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

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

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

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

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

    Historical Precedents

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

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

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

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

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

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

    The New Battle Lines

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

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

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

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

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

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

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

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

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

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

    This piece first appeared in Real Clear Politics.

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


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

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

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

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

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

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

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

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

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

    San Antonio: The Emerging Upstart

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

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

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

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

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

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

    Greater San Marcos: Whoa Nellie!

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

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

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

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

    Choices To Be Made

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

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

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

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

    This piece first appeared in Forbes.

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


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

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

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

    Not Capital Nor Institutions

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

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

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

    The Problem

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

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

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

    The Great Enrichment

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

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

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

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

    Reversion

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

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

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

    A Sampling of Observations

    Throughout the book, McCloskey provides useful observations.

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

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

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

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

    High Density Economics

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

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

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

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

    Trickle-Out Economics

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

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

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


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  • 10/17/16--02:38: Two Cheers for NIMBYism
  • Politicians, housing advocates, planners and developers often blame the NIMBY — “not in my backyard” — lobby for the state’s housing crisis. And it’s true that some locals overreact with unrealistic growth limits that cut off any new housing supply and have blocked reasonable ways to boost supply.

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

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

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

    Read the entire piece at The Orange County Register.

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


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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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

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

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

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

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

    Here's the five-phase process:

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

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

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

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

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

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

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

    image of detroit

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

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

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

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

    google image of grand river avenue intersecting with Grand Boulevard

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

    google image of Gratiot Avenue and Grand Boulevard

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

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

    google image of Chicago's Logan Square

    Or Logan Circle, in Washington, DC:

    google image of Logan Circle

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

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

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

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

    Top photo: detroit.curbed.com

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


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

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

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


    Fifty Shades

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

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

    screen-shot-2016-10-06-at-10-54-39-am-2

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

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

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

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

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

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

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

    Data for Policy

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

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

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

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

    Why does the Census Bureau collect information on race?

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

    Looking at each in turn,

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

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

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

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

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

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

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

    This piece first appeared at Populyst.net.

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

    Photo: Travelin' Librarian


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    In recent years, the plight of renters in a stagnant economy has been covered extensively. A book title incorporated the phrase “the rent is too damn high” (by Matthew Iglesias). The “Rent is Too Damn High Party” ran candidates in both city and state of New York elections. However, as bad as rent increases have been, more serious has been the escalation of house prices in the major metropolitan areas of the United States.

    The Expected Nexus

    Generally, a closely aligned relationship between trends in owner occupied and rented housing costs would be expected . This was certainly true until 1970 (Note 1).  In 1949 there was a 135 percent difference between the lowest median household value and the highest in the major metropolitan areas (Note 2). There was a similar 114 percent difference between the lowest gross rent and the highest (Figure 1). The house value variation was 18 percent higher than the rent variation.

    By 1969 median house values varied a maximum of 134 percent from the lowest figure to the highest, a slight reduction from the 135 percent difference across the United States in 1949. Median gross rents varied a maximum of 107 percent among the same metropolitan areas, down modestly from 1949’s 114 percent (Figure 2). The house value variation was 25 percent higher than the rent variation.

    The close relationship between the variations in house value and rent   was substantially broken in more recent decades. The 2015 American Community Survey shows that the variation among the major metropolitan areas in median house values is now a staggering 509 percent. The range between the least expensive and most expensive rental markets is a much smaller 158 percent (Figure 3). The difference in the variations between house value and rents across the nation rose to 222 percent, nearly nine times the 1969 figure.

    Among the 10 metropolitan areas with the largest house price increases between 1969 and 2015, house values increases averaged 226 percent, nearly 350 percent more than the 65 increase in median rents, both figures inflation adjusted (Figure 4).

    Of course, the hideously expensive California metropolitan areas are well represented, such as San Jose, San Francisco, Los Angeles and San Diego, among the most impacted. Even inland Sacramento, with significant housing affordability problems often over-shadowed by the Bay Area, is included. However, the huge differences extend to metropolitan areas outside California, such as Denver, Baltimore, Portland, Seattle and Boston.

    The broken relationship between rent and house value could imply severe distortion in either the rental market or the owned housing market.

    If the Rent is Too Damn Low

    Distortions in the market could have prevented rents to retain their relationship with rising house values.

    The implications are ominous. If the increase in rents had kept up with the increase in house values, the median gross rent in the San Francisco metropolitan area would have been approximately $3,700 per month, compared to the actual $1,600 per month in 2015. This would suggest that rents in 2015 were $2,100 below market in San Francisco. If this is true, then the rent is too damn low in San Francisco. The situation would be even worse down the road in San Jose where to keep up with house prices rents need to be $4,700 per month, $2,800 per month higher than market.

    If the rental market is distorted, then rents are far too low in other metropolitan areas. In Los Angeles, San Diego, Baltimore, Sacramento and Portland rents are between $1,000 and $1,400 too low. Rents would be at least $800 below market in Boston, Seattle and Denver (Figure 5).

    If House Prices are Too Damn High

    If the owned housing market became distorted relative to the rental market between 1969 and 2015, then it is the rents that are too damn high.  If house values had risen at the same rate as rents, none of the 53 markets would have exceeded a price to income ratio of 5.0, which denotes is denoted as “severely unaffordable” in the Demographia International Housing Affordability Survey. This would be a substantial improvement, given that 11 major markets actually were severely unaffordable in 2015.

    The 10 major metropolitan areas with the largest house value increases would have had hugely lower house prices. In San Jose, the median house value would have been equal to 3.2 years of median household income in 2015. This is considerably better than the actual 8.1 years, representing a 55 percent improvement. In San Francisco the median house value would have been equal to 3.5 years of median household income. This would be a 60 percent improvement on the actual 8.1 ratio in 2015 (Note 3). 

    In Los Angeles, Portland, Sacramento and San Diego, house values would have been about 50 percent less if they had risen at the same rate as rents. In Boston, Denver and Seattle, house prices would have been between 40 percent and 45 percent less (Figure 6).

    It’s the House Prices that are Too Damned High

    Rents have risen faster than incomes, but nothing compared to the increase in house prices. Clearly, house prices are too damn high. The huge increase between 1969 and 2015 in house prices is an anomaly that has become extreme in recent decades. The ranges in rents (1949, 1969 and 2015) and the ranges in house values in 1949 and 1969 were far more similar and reflected a reality more in line with the stability that would be expected in non-distorted markets (Figure 7). Indeed, the large increase in the 1969-2015 rent range could well have been influenced upward by the virulent house price increase (reflected in land prices).

    It seems likely that rents across the country are much more reflective of an efficiently operating market, while there are serious distortions in the owned housing market.

    Finally, owner-occupied housing, especially detached housing, has been under assault by restrictive urban planning regulations since 1970. House prices are most out of alignment in markets where this has occurred, especially in California, Oregon, Washington, and the Denver, Baltimore and Washington, DC metropolitan areas. More often than not, these regulations have evolved into urban containment policy (Note 4), which draws arbitrary lines around cities beyond which detached housing tracts are not permitted (See: Urban Containment, Endangered Working Families and Beleaguered Minorities). Obviously, as in goods and services generally, this regulatory over-reach makes housing less affordable (See: People Rather than Places, Ends Rather than Means: LSE Economists on Urban Containment).

    There has been no such assault on multi-family building, which represents the bulk of rentals. This is not to suggest that rental regulation is perfect, only that the market distortions have been far more severe in reference to the owned housing market in some metropolitan areas, such as those identified above.

    All of this has serious consequences for the nation and its threatened middle income households. With median household incomes below nearly two decades ago (perhaps for the first time in US history), economic stagnation and younger people burdened by rising college debt, lower house prices are a necessity in the over-regulated metropolitan areas. Yet there seems little desire on the part of most governments, particularly in the most severely impacted markets, to do much about it.

    Note 1: These censuses collected house value and rent data for the previous year, 1949 and 1969 respectively. The rent and house value data referenced in this article was first available in the 1950 census.

    Note 2: The 53 metropolitan areas with more than 1,000,000 population in 2015 (in 1950, only 51 of these had achieved metropolitan area status). The rent ranges cited in this article are calculated by dividing the highest major metropolitan area rent by the lowest major metropolitan area rent in the particular year. The house value ranges cited in this article are calculated by dividing the highest major metropolitan area house value by the lowest major metropolitan area house value in the particular year.

    Note 3: Some analysts cite topographic barriers for creating the scarcity of land that has driven house price up so much in the San Francisco Bay Area (which includes both the San Francisco and San Jose metropolitan areas). As indicated in a previous article, there is far more land available for greenfield residential development in the Bay Area than would be required by even the strongest population growth.

    Note 4: With respect to urban containment policy, Boston is an exception, which is the only seriously unaffordable major metropolitan area in the Demographia International Housing Affordability Survey that does not have urban containment policy. Boston has large lot zoning so expansive that it has created a severe shortage of land for development, with urban containment-like effects on house prices. Boston’s urbanization covers more land area than all urban areas in the world except New York and Tokyo, despite having only a fraction of their populations (See: The Evolving Urban Form: Sprawling Boston).

    Photo: Sacramento: An inland California unaffordable housing market (by author)

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


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    The other day when I was riding my bike in Minneapolis crossing I-94 near Riverside I encountered a small townhome project built during the first (failed) green era under the Carter administration. It was built to showcase the future. One thing I've learned over the years building my own green homes is to not listen blindly to the experts who parrot others' ideas without thinking of the ramifications.

    The world's first solar and earth-berm grass-roof townhome projects look like this today:

    image of townhome

    The original townhomes were built with earth covered roofs, with south facing solar panels for heating, and stored the heat collected over a long period of time in a room full of boulders. In 1983, I also owned an earth-berm solar heated home overlooking a lake in another part of town. Back then we thought, as the world freezes over (no global warming at that time), we would be nice and toasty in our 'energy-independent' homes powered by the sun itself. I went even further with a 10kW Bergey Wind Generator on a 100' tall tower. Heated by the sun and powered by the wind.

    As you see in the above pictures, this experiment, which had the University of Minnesota involved (from what I remember), did not age well, nor did it work - at all! Gone are the solar panels that used to collect the heat positioned along the bare brown steel roof panels, and gone is grass roof that leaked. Banished is the room full of boulders to store the heat, which got so hot often windows needed to be opened to let in cold winter air, a problem my own solar home had also.

    In 1983, my 4,000 square foot lake front solar home cost $120,000 and after tax credits, my Wind Generator cost $12,000. These smaller townhome units cost $80,000 at the time. One of the original residents who stayed over the decades experienced failed systems and lawsuits. They eventually sold their home – for $80,000! Quite the investment these fancy schmancy trendy homes. A Nigerian investment scheme via an E-Mail might have been less risky. You would think the first home owners would have been the architects and professors who were behind this project – but they themselves didn’t buy in, so there’s an indication that maybe the idea was not so terrific. This is the lesson I’ve learned, never take advice from anyone who is not willing to personally invest and take the same risk as they suggest to others in a new concept.

    The Carter era was a troubled one, with energy widely predicted to be running out, and home mortgage rates as high as 18%. It’s hard to imagine there was any new housing being built, but some were. The initial residents of these townhomes (including myself) believed we were the smart ones, preparing for the energy costs skyrocketing and never having to worry. Hell could freeze over – but we wouldn’t.

    That was then, but how does this apply to now, especially with an election just days away?

    Hillary Clinton was promising half a billion solar panels on rooftops. OK, now picture the above bare rooftops – that’s how the roofs will look when the lifespan of those half billion heavily subsidized solar panels reach the end of their usefulness - in two decades. Where do you think most solar panels are made today? If you answered China, you deserve a star! And if a roof needs repair or replacement prior to the end of the panels’ lifespan, will the government subsidize the extra cost of repairs? Who will pay for cutting down the mature trees along the streets so that the sun can reach these panels? Oh, wait, you are supposed to keep those mature, beautiful, and value increasing shade trees? My bad. You think Obama Care was a terrible idea… just wait for the Hillary program, and the social engineering sure to follow, and sure to fail.

    Trump? I imagine he’d be politically incorrect of course, calling those solar townhomes: ugly, hideously, awful useless, fat, blemished, blight… only unlike comments about women, he’d have a lot who would agree. I don’t know what a Trump administration would look like, but I’m pretty confident that it would not involve social engineering, nor have subsidies go to China or Mexico. I hope that if he had a wind or solar agenda, the panels would be produced here with a fair and proper competition to award the vendors with the best price/performance ratio and make them bond a 20 or 30-year fund if the mechanisms wear prematurely.

    I hope that Trump or Clinton look into creating new programs that encourage private new developments or large scale redevelopment to have their own ground based solar gardens instead of the current wave of public investments of solar farms which have federal tax advantages but seem, at least to me, a questionable investment at best. They are even promoting these solar investments at the Best Buy store in Minnetonka, Minnesota with the promise of a consistent energy cost, but they require a 20-year commitment, even though the average home sells once every 6 years.

    These are heavily subsidized by you, the tax payers. Some of these solar fields are supposed to supply the power companies themselves, for example Ivanpah in the California desert which was to supply power for PG&E. Ivanpah was a solar system using mirrors heating up over 170,000 panels to create steam, but failed to deliver the power the ‘experts’ promised. Besides killing thousands of birds, the 1.5 billion dollars of your tax money was pretty much a really bad investment – oopsie! A more viable alternative is to create a more localized system as part of new developments or large scale redevelopments.

    Having a solar garden in a subdivision eliminates the problem with roof-top application, cleaning ice and snow off the panels, and streets could still have those shade trees. Each resident in the subdivision would have their share of the power and as technology improves, every resident would benefit from the latest technologies – be it solar, wind, or both. Such a Federal program does not exist – but should.

    Top photo by https://pixabay.com/en/users/Kenueone-2397379/ [CC0], via Wikimedia Commons

    Rick Harrison is President of Rick Harrison Site Design Studio and Neighborhood Innovations, LLC. He is author of Prefurbia: Reinventing The Suburbs From Disdainable To Sustainable and creator of LandMentor. His websites are rhsdplanning.com and LandMentor.com


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    For progressives, the gloating is about to begin. The Washington Monthlyproclaims that we are on the cusp of a “second progressive era,” where the technocratic “new class” overcomes a Republican Party reduced to “know-nothing madness.”

    To be sure, Trump himself proved a mean-spirited and ultimately ineffective political vessel. But the forces that he aroused will outlive him and could get stronger in the future. In this respect Trump may reprise the role played another intemperate figure, the late Senator Barry Goldwater. Like Trump, Goldwater openly spurned political consensus, opposing everything from civil rights and Medicare to détente. His defeat led to huge losses at the congressional level, as could indeed occur this year as well.

    Goldwater might have failed in 1964, but his defeat did not augur a second New Deal, as some, including President Lyndon Johnson, may have hoped. Instead, his campaign set the stage for something of a right-wing resurgence that defined American politics until the election of President Obama. Pushing the deep South into the GOP, Goldwater created the “Southern strategy” that in 1968 helped elect Richard Nixon; this was followed in 1980 by the victory of Goldwater acolyte Ronald Reagan.

    History could repeat itself after this fall’s disaster. People who wrote off the GOP in 1964 soon became victims of their own hubris, believing they could extend the welfare state and the federal government without limits and, as it turned out, without broad popular support. In this notion they were sustained by the even then liberally oriented media and a wide section of the “respectable” business community.

    Three decades later a similar constellation of forces —- Hollywood, Silicon Valley, Wall Street—have locked in behind Hillary Clinton. But it is the transformation of the media itself both more ideologically uniform and concentrated more than ever on the true-blue coasts, that threatens to exacerbate Progressive Triumphalism. In this election, notes Carl Cannon, no Trump fan himself, coverage has become so utterly partisan that “the 2016 election will be remembered as one in which much of the mainstream media all but admitted aligning itself with the Democratic Party.”

     Progressive Triumphalism may lead the Clintonites to believe her election represented not just a rejection of the unique horribleness of Trump, but proof of wide support for their favored progressive agenda. Yet in reality, modern progressivism faces significant cultural, geographic, economic and demographic headwinds that will not ease once the New York poseur dispatched.

    Successful modern Democratic candidates, including President Obama and former President Clinton, generally avoid openly embracing an ever bigger federal government. Obama, of course, proved a centralizer par excellence, but he did it stealthily and, for the most part, without the approval of Congress. This allowed him to take some bold actions, but limited the ability to “transform” the country into some variant of European welfare, crony capitalist state.

    Hillary Clinton lacks both Obama’s rhetorical skills and her erstwhile husband’s political ones. Her entire approach in the campaign has been based on creating an ever more intrusive and ever larger federal government. Even during Bill Clinton’s reign, she was known to be the most enthusiastic supporter of governmental regulation, and it’s unlikely that, approaching 70, she will change her approach. It seems almost certain, for example, that she will push HUD and the EPA to reshape local communities in ways pleasing to the bureaucracy.

    Yet most Americans do not seem to want a bigger state to interfere with their daily life. A solid majority—some 54 percent—recently told Gallup they favor a less intrusive federal government, compared to only 41 percent who want a more activist Washington. The federal government is now regarded by half of all Americans, according to another poll by Gallup, as “an immediate threat to the rights and freedoms of ordinary citizens.” In 2003 only 30 percent of Americans felt that way.

    Nor is this trend likely to fade with time. Millennials may be liberal on issues like immigration and gay marriage, but are not generally fans of centralization, fewer than one-third favor federal solutions over locally based ones. 

    Due largely to Trump’s awful persona, Hillary likely will get some wins in “flyover country,” the vast territory that stretches from the Appalachians to the coastal ranges. In certain areas with strong sense of traditional morality, such as in Germanic Wisconsin and parts of Michigan, notes Mike Barone, Trump’s lewdness and celebrity-mania proved in the primaries incompatible with even conservative small town and rural sensibilities, more so in fact than in the cosmopolitan cores, where sexual obsessions are more celebrated than denounced.

    Yet Trump’s strongest states, with some exceptions, remain in the country’s mid-section; he still clings to leads in most of the Intermountain West, Texas, the mid-south and the Great Plains. He is still killing it in West Virginia. This edge extends beyond a preponderance of “deplorables” and what Bubba himself has referred to as “your standard redneck.”

    Exacerbating this cultural and class discussion is the growing division between the coastal and interior economies. Essentially, as I have argued elsewhere, the country is split fundamentally by how regions makes money. The heartland regions generally thrive by producing and transporting “stuff”—food, energy, manufactured goods —while the Democrats do best where the economy revolves around images, media, financial engineering and tourism.

    Energy is the issue that most separates the heartland from the coasts. The increasingly radical calls for “decarbonization” by leading Democrats spell the loss of jobs throughout the heartland, either directly by attacking fossil fuels or by boosting energy costs. Since 2010, the energy boom has helped create hundreds of thousands of jobs throughout the heartland, many of them in manufacturing. At the same time, most big city Democratic strongholds continued to deindustrialize and shed factory employment. No surprise then that the increasingly anti-carbon Democrats control just one legislature, Illinois, outside the Northeast and the West Coast.

    Trump’s romp through the primaries, like that of Bernie Sanders, rode on the perceived relative decline of the country’s middle and working classes. For all her well-calculated programmatic appeals, Hillary Clinton emerged as the willing candidate of the ruling economic oligarchy, something made more painfully obvious from the recent WikiLeaks tapes. Her likely approach to the economy, more of the same, is no doubt attractive to the Wall Street investment banks, Silicon Valley venture capitalists, renewable energy providers and inner city real estate speculators who have thrived under Obama.

    Yet more of the same seems unlikely to reverse income stagnation, as exemplified by the huge reserve army of unemployed, many of them middle aged men, outside the labor force. The fact remains that Obama’s vaunted “era of hope and change,” as liberal journalist Thomas Frank has noted, has not brought much positive improvement for the middle class or historically disadvantaged minorities.

    The notion that free trade and illegal immigration have harmed the prospects for millions of Americans will continue to gain adherents with many middle and working class voters—particularly in the heartland. We are likely to hear this appeal again in the future. If the GOP could find a better, less divisive face for their policies, a Reagan rather than a Goldwater, this working-class base could be expanded enough to overcome the progressive tide as early as 2018.

    The one place where the progressives seem to have won most handily is on issues of culture. Virtually the entire entertainment, fashion, and food establishments now openly allied with the left; the culture of luxury, expressed in the page of The New York Times, has found its political voice by identifying with such issues as gay rights, transgender bathrooms , abortion and, to some extent, Black Lives Matter. In contrast, the Republicans cultural constituency has devolved to a bunch of country music crooners, open cultural reactionaries and, yes, a revolting collection of racist and misogynist “deplorables.”

    Yet perhaps nowhere is the danger of Progressive Triumphalism more acute. Despite the cultural progressive embrace of the notion that more diversity is always good, the reality is that our racial divide remains stark and is arguably getting worse. As for immigration, polls say that more people want to decrease not just the undocumented but even legal immigration than increase it.

    And then there’s the mountain rebellion against political correctness. Relative few Americans have much patience with such things as “micro-aggressions,” “safe spaces,” the generally anti-American tone of history instruction whose adherents are largely concentrated in the media and college campuses. Fewer still would endorse the anti-police agitation now sweeping progressive circles. For some, voting for Trump represents the opportunity to extend a “middle finger” to the ruling elites of both parties.

    Yet Trump’s appeal also represented something of a poke in the eye for the old-school religious right; Trump has actually helped the GOP by embracing openly gay figures like Peter Thiel. He may have caused many bad things, but the New Yorker succeeded, as no Republican in a generation, in making the holy rollers largely irrelevant.

    The dangers for the Democrats lie in going too far in their secularism. As recent emails hacked by WikiLeaks have demonstrated, there is widespread contempt in left circles for most organized religion, most importantly for the moral teachings of the Roman Catholic Church, even under a more progressive Pope. Some Democrats may argue that irreligiosity will remain “in” among millennials. Yet this was also said about boomers and turned out to be wrong. Few sociologists in the 1970s would have expected a religious revival that arose in the next decade.

    Simply put, millennials’ economic and cultural views could shift, as they become somewhat less “idealistic” and more concerned with buying homes and raising children. They could shift more the center and right, much as Baby Boomers have done.

    No matter what happens this year, the battle for America’s political soul is not remotely over. Trump may fade into deserved ignominy and hopefully obscurity, but his nationalist and populist message will not fade with him as long as concerns over jobs, America’s role in the world, and disdain for political correctness remain. If Hillary and her supporters over-shoot their nonexistent mandate and try to impose their whole agenda before achieving a supportable consensus, American politics could well end up going in directions that the progressives, and their media claque, might either not anticipate or much like.

    This piece first appeared in The Daily Beast.

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

    Photo by Gage Skidmore [CC BY-SA 3.0], via Wikimedia Commons


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    The consumer technology boom, largely responsible for a resurgence in California’s economy after the tech wreck of 2001, seems to be coming to an end. The signs are widespread: slowing employment, layoffs from bell-weather social media companies, the almost embarrassing difficulty of finding buyers for Twitter, the absorption of Yahoo by Verizon and the acquisition by Microsoft of LinkedIn.

    This is not to minimize the great things which have been accomplished over 15 years of massive investment in these technologies. Mark Zuckerberg founded Facebook in 2004, and is now worth some $55 billion, up $15 billion from last year. In 2015, more than 1 billion people globally used Facebook applications every single day. The “app economy” created by Steve Jobs and Apple is equally impressive. What would we have done with our free time if it were not for Farmville, Angry Birds and Pokemon Go?

    The tech boom has changed the face of wealth in America. Tech oligarchs, mostly clustered in the Bay Area, which dominates some 40 percent of employment in search and web publishing, now account for one quarter of the wealth of the Forbes 400 richest Americans. This tilting of wealth is not going away, and may shape the business world for a generation.

    Concentration and contraction

    Overall though, the economic impact of these technologies has been limited. Google’s Alphabet Inc. and Facebook Inc. together employ fewer than 75,000 people, one-third fewer than Microsoft, worth only a fraction its value. Snapchat, the star of Silicon Beach, employs several hundred people, hardly enough to reverse a long-term decline in Southern California tech employment.

    More troubling still are changes in the Bay Area tech culture. In its 1980s heyday, Silicon Valley was a Wild West of start-ups, new companies and ideas, and lots of jobs. Today, it resembles increasingly the cozy and fundamentally uncompetitive world of Detroit’s Big Three — Ford, Chrysler and General Motors. The Valley is increasingly dominated by a handful of companies — Google, Facebook and Apple — while conditions for startups, even well-funded ones, have deteriorated markedly.

    Read the entire piece at The Orange County Register.

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

    Marshall Toplansky is Senior Advisor to Chapman University in the area of Data & Analytics, as well as adjunct faculty member at the Argyros School of Business and Economics. Formerly Managing Director of KPMG’s national center of excellence in Data & Analytics, Marshall co-founded big data company Wise Window, a pioneer in analyzing social media, blogs and news stories to track and predict business and political trends. Marshall is Chairman of the Cicero Institute, a strategy and research institution in Salt Lake City, Utah. He is past Managing Director of the Harvard Business School Association of Orange County, and was elected to the Computing Industry Hall of Fame for his role in creating the industry’s largest technical service certification program, A+, which has certified more than 3 million computer technicians worldwide.


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    The story of skyrocketing rents has two components: residential and commercial.

    My New York neighborhood, the Upper West Side, features fairly stable residential rents, but commercial rents seem to have been soaring. This has caused the familiar angst over the loss of neighborhood businesses to the ubiquitous bank branches and drug stores.

    But today even chains are getting priced out. The quintessential marker of gentrification, Starbucks, was recently forced to relocate in my neighborhood. They vacated their stores at 67th and Columbus when the landlord raised their rent to $140,550/month.

    You’ve got to sell a lot of grande’s to cover that kind of rent check. How many businesses can realistically survive at this location? (Maybe none – it’s still vacant).

    A block up the street, another store helps illustrate the forces sending retail rents through the roof. It’s the Maille “mustard boutique” at 68th and Columbus pictured above.

    Maille is a supermarket brand of dijon mustard. It’s a product of Unilever, the Anglo-Dutch food and consumer products giant. You may not know Unilever, but you know their brands, including Hellman’s, Dove, Lipton, and even Ben and Jerry’s.

    This particular location provides mustard tastings, and sells dijon in a variety of flavors not typically available. I believe they also have some vinegars. I was once needed some dijon and purchased a jar of their regular flavor for $7 – which is $3 more it sells for at the grocery store a few blocks away.  They apparently charge as much as $99 for a jar of black truffle mustard.

    I don’t know what their monthly rent is. It’s a smaller, mid-block store than the former Starbucks location. Based on square footage equivalents, the rent would be somewhere around $30,000 a month.

    Can you really sell enough mustard to cover that kind of rent (to say nothing of the “mustard sommelier” and other employees they have on staff and all the other costs of operations)? I see people in the store, but it’s never crowded. And it’s rare to see someone walking out with a shopping bag.

    It strikes me as dubious that this store could even break even, much less turn a profit that would earn the required return on invested capital.

    But ultimately it doesn’t matter if this store makes money or not. The rent isn’t even a rounding error to Unilever and can easily be justified as a marketing expense.

    If there’s one thing it’s not hard to find in this world, it’s gourmet mustard. This neighborhood needs a corporate mustard showroom like it needs a hole in the head.

    But we have one anyway. And there’s actually a second location in the Flatiron. These are the only Maille stores in the US, save for what appears to be a popup going into a Connecticut mall.

    You can tell a lot of amazing “only in New York” stories. But this is an example of a bad one. These showrooms may be exclusive to the city, but they put upward pressure on retail rents and make it harder for actual neighborhood serving businesses to make it. (This location was closed over the summer for a sidewalk replacement project and I was hopeful it wouldn’t reopen – alas, it was to be denied).

    Multiply two Maille mustard showrooms by all the other major corporations who use NYC as a branding platform, and it’s easy to get a sense as to why retail rents are so high in Manhattan.

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

    Photo: Maille mustard “boutique” on Columbus Ave at 68th St.


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  • 10/26/16--22:38: Suburban. Comma. Transit.
  • I explored the Orange Line Bus Rapid Transit (BRT) system that runs for eighteen miles across the San Fernando Valley in Los Angeles. The Valley is a profoundly suburban city-within-a-city and home to 1.8 million people spread out over 260 square miles. Attempts to upgrade public transit by the central authorities in LA proper have been fought tooth and nail by folks in the Valley and illustrate why transit just doesn’t work when the local culture doesn’t want it. I’m not sure why LA keeps pushing on this particular string.

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    Transit works best when one compact highly productive walkable neighborhood is connected to another compact highly productive walkable neighborhood. Manhattan or Hong Kong isn’t required. A plain vanilla Main Street with two and three story buildings works just fine.

    Suburbia is the exact opposite. Everything is spread out and oriented around private space, leisure, and consumption. Public space is an afterthought and any hint of density is anathema. Transit is believed to attract “the wrong element.” If this is the kind of world these folks want to inhabit… I say walk away and let them all enjoy the Jiffy Lubes and drive-thru burger joints without transit.

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    This is the standard suburban environment with its sad begrudging crumbs of half assed bus service. It’s a monumental waste of scarce public funds to attempt to operate public transit here. The land use pattern and culture are in direct conflict with efficient cost-effective transit. And it’s punishing for the people who have no choice but to walk or take the bus: the young, the elderly, the infirm, and the poor.

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    Here’s how suburban communities typically deal with transit. To the extent that it’s tolerated at all the transit station is hidden away behind a row of self storage facilities and plumbing supply warehouses. The entrance is treated as if it were an office park. There’s an enormous amount of surface parking. The assumption is that people will drive to the bus or train station since transit is a bridge between the comforts of the private automobile and the necessary evil of commuting to a more congested urban destination.

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    The Park and Ride model of transit like this Metro stop in Chatsworth (the terminus of the Orange Line) is moderately acceptable to middle class suburbanites so long as the station is properly landscaped. Absolutely nothing can be built anywhere near the station. Loitering must be prevented at all costs. Theoretically it’s possible to walk to and from the station, but the location and design of the place ensure it isn’t a common practice.

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    I followed the entire route of the Orange Line and found the stations themselves are well designed, convenient, and efficient. The fully segregated busway disguised in a tunnel of greenery mean buses are never stuck in the same traffic that afflicts cars and trucks. The buses come frequently and predictably and travel is comfortable and fast. BRT simulates the benefits of a light rail system, but at a tenth the cost.

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    But each station was built in a spot that makes it unlikely that transit will live up to its full potential. This is the De Soto stop. The buses do a great job of getting passengers from one isolated station to another. This isn’t an accident. It’s the only set of arrangements the locals would tolerate – and the locals have a lot of lawyers. Transit is associated with the lower class and home owners here want no part of it. So they litigated for years until the proposed rail line was beaten back to a bus route and some decorative shrubbery that didn’t go anywhere too offensive.

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    Here’s the Balboa station. Abundant surface parking, plenty of landscaped strips, and a location that doesn’t infringe on nearby private property lets people drive to the bus. Unfortunately the effectiveness of good transit is negated by the barren surroundings. If you had access to a car and could drive to the bus… you wouldn’t really need the bus.

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    Here’s the Sepulveda station. Notice how the pattern repeats. In the Valley it’s now possible to take a highly effective bus trip from the Costco parking lot in Van Nuys to a strip mall a dozen miles away in Canoga Park. That’s progress of a sort since the BRT is so much better than traditional suburban bus service. But the public investment in infrastructure isn’t being complimented by the required private investment near any of the stations. That’s because the culture rejects the kind of infill development that would make the stations economically meaningful.

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    Bicycle and pedestrian paths parallel the BRT busway along many miles of the system. This allows people to get from Point A to Point B in a way that doesn’t rile up the locals quite as much as the proposed light rail did. Fenced in landscaped bike paths follow the suburban “Sunday in the park” model of leisure that’s at least borderline socially acceptable in the Valley. The fact that low income people also use the paths to peddle to work is an unfortunate and much lamented side effect. I noticed more than a few Spandexed guys on $4,000 bikes yelling at slow moving folks to get out of the way.

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    The eighteen miles of Bus Rapid Transit in the Valley cost $324 million dollars to construct. That’s $18 million per mile. Compare that to the recent $1.1 billion road improvement project on a ten mile stretch of freeway in the Valley. The freeway was already ten lanes wide so adding slightly better on and off ramps and tweaking the car pool lanes did exactly nothing to relieve traffic congestion. That’s $110 million dollars per mile. The same people who lament the waste of taxpayer money on transit think the city should be spending more to upgrade the roads.

    Over the years community groups and their elected representatives in the Valley have created legislation that forbids the construction of light rail or the use of sales tax revenue to fund a subway. Other local groups created rules that mandated a fully underground subway system because they objected to surface or elevated rail lines in their neighborhoods. And the ubiquitous anti-infill and anti-density brigades continue as always.

    Personally, I don’t see the point of fighting locals who don’t value transit. I say give this part of the city no transit at all. But also require the locals to fund their own road projects from their own immediate tax base as well. Actually, I would love to see things taken a step farther. Cut the Valley loose from the City of Los Angeles altogether as so many folks in the Valley have attempted to do for decades. Let the Valley keep its own tax revenue and pay for its own services and infrastructure as an independent city. And let Los Angeles be free to focus on projects that actually make sense in the coastal communities that actively want transit and more intensive development. If that means the region is less integrated as a result… I don’t see how things could be worse.

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


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    It’s increasingly unfashionable to celebrate those who made this republic and established its core values. On college campuses, the media and, increasingly, in corporate circles, the embrace of “diversity” extends to demeaning the founding designers who arose from a white population that was 80 percent British.

    In this American version of Mao’s “Cultural Revolution,” which tried to eviscerate traces of China’s past, venerable buildings are being renamed, athletes refuse to stand for the national anthem and, on some campuses, waving the American flag is now considered a “microaggression,” while English students at Yale want to avoid reading the likes of Milton, Shakespeare and Chaucer.

    Of course, some changes are justified. Asking anyone, particularly African Americans, to revere the Confederate flag or attend schools named after the founder of the Ku Klux Klan is, indeed, offensive. But in our zeal to address old wrongs, we may also be sacrificing the very things that have made this republic so attractive to millions from distinctly different backgrounds for the last two centuries.

    Why we come here

    Just to clear the air, I have not a single drop of British blood in me. The closest ties I have to what I consider my cultural and political home country come from my great uncle Simon, who served in Gen. Allenby’s Jewish brigade in World War I, and that my wife, born in Montreal, came into the world a subject of Her Majesty, Queen Elizabeth. Career wise, I did work for a think tank in London for several years.

    But what ties most Americans to the founders is not race, but our embrace of a political and legal culture based on distinctly Anglo-Saxon ideas about due process, representative government, property rights and free speech. These proved infinitely superior to the divine right of czars, kaisers, emperors and other hereditary autocrats for generations of non-Anglo-Americans.

    This system, always capable of amendment, has allowed waves of traditional outsider groups — African Americans, Latinos, women, Mormons, Jews and Muslims — to join the economic, political and cultural mainstream. In some cases, as in the case of President Obama, they have also secured the highest reaches in the national firmament.

    Read the entire piece at the Orange County Register.

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

    Photo: William Robert Shepherd [Public domain], via Wikimedia Commons


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    One of the great pleasures of China is a walk along the Bund promenade.

    Shanghai’s Bund is one of China’s great tourist and historic sites. Its history lessons are from two distinctively different periods. All of this can be witnessed from the raised promenade along the west bank of the Huang Pu River, which separates the old Puxi (west of the river) commercial core of Shanghai from the new, iconic business district that has grown up in Pudong (east of the river). It is clear that the promenade at the Bund is a very popular local tourist attraction as well.

    The Bund became a center of British commerce in the mid-19th century and remained a part of the Shanghai International Settlement (through a 1860s merger of the British and American concessions) until the beginning of World War II. Most of the buildings were built in the first quarter of the 20th century.

    This article will provide a quick tour of the western style buildings in Puxi, behind the promenade and a few views of Pudong (the Lujiazui business district) across the river. The tour starts at the south end of the Bund and continues approximately 1.2 kilometers (0.75 miles) to Suzhou Creek, just beyond the north end of the Bund. The western buildings are located along Zhongshan East #1 Road, facing the Huang Pu. The promenade is between the buildings and the Huang Pu, across from which is the Lujiazui business district of Pudong. Generally, the names used for the buildings are the original or pre-World War II, though the there can be conflicting names. I would be pleased to be advised of any corrections.

    Image 1 shows a broad sweep of the central Bund from the south to north. It includes the four most iconic buildings.

    The Hong Kong and Shanghai Banking Corporation (HSBC) Building is the large domed building near the left of the picture. It was constructed in 1923 and served as the local branch of this UK bank until 1955, six years after the establishment of the People’s Republic of China. When the bank left, it ceded title to the Shanghai People’s Government, which used the building as its headquarters for some years. It is now the Shanghai Pudong Development Bank Building.

    The Customs House is just to the north of the Shanghai Pudong Development Bank Building, with the tall clock tower was opened in 1927.

    The Peace Hotel is farther north, with the green peaked tower. It was originally the Sassoon Hotel and was the north building of the hotel complex. It is now the Fairmont Peace Hotel. Across the street, is the south building of the Peace Hotel, now called the Swatch Art Peace Hotel.

    The Bank of China Building is just to the north of the Peace Hotel. Construction began on the building in the mid-1930s and it was opened after the start of World War II, in 1942.

    The illustrations start at the south end of the Bund, just north of the Pudong Ferry Terminal

    Image 2: Asia Building

    Image 3: Shanghai Club

    Image 4: Union & Nish in Navigation Buildings

    Image 5: Nishin Navigation & China Merchants Bank Buildings

    Image 6: Great Northern Telegraph to HSBC Building

    Image 7: Great Northern Telegraph & Bund #6

    Between Bund #6 and the Hong Kong & Shanghai Bank Buildings, Fuzhou Road reaches Zhongshan Road. Fuzhou Road has been known for its bookstores, though there have been fewer in recent years.

    Image 8: Original Hong Kong & Shanghai Bank (HSBC) Building, now Shanghai Pudong Development Bank.

    Image 9: HSBC Bank & Customs House Buildings

    Image 10: Customs House and buildings to the south

    Image 11: Customs House

    Image 12: Bank of Shanghai & Russo-Chinese Bank

    Image 13: Russo-Chinese Bank, Bank of Taiwan (original name, Taiwan was occupied by Japan when built) and the North China Daily News buildings. The North China Daily News was the leading English newspaper of China until it closed at the beginning of World War II.

    Image 14: Bank of Taiwan, North China Daily News & Chartered Bank

    Image 15: North China Daily News Peace Hotel South Building, Peace Hotel (North) and Bank of China buildings

    The Peace Hotel north and south buildings are across Nanjing Road opposite one another. Nanjing Road is an important shopping street, and a few more blocks inland becomes a pedestrian mall. It is also famous for offers from local students to join them in tea drinking ceremonies or at art exhibitions at which they claim to have work on display. This can be a costly experience and is not recommended.

    Image 16: Peace Hotel (North) and Bank of China

    Image 17: Peace Hotel (North) and Bank of China

    Image 18: South from Peace Hotel (North) to North China Daily News

    Image 19: Yokohama Specie Bank and Yangtze Insurance buildings

    Image 20: Jardine Matheson, Yangtze Insurance, Yokohama Specie Bank and Peace Hotel (north and south buildings). Jardine Matheson was an early trading company that got its start in Guanghou (Canton) and Hong Kong.

    Image 21: Glen Steamship Lines and Bank of Indochina

    Image 22: North end of the historic bund buildings on Zhongshan Road (Glen Steamship Lines and Bank of Indochina).

    Image 23: Waibaidu Bridge over Suzhou Creek, Broadway Mansions and Russian Consulate

    Image 24: Central Bund, including HSBC, Customs House and North China Daily News buildings from the World Finance Centre. The Shanghai World Finance Center has an opening at the top and locals refer to it as the “bottle opener” for its resemblance (Image 33).

    Image 25: Northern Bund, including North China Daily News, Peace Hotel, Bank of China and Jardine Matheson Buildings from the Shanghai World Financial Tower.

    Images 26 to 28: Promenade views

    Image 29: View of Pudong’s Lujiazui business district from the Bund promenade (across the Huang Pu). The Pearl of the Orient Tower is to the left. The tallest building, on the right, is the Shanghai Tower, second tallest building in the world (127 stories).

    Image 30: Northern tip of Lujiazui business district from the promenade

    There are a number of additional Western-style buildings that were a part of the International Settlement in Puxi. Many are on the East – West streets leading from Zhongshan Road as well as on some North – South streets, such as Sichuan Middle Road. Some buildings of the same era are located on Nanjing Road. The Park Hotel, located across the street from People’s Park was the tallest building in Asia when it was built in 1934 (Image 31), and may be the best known local hotel, along with the Peace Hotel, on the Bund.

    The Bund is close to other interesting tourist areas. The Yu Garden dates to the 16th century and is the very architectural conception of China for some tourists. As Chinese as is its appearance, not much of Chinese cities looks like this. Yu Garden now hosts extensive shopping, as well as the Huxinting Teahouse (Image 32, at night).

    The Bund sightseeing tunnel provides a short rail service from East Beijing Road (across the street from the Bank of China) under the Huang Pu to Lujiazui, near the Pearl of the Orient Tower. From there overhead walkways provide access to Lujiazui skyscrapers, include the three tallest (Image 33), which are virtually across the street from one another. These include the Shanghai Tower (second tallest in the world), the Shanghai World Financial Center and the shortest, the Jin Miao Tower, which is taller than the Empire State Building in New York and nearly as tall as the Willis Tower (former Sears Tower), in Chicago, the tallest in the world for a quarter of a century.

    From here, it is a short walk to the ferry terminal for a short right to the south end of the Bund (Image 34), completing the circle tour that began with Image 2.

    Finally, the Bund promenade is also a very well designed urban space that has become one of Shanghai’s most important public meeting spaces. It is well appointed with places to sit, relax or read a book. Like Le Jardine du Luxembourg in Paris and New York’s Central Park, there are few places to better spend a Saturday afternoon.

    Photograph at Top: Central Bund (Hong Kong & Shanghai Bank and Customs House), by author

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


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    From Southern California to Shanghai and London, inflated real estate prices have evolved into a simulacrum for broader prosperity. In an era of limited income gains, growing inequality, political dysfunction and fading productivity, the conjunction of low interest rates and essentially free money for the rich and well-placed has sparked the construction of often expensive, high-density residential housing.

    This heady period of rapid real estate asset inflation could soon be coming to an end, followed by a potentially nasty correction in high-density, high-cost, more urban core locations. Since the 2008 crash, centered in overpriced single-family housing, density has been the new mantra, a trend largely echoed in the media, academia and among the planning professions.

    The notion that dense, expensive urban real estate would dominate the future rested on two assumptions. First, it was widely explained to developers that millennials would prefer to rent small apartments for the foreseeable future, padding the profits of the investor class. Second, it was assumed that money would continue to pour into elite Western cities from the newly rich of China, Russia, Latin America and the Middle East.

    Today, both trends are diminishing. Millennials are getting older, and by 2018 more will be in their 30s — when most people seek out single-family homes — than in their 20s. We are already reaching “peak urban millennials,” as University of Southern California demographer Dowell Myers suggests, while the replacement generation, known as the “Z” or “plurals,” will be somewhat less numerous.

    At the same time, high-end residential investors from the once booming BRICS countries — Brazil, Russia, India, China and South Africa — are, with the exception of India, now experiencing slower or negative growth. They are likely to be a far less reliable source of funds for high-end luxury housing.

    Read the entire piece at the Orange County Register.

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

    Photo by Mark Lyon -- Full Floor For Rent.


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    Retraining the employed and the unemployed for higher value-added skills is now more important than simply adding to the number of jobs.

    Coal and steel magnate Wilbur Ross, a senior policy advisor to the Trump campaign, has just made in the pages of the Wall Street Journal an economic prediction that looks mathematically unattainable.

    Writing with Professor Navarro of UC – Irvine, Mr. Ross forecast that policies enacted by a President Trump would lead to the creation of 25 million new jobs, ostensibly over an eight year period:

    Donald Trump will cut taxes, reduce regulation, unleash our abundant energy and eliminate our trade deficit through muscular trade negotiations that increase exports, reduce imports and eliminate cheating. These policies will double our economic growth rate, create 25 million new jobs, boost labor and capital incomes, generate trillions of additional tax revenues and reduce debt as a percentage of GDP.

    To evaluate the 25 million figure, remember that new job creation during the booming Ronald Reagan and Bill Clinton two-term presidencies amounted to 16.1 million and 22.5 million, respectively. Given the growth of the population, you could say that a 25 million target compares reasonably to these figures. It is optimistic but, on the face of it, not outlandish.

    That is, until you scrutinize the underlying demographics. A new job requires not only an open paid position but also a person to occupy this position. In order to have 25 million new jobs, we need 25 million people to fill these jobs. So does the US even have 25 million people who would be available in the next eight years? It doesn’t seem like we do.

    job numbers

    Now as at any time, there are three main sources of new workers:

    Increase in working-age population: During the 1980s decade (which includes the two Reagan terms), the population aged 20 to 64 grew by 18.5 million. During the 1990s (including the two Clinton terms), it grew by 19.1 million. In the coming decade ending in 2025 by contrast, it will only grow by a much smaller 2.6 million.

    What explains this decline in growth for this segment? Simply put, there were many more new babies in the 1960s than in the 1910s, resulting in strong growth in the 1980s. But there were only a few more babies in the 2000s than in the 1950s, resulting in lower growth in the 2016-25 decade. Put another way, a rising number of boomers are turning 65 every year and exiting the 20-64 age bracket. This means that, unlike in the 1980s and 1990s, a large percentage of people going into these 25 million jobs will have to come from other sources.

    Immigration: Assuming an annual influx of one million immigrants (green card holders), we estimate another 7 new million workers for the decade, and a prorated 5.6 million over eight years.

    The idle and unemployed: The current official unemployment rate is hovering around 5%. However, the U6 measure of unemployment now stands at 9.7%, not far from its historical average. If we assume generously that U6 will drop by 3% towards its low of October 2000, there would be an additional 4.8 million people available for work.

    Adding all these figures (and making adjustments from 10 to 8 years where needed), we see that there is still a shortfall of 12.5 million people, or half the 25 million needed to meet the new supply of jobs.

    Keeping an open mind, we could speculate that an additional 12 or 13 million people, counting for example a large number of women and elderly, could decide to join or remain in the labor force. But this seems unlikely within the big economic boom described by Mr. Ross and Professor Navarro. If the economy will be doing that well, fewer spouses may choose to work and more people will retire early.

    Finally, the next President could increase the number of immigrants to address the labor force shortfall. This decision would require doubling or tripling the number of visas and green cards awarded annually, a policy that runs against the grain of Trump campaign pledges.

    To sum up, an optimistic level of job creation under the next President, whether Trump or Clinton, would be 12 to 15 million. But even this lower target will prove to be too ambitious if, as is widely anticipated, automation and the internet of things take over more job functions.

    Further, because the marginal demand for jobs will be less than in the past, an effort to boost the supply looks not only ill-fated but also misdirected, like that of a general preparing to fight the last war. At this juncture of changing demographics and increased automation, it will be more important to upgrade jobs to higher value-added functions than to simply count the number of net new jobs. Bringing the old jobs back would in theory provide much needed relief to households that are struggling, but retraining these same workers for better jobs will ultimately lead to more favorable outcomes.

    In this vein, investments in education and retraining seem more critical now than in the past. Rather than merely adding jobs, a more promising employment strategy for the next President would be to facilitate retraining programs for people who have not kept up with the economy because of outsourcing or other factors.

    All this will probably be unconvincing to Mr. Ross and Professor Navarro who downplay the role of demographics in the economy and who believe that a sufficient amount of can-do spirit will overcome the facts of a hard-nosed analysis:

    Some falsely assert that the U.S. and other developed countries have settled into a “new normal” of slower economic growth due to greater competition from developing countries and demographic changes beyond our control.

    But to quote Mr. Trump’s running mate, Gov. Mike Pence, “People in Scranton know different. People in Fort Wayne know different.”

    We shall see.

    One clear fact remains however: the golden decades ending in 2005 were in part powered by a fast-growing population and a declining dependency ratio, two conditions that are now fading.

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

    Photo: neetalparekh


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    When Americans consider a move to another part of the country, they sometimes are forced to make a tough choice: should they go to a city with the best job opportunities, or a less economically vital area that offers a better standard of living, particularly more affordable housing? However,  there are still plenty of metropolitan areas in the U.S. where you can get the best of both worlds.

    Center for Opportunity Urbanism senior fellow Wendell Cox has developed a set of rankings that identify metropolitan areas where salaries are relatively high relative to costs, and you get more for your paycheck. Our list is geographically and demographically diverse, both in terms of the top 20 and the places closest to the bottom.

    The COU Standard of Living Index takes the 2015 mean pay per job in the 106 metropolitan statistical areas with more than 500,000 population and adjusts it by cost of living. Metro areas that have a large proportion of high-wage jobs tend to do best, such as San Jose, Calif., and Houston. The biggest differences in terms of cost of living generally have to do with housing; costs for goods varied by 23 percent and for services by 35 percent in 2014 across the metropolitan data, but for rents the differential between the most and least expensive metro areas is 194 percent and, for housing purchased in 2014, a remarkable 775 percent. The composite cost of living index underlying the COU Standard of Living Index is developed from a blend of annual rent as well as home ownership costs for prospective home buyers.

    I have divided the top and bottom rankings into four basic groups: expensive but worth it; moderately priced but still high income; expensive but so costly as to  be economically barely worth it; and, finally, areas that are cheap, but not for the right reasons.

    Expensive, But Worth It

    There are several high-cost areas that do very well in this ranking, largely because they offer high incomes to match. The metro area with the highest annual wage when adjusted for cost of living is San Jose, the center of Silicon Valley. The cost of living there is 63 percent higher than the national average, the highest in the nation, but with the highest nominal pay per job at $112,300 ($27,000 above the next best), the metro area still ends up with the highest adjusted paycheck of $68,850.

    Four other high-cost areas also make our top 10. Two are in Connecticut: No. 4 Bridgeport-Stamford, where the cost of living is 45 percent above the national average, and No. 5 Hartford, where costs are 15 percent above the national average. But higher wages — $85,400 for Bridgeport and $62,600 for Hartford — give residents the buying power to absorb those costs, and places these metros areas high on the list.The other two are No. 6 Boston and 10th-ranked Seattle.

    One common thread that helps these metro areas overcome high costs is a high concentration of jobs in better paying fields such as technology and business and professional services.

    Opportunity Cities: Less Expensive And Economically Vital

    The other five top cities in our Standard of Living index fit a very different mold. These are what may be seen “opportunity cities,” where there are relatively high wages and somewhat low costs. If the successful blue cities can be seen as something of “gated communities” for well-educated, largely white and Asian residents, these cities offer a higher standard for a broader and often more diverse population.

    The epitome of opportunity cities, Houston, takes second place. Like San Jose, Houston has a strong concentration of engineering talent and STEM jobs, many of them related to the energy industry. The average annual paycheck in America’s Energy Capital is $65,000, well above the national average, and with a cost of living barely 5 percent above the usual, it’s only eroded slightly to an adjusted worth of $62,300.

    The other cities in our top 10 tend to feature high growth in STEM employment but moderate to low costs. They include No. 3 Durham, N.C., located in the tech-rich Research Triangle area, No. 7 Atlanta and No. 8 Detroit. In all these areas the cost of living is around the national average, but salaries are higher. You may be surprised by Detroit, but this ranking looks at the total metro area, which is in much better shape than the core city. With good-paying jobs, many connected to the revived auto industry, the Detroit metro area is in far better shape than is commonly suggested.

    Of course, the Motor City may lack the glamour and stratospheric wages of Silicon Valley, but its far lower costs offer a surprising high standard of living. Nor is it the only Rust Belt city that ranks highly. Consider No. 13 Cincinnati, No. 15 Pittsburgh, No. 16 Cleveland and No. 19 St. Louis. In the future it may make sense for more individuals and companies to take a second look at these areas.

    Expensive, And Not Producing Enough Good Jobs To Make Up For It

    Not all expensive cities are worth the cost, particularly if you are considering a move. Take 89thplace San Diego and 97th place Los Angeles, two California cities with idyllic climates and dynamic histories, but that now have become too expensive to offer a high standard of living for anyone not making far more than the local average salary.

    The tragedy for these Southern California metro areas is that, while they have seen a rapid escalation in housing prices and rents, they have not been able to take a meaningful part in the tech boom that has driven up wages in San Jose and the Bay Area. San Diego’s mean wage of $58,000 might seem more than respectable, but with a cost of living 36 percent above the national average, it reduces the real pay in this attractive coastal city to a more modest $42,700.

    Most critical, however, is the clear downshift in the standard of living in my adopted home region, greater Los Angeles. Once L.A. was full of high-wage jobs, many of them tied to aerospace and manufacturing, as well as high-end business services. Those industries have been eroding for well over a decade, replaced, in large part, by lower-wage positions in hospitality, retail and health. Now it is one of the poorest big cities in America, yet one with extraordinarily high costs, particularly for housing. The cost of living in LA is 46 percent above the national average, driving real wage from a respectable nominal average $59,000 to a dismal adjusted $40,400.

    Left Behind

    Most of the metro areas at the bottom half of our list are smaller, with barely a million people or less. Many of these are in high-cost regions, notably our last-place finisher, Honolulu. In the Hawaiian capital, the average paycheck is $48,800 but when you factor in our cost of living modifier, the real income falls to $33,900. That’s partly due to a lack of developable land that drives up property prices and also due to the high proportion of necessities that are imported, including food and oil.

    This pattern is repeated by many areas in our bottom 10, including the California cites Stockton (94th), Fresno (98th), Riverside-San Bernardino (102nd) and Santa Rosa (105th). In all these cases, incomes tend to be  modest, but costs, particularly for housing, are higher than their economies would logically warrant. Much of the “credit” here may well belong to California’s restrictive land use and housing policies, and generally poor climate for manufacturing, agriculture and other blue-collar businesses.

    What does this tell us? Metro areas that want  to improve in these rankings need to focus not just on developing their economies, but also policies that keep costs competitive with other regions.



    Center for Opportunity Urbanism
    Standard of Living Index: 2015
    Rank (of 106) Metropolitan Area Annual Pay Per Job, Adjusted by COU CoL Index
    1 San Jose, CA $68,855
    2 Houston, TX $62,305
    3 Durham, NC $59,526
    4 Bridgeport-Stamford, CT $58,704
    5 Hartford, CT $57,050
    6 Boston, MA-NH $56,979
    7 Atlanta, GA $56,647
    8 Detroit,  MI $56,421
    9 Dallas-Fort Worth, TX $55,529
    10 Seattle, WA $55,123
    11 Charlotte, NC-SC $55,122
    12 Washington, DC-VA-MD-WV $54,525
    13 Cincinnati, OH-KY-IN $54,265
    14 Birmingham, AL $54,256
    15 Pittsburgh, PA $54,168
    16 Cleveland, OH $54,059
    17 Minneapolis-St. Paul, MN-WI $53,668
    18 Denver, CO $53,526
    19 St. Louis,, MO-IL $53,519
    20 Nashville, TN $53,144
    21 Des Moines, IA $53,115
    22 Kansas City, MO-KS $53,009
    23 Austin, TX $53,002
    24 Memphis, TN-MS-AR $52,911
    25 Columbus, OH $52,319
    26 Philadelphia, PA-NJ-DE-MD $51,912
    27 Fayetteville (Bentonville), AR-M $51,876
    28 San Francisco, CA $51,723
    29 Baton Rouge, LA $51,492
    30 Chicago, IL-IN-WI $51,425
    31 Raleigh, NC $50,980
    32 Tulsa, OK $50,798
    33 Indianapolis. IN $50,781
    34 Akron, OH $50,578
    35 Harrisburg, PA $50,483
    36 Louisville, KY-IN $50,390
    37 Richmond, VA $50,053
    38 Oklahoma City, OK $50,018
    39 New York, NY-NJ-PA $49,760
    40 New Orleans. LA $49,739
    41 Albany, NY $49,578
    42 Phoenix, AZ $49,403
    43 Sacramento, CA $49,323
    44 Portland, OR-WA $49,262
    45 Dayton, OH $49,203
    46 Winston-Salem, NC $49,079
    47 Knoxville, TN $49,060
    48 Milwaukee,WI $49,022
    49 Baltimore, MD $48,771
    50 Toledo, OH $48,705
    51 Wichita, KS $48,608
    52 Melbourne (Palm Bay), FL $48,230
    53 Augusta, GA-SC $48,065
    54 Omaha, NE-IA $47,956
    55 San Antonio, TX $47,910
    56 Little Rock, AR $47,900
    57 Chattanooga, TN-GA $47,877
    58 Jacksonville, FL $47,810
    59 Madison, WI $47,510
    60 Rochester, NY $47,486
    61 Grand Rapids, MI $47,459
    62 Salt Lake City, UT $47,368
    63 Syracuse, NY $47,239
    64 Greensboro, NC $47,013
    65 Greenville, SC $46,762
    66 Buffalo, NY $46,500
    67 Columbia, SC $46,437
    68 Tampa-St. Petersburg, FL $46,410
    69 Allentown, PA-NJ $46,141
    70 Springfield, MA $45,585
    71 Providence, RI-MA $45,323
    72 Worcester, MA-CT $45,236
    73 Jackson, MS $45,196
    74 Colorado Springs, CO $45,017
    75 New Haven CT $44,848
    76 Charleston, SC $44,613
    77 Miami, FL $44,589
    78 Orlando, FL $44,527
    79 Virginia Beach-Norfolk, VA-NC $44,290
    80 Las Vegas, NV $44,265
    81 Spokane, WA $43,770
    82 Albuquerque, NM $43,486
    83 Tucson, AZ $43,484
    84 Bakersfield, CA $43,464
    85 Boise, ID $43,103
    86 Scranton, PA $43,082
    87 Lakeland, FL $42,907
    88 Youngstown, OH-PA $42,766
    89 San Diego, CA $42,716
    90 Lancaster, PA $42,227
    91 Modesto, CA $42,034
    92 Portland, ME $41,902
    93 Cape Coral-Fort Myers, FL $41,547
    94 Stockton, CA $40,512
    95 Provo, UT $40,473
    96 Sarasota (North Port), FL $40,434
    97 Los Angeles, CA $40,432
    98 Fresno, CA $40,226
    99 El Paso, TX $40,074
    100 Oxnard, CA $40,049
    101 Ogden, UT $39,966
    102 Riverside-San Bernardino, CA $38,598
    103 Daytona Beach (Deltona), FL $38,242
    104 McAllen, TX $38,182
    105 Santa Rosa, CA $35,370
    106 Honolulu, HI $33,903

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

    Photo by w:Flickr user Bill Jacobus [CC-BY-2.0], via Wikimedia Commons


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    The Canadian Mortgage and Housing Corporation (CMHC) has issued a “red warning” for the entire housing market in Canada.” According to CMHC the red warnings are due to “strong evidence of problematic conditions for Canada overall. Home prices have risen ahead of economic fundamentals such as personal disposable income and population growth. This has resulted in overvaluation in many Canadian housing markets.”

    This pattern has been present  in Canada for at least a decade. This was the subject of a policy report authored by Ailin He, a PhD candidate in economics at McGill University (Montréal) and me (Canada’s Middle-Income Housing Affordability Crisis), which was published by the Frontier Centre for Public Policy in Winnipeg. The report covered all census 33 metropolitan areas and two smaller census agglomerations.

    The Executive Summary (adapted) and selected charts from Canada’s Middle-Income Housing Affordability Crisis are reproduced below.

    Canada has a serious middle-income housing affordability crisis. Canada’s house prices have grown nearly three times that of household income since 2000. This contrasts with the stability between growth in house prices and household income during the previous three decades. These house-price increases have raised serious concerns at the Bank of Canada and at international financial organizations such as the Organisation for Economic Co-operation and Development (OECD) and the International Monetary Fund (IMF).

    This public policy report examines overall housing affordability in 35 housing markets, including all 33 CMAs and two census agglomerations (Section 1).

    Higher house prices reduce the standard of living and constrain economic growth. Housing affordability is analyzed using indicators with comparisons between housing markets and within individual housing markets over time. Price-to-income multiples are used. Higher house prices mean less home buyer discretionary income (the amount left over after paying for necessities such as housing, food, clothing and transportation). Households have less income available for purchasing other goods and services, which can constrain economic growth and job creation. Moreover, less discretionary income translates into lower standards of living (Sections 1.1 and 1.2).

    There was serious deterioration in middle-income housing between 2000 and 2015.This analysis shows that house prices rose faster than income in each of the 35 markets. The largest losses in housing affordability occurred in the six markets with a population of more than one million (Calgary, Edmonton, Montréal, Ottawa-Gatineau, Toronto and Vancouver), where house prices rose on average 3.3 times that of household income. More alarmingly, house prices rose more than four times household income in Vancouver and Toronto. In the five metropolitan areas with between 500,000 and one million residents (Hamilton, Kitchener-Waterloo, London, Québec and Winnipeg), house prices rose 3.2 times that of household income. Even in the smaller markets, house prices rose on average by at least double that of household income (Section 2).

    Substantial mortgage affordability losses could occur with the expected interest increases. Should mortgage interest rates rise by 2020 as projected by The Conference Board of Canada, approximately 800,000 fewer households will be able to qualify for a mortgage on an average-priced house, all else being equal. This could have an impact sooner than expected, since many Canadian mortgages require renewing every five years (Section 3).

    Higher house prices have made it more difficult for middle-income households to afford the housing that Canadians have preferred for decades. Higher house prices appear to have been a principal factor in a trend toward smaller houses and condominiums across Canada between 2001 and 2011. This shift is most evident in Vancouver and Toronto, where housing markets also have the most-restrictive land-use regulation (Section 4).

    Restrictive land-use policy is associated with housing affordability losses. International economic literature associates more-restrictive land-use regulation with diminished housing affordability. The largest housing affordability losses have occurred in metropolitan areas (markets) that have adopted urban containment land-use strategies, which severely limit the land that can be used for building houses on and beyond the urban fringe. Consistent with basic economics, this reduction of land supply is associated with rising land prices, which lead to higher house prices. Without the substantial reform of restrictive land-use policies, housing affordability is likely to continue deteriorating (Section 5).

    Higher house prices impose adverse social and economic consequences. Higher house prices are associated with increased rates of internal migration out of higher-cost markets, increased inequality, overcrowding, the greater public expenditure that is required to support low-income housing and losses to the economy (Section 6).

    Solving the middle-income housing affordability crisis will require policy reforms. There is considerable evidence that restrictive land-use policies are associated with significant losses in housing affordability in Canada as is the case elsewhere. Metropolitan areas with restrictive land-use policy should undertake reforms aimed at improving housing affordability. There should be a moratorium on the adoption of urban containment policy where it is not yet in place. Concerns have been expressed about the potential for high house prices and high household debt to complicate the ability of central banks (such as the Bank of Canada) to perform their monetary policy responsibilities.  Conclusion:  that middle-income housing affordability in Canada is a profound social and economic crisis that warrants serious and concentrated public policy attention (Section 7).

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

    Photograph: Calgary (by author)


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