 percent in the past year.

The Issue of Race

On paper, the “creative class” theory worships at the altar of diversity. “The great thing about cities,” Florida told NPR last year, “is they're diverse. There's diverse people in them.” Yet even leaving aside their lack of economic diversity, the exemplars of “hip cool” world, notes urban analyst Renn, tend to be vanilla cities with relatively small minority populations. San Francisco, Portland and Seattle are becoming whiter and less ethnically diverse as the rest of the country, and particularly the suburbs, rapidly diversify.

Creatives may espouse politically correct views, but the effect of Florida’s policy approach, notes Tulane sociologist Richard Campanella, often undermine ethnic communities. As they enter the city, creatives push up rents, displacing local stores and residents. In his own neighborhood of Bywater, in New Orleans, the black population declined by 64 percent between 2000 and 2010, while the white population increased by 22 percent.

In the process, Campanella notes, much of what made the neighborhood unique has been lost as the creatives replace the local culture with the increasingly predictable, and portable, “hip cool” trendy restaurants, offering beet-filled ravioli instead of fried okra, and organic markets. The “unique” amenities you find now, even in New Orleans, he reports, are much what you’d expect in any other hipster paradise, be it Portland, Seattle, Burlington, Vermont or Williamsburg.

Families and the Future

Campanella also suggests another byproduct of hipster gentrification: a dearth of families. Ten years ago his increasingly “creative class” neighborhood of Bywater was family oriented. Now, it’s “a kiddie wilderness.” In 2000, 968 youngsters lived in the district. Just 10 years later, the number had dropped by 70 percent, to 285. When his son was born in 2012, it was the first post-Katrina birth on his street, the sole child on a block that had 11 when he first arrived from Mississippi in 2000.

Unsurprisingly, there’s not much emphasis about families in Florida’s work, in part because his basic theory puts focuses largely on groups like singles, childless young professionals and gays. He largely discounts suburbs, generally the nation’s nurseries, as outdated for the “creative age” and considers homeownership and single family houses, also vastly preferred by families, as fundamentally passé.

Indeed, the places that most attract “the creative class” are also the ones with the fewest families and children, led by San Francisco, Seattle, Manhattan, and rapidly gentrifying Washington, D.C. The very high prices per square foot, understandably celebrated by urban real estate boosters, have made it hard not only on the poor but on middle- and even upper-middle-class families. When you have children, you often have to let go of your bohemian fantasies; it’s hard to imagine being a parent in a place like San Francisco where there are a raging debates about the right of people to walk around naked.

The Real Geography of Opportunity

To be sure, the leading “creative class” cities have much to recommend them, and some of them, such as Portland and Boston, have registered impressive rises in their per capita income in recent years. But over the past decade, most “cool cities” have not been enjoying particularly strong employment or population growth; in the last decade, the populations of cities like Charlotte, Houston, Atlanta, and Nashville grew by 20 percent or more, at least four times as rapidly as New York, Los Angeles, San Francisco, or Chicago. This trend toward less dense, more affordable cities is as evident in the most recent census numbers than a decade.

One reason for this: the fastest job growth has taken place in regions—Houston, Dallas, Oklahoma City, Omaha—whose economies are based not on “creative” industries but on less fashionable pursuits such as oil and gas, agriculture and manufacturing. Energy mecca Houston, for example, last year enjoyed the largest GDP growth of any major American city, easily outpacing “creative” urbanist favorites like Chicago, New York, San Francisco, or Boston. The other two top GDP gainers were Dallas-Fort Worth and, surprisingly, Detroit, largely as a result of the auto industry’s comeback.

Of course, some these ascendant cities now are sprouting their own “hip” neighborhoods. But these regions also accommodate far faster growth in rapidly expanding, family-friendly suburbs and exurbs. Equally important, none, including “creative class” hotspots Raleigh and Austin, are dense, transit-centered places of the kind urbanists suggest create economic vibrancy and attract the largest number of migrations.

In fact both Raleigh and Austin are both very low-density regions with only compact urban pockets surrounded by vast suburban communities. Take a walk in downtown Raleigh sometime; about five minutes from the densest central areas and you find yourself on tree-lined streets with nice single-family houses, essentially, older suburbs. Austin, too, is a relatively low-density place surrounded by the kind of suburban sprawl detested by Floridians; this is also the case with Charlotte, Atlanta, and other fast-growing cities.

These facts, of course, are unlikely to interfere with the self-interested lobbying by large developers for subsidies for downtown development much less the defined prejudices of the urban-centric media. But contrary to the narrative espoused by Florida and other proponents of high-density cities, the predominant future urban form in America is emerging  (largely unrecognized to the media) elsewhere, in places less dense, economically diverse and, perhaps, just a bit less hip and cool.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the The Daily Beast.

Seattle photo by Bigstock.

What Killed Downtown?

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What Killed Downtown?: Norristown, Pennsylvania, from Main Street to the Malls
by Michael E. Tolle

For those of us who have grown dyspeptic on the over-indulged topic of the collapse of the American city center, Michael Tolle’s What Killed Downtown? Norristown, Pennsylvania, from Main Street to the Malls earns much of its anodyne appeal by straying from a commonly accepted convention in urban studies—that an analysis of the socioeconomic decline of a community should draw heavily upon socioeconomic variables. Isn’t there another way to get the point across? And more importantly, aren’t there other contributing factors?

This compassionate narrative of the 20th century rise and fall of an older Philadelphia suburb avoids graphs and charts for the most part, becoming much more engaging for its alternative approach. And likeability is exactly what it will need to win over skeptics, or the merely apathetic, because most people in the US probably have never heard of Norristown. In fact, it’s likely that quite a few people on the other side of the Keystone State aren’t familiar with it either. After all, the borough at its 1960 peak only had 39,000 inhabitants (the 2010 Census records a population of 34,000). But Norristown merits further observation, not so much because its downtown has declined in the mid-20th century—that happened everywhere, in municipalities of all sizes—but because Norristown sits squarely in the middle of Montgomery County, an expansive bedroom community of Philadelphia with 800,000 people and a median household income of over $78,000, placing it within the top 100 wealthiest counties in the nation. Meanwhile, Norristown’s median household income, according to the latest Census, is approximately $43,000 and its poverty level of 16.4% is almost triple that of the county’s 5.7%, and still a fair amount higher than the state’s rate of 12.6%. While Montgomery County boomed over the last half century, Norristown has not shared in that prosperity. It is by no means a devastated town—many old neighborhoods remain charming and fully intact—but the commercial heart of Norristown has never healed.

The above paragraph contains a higher concentration of raw data than one should ever expect to encounter in Tolle’s new book. Rather than delving into the Bureau of Labor Statistics, the US Census Bureau, or rankings from Urban Land Institute or the Brookings Institution, Tolle manages to chronicle the rapid ascent of this suburban outpost, its 75-year dominion over commercial activity within the county, and its precipitous decline shortly after the Second World War—and he achieves it through a diligent perusal of old city directories, interviews with almost two dozen of Norristown’s older citizenry, and a vigorous exploration of the internal machinations of the Borough Council. He applies an anthropologist’s lens to a subject that sociologists have long overcrowded.

While Norristown’s early history—first as a manor under one of William Penn’s initial surveys, followed by a subdivision into smaller farms by Isaac Norris in 1712—is clearly never the focal point for Tolle’s methodical dissection of downtown, he avoids glossing over it. Not surprisingly, Norristown emerged as the most desirable plot of land in the sprawling manor because of its accessibility: it abutted the “canoeable part of the Schuylkill” and the interconnected American Indian trails that allowed for easy fording of the river. By 1784, the Pennsylvania Assembly carved Montgomery County out of the existing Philadelphia County, and a subsequent deed conveyed lots reserved for county buildings at the intersection of two of the only extant roads at the time. Due to its advantageous location, it became a nearly self-sufficient Town of Norris within a few years, abiding by Penn’s “Town Model” for Philadelphia and other Pennsylvania cities, employing tightly organized, gridded streets that maximized uses of available space. The construction of some of the earliest turnpikes helped to stimulate the town’s steady growth and prepare it for its incorporation as a borough of 520 acres in 1812, followed shortly thereafter by the rail networks that galvanized further expansion.



Swede Street just north of Main Street, known by some as Lawyers’ Row. Photo from Spring 2011, courtesy of Matthew Edmond.

The early chapters of the book may only provide a backdrop for Norristown’s 20th century rise and fall, but Tolle chronologically accounts for the factors that helped Norristown emerge as the primary urban center in Montgomery County. And unlike neighboring 19th century boomtowns that dot both the Delaware and Schuylkill Valleys, Norristown “lacked the characteristics that define similar towns of sufficient size and influence that could easily explain the downtown’s decline. . . [It] was never a one-company town. It was never dependent on [a] single employer whose corporate fate might have led it to a catastrophic domino effect; rather Norristown’s workforce has always been distributed among many workplaces.” It owed much of its steady growth to its fortuitous location 17 miles northwest of Philadelphia, the convergence of several modes of transportation, and its role as the administrative center of a large and increasingly prominent county.

By the book’s twentieth page, Tolle reveals the real heart of his study: the bustling commercial core of Norristown’s six-block Main Street. At the borough’s Centennial Celebration, population approached 30,000, swelling largely from immigrants who arrived to work in various industries: first the northern European Protestants, then the Irish, then, in by far the highest concentration, the Italians, overwhelmingly from Sicily. Mennonites, Amish, and Jews (predominantly of German heritage) along with African Americans arrived in smaller numbers. While the population self-segregated along largely ethnic and economic lines (working and lower-middle class Protestants on the West End; the wealthy, Northern European original settlers in the North End and DeKalb Street; Italians and African Americans in the blue-collar East End), all the strata converged along Main Street’s densely commercialized blocks. Tolle explores the full week’s worth of celebratory activities, from the details of the floats in the Industrial Day parade to overhead weave of flags, bunting, and electrical wires. The pace of the narrative slows at this point, but Tolle employs a humanism that he retains across the ensuing pages. When he intermittently bogs down in relentless detail, he’s easily forgivable—even a little admirable for not shying away from his obsessions.



A view of DeKalb Street, Norristown’s most affluent residential address, from its southern junction with Main Street. This was once the center of commercial activity in the borough. Tolle details the controversy of the implementation of the Comprehensive Plan to make DeKalb Street one-way northbound in 1951, a restriction which remains today. Photo from Spring 2011, courtesy of Matthew Edmond.

The Directory of the Boroughs of Norristown and Bridgeport, Montgomery County, Pa, for the years 1860-1861 serves as the bedrock for his chronological exploration of the commercial health of downtown Norristown. For some of the most resilient businesses—Chatlin’s Department Store, Egolf’s Furniture, Zummo’s Hardware—Tolle offers vignettes on their immigrant backgrounds and the financial maneuvering necessary to start their trades. Interspersed with these brief accounts are updates from subsequent City Directories, chronicling the change in business composition over time. But Tolle generally eschews tables and charts—with few exceptions, he narrates the changing commercial landscape of Norristown by integrating the livelihoods of the proprietors with the demands of the consumers. Because the authorial voice depends so heavily on firsthand accounts of the business climate—articles from the Norristown Times Herald, advertisements (including misspellings and solecisms), and, in the later years, eyewitness accounts—the routine references to City Directory data never grow stuffy or monotonous.



What Killed Downtown? is a concatenation of anecdotes. While such an indulgence in human-interest nostalgia could take a maudlin turn, Tolle again counterbalances these episodes with moments of acerbic subjectivity, as any conscientious anthropologist cannot help but do. My two favorite anecdotes feature a building and a person. The Valley Forge Hotel emerged in the roaring 1920s, purely driven by the local business community, who felt that the proud city demanded a first-class hotel. A stock subscription campaign raised enough to complete the massive six-story brick structure by November of 1925. Though it rarely made a profit, its size and relative opulence made it an icon for the city, and as an emblem of civic pride, it succeeded. The other great anecdote involves the detailed account of the life of the city’s most colorful politician, the recalcitrant Paul Santangelo. Lacking greater aspirations than borough administration, Santangelo earns more ink on these pages than any other civic leader, including the mayors. He fiercely defended the interests of the poorer Sicilian immigrants who comprised much of his district, voting ferociously in their favor but often—in Tolle’s opinion—at the expense of city progress as a whole.



Norristown Main Street, west of Swede Street and looking westward. Photo from Spring 2011, courtesy of Matthew Edmond.

Tolle’s account of Norristown’s Main Street after its 1950 apex avoids mind-numbing predictability even has he identifies the usual culprits contributing to its decline: growing dependence on the automobile, competition from suburban shopping plazas like the now-mammoth King of Prussia, shift of the population center toward the far-southern part of Montgomery County, construction of limited access highways outside of the borough’s limits. And of course, all these factors converge with the suburban amenity that wounds Norristown the most: “free, ample parking”—a mantra which Tolle repeats enough that it tacitly answers the question to his book’s title. Anyone with a scintilla of knowledge of American urbanism will know where this is headed. But by the1950s, Tolle reaches a point in time where procures firsthand accounts of Main Street’s changes. The worm’s-eye view continues, imbuing the narrative of Norristown’s saddest days—by the 1970s it is not safe to walk Main Street at night—with empathy and hope.



Courthouse Plaza along Main Street, one of many mid-century projects that removed commercial buildings and replaced them with staid, largely unused civic space. Photo from Spring 2011, courtesy of Matthew Edmond.

For a person as enamored by details as me, Tolle’s worm’s-eye view never really grows old, even when he’s a fussbudget over counts of shuttered storefronts from year to year. At the same time, this intricate approach to an already small subject could easily undermine the ability for What Killed Downtown? to find a broad audience. What happens to a little-known suburban city can hardly resonate as much as if he had explored the devolution of downtown Philadelphia—or even Allentown or Erie. The fixation on downtown storefronts—at the expense of geographic context—firmly ensconces the book in the “local interest” category. His 250-page narrative rarely explores impacts on Norristown Main Street outside of Montgomery County. From an early point in the book, he describes street intersections with specificity that would only mean anything to a local; then he only provides two referential maps.

None of these cavils really amount to an inherent weakness of the book—after all, it might prove just the right medicine for Tolle’s fellow Norristowners. But the narrowness of scope does foretell an oversight as to the broader implications for this city’s decline, which could have made for a much bolder peroration than the one the book currently provides. The only atypical bogeyman contributing to downtown Norristown’s precipitous decline is the persistent political gridlock and resultant incompetence of the Borough Council, which he relates with the same humanist eye he applies to his wonderful vignettes of immigrant entrepreneurialism. But Tolle had the chance to make this story matter on a scale that could mean something to someone from Ashtabula or Waukegan, and he spurned the opportunity.

My knowledge of Philadelphia, having lived there for a time, gives me an unfair advantage, but I can’t help but ask a few questions. Norristown, the seat of wealthy Montgomery County, declined and its main street is moribund to this day. But Media, the much smaller seat of neighboring Delaware County, boasts a flourishing main street of local shops and restaurants—all despite the fact that Delaware County, while equally urbanized, is much less affluent than Montgomery County. Meanwhile, cities like Chester (also in Delaware County) and Camden, New Jersey can claim a similar lifespan to Norristown, strong transportation access, and an industrial boom. But today these two cities are not only among the most devastated municipalities in their respective states, Chester and Camden are among the poorest cities in the country. Perhaps most interestingly, after several decades of population decline, Norristown began to trend upward again in the 2000 census, and by the 2010 Census the city grew virtually 10%–an unprecedented occurrence for a city that still has the reputation of being the poorest place in its respective county.

What Killed Downtown? remains a welcome contrast to countless other chronicles of downtown decline whose narratives depend on sociological detachment. Recognizing that true objectivity is impossible, Tolle instead depicts the Norristown transformation from the perspective of people who experienced it. Because its vision is geographically precise and obscure to people outside southeast Pennsylvania, I suspect our author felt driven to write it even if it enjoyed a readership of zero. Such an endeavor could reek of self-indulgence, but Michael Tolle’s opus has way too much empathy for that. Hopefully Norristown’s coterie of model train owners and newspaper collectors will put this book on their to-do lists—and then recommend it to others.

Eric McAfee is a licensed urban planner currently working in emergency management. Though he hails from Indianapolis, his professional field grants him a certain degree of itinerancy, which he uses to his advantage to write about and photograph landscapes across the country in his blog, American Dirt. He lived and worked as a military planner in northern Afghanistan from 2010 to 2012, letting him fudge on the “American” aspect of his blog a little bit. In the past, Eric’s writing has won him Outstanding Paper in Real Estate at the University of Pennsylvania, as well as an outstanding research on housing award from the Joint Center for Housing Studies at Harvard University.  Aside from American Dirt, he has featured his writing on Urban Indy.com, Streetsblog.net, and Urbanophile.com. 

California is in for a World of Hurt

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California’s political class, led by Governor Brown, has been patting itself on the back for solving California’s problems. This celebration is ludicrous.  What they’ve done amounts to a mere slowing down in a long-term political, fiscal, and demographic decline. 

Demographic trends themselves are creating a crisis brought about by a population that is simultaneously losing its children and getting older, and to a frightening extent poorer. From 2000 to 2010, the percentage of Los Angeles' population under 15 years old fell by 15.6 percent. This was the greatest decline of any U.S. major metropolitan area, and about double the U.S. average of 7.4 percent.

California's poverty statistics are just as depressing.  The state now is home to one-third of all US welfare recipients. According to a Census Bureau report, The Research SUPPLEMENTAL POVERTY REPORT: 2011 California has the nation's highest poverty rate of any state. By its Supplemental Poverty Measure, 23.5 percent of California's population is poor, while only 15.8 percent of the nation's population is poor.  No other state is above 20 percent.

Because of its aging and increasingly poor population, its dearth of young people and migratory trends, demand for government services in California will be increasing as the number of people available to pay for those services will be decreasing.  Financing concurrent expenses will be hard enough.  Paying for today’s excesses may prove impossible.

Let’s go through the evidence:

Figure 1 shows California’s Department of Finance’s (DOF) estimate of domestic migration, migration between California and other states.  According to the DOF, California’s domestic migration has been negative in 18 of the past 20 years.  This is less dismal than the U.S. Census’ estimate that California’s domestic migration has been negative for 20 consecutive years.  This is the longest sustained period of negative domestic migration in California’s history.  We've seen this before, in the rust belt.  It leads to decay, poverty, increased crime, and unlivable cities.

Domestic migration is important because it should be seen as an early warning signal of eventual decline.  Migrants are the proverbial “canaries in the coal mine”.  When domestic migration is negative, people are voting with their feet.  They are saying that California doesn’t provide enough opportunity to stay, particularly given its high cost of living.  Given how comfortable it is to live in California, I think they make that decision reluctantly.

Over most of California’s recent history, international migration has been strong enough that total migration remained positive.  That’s no longer true.

Figure 2 shows California’s total net migration for the past 107 years.  Prior to 1993, California had never seen a year where total migration was negative.  Now, we’ve have negative migration for eight consecutive years.

More critically, the rate of foreign migration in the state’s cities is falling behind many competitor cities. For example, over the last decade, New York had almost six times the increase in foreign born than Los Angeles. Houston, which has barely one third the population of LA-Orange County, increased its foreign born nearly four times as fast. Overall, LA-Orange had the lowest percentage increase of any major US metro. Given that the Southland has been the state’s immigration magnet for a generation, this is not good news.

Weak, negative migration is likely to continue.  We used to characterize domestic migration as pull migration; rapidly growing economies attract migrants looking for opportunity. International migration, especially from other countries in this hemisphere, was thought to be push migration; conditions were so bad in the country of origin that migrants would come to California even in a recession.

Apparently, that’s no longer true.  Mexico, for example, has an unemployment rate of about half of California’s today.  When you add the increased cost imposed by coyotes on illegal immigrants (a price increase from about $3,000 a few years ago to about $6,000 today plus the requirement to carry drugs), it’s no mystery why California’s growers are having a hard time finding an adequate workforce.

Negative migration is important because migrants have been a critical part of California’s growth and creativity.  Not only is California losing the services of the migrants who choose, say, Texas instead of California, California is suffering a drain of some of its talent pool, particularly among those about to have children.

For a long time, many people thought that California’s Hispanic population would cause its population growth rate to increase.  That turns out to not be true.

Figure 3 shows California’s birthrate.  Our births per thousand population is the lowest it’s been since the worst part of the depression.  What’s scary though, is the rate of decline.  Births have fallen below 15 per thousand and seem destined to hit 10 per thousand.  This is a national trend and a key reason to create national policies that encourage increased international immigration.

If a population is growing, it’s possible to have increasing births (new people) even when the birth rate is declining. Unfortunately, California isn’t there.

Figure 4 shows the total number of births in California.  It’s fallen to 500,000 per year from 600,000 per year about 20 years ago.  If California’s birth rate falls to 10 percent, we can expect the number of births to decline to about 350,000.  At that point, the math starts to get to be a problem.  Is a decline to 10 per thousand possible?  You bet.

According to the CIA, as of 2012, 29 out of 221 countries (13 percent) had birth rates below 10 per thousand.  Those 29 countries included Japan, Germany, Switzerland, South Korea, and Singapore.

Unfortunately, California --- as opposed to states such as Texas --- could reach a 10 per thousand birth rate within 10 years if existing birth rate trends continue.  Even more disturbing, there is no reason to believe that 10 per thousand is a lower bound.  Germany, for example, has a birth rate of 8.33, while Hong Kong and Singapore have rates of only 7.54 and 7.72 respectively.

For California’s population to continue to grow, births have to outnumber the losses to migration and deaths.  We’ve already discussed migration.  What about deaths?

Figure 5 shows annual California deaths from 1971 through 2012.  While recently flat, the trend is up, and an aging population implies more increases. For our calculations, we’ll assume California deaths at 250,000 per year.  This is a conservative assumption. As the Baby Boomers age, California deaths will increase.

When California’s birth rate falls to 10 per thousand, we can expect 350,000 births.  Deaths will be about 250,000. Apparently, as long as outmigration doesn’t exceed 100,000 California’s population won’t decline overall.

The good news is that outmigration in excess of 100,000 has only happened once.  California's net outmigration exceeded 100,000 for two consecutive years in the 1990s, when California was undergoing a dramatic economic realignment brought about by the end of the Cold War. 

The bad news is that we’ve come very close to losing 100,000 twice in the past eight years, particularly during the housing boom. Many people believe that low home prices are restraining domestic outmigration, because people are waiting for equity to return before making the move. Higher home prices and increased tax rates could drive big increases in the numbers of people leaving California.

Unless there is some dramatic change, it is almost inevitable that California will suffer a declining population within a generation. The way to avoid this calamity is create an economic environment that encourages job growth and economic activity. 

At the same time, it appears prudent to begin planning now for an aging and possibly smaller population.  Increased government revenues through more robust and varied economic activity would help here, but more probably needs to be done. California needs to reform its business climate, reduce its debt and unfunded liabilities, and do so quickly.

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.


Commuting in Australia

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Data from the 2011 censuses indicates that mass transit is gaining market share in all of but one of Australia's major metropolitan areas. The greatest increase as in Perth, at 21% , aided by the new Mandurah rail line to the southern urban fringe. On average, mass transit's market share increased by 10.8% in the five metropolitan areas with more than 1 million population. This increase seems likely to be in response to both mass transit service improvements (such as in Perth) and higher petrol (gasoline) prices. The highest mass transit market share is in Sydney, at 22%, approximately equal to that of Toronto and greater than all major US metropolitan areas except New York (31%). Adelaide has the smallest transit market share, at 9.5%, which is nonetheless 50% above that of Portland, to which Adelaide officials have often looked as a model (Figure 1).

At the same time, there was a personal vehicle (automobiles, motorcycles, taxis and trucks) market share in all 5 metropolitan areas, averaging 2.2% (Table). However, the much larger base of personal vehicle use prevented mass transit from materially reducing the share of the automobile in any of the metropolitan areas.


Work Trip Market Share 2006-2011
Major Metropolitan Areas in Australia
2000Personal VehiclesMass TransitBicycleWalk (Only)Work at HomeOther
Adelaide81.2%9.6%1.5%3.1%3.5%1.2%
Brisbane76.5%13.2%1.1%3.5%4.5%1.2%
Melbourne76.7%13.3%1.3%3.4%4.2%1.1%
Perth80.8%10.0%1.1%2.5%4.1%1.5%
Sydney69.0%20.3%0.6%4.7%4.4%1.0%
Average76.8%13.3%1.1%3.5%4.1%1.2%
2010
Adelaide81.1%9.5%1.3%2.8%3.7%1.6%
Brisbane75.1%14.3%1.2%3.5%4.6%1.4%
Melbourne74.5%15.4%1.5%3.3%4.1%1.2%
Perth78.1%12.1%1.2%2.6%3.9%2.0%
Sydney66.9%22.2%0.8%4.6%4.4%1.1%
Average75.2%14.7%1.2%3.4%4.1%1.4%
Change in Market Share
Adelaide-0.1%-0.6%-12.2%-7.4%4.6%32.1%
Brisbane-1.8%8.3%10.5%0.3%0.5%14.4%
Melbourne-2.9%15.6%17.2%-4.4%-1.0%10.8%
Perth-3.3%21.0%11.3%4.0%-3.9%30.2%
Sydney-2.9%9.4%30.3%-3.6%-0.4%11.1%
Average-2.2%10.8%11.4%-2.2%0.0%19.7%
Source: Calculated from Australian Bureau of Statistics data

 

Unlike the United States, where working at home is the fastest growing method of work access (and likely to pass mass transit in this decade), Australia’s working at home share has stayed constant. Working at home is also increasing in Canada.  

Mass Transit: About Downtown

In Australia, as in Canada and the United States, mass transit is dominated by commuting to the central business district (downtown). On average, 65% of mass transit commuters had a work trip destination in the urban core, which includes the central business district (downtown). This ranges from a low of 59% in Perth to a high of 73% in Adelaide (Figure 2). This concentration of mass transit destinations in the central business district is epitomized by Sydney, where there was a core share of all trips of nearly 60%. By contrast, in Parramatta, which includes one of the largest suburban business centers, is well served by not only the region's rail system but also by an exclusive busway, the mass transit market share was 15%, one-fourth that of Sydney's core.

In the five large Australian metropolitan areas, nearly 21% of jobs are located in these urban core areas that include the central business district (Figure 3). The difficulty for transit in serving the nearly 80% of work trip destinations outside the urban core lies with far lower employment densities and mass transit travel times not remotely competitive with the automobile (on the assumption that services even available). On average, mass transit carries 200 times as many commuter to each square kilometer of core land area for each commuter carried per square kilometer in the rest of the urban area (urban centre).

It is not surprising that the central business districts dominate mass transit commuting. They are the only locations in virtually any urban area that have a sufficient employment densities and a comprehensive enough radial rapid transit system to provide no-transfer service to a large number of riders.

Australia's Long Work Trip Travel Times

The growth of transit has not reduced travel times but may have boosted it. In fact Australia's workers already are traveling for longer times to work than in nearly all similar- or larger-sized metropolitan areas in Canada and the United States (Figure 4). For example, the average one-way work trip travel time in Melbourne is 36 minutes, which is longer than that of any major metropolitan area in the US or Canada.  Sydney's one-way work trip travel time is 34 minutes. This exceeds that of all similarly sized or larger metropolitan areas in the three countries with the exceptions of New York and Washington, which are larger. In Improving the Competitiveness of Metropolitan Areas, I cited Statistics Canada data showing that mass transit work trip travel is much longer than by car and that transferring demand to transit would not improve average travel times.

Both Melbourne and Sydney have slightly longer one-way travel times than larger Toronto, which is also larger, at 33 minutes. The Toronto Board of Trade, the Federation of Canadian Municipalities, and the Canadian Urban Transit Association have all expressed serious concern about Toronto's long journey to work time, noting that it places is a competitive disadvantage relative to other metropolitan areas.

Melbourne and Sydney also have longer one-way travel times than all of the other 12 US metropolitan areas with more than 4 million population. Perhaps the starkest comparison is with Los Angeles, often cited as having some of the worst traffic congestion in the high income world. Yet, despite having a urban population density higher than that of either Melbourne or Sydney and a far lower transit work trip market share, Los Angeles has a one-way work trip travel time of 28 minutes The secret in Los Angeles, is more dispersed work locations and a more comprehensive freeway system (though major parts of the planned freeway system were not built).

Far starker is the comparison with Dallas-Fort Worth, which has a population density well below that of both Melbourne and Sydney and a much lower transit work trip market share (2%, compared to 22% in Sydney and 15% in Melbourne). Yet, in Dallas-Fort Worth, the average work trip travel time is 26 minutes, a full quarter less than in Melbourne and 8 minutes less than in Sydney.

Where Should Planners "Put" People?

A recent Infrastructure Australia report (The State of Australia's Cities: 2012) cites "Marchetti's Constant," which it characterizes as holding that "people will devote on average 90 minutes a day to travel and no more." (In fact, 90 minutes represents is a full 30 minutes greater than Marchetti indicates: See Note on Marchetti's Constant).

Infrastructure Australia continues "This suggests that improving the efficiency of urban transport systems by putting people in their economically optimal location within a total travel time of 90 minutes may be the key to improving the productivity of cities."

"Putting people" where they have total travel time of 90 minutes seems a pessimistic goal; Sydney’s average daily travel time is now nearing 80 minutes. This justifies policy makers to further increase its already non-competitive work trip travel times. Economic research associates maximizing the number of jobs that can be reached by people in a metropolitan area in a specified time (such as 30 minutes) is critical to improving city productivity  (see The Need to Expand Personal Mobility.)

The issue is not where to "put" people, but rather to facilitate more rapid access for commuters throughout the metropolitan area.

Things are Likely to Get Worse

In the end, there is only so much mass transit can do. Already the Australian metropolitan areas have high transit commute market shares to the cores, which leaves only modest room for improvement. At the same time there is little potential for material increases elsewhere in the metropolitan areas. Automobile competitive transit to these locations would be cost prohibitive, perhaps requiring annual expenditures rivaling the total income of the metropolitan area each year for operations, capital costs and debt service (see Megacities and Affluence: Transport and Land Use Considerations).

Australian urban areas are generally underserved by freeways, despite their overwhelming reliance on personal vehicle travel. At the same time, urban consolidation, “smart growth” land use policies are increasing population densities without accommodating the inevitable associated additional personal vehicle demand (see Urban Travel and Urban Population Density). Things could get worse.

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

-----

Methodology: The analysis is based upon Australian Bureau of Statistics (ABS) data for capital city statistical divisions. The urban core was defined as the following local government areas: Sydney, North Sydney, Melbourne, Perth and Adelaide. In Brisbane, where the local government area is far larger, the inner Brisbane census division was used. Consistent data is limited to the central business district is not readily available. All trips which include transit as a mode are counted as transit. Workers who did not work on census day or who did not provide information were excluded from the analysis.

Note on "Marchetti's Constant:" Not only does Marchetti find a 60 minute, rather than a 90 minute average, but he also credits Zahavi of the World Bank with the concept, noting that with respect to travel:  "The empirical conclusion reached by Zahavi is that all over the world, the mean exposure time for man is around one hour per day.” While there are few references to Marchetti's Constant in the academic literature, it might be more appropriately named "Zahavi's Constant." In a further irony, Professor Peter Newman, a member of the board of Infrastructure Australia, cited 60 minutes (echoing Marchetti), rather than the 90 minute average in describing the "Zahavi/Marchetti Constant" in a Sydney Morning Herald commentary ("Why We're in Reaching Our Limits as a One-Hour City" ).

Photo: Downtown Brisbane (by author)

U.S. Could be Courting Trouble in Europe

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One of the most fascinating aspects of Barack Obama's presidency stems not so much from his racial background, but his status as America's first clearly post-European, anti-colonialist leader. Yet, after announcing his historic "pivot" to vibrant Asia, the president, the son of an anti-British Kenyan activist, recently announced as his latest foreign policy initiative an economic alliance with, of all places, a declining, and increasingly decadent, Europe.

Some analysts, such as Walter Russell Mead, suggest the possible "ratting out" of the new Asia focus could constitute "a mistake of historic proportions." In East Asia, leaders, from Vietnam and Singapore to Japan, have been counting on a strong U.S. presence to ward off Chinese hegemony in the region. The idea of a reduced naval presence and a weakening commitment to allies would undermine our influence in this increasingly critical economic region.

At the same time, the president's desire to integrate our economies more closely to that of Europe reflects a longtime prejudice within the Democratic Party favorable to the old Continent. The notion of a new trade tie to the European Union set longtime Eastern policy types, such as former Bill Clinton aide and onetime Woodrow Wilson School head Anne-Marie Slaughter into rhapsodies about an emerging new "Atlantic Century." Vice President Joe Biden, for his part, told a recent Munich security conference that Europe represents "the cornerstone of our engagement with the rest of the world."

This is delusional, to say the least. Republicans have their faults, but at least they know how to tell historic time. In contrast, largely Democratic Europhiles simply want to relive the glorious past, and consume a legacy of affluence. And to be sure, generally it's more pleasant to attend – as long as someone is paying the bill – a conference in London, Paris or Zurich than Beijing, Mumbai or Mexico City. Europe, as we know from the debates over compensation of EU bureaucrats, knows how to treat functionaries with the comfort to which they easily can become accustomed.

Pumping for greater Euro-ties seems almost insane under current conditions. The Continent's unemployment rate, nearly 12 percent among the 17 EU member countries, is already at record levels, and its younger generation suffers unemployment approaching 30 percent or higher in at least five EU countries, including Greece, Spain and France. In Portugal, 2 percent of the population has migrated just in the past two years, not only to Northern Europe but, amazingly, also to Portugal's booming former African colonies.

This does not seem to be setting up the prime conditions for Ms. Slaughter's imagined new "Atlantic Century." Although North America retains the resources, demographics and innovative culture to compete with Asia and other rising powers, Europe is in a notably downward trajectory. Its share of the world economy has plummeted from nearly 40 percent in 1900 to 27 percent today and continues to shrink rapidly. By 2050, not only the United States, but China and the rest of the developing world, according to the European Commission, will have surpassed the total of the 27 countries in the EU.

One has to be a cockeyed optimist not to see that the long-term prognosis, even without the current euro crisis, is not good. Manufacturing, long a Continental bastion, is weak and falling behind that of the U.S. as well as Asia. German engineering may still be first-class, but much of the production and design will be moving to Mexico, the U.S., Latin America and Asia.

Energy may prove a particular vulnerability. Although the region has shale and other energy resources, greens are far more powerful in Europe than in America and hostile to the hydraulic fracking that has created the current U.S. boom in oil and gas. The combination of radical green policies favoring expensive, often unreliable renewables, as well the shuttering of the Continent's once-strong nuclear industries, are creating both high prices and wobbly reliability of electricity supplies. (Ironically, the reluctance to maintain nuclear power and oppose fracking for natural gas has led to a rise in greenhouse gas emissions and even some increased use of coal.) Tulane's Eric Smith suggests many of Germany's manufacturing powers are intensifying efforts to shift operations, notably to the southern United States, for cheap electricity and lower overall costs.

Demographics, however, may be Europe's weakest suit. Although East Asia is now experiencing low fertility, Europe has been demographically stagnant for at least a generation longer. By 2050, Europe's workforce is expected to decline by 25 percent from 2000 levels; the U.S. is expected to see expansion of upward of 40 percent.

This phenomenon threatens Europe's lone serious economic power, Germany. The country now produces fewer children than in 1900. Given the expansive welfare state, the fiscal burdens being faced in Germany and other EU countries will dwarf those of the United States; by 2050 Germany will have nearly twice as many retirees per active worker as America.

Yet remarkably, for all its manifest failings, Europe remains a Mecca and role model for many American progressives, like Ms. Slaughter. The past decade has seen the publication of a spate of books, such as Jeremy Rifkin's "The European Dream" and Steven Hill's "Europe's Promise," that see Europe's regulation state and "soft power" an alluring alternative to America. Some hail the EU as the prototype of a benign "new kind of empire" based on culture and pacifism.

If so, it's an empire rapidly hurtling into its dotage. The great European historian Walter Lacquer has pointed out that such optimism about the Continent becoming "united and prosperous" is likely "misplaced." In policy terms, for the U.S. to follow Europe's model is an almost sure recipe for our own decline. Even the usually pro-free-trade Wall Street Journal is concerned that any attempt to "harmonize" American policies with those of the "European model" will simply expand government power and bureaucratic hegemony.

To be sure, there remain parts of Europe, particularly in the Northern rim, that are doing better. These countries – the Netherlands, Scandinavia and Germany – have enacted significant labor market reforms, retain some strong industries and have tried to be responsible fiscally. If they broke off from the EU and set up a modern-day Hanseatic League, it may make sense for us to embrace stronger ties with them. But that can't be said of an alliance with the weak sisters of the EU's southern and eastern fringes, or even dirigiste state-dominated France.

In reality, the EU will never become a giant Sweden. Scandinavia possesses a unique history, shaped by massive outmigration in the past century and a largely homogeneous population; many of these countries possess great natural resources, such as oil, iron ore or hydroelectricity. In contrast, the eastern edge of the zone contains some of the most depopulating parts of the planet, as people seek opportunities in the more economically viable North. The comic political economy of Italy, the political violence of Greece and the mass disenchantment of Spain presage a European future that contrasts greatly with the relative prosperity and order of the North.

None of this suggests that, if the political strings are not wound too tight, that a free-trading arrangement with Europe may prove useful. But if an agreement becomes a wedge for accelerating the adoption of Euro-style policies, it could allow us to squander an opportunity to maintain our pre-eminence in the post-colonial, and post-European-centered, world.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared in the Orange County Register.

Postmodernity: Will Another Bite from the Apple Help?

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The visionary evangelical zeal of Steve Jobs lured me from my   cozy philosophical pursuits at Barry University in south Florida to the frenetic gyrations of 1980s Silicon Valley. Jobs' incantations held me spellbound with his revelation of an Information Revolution that would not only democratize the entire world, but would inevitably and infallibly take a bite out of every apple that stood in the way of humanity's own paradise.

I would later come to dub this techno-omnipotence "Her Highness Technology." After the Dot Com Dot Bomb of March 2000, however, I came to refer to the whole Valley scene as just "sillyConValley." Now, let's fast forward some thirteen years to 2013 and see what's up...

iPads that take dictation! Location-based services that guide you to the nearest Italian restaurant! And soon, we are promised, human-computer interfaces that respond to your needs even before you speak, tap, or click. With all this going on it would only be natural to expect that the priesthood of the high-tech self-proclaimed digital Mecca of Silicon Valley   would surely devise a host of dazzling techno-wizardries to conquer whatever ills are ailing America, all the way from here to Eternity. To question the omnipotence of Her Highness Technology or her saving graces would be a matter of heresy against new age orthodoxy. Even so, I am willing to stick my neck out and risk excommunication from Techno-Paradise and do just that. Why not?  

So, not discounting the remarkable accomplishments of the past hundred years, there are some nagging developments that would seem to signal that we are approaching some kind of tipping point—where three steps forward over here are confounded by three steps backward over there. Have a look, now, at some social, economic and political illustrations where even the most glittering technologies failed to deliver the expected end results. 

Jobs Crisis or Jobs' Crisis?

Her Highness Technology has been performing more and more of the work that we used to do. This was once the chief selling point for the industrial revolution: washer plus dryer equals more leisure time for everyone. But now our labor-saving fantasies are turning into a daily nightmare for millions of lately obsoleted workers. In China, they're even replacing—note "replacing," not helping—waiters with robots. Can it be that Steve Jobs' revolution is now contributing to a Jobs Crisis?

For sure, major innovations like Jobs' Apple II and Macintosh once created a plethora of breathtaking career opportunities, along with personal empowerment. Perhaps another such game changer might come along. But absent that, new technologies will likely extend the trend of the last ten years: creating splendid career opportunities for fewer and fewer while diminishing job opportunities for more and more.

Looking forward, most advanced technologies like AI, quantum computing, and nanotech robotics are sure to put more and more professional, skilled, and semi-skilled people out of work. Their only hope might be to merge themselves with their technology, as presently being prototyped in Alzheimer's patients and military volunteers.  Make way for "Homo Sapiens 2.0?"

Global Democracy or Ersatz Democracy?

Working as a manager at Xerox LiveWorks during the rise of the Internet, I uncritically promoted Steve Jobs' utopian vision of electronic democracy. All my fellow engineers, on the other hand, ardently insisted "Forget about it!" Computerized balloting, they warned, is 180 degrees out of phase with old-fashioned paper balloting. Why? While paper ballot processing is transparent to anyone who can count, computerized ballot processing is transparent to no one except the software proprietor. To be authentic, however, democracy requires a transparent ballot process.  

Since its implementation, opaque computerized elections have yielded the widest discrepancies ever between the "official count" and many exit polls—historically the most accurate predictor of who actually won the election. While technology is not inherently anti-democratic, it is not inherently democratic either; and just because we can computerize anything does not mean we must computerize everything.

On the bright side of computerization, social media do represent a potential force for democratization by enabling peoples' movements across national, religious, and racial boundaries, and with a speed and facility never before thought possible. How about global consumer unions that patronize only those vendors that meet published standards of acceptance? Every time you shop, you're voting: that's effective participative democracy.

Education crisis: "No amount of technology will make a dent."—Steve Jobs

In 1996, when asked what should be done about education's gradual slide into mediocrity, technology evangelist Jobs cautioned"What’s wrong with education cannot be fixed with technology...The problems are sociopolitical." And he's right.

For thousands of years Egyptian mathematicians, Greek philosophers, Roman architects and British engineers solved complex geometry problems, were literate in multiple languages, built durable bridges and aqueducts, and designed powerful internal combustion engines—with not much more than "paper and pencil" or a slide rule. Today, after thirty years of computerization and the Internet, our high school graduates can barely compose a complete sentence in their native language and don't even know why we celebrate the Fourth of July. The problem is not technical. It has to do with basic human nature and the need for discipline, focus, integrity and commitment—traditionally the stuff of good parenting. (Hint: Less time twittering equals more time for studying.)

Computerized Government: Digital Deliverance or Digital Disaster?

When I arrived in Silicon Valley in the mid-1980s California had a strong billion state surplus and was the ninth largest economy in the world. By 2004, after computerizing the government, the state had accumulated a $22 billion debt. Apparently, all the $billions they had put into computers, databases, servers, web applications, and middleware was not able to offset the mismanagement of state budgeting, population growth, and a rapidly globalizing (and digitizing) economy.

And the feds? Well, since digitizing the entire government under Clinton and Bush, federal debt has only gotten much worse. Why? Because balanced budgeting is not so much a technical problem; it's mostly a matter of good arithmetic and basic integrity. For example, following computerization, we saw Rumsfeld report $2.3 trillion unaccounted for in Pentagon spending.   Before digitized "friction-free capitalism" (Bill Gates, The Road Ahead) a loss that stupendous was not only unthinkable, it was not even technically possible!

US Trade Deficit

This is largely a matter of importing more than we export, or consuming more than we produce—a likely result of globalization and too much offshoring of manufacturing. SCM (supply chain management) and other high-tech e-commerce software have only greased the rails for US corporations to outsource and offshore more operations, which ultimately translates to increased imports. While the US continues to lead the world in arms and pharmaceuticals exports, our leading imports are now those things everybody needs for everyday life.   Americans must either go back to manufacturing real products for everyday consumption, or shrink consumption—or both. New technology exports won't help much, since after invention and productization most of the operations are soon offshored.

Maybe Biting the Apple Never was the Way to Paradise

The US was once a world leader in manufacturing, exports, agriculture, education and trade surplus—all without iPads, laptops, social media, cell phones, high-speed computer trading, or computerized derivatives. And also without ponderous debt or a jobs crisis.

Of course, only a Luddite would reject all mechanized or computerized technology. It is equally true that only an overreaching religious zealot would tenaciously hold to the credo: "Her Highness Technology Über Alles!" Even Steve Jobs backed off of that one.

Technology is very good at solving many problems. Transforming human nature is not one of them. People still cheat, steal, lie, shade the truth in their favor, betray, enslave, bomb, torture, and murder—only now it's at light speed. This wanton behavior has been going on since Adam bit the apple and lost paradise. Can technology rehabilitate the human situation? While transhumanists insist "Yes", history emphatically says "No."   

The quandaries of post-modern—some say posthuman—civilization are not essentially technical in nature and do not fit neatly into a technical solution. The errant human condition and its predicament is essentially spiritual in nature and calls for a spiritual remedy—one ordered under a combination of proven virtues and a serious dose of transcendent Wisdom. Without this, all the science, technology and bitten apples in the whole universe are more likely to lead us to Kidron Valley than back to Eden. 

Rob Argento is a senior technical writer and project leader with a background in aerospace engineering and some 18 years in Silicon Valley with Oracle, Xerox, Microsoft, and Sony. His broad industry experience includes NASA, e-commerce, US Navy, Biotech, and PC Games. He has degrees in physics and theological studies.

Shanghai photo by flickr user acaben

Marissa Mayer's Misstep And The Unstoppable Rise Of Telecommuting

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Marissa Mayer’s pronunciamento banning home-based work at Yahoo reflects a great dilemma facing companies and our country over the coming decade. Forget for a minute the amazing hubris of a rich, glamorous CEO, with a nursery specially built next to her office, ordering less well-compensated parents to trudge back to the office, leaving their less important offspring in daycare or in the hands of nannies.

The real issue is how we deal with three concerns: the promotion of families; humane methods to reduce greenhouse gases; and, finally, how to expand the geography of work and opportunity.

For parents, particularly women, telecommuting provides a golden opportunity to balance the challenges of child-raising with those of work. Working at home, full or part-time, shrinks the number of hours wasted commuting and allows greater flexibility that is often critical to maintaining a family. In a country with a deteriorating fertility rate, and ever greater strains on those trying to raise children, telecommuting offers, at least for some, a way to remain in the labor force without cheating the next generation.

Equally important, as the online universe expands, telecommuting allows us to reduce carbon emissions and energy use without forcing people to live in dense communities that most Americans, particularly in their adult years, clearly do not prefer. Greens, planners and many pundits seem anxious to force people to live in crowded housing close to buses and trains, yet rarely mention that it’s infinitely more eco-friendly to not commute at all.

Finally there’s the often ignored issue of geography. If you force people to work in daily commuting distance from Yahoo’s Palo Alto headquarters, you are essentially telling them to live in a region where housing is among the most expensive in the nation. For anyone under 40 who does not have wealthy parents, a large amount of dot-com stock or recently robbed a bank, it’s almost impossible to buy a single-family home or spacious townhouse in the Valley, even in the only modestly attractive parts.

So what’s the beef with the expansion of telecommuting? The conventional explanation usually revolves around the notion that putting employees together every day together generates greater innovation. See the New Yorker’s James Surowiecki for a good summary of this argument.

That’s really not too surprising, since one of the last rationales for many without large financial resources to put up with big city home prices and taxes lies in the idea that, as the great economic royalist Michael Bloombergmaintains, you have to be located in “the intellectual capital of the world” to be successful. Natural allies of the anti-telecommuting crowd include urban land speculators and developers, who prefer that the “talent” remain chained to their particular locations and not wander off to the awful periphery.

There are clearly advantages in face-to-face contact, particularly for younger people and top-echelon executives, who may be more effective minding the store if they hang around the office. But for most employees productivity actually rises with telecommuting.

This is confirmed by broad studies such as one by the consultancy Workshifting that found, on average, a 27 percent rise in productivity among telecommuting employees. Over two thirds of the employers surveyed reported higher productivity among home-based employees, including British Telecom, Dow Chemical, American Express and Compaq.

One of the best examples of telecommuting advantages can be seen at the high-tech company Cisco, which in contrast to Mayer’s assertion, has found telecommuters are effective at communicating and collaborating. It has also improved employee retention and also saved $277 million by allowing its employees to telecommute.

Other companies reporting positive results, particularly in terms of retaining employees, from telecommuting, include IBM and Best Buy.

Equally critical, notes a study by Global Workplace Analytics, are the tremendous environmental savings. Half-time telecommuting could reduce carbon emissions by over 51 million metric tons a year — the equivalent of taking all of greater New York’s commuters off the road. Additional carbon footprint savings will come from reduced office energy consumption, roadway repairs, urban heating, office construction, business travel and paper usage (as electronic documents replace paper). Traffic jams idle away almost 3 billion gallons of gas a year and accounts for 26 million extra tons of greenhouse gases.

But perhaps most relevant, whatever its merits, telecommuting and home-based work seems to be the inevitable wave of the future, whether corporate managers like it or not. Working at home grew faster percentage-wise than any other mode of work access in the United States between 2000 and 2010. In that decade, the country added some 1.7 million telecommuters, almost twice the much ballyhooed increase of 900,000 transit riders.

This tends to be more true in places like Silicon Valley, where workers are computer savvy and housing costs are onerous. Between 2005 and 2009, the Valley workforce grew by less than 10 percent but the telecommuting population increased by almost 130 percent. Tech-oriented places like Austin, Portland, Denver, San Diego, San Francisco and Seattle all rank among the cities with the highest percentage of people working at home.

As workers become more familiar with technology, these trends should accelerate. A survey by the Information Technology Association of America found that 36 percent of respondents would choose telecommuting over a pay raise. These preferences appear to be even greater among millennial generation workers, who, according to a Pew study, tend to seek a “balance” between work and life. Global Workplace Analytics suggests this means they will be more attracted to flexible work throughout their careers , particularly as they start families.

Other trends, including the huge expansion in self employment in the U.S., promise to accelerate telecommuting in years ahead. The ranks of independent contractors have grown by 1 million since 2005, according to George Mason University economist Jeffrey Eisenach. One in five work in such fields as management, business services or finance, where the percentage of people working for themselves rose from 28 percent to 40 percent between 2005 and 2010. Many others work in fields like energy, mining, real estate or construction. Altogether there are now as many as 10 million such independent workers, constituting upwards of 7.6 percent of the national labor force and over $626 billion in income.

This trend will be further accelerated not only by millennials but increasingly by the other big growth demographic, aging boomers. The self-employment rate for adults 55 and older is 16.4 percent, according to the Bureau of Labor Statistics, well above the 10.4 percent rate of self-employment for the total labor force. From 2007 to 2008, the latest data available, new businesses launched by 55- to 64-year-olds grew 16 percent, an increase that was faster than that of any other group, according to the Kauffman Foundation. All told, Boomers in that age group started approximately 10,000 new businesses a month.

Many of these older entrepreneurs are likely to work out of their homes, which many now own outright. In fact, over time, according to Workplace Analytics, upward of half the American workforce could eventually telecommute. Ultimately the issue of whether managers of office developers like this trend is beside the point. Smart managers who learn how to adjust to this path will flourish. Those who do not, like Marissa Mayer, are standing against a historical wave that is likely to prove too powerful for any company or CEO to overcome.

Joel Kotkin is executive editor of NewGeography.com and a distinguished presidential fellow in urban futures at Chapman University, and a member of the editorial board of the Orange County Register. He is author of The City: A Global History and The Next Hundred Million: America in 2050. His most recent study, The Rise of Postfamilialism, has been widely discussed and distributed internationally. He lives in Los Angeles, CA.

This piece originally appeared at Forbes.com.

Photo by By Rae Allen, "My portable home office on the back deck"

Corporate Compensation: Will 'Say On Pay' Catch On?

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Because so many chief executives of failed or mediocre companies have walked away with millions in bonuses and swag bags, both Switzerland and the European Union recently voted to put a cap on corporate bonuses, limiting them to a small multiple of base salary. What prompted the acceptance of the “Minder Initiative”—named after the independent parliamentarian who sponsored the referendum — is a string of stunning business losses that had no affect on the bonuses paid to the sitting executives.

Swissair went bankrupt in 2001, although not before it could pay out a $10 million bonus to its grounded chairman. The chief executive of the Swiss pharmaceutical giant, Novartis, was recently offered a $78 million sendoff. The Swiss bank, UBS AG, appears regularly in the headlines as the poster-child of bad loans ($40 billion absorbed by the government), LIBOR rate rigging ($1.5 billion in fines), and other dim practices (a so-called rogue trader lost $2.3 billion in London), although the losses are never enough to drain the bonus pool.

The architect that turned the once-staid UBS into an off-track betting parlor, chairman Marcel Ospel, regularly paid himself CHF (Swiss Francs) 24 million in annual salary, something that Swiss voters had in mind, along with the Novartis proposal, when casting their votes with Minder. After the vote, UBS quietly offered an incoming executive a $28 million sign-on bonus — something the law, when enacted, will prohibit.

In the US, corporate activists and some regulators want shareholders to have a “say on pay” of the top CEOs, or for Congress to tax away paycheck windfalls. So far, most reforms have been non-binding.

Members of the business community, nevertheless, resent the intrusion of state or federal bureaucracies into their corner offices. In their minds, salaries are best left to compensation committees and captive boards of directors, which are free to rain money on a handful of senior executives, some of whom are chairmen of the same boards that dole out their pay.

According to the latest estimate, Fortune 500 CEOs have to scrape by with compensation that averages $12 million a year and that is 380 times the pay of the average worker. In 1965, this ratio stood at 24 times and in 1990 it was 71 times.

Meanwhile, real American wages have been declining since 1974, and per capita average income in the country is about $27,000, just above the poverty line of $21,000. The median income for American households is about $50,000 a year. The reason most American corporations reward senior management and stiff the rest of the work force is because many public companies are little different from banana republics.

In theory, the shareholders elect the board, and the board watches their interests, a mandate that includes signing off on the top salaries. In practice, shareholders, even big ones, have little say in who is put on the board, especially if the CEO is also chairman. In those cases, board members serve at the whim of the same CEO. Often such an approval rating depends on voting the prince a big salary, along with big bonuses and stock options.

Under the new Swiss law and other corporate reform proposals, shareholders are given the right to approve the top pay packages in a company. This sounds democratic enough, except that most corporate proxy votes turn out results that would be familiar to commissars in the Soviet Union.

One reason is that many mutual and pension funds, which own the large positions in many public companies, are required by charter to vote with management or, if they disagree, to sell the positions. It's unusual for a large institutional shareholder to both hold on to a position and vote against management. So letting shareholders approve top compensation will not keep managers from pocketing $50 million pay envelopes.

The usual justification for multimillion-dollar rewards is that the company has performed well “in the market” or “exceeded the budget forecasts.” Of course, meeting such a benchmark explains a bonus of $250,000, not necessarily one of $20 million. Yes, the CEO has responsibilities and “duties of care,” but if the board were to auction off the position of CEO in most companies, it's likely that they would find many qualified takers for $1 million a year.

The truism about salaries—“You don’t get what you deserve; you get what you negotiate”—does not apply to the C-suite, which gets what the board is dumb enough to give away almost blindly. They go along with the lavish payouts based on similar compensation paid by competitors.

Because of this mutual-remuneration self-congratulatory circle, salaries have skyrocketed, even if stock prices have remained flat or plummeted. General Electric’s CEO has earned $54 million in the past five years, while the company’s stock went from $37 to $7 and back up to $23 a share. As the Death of Salesman line goes, “No man only needs a little salary.”

Ex-Treasury Secretary Robert Rubin pulled down $126 million from 1999 to 2009 as a top Citigroup senior executive, but when it went bust said that he had no responsibility for the bank’s creditworthiness. He confessed, “My great regret is that I and so many of us who have been involved in this industry for so long did not recognize the serious possibility of the extreme circumstances that the financial system faces today.” But he didn’t give back any of the money. Rubin’s boss, Charles Prince, left the chairmanship of Citi with about $80 million in his pockets, even though the company went to the wall the moment he was out the door.

The goal should not be just to limit CEO pay, but to increase average wages and salaries, and think of increasing the dividend, especially in companies eager to throw millions at the boss. Stock options and profit sharing could be allocated equally to all employees, and not simply reserved as corner-suite perks.

Likewise, cumulative voting of board directors allows smaller blocks of shareholders to elect a representative (you put all of your votes on one candidate).

Many top CEOs live in a bubble of private jets and pillowed suites, and are accountable to only a handful of cronies—certainly not the vote of the employees or the shareholders. They thrive in the cozy confines of oligopoly — think of a golf club lounge — in which a corporation’s success is due only to the top managers, not to the shareholders’ capital or to the workers.

Why not have a companywide plebiscite on the chief executive every two years? The Greeks knew that war was too important to be left to the generals, and had their soldiers elect them.

Employees, pensioners and shareholders all ought to have seats at the table. The Chinese garment workers who stitch together all those sailor suits that are sold at vast markups in sweat shops might be less inclined to pay Ralph Lauren $66 million a year than the board in New York would.

Minder’s law and its clones in the EU or, were legislation to come about, in the US, won't solve the problem on their own. Rather than passing legislation that sounds good in the headlines (The Economist: “Fixing the Fat Cats”) but achieves little reform at the office, the most significant recovery for the ransoms paid to many senior executives would be to overhaul how boards of directors are established and operated — to make them legally accountable for the company’s performance and representative of all stakeholders, including the work force. Keep in mind that when salesman Willy Loman asked for a golden parachute, he only needed “fifty dollars to set his table.”

Flickr photo by World Affairs Council of Philadelphia: Former Citigroup Director and executive Robert Rubin. Is that the size of his bonus?

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.

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