Robert Sarnoff , the CEO of RCA before it was absorbed by GE, once said, “Finance is the passing of money from hand to hand until it disappears.” That process is very clearly defined in The Age of Greed by Jeffrey Madrick. It recounts, in concise terms, how a few dozen individuals—some in the private sector, some in government--brought us to our current economic pass, in which finance seems to have been completely detached from life. Names from the past come back, and their crimes are explained. Ivan Boesky, Michael Milken, and Dennis Levine look guiltier in the retelling than they did in the newspapers at the time. And in this telling, the philosopher king of the new finance was Walter Wriston, CEO of Citicorp.

I wrote for Wriston and other senior managers of Citibank from 1980 through his retirement in 1984, and for his successors through 1991. My colleagues and I were charged with helping Wriston make the case that the financial regulatory regime that was put in place during the Depression was obsolete. Let me make it clear: I was a footnote, although I occasionally run into old acquaintances who still shake their fingers at me.

Madrick’s Wriston is by far the book’s most compelling character. As with all the other subjects, there’s a smattering of armchair Freud, although most of the political figures who make appearances here escape their two minutes on the shrink’s couch. Wriston’s psyche was more interesting than the insecurities of Ivan Boesky and Sandy Weill, to name just two; his university-president father Henry Wriston despised the New Deal as it was happening, and imparted that attitude to the son. Henry then remarried too quickly after Walter’s mother died for the son’s taste, and they became estranged.

But there’s more to Wriston than you read in Madrick. He was a restless intellect, impatient with field of diplomacy he had studied for before World War II, and after taking a job in banking, which he once wrote seemed like, “the embodiment of everything dull,” found a vehicle for exerting his imagination, and then for fulfilling his ambitions. The First National City Bank, later to become Citibank and Citicorp, and then Citibank again, had inspired imperial dreams before. Through a series of mergers it became the biggest bank in the biggest city in the country. When trade followed the flag around the world, Citibank’s precursors were right there with it. During the Roaring Twenties, Charles Mitchell dreamed of a “bank for all”, the forerunner of Wriston’s vision of one-stop banking, although Mitchell’s stewardship ended with a trial (and an acquittal) after the stock market crash and the Pecora hearings in the early ‘30s. While the bank had social register threads running through its history—when Wriston started the president was James Stillman Rockefeller, descended both from the Stillmans and the Rockefellers, married to a Carnegie—the patrician elements always had hungry outsiders around to push the envelop of banking practice. When Rockefeller was chairman, he had a president named George Moore, and Wriston was his protégé. However, Moore was too frisky for Rockefeller, and when a successor was chosen, it was Wriston.

Wriston hung a portrait of Friederich Hayek on the wall of his office. He was a reader. When Adam Smith became the Holy Ghost of the Church of Deregulation, Wriston’s top writer (and later my boss) was the man who actually edited The Wealth of Nations for the Great Books. When I was new there, I asked one of the bigshot corporate bankers which great thinkers he liked to quote in his speeches. He answered, “The only person who can get away with that is Walt Wriston, and I’m not sure he can.” Wriston’s ambition may have been shaped by philosophy, but he achieved it with tactics and strategy that sprang from a contrary nature as much as by the force of his ideas, and Madrick recounts that. He wanted his bank to be valued like a growth stock, and promised analysts 15% a year return on equity—not a recipe for safety and soundness.

Whether it was inventing financial instruments to get around interest rate restrictions, making outsize bets on railroad bonds and New York City bonds, creating the Eurodollar market, blitzing the country with credit cards, or wholesale lending to developing countries to recycle petrodollars, Wriston had a knack for making money when the economy was right and then challenging the government to deregulate in time to accommodate his losses. Personally, I think that before the bank was too big to fail, it was too big to succeed.

Looked at now, there’s something quaint about these investments. At least they had to do with real things, like trains, oil, municipal governance, and the ostensible aspirations of people in emerging markets, although they were mostly oligarchs and autocrats. In Madrick’s account, Wriston was dismissive of the government’s capacity to efficiently recycle petro-dollars, among many other things, and contended that his loan officers knew more about their corporate customers than anyone else did, which would enable them to safely make riskier loans than capital standards would permit. We all know how that turned out.

Wriston was a real visionary. To underscore his then-revolutionary idea that information about money was as important as money itself, he bought a transponder on a satellite to carry the bank’s data stream, and then put a satellite on the cover of the annual report. Theoretically, all that proprietary information made it hard to hide bad news about a company’s finances or a country’s; executives and prime ministers beware of poor management! He was undoubtedly the first bank CEO to anticipate what Moore’s Law—quantifying the exponential growth of computing power—would mean to business and society. Unfortunately, that power is exactly what enables the hollow finance we have today.

Reading Madrick’s book was like watching my life pass before my eyes, including the parts I slept through, and it certainly brought me up to date on events that happened long after my eyes glazed over.

It reminded me that when Wriston ran it, Citibank was fun to work for, as jobs in tall buildings went. My closest colleagues were well-educated and witty refugees from college faculties. The bank’s historian worked closely with us, and we learned the secrets that never made it into the deadly official history, such as the fact that one of Wriston’s predecessors kept a house in Paris, where he was known among the haute couturiers as le bonbon, or that when the Titanic went down, some hard-money banker had written to customers that there was good news—the loss of all the paper currency aboard would strengthen the dollar. Wriston set the tone: History counted, an attitude that wouldn’t survive the cost-cutting that came later. Wriston was renown for his sharp needle, but when I found myself in his office with the portrait of Hayek staring down, he seemed to enjoy the relief from the routine pressures of his job. I always had some kind of bleeding heart question based on current events, and he always had a sharp, witty retort.

He was also a citizen. When the City of New York had its own financial collapse in 1975 (“Ford to City: Drop Dead”), Wriston represented the commercial banks on the committee charged with rescuing the city’s finances. One of the bank’s economists assigned to work with him saw the beating Wriston took every day at the hands of the municipal unions and asked why he carried on. He answered, “Because I live here.” I wish some of the new financiers who have benefited from the work Wriston did would exhibit some evidence that they felt that way about the city. About the country. About the world.

Photo: Bigstockphotos.com; the old Citibank and newer Citicorp buildings.

Henry Ehrlich no longer writes for bankers, although he still likes money. He is editor of
www.asthmaallergieschildren.com, and co-author of Asthma Allergies Children: a parent's guide.

The recently released estimates of population change and the natural increase and migration components of that change for 2010-2011 contain a few surprises, as well as much what has come to be expected.  What we population freaks have been awaiting are estimates of the components of change for the whole 2000-2010 decade, but these are still being adjusted, in part because of the tremendous complexity of migration and immigration and, yes, estimating  just who is in the country!

I provide four simple maps, one of population change, 2010-2011,  one for the portion f that change due to natural increase (births less deaths), one for immigration and one for domestic or internal migration between the states.  Overall the big news is a slowdown of growth, to only .92 %, the lowest since the 1940s. This was due to a fewer  births, and thus of natural increase, because of folks not marrying or marrying later, and or postponing births because of the recession. It also has to do with  a reduction in immigration, again because of the recession, and possibly because of anti-immigrant sentiment and policies.

The second big news is the somewhat surprising shift of some rapid growth to areas beyond the sunbelt and towards the northern tier.  Still impressive absolutely, the pace of growth has slowed in states such as Florida and Georgia, more so in Arizona and even more in Nevada, from the housing collapse and lower immigration. The South Atlantic region remained strong, but the new locus of faster growth is the “northern tier” from Minnesota through the Dakotas to Oregon and Washington. The Dakotas’ growth, also affecting Montana and Wyoming, is energy related, while that of Washington, now the 6th fastest growing state, is a reflection of a young population, continuing immigration, both high tech and agricultural growth, and a relatively robust economy.

Natural increase. Natural increase is low in the states with the highest shares of the elderly, most obviously Florida, Pennsylvania, West Virginia and northern New England, in general regions and states from which young people have moved, e.g., MI, OH, KY, MO, AR, LA, MS, AL and IA, across the eastern heartland. But natural increase may have picked up a little in economically stronger states like NY, NJ, IL, IN and WI. Natural increase rates are higher, as might be expected, across the southwest and in Mormon states like Utah and Idaho. The bigger surprise once again is in the the upper Plains, including MN, ND, SD, and NE. Again Washington surprises, behaving like a sunbelt state, due more to an influx of a young population, than high fertility. 

Immigration. Immigration overall has slowed, but was a relatively significant part of growth for much of the northeast, especially NY, NJ, MA, CT, RI, MD and DE, and remained important in FL, CA, NV, AZ, and WA (and yes Texas, but at a lower rate). The pace of immigration fell most in Nevada and Arizona.

Domestic migration. This map is the one that most closely reflects the perceived and/or actual attractiveness of the states in the recent past. The states with the highest rates of net out-migration are mainly in the old urban-industrial core, including IL, MI, OH, NY, NJ and even CT, KS in the Plains and now Nevada. Even Alaska, Hawaii and especially California lost through domestic migration. The biggest change is the shift from net out-migration to net gains for the District of Columbia, Louisiana (after years of loss), and especially North Dakota, which made strong gains for the first time in decades. Missouri, New Hampshire, Utah and especially Nevada shifted from net gain to net loss.

The gains of Texas and Florida, and at a lower rate, North and South Carolina and Tennessee, continue a pattern seen throughout the 2000-2010 decade. But Arizona, Georgia and Virginia have slowed down, and Nevada went from big gains to a loss. The biggest winners are South and especially North Dakota and Montana, in a dramatic turnaround, Colorado, now with the 4th highest rate, and Washington, with the 5th highest. Colorado appears especially popular with retiree migrants, particularly from California. DC and ND, losers for 2000-2009 had the two highest rates of gain for 2010-2011!

Warning: These trends are fascinating, but we should remember that economic conditions – and even perceived attractiveness of states for cultural or environmental reasons – are volatile and can change again and again.

Richard Morrill is Professor Emeritus of Geography and Environmental Studies, University of Washington. His research interests include: political geography (voting behavior, redistricting, local governance), population/demography/settlement/migration, urban geography and planning, urban transportation (i.e., old fashioned generalist).

More than a decade ago, the Sierra Club and I crossed keyboards over urban density. The Sierra Club had just posted a new "neighborhood consumption calculator," that gave visitors the opportunity to look at the purported impacts of various density levels. The Sierra Club designated 500 dwelling units per acre as "efficient urban." Independently, Randal O'Toole and I quickly were on the Internet pointing out the absurdity of such high density. I noted that the so-called "efficient urban" density was far higher than that of the "black hole" of Calcutta, and high enough for all US residents to live in the Portland urban area.

Within 24 hours of our responses, the "neighborhood consumption calendar" had been taken off the Internet. It was later to reappear with "efficient urban" density being discounted a full 80 percent, to 100 housing units per acre. This is still far more dense than nearly all of the world except for low income world shantytowns.

The Kolkata Municipal Corporation (KMC): The central city of Calcutta, now called Kolkata, remains one of the densest on earth. Its population density is 63,000 per square mile (24,000 per square kilometer)  is nearly the same density as in Manhattan or the Ville de Paris. More accurately, it resembles the entire urban area densities of Mumbai and Hong Kong. The expanding suburbs of Kolkata have a population density of 25,000 per square mile (9,000 per square kilometer). The next edition of Demographia World Urban Areas (due out in the spring) will estimate the population density of the Kolkata urban area at 30,000 per square mile (12,000 per square kilometer).

Kolkata's spreading urbanization, however, has been going on for at least a half century. Since the 1951 Census, the central city of Kolkata has accounted for only 19% of the urban area population growth. The central city has added nearly 1,800,000 people while the suburbs have added approximately 7,650,000 (Figure 1).

Over the past two decades, the central city's growth has been minimal, adding 87,000 people from 1991 to 2011, while the suburbs added more than 3 million new residents. This intensifies the pattern of the last half-century where most growth clustered close to the city core.

Between 1901 and 1951, 59% of the growth in the Kolkata urban area was in the central city (Kolkata lost the British capital to Delhi in 1911).

Photo: Victoria Memorial, KMC

Slower Growth in the Urban Area: Kolkata is an unusually shaped urban area, nearly 50 miles (80 kilometers) long and stretched along the Hooghly River, one of the many mouths of the Ganges. Dhaka, the megacity capital of Bangladesh used to be on a mouth, until the river's course changed. The urban area averages little more than 10 miles (16 kilometers) in width. The municipality of Kolkata is in the south, on the east bank of the Hooghly, with most of the suburbs to the north or just across the river.

Like a number of major urban areas around the world, Kolkata has seen its population growth slow markedly. The peak population growth decade was the 1930s, when there was an increase of 69%. Growth dropped to 29% during the 1940s but continued at 20% or more until 2001. However, between 2001 and 2011, the urban area growth rate dropped to 7%, as the area added only 900,000 new residents. Despite its earlier, smaller size, the Kolkata urban area had not added this few people since the 1921 to 1931 decade.

In reality, Kolkata is getting less dense by the day. The results of the 2011 Census of India showed that every new resident of the Kolkata urban area was added in the suburbs (Note 1). Yes, the central city of Kolkata remains very dense but its population fell from 4,573,000 people in 2001 to 4,487,000 people in 2011. At the same time, the population of suburban Kolkata grew by nearly 1,000,000 people, and accounted for 110% of the population growth.

Photo: Howra Bridge, Hooghly River (Howra)

Kolkata, Los Angeles and China: It also may seem strange that despite its huge typically third world growth since 1951, the Kolkata urban area grew at a rate similar to that of the Los Angeles urban area (Note 2). Los Angeles was larger from the 1960s to 1990, while Kolkata was larger in the 1950s and has been larger the last two decades (Figure 2). Still, Kolkata's growth has fallen to high income world rates. Other Asian megacities (over ten million)  including Delhi, Shanghai, Beijing, Mumbai, Shenzhen, Manila, Jakarta, Dhaka and Guangzhou) have all experienced much faster growth over the past decade (Note 2). Shanghai and Beijing combined added nearly the same number of people as live in Kolkata.

Hyper-Densities: Nonetheless, Kolkata continues to have some of the highest densities in the world. In 2001, one third of the central city population (1.49 million) live in slums and shantytowns (photo). They are crammed into just 2 square miles (5 square miles). This would be like all the population of the San Fernando Valley living within a radius 0.6 miles (1 kilometer) of Los Angeles City Hall or all the population of the city of Dallas in the space covered by the passenger terminals at Dallas-Fort Worth International Airport. This is more than 725,000 people per square mile (280,000 per square kilometer), and would nearly equal the "efficient density" definition that the Sierra Club wisely discarded. It can only be hoped that when the 2011 Census slum data is available, it will show that all of the city of Kolkata's  population loss will have been from the slums.

Kolkata, like that of other large urban areas around the world described in The Evolving Urban Form series, shows that, given a chance, people reveal their preferences by moving to more space, to construct a better life for themselves and their households.

Photo: KMC Slum

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

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(Lead Photo: Mahatma Gandhi Road, KMC.

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Note 1: This is the Kolkata "urban agglomeration," which is the term the Census of India uses to denote urban areas, or areas of continuous urban development. The Census of India, however, applies to criteria to its urban area definitions that make them difficult to compare to urban areas in other parts of the world. The Census of India does not, for example, allow an urban agglomeration to be defined across state lines. Thus, the Delhi urban area continues to be shown as smaller then the Mumbai urban area. This is despite the fact that the immediately adjacent urbanization of Delhi includes millions of additional people in the states of Haryana and Uttar Pradesh and is by international definition by far the largest urban areas in India. The other difficulty is that the Census of India includes the entire land area of any municipality in the urban area. Thus, where municipalities are particularly large in area, as in the case of Mumbai, considerably more land area is reported that he is truly urban. This can lower urban area densities by the inclusion of large areas that are rural. In the case of the call, urban area, the municipalities are generally much smaller, and the geographical definition of the Census of India is much closer to a genuine definition of an urban area or urban agglomeration.

Note 2: The Mission Viejo urban area is included in the 2000 Los Angeles urban area population in this comparison. Much of this urban area was included in Los Angeles before the 2000 census and it seems likely that it will be reunited with Los Angeles in 2010. The 2010 US urban area geographical definitions have not yet been released. Based upon the change in the Los Angeles metropolitan area population, it is assumed that the Census Bureau's urban area will show a population of approximately 12.5 million.

Note 3: Chongqing is sometimes incorrectly characterized as a megacity, because of its status of a "provincial level municipality" in China. However, the Chongqing provincial municipality is largely rural, and covers a land area similar to that of Austria or Indiana. The Chongqing urban area has a population of approximately 7 million.

When it comes to environmental issues, emotions often trump reasoned argument or sensible reform, especially in California. In Sacramento at our state capitol, real world impacts are abstracted into barbed soundbites. It’s the dialogue of the deaf as environmental advocates rally around our landmark California Environmental Quality Act (CEQA) -- and economic interests decry it as “a job killer.” Perhaps the polarization can be put aside to ask about a specific example in the real world. Why does an old K-Mart sit vacant on Ventura’s busiest boulevard despite initial City approval for a Walmart store? All the thunder and lightning surrounding whether a Walmart belongs in Ventura is behind us. A vigorous and contentious debate (and a failed citizen initiative) have rendered the verdict that filling an empty discount retail space with a different discount retailer is a function of the market, not government regulation.

Nor can we directly blame the stalemate directly on the California Environmental Quality Act (CEQA). What keeps the store empty is not the controversial law itself, but the way it has been twisted like a pretzel into a tool to stop urban developments opposed by well-funded interests. Recently, the Los Angeles Times exposed the ironic way it has even been adapted by developers and big corporations to fend off their competition.

The California Environmental Quality Act is the toughest state environmental protection statute in the nation. Passed more than 40 years ago in the wake of the first Earth Day (and signed by Governor Ronald Reagan), CEQA has spawned an industry of specialist consultants, attorneys and planners. Its original laudable goals for managing natural resources have been obscured by the hard ball tactics of litigators in our state.

The vast majority of Californians support sensible environmental protections and are suspicious when business interests lobby to weaken them. They remember oil spills and toxic dumps and slash and burn hillside developments. Yet the case law that has grown up around CEQA is so burdensome that virtually any public or private project can be slowed or killed on bogus grounds that really have nothing whatever to do with protecting our natural environment.

Yes, the law has protected stands of redwood trees from clear-cutting and sensitive habitat from suburban sprawl. And there are David and Goliath stories: a little band of neighbors stop a mega-developer from flooding their neighborhood with traffic (although this is a long stretch from protecting “natural resources”.) But it is now routine for special interests to hire high-powered law firms to exploit the law for their own economic interests.

Here in Ventura, lawyers for construction unions combed over the Environmental Impact Report done for the new Community Memorial Hospital project with the goal of seizing on any technical errors or ambiguities. They fired off a thirty page “comment letter” which lays the groundwork for a lawsuit. The goal was certainly not “protecting the environment” — it was to pressure the hospital to use union labor for the construction. They were successful.

The proposed Walmart at the old K-Mart site is stalled after initial city approval because the company knows that even something as simple as changing the facade on the building could trigger a lawsuit alleging inadequate “environmental review.” So the project sits in limbo while Walmart analyzes its legal options. What Walmart fears is exactly what happened to WinnCo grocery, which did see its proposed new signage and facade challenged by a CEQA lawsuit.

There are lots of things not to like about development in a city. But that’s why we have planning commissions, public hearings and appeals to elected City Councils, along with detailed rules that must meet stringent legal guidelines for adoption and enforcement. But why have an elaborate land use entitlement and permit review process if it can be superseded by anyone with the resources to file a CEQA lawsuit? Democratic due process goes out the window, replaced by months or years of costly legal maneuvering.

No sensible person advocates repealing CEQA. But after forty years, it is past time to return to its original, laudable purpose and intent: to protect our natural environment and sustainably manage our natural resources.

Understandably, environmental advocates are skittish about tinkering with the law. There is precedent, however, for consensus reform. When the League of Conservation Voters pushed a bill to curb greenhouse gas emissions and promote sustainable regional planning, they won the support of both the League of California Cities and the Building Industry Association by incorporating a modest relaxation of onerous CEQA burdens on “infill development.” There’s lots more room for common sense consensus to separate environmental protection from a racket for special interest litigation.

One of the worst ways to proceed is to pick out individual projects for favorable CEQA treatment. That’s what’s happened on a couple of controversial stadium projects that won legislative relief from the typical CEQA procedural hurdles. Having to lobby Sacramento to pass a special law is a brutally stark example of special interest litigation. Football stadiums are not the only or even the most important projects held hostage by CEQA abuse. Comprehensive reform is long overdue.

In these economic times, the jobs lost to CEQA abuse aren’t offset by the ones created for CEQA experts and CEQA attorneys. California led the nation in protecting our state’s environment. If we can look past the symbolism that CEQA has assumed to both advocates and detractors, we’ll see that it’s urgent to restore the law’s original purpose and keep it from being hijacked for other agendas. That may be unlikely in today’s polarized political climate. That’s why it is crucial to bypass the soundbites and the symbolic posturing, and remember the real world fallout of failing to reform the way CEQA is administered in the Golden State.

Rick Cole is city manager of Ventura, California, and recipient of the Municipal Management Association of Southern California's Excellence in Government Award. He can be reached at RCole@ci.ventura.ca.us

Photo: The vacant K-Mart in Ventura, California

Driving through the bustling Orchard Road in the heart of Singapore, Wei Ping stares at the shiny new Prada hoarding. Maybe she should ”invest” in a new Prada bag. She must watch out for the next big season sale. Her birthday is a distance away but ever since she and her husband had started talking about the baby, she needed some retail therapy to lift her mood.

As she drives under the ERP (Electronic Road Pricing) barrier at Orchard Road at the heart of Singapore her mind shifts to the balance in her cash card and the fact that she should load it soon. Singapore, like many other cities trying to control car population, levies an entry tax every time you drive into the central business district. Every car comes fitted with a special electronic unit that can be read by the overhead ERP gantry. All that a car driver needs to do, is insert a cash card into the special unit and hope that the cash card has enough money in it to avoid being fined. The electronic gantry allows for manipulation of the ERP amount depending on the traffic. The amount to be deducted is prominently displayed on the gantry but once you are in the queue for entering the city, and realize that the balance in the cash card is lower than the entry tax you budgeted, you are in trouble with the LTA Local Transport Authority anyway in this “fine” city.

The 30 year old prides herself in maintaining a smart yet frugal existence, the famous “kiasu” attitude of Singaporeans, which many outsiders interpret as “stinginess” but to Wei Peng is all about  getting the maximum out of a deal, the only way to go.

Coming on top of inflated car and fuel prices as well as road tax, cost of living in one of the most modern cities in Asia tops the concerns for most people in Singapore. Worse, with rising prices, Singaporeans have to think twice before doing what they like best: upgrading housing and clothing to better housing and better clothing. In fact being kiasu, or looking out for the best deals in housing, clothing and food, is really the only smart way to survive in this expensive city. And that was the reason why Wei Peng had driven 45 minutes all the way from the heartlands (normally called suburbs) to the centre of town, braving the Friday evening crowds and struggling for 10 minutes for a parking slot, to check out the year-end deals in the shopping district.

Wei Peng has a friend who had recently landed a job with a property developer. Fuelled by a real estate boom and resulting commissions, Diane has booked a swanky new condominium close to her current HDB (government provided) unit, significantly upgrading her lifestyle. Wei Peng would love to do the same, for that she would have loved to look for a job paying more than her current one of three years. However she knows it wouldn’t be possible, especially since her husband of two years had actively expressed interest in starting a family. The painful afterthought of financial implications of an expanding family was all she could think about lately.

For years now, Singapore has been struggling with a declining birth rate. The government has tried to stem it with cash incentives, extended post-pregnancy leave and open immigration policies with limited success at best.

The Singapore of today is faced with twin problems of slowing birth rate and ageing population. In 2000, 14% of women between age 30-39 chose to remain childless. By 2009, this figure has gone up to 20%. A similar trend was seen in the 40-49 year age group. In a country with a life expectancy of 81 years, the age support ratio or the ratio of working age population (15-64) to the elderly (65+) has declined from 9.9 in the year 2000 to 8.2 in 2009. (Source: Singstat.gov.sg)

In human terms this translates into a no escape from cost of living even after retirement. There is no cheaper “hinterland” they can migrate to. The newspapers are full of stories of ungrateful children and abandoned elderly parents. A recent government campaign talks of family values and of children fulfilling their duties towards their parents. Wei Peng, who is an only child, knows she has to think of taking in her parents in to live with her someday. And for her husband, it means sharing the duties of “filial piety”, as the campaign calls it, with his younger siblings.

Most of her friends were not keen to become parents anytime soon. The few who did relied on their retired mothers and fathers but she could not think of imposing on her parents’ lifestyle. She saw a close friend go through one child after another in quick succession and finally decided to quit her flourishing career in the private sector. Her friend’s life is now consumed with the tension of getting admissions into a reputed school, and hustling the children into “special classes” ranging from music to sports. They don’t talk on the topic but for Wei Peng the thought of giving up her own ambitions hurts. Not to mention the small sacrifices like giving up on the comforts of a car for the city’s clean, efficient but often very crowded public transport.

After all, starting a family meant having to plan for one less income, at least for some time,  and additional expenses indefinitely. For instance, raising a child would mean hiring a full-time nanny. Finding a nanny is easy, thanks to Government policies that allow “domestic workers” to live and work in Singapore. However, keeping a nanny means paying the government two hundred odd dollars as tax, not including the worker’s salary and the cost of her upkeep. Having a baby would also drive a more disciplined lifestyle.

Right now, she’s cooked in her kitchen precisely two times, once for Chinese New Year and the other when her husband’s parents had come over. It was simply more convenient and maybe even cheaper to eat out at the various hawker centers/food courts conveniently scattered across the city. Of course eating out came with the added attraction of hanging out with like-minded friends, especially over the weekend. She looked forward to scouring the papers for a new restaurant review that could potentially be the weekend outing.

With a baby, the look of her pristine kitchen would definitely change. Was she ready to stop looking after that lovely coffee machine and the induction cooker which looked like it belonged in a show flat even after two years?

No eating-out, no annual holiday, increased expenses, maybe missing that promotion she so wanted…where were the positives to motherhood?

As she drove into the overcrowded car park filled with deal seeking crowd, her glance fell on the road tax sticker stuck to the windshield. The expiry date was within 15 days! Oh well, she sighs, another day, and another expense. Prada will have to wait for a while and the baby, a while longer.

Note: Wei Peng is fictitious but Singapore’s baby problems are real.

Vatsala Pant is a management graduate with several years of business leadership experience and a connoisseur of people, places and cultures. She currently lives in Singapore.

Photo of Singapore ERP system by Flickr user choyaw99.

“Hands off Our Land!” screams the Daily Telegraph, like some shotgun-toting red-faced farmer.  The newspaper, on behalf of the reactionary toffs who form the least pleasant section of its readership, has launched a campaign directed against ‘urban sprawl’ (ie. the rest of us).

On a good day, the Telegraph serves up enlightened articles by progressive liberals like Janet Daley and Simon Heffer and Jeff Randal (I’m talking about real liberals here, not American Trotskyites).  But then it disappears under the desk, drinks some devilish, bubbling potion and emerges looking like Mr Hyde, all wonky teeth and messy hair.  “Hands off Our Land” is the Telegraph at its worst - a campaign to thwart the government’s all-too-modest suggestions to reform Britain’s vicious planning laws.  

NIMBY (Not In My Back-Yard) is a misnomer.  As James Heartfield observes in his brilliant book Let's Build! if it was their back-yard there wouldn’t be a problem.  By “Our Land”, the Telegraph’s Colonel Blimps do not mean “land owned by us”.  They mean “other people’s land”, over which they wish to continue to exercise control via the State. 

The battle against suburbanisation (which the Greens these days clothe in the jargon of 'sustainability') has been going on for decades, and the success of the NIMBYs in keeping the bulk of Britain’s population locked inside towns and cities, has disfigured Britain and blighted the lives of millions of people.  As a result of State planning restrictions, Britons are stuffed into towns and cities like battery-farmed chickens.  We are among the most densely packed people in the world.  In Britain, 90 percent of people live in urban areas.  In Germany (which has a similar population density) only 75 percent of people live in urban areas, while only 68 percent of Italians live in urban areas, and only 62 percent of the Irish (is the Italian or Irish countryside so awful?).  In India only 30 percent of the people live in urban areas. 

And to make matters much worse for the Brits, our urban areas constitute a mere 9 percent of total land use.  That’s right - 90 percent of the people crammed into 9 percent of Britain.  Compare that to the 13 percent of land devoted to ‘Green Belt’ (the stuff holding us in).  Even in the South East of England, by far the most densely crowded bit of the UK, woodland and farmland, absurdly, accounts for more than three quarters of land use. 

Britain is not a crowded island – contrary to the frothing rants from the misanthropes at the Telegraph.  Viewers wrote in to express their incredulity when the BBC broadcast a series called ‘Britain from Above’.  The BBC helicopters filmed hour after hour of vast, unending tracts of flat, rectangular fields and giant swathes of green nothingness.  It was astonishing to the naïve urbanites watching to see how empty the place was.  (Just take a look on Google satellite images).  The reason why Britain feels, to most of us, like an overcrowded island, is because all most of us ever see are congested towns and cities (or a fleeting glimpse of industrial farmland out of a car window as we travel along ‘urban corridors’ between towns). 

Hemming people into towns and cities with ‘Green Belts’, has acted like a pressure-cooker on property prices.  The planning system, by limiting the amount of land available to build on, has created an artificial shortage of living space, forcing up the prices of houses and flats to such astronomical heights that many young couples can only dream of affording one.  The less affluent dare not get a job for fear of losing housing benefit.  There are families in London where the children sleep three and four to a room – a tiny room in a dingy flat.  Children who have outgrown their cots are forced to stay in them, sleeping with their legs bent (I have direct knowledge of such cases).  It is impossible to document the sheer bloody misery caused by the planning system - countless examples of diminished lives.  Even well paid professional couples in London now struggle to afford dark, crumbling Victorian houses, in rough parts of town.  Houses built for costermongers and chimney sweeps in the late 19th Century.

But it goes far beyond property prices. Soaring urban land values have a knock-on effect, raising the cost of everything, from cinema tickets to shoes.  The land and property shortage (artificially created remember) has pushed all prices up, reducing our quality of lives in a myriad of unseen ways.  Meanwhile, the few remaining patches of green in our towns and cities are fast shrinking and disappearing. Gardens are designated ‘brown-field’ sites to allow more flats and houses to be built.  Houses are horribly divided into tiny disfigured flats.  School fields, parks and squares are shrinking and disappearing at an alarming rate, extra blocks of flats spring up everywhere, like weeds in the cracks.  The shocking effect of Green Belts has been to empty our urban areas of green spaces, and yet, as State planners know fine well, these are the most cherished bits of green in Britain, giving far more people, far more pleasure than ‘the countryside’ (to which so few of us go).  Worryingly, the London Planning Advisory Committee has decided that London has room for 570,000 extra homes.  As James Heartfield pleads, ‘Do we really want every inch of London packed with houses, instead of parks, squares, playgrounds and other amenities?’  And of course transport in our congested urban areas has become a living hell.  They cram us in then prohibit us from parking anywhere and charge us for causing ‘congestion’.

Nor is the misery confined to the towns. Green Belts have killed the countryside.  Although a gigantic amount of Britain’s land mass is reserved for agriculture, farming accounts for less than one percent of Britain’s economic activity (and even this is massively subsidised).  In the countryside itself, only 3 percent of people actually work in agriculture.  It is argued the countryside must be preserved in order to protect traditional communities and ways of life.  But there is nothing traditional about our countryside.  The vast, boring fields you see today bear no resemblance to the small, labour-intensive agriculture of old.  The landscape has changed, the ‘communities’ have changed, the economics has changed.  Nor should we idealise what went before … grovelling, impoverished tenant small-holders and agricultural labourers (and before them serfs) breaking their backs to maintain the idle gentry.   Life for the rural masses was poor, hard, dull and servile. 

The NIMBYism of the new gentry (organised, for example, in the Council for the Protection of Rural England) has stunted and thwarted genuine economic development in the countryside.  The vast bulk of Britain is now a wasteland, a poorly attended heritage theme-park, fit for well-heeled second-homers to live out their naff rural fantasy every third weekend.  Ordinary folk in the countryside are reduced to working in National Trust postcard shops, and with their meagre wages, they struggle to afford small nasty-looking houses which face directly onto busy A-roads.  No wonder the young want to get the hell out. 

But the battle over planning laws has nothing to do with the giant wide open spaces in Northumbria and wherever else, because no-one in their right mind wants to go and live there.   The land in dispute is in truth much smaller.  The desire for planning restrictions is really an expression of upper class disdain for suburbs, and the people who live in them and like them.  Peter Hall, the professor of planning at the Bartlett School of Architecture, in his book Cities of Tomorrow, exposes the motives behind ‘sustainable development’, which in effect means ‘pulling up the drawbridge to stop anyone else entering their well-healed enclaves (save a few select people like themselves, whom it would be quite fun to invite for drinks on Sundays) … pulling up the drawbridge against newcomers, especially if they lack the right income or right accent.’ 

The snobbery and hatred of the suburbs dates back to the end of the 19th Century.  The railways allowed the first suburbs to flourish as the working and lower-middle-class ‘clerk’ class, experiencing prosperity for the first time, sought to escape the urban slums, to have a little house and a little garden.  The suburbs were considered vile because of the people who inhabited them. In a book called The Suburbans, written in 1905, the poet T.W.H. Crossland launched a vitriolic attack on the ‘low and inferior species’, the ‘soulless’ class of ‘clerks’ who were spreading into the new comfortable houses in the suburbs, eating tinned salmon.  He was disgusted by them, their aspiration to self improvement, offensively self-made and self-assured.

Professor John Carey, in his magnificent book The Intellectuals and the Masses, describes the widespread upper class loathing of the newly enriched masses and their suburban ways.  In Evelyn Waugh’s Vile Bodies, two characters are leaving England in an airplane. They recall Shakespeare’s description of England, ‘This precious stone set in a silver sea’, but then they look out the window.  They see the ‘straggling’ suburbs, the hills sown with bungalows, the wireless masts and overhead power cables, and ‘men and women, indiscernible except as tiny spots’ who were ‘marrying and shopping and making money and having children.’  Then one of Waugh’s characters says, ‘I think I’m going to be sick.’

HG Wells contemptuously describes suburbs as a ‘tumorous growth’ … ‘ignoble’ Croydon and ‘tragic’ West Ham.  Betjeman of course pleaded to the Nazis, ‘Come friendly bombs and land on Slough, it isn’t fit for humans now’.  The suburbs were “Bathed in the yellow vomit” of sodium lamps.  Carey describes Betjeman’s horror of the suburbs, ‘harbouring the mixed bag of atrocities with which Betjeman associates with progress – radios, cars, advertisements, labour-saving homes, peroxide blondes, crooked businessmen, litter, painted toenails and people who wear public-school ties to which they are not entitled.’

The vile lower orders had to be stopped.  It is no accident that one of the key figures in post-war planning was Sir Patrick Abercrombie, founder and head of the Council for the Protection of Rural England.  Planners like Abercrombie knew that ordinary folk were itching to escape the grimy crowded towns.  But instead of the semi-detached houses with nice back gardens, which they craved, they would have to be stacked high in tower blocks.  The planners knew that it wasn’t what people wanted.  They knew that people wanted a little space of their own, with a little back lawn where they could keep an eye on their three-year old playing.  A fairly modest, basic human desire in this day and age, you might think, and yet one they would be deprived of.

A system of Green Belts was devised to keep the proles locked in.  Professor Hall refers to Green Belts, correctly, as ‘the polite English version of apartheid’ … ‘a system of controlling and regulating the suburban tide to a degree that would have been unthinkable in the United States’.  The Town and Country Planning Act of 1947 effectively nationalised the right to develop land.  Hall describes how the containment of the lower orders in increasingly crowded urban areas, and the resulting inflation of land and property prices, led to distress on a vast scale.  Since land was so scarce and pricey, to build houses which people could actually afford, private builders were forced to build smaller and smaller homes, reducing the quality to make them less expensive.

As the private housing market was strangled, it was decided that instead the State would build inner-city accommodation for the masses.  They were to be confined to urban areas, forced to live in high densities in high-rise blocks.  Rather than chose their own home in a free market, ordinary people had to apply to the State to be housed and would be allocated one (a very nasty State produced home).  By the 1970s around a third of the British population lived in State housing.  The State thus determined how and where we should live.  Over the years, it has become suffocating.  Green spaces inside towns have shrunk or disappeared as more and more nasty council blocks have been crammed in.  Early ‘leafy suburbs’ like Ealing have become more and more crowded and less and less leafy.  Now, they feel like part of the towns, only without the attractions of the bright lights.  In Britain, the dream of better living stopped in 1947.

We have had enough of all this crap about ‘protecting the countryside’.  Planning (let us call it what it is: authoritarian State control of our lives) has always been primarily a tool of social prejudice.  Behind the cult of the British countryside, from Wordsworth and Ruskin onwards, has always been contempt for the masses.   Who are we protecting the ‘countryside’ for?   And from whom are we protecting it? 

Let us be honest about ‘the countryside’.   These days it is largely made up of very big, very flat rectangular fields used for (largely pointless, subsidised) industrial farming … not at all beautiful and frankly the last place you would want to have a picnic. (Ironically most of the green rural fantasists in our midst tend to hang out in relatively crowded places like Southwold and Alderburgh (to enjoy the music festivals) and the ‘Wordsworth-country’ bit of the Lake District where Beatrix Potter lived.)

Very few bits of the countryside look like it does in Postman Pat, and these bits are enjoyed by very few people indeed.   Let’s have more of them.  Wonderfully landscaped areas – big ones - not far from towns and suburbs, accessible to lots of people, with adjacent toilets and cafes and car-parks.  We do not want Green Belts, we want Green Patches – big parks and broad, lovely town squares, and large chunks of beautifully landscaped green spaces, close to where people live.  We want green everyone can enjoy.  And in between the green bits, we demand the freedom to build what we want, where we want. Three cheers for ‘Urban Sprawl’, the motor car, roads, supermarkets, golf courses and service stations.

It’s time to get angry with the angry-brigade at the Telegraph.  To get angry with the organic, home-grown TV chefs and their agro-hobbyist friends, with the grungy middle class road protesters (imaging themselves to be radical), with the suburb-hating, supermarket-opposing, free-range chicken loving reactionaries, the metropolitan elite who can afford second-homes, yet who would deny first-homes to others, the heritage bores and bearded ramblers and people who drink cloudy expensive beer from local breweries and write bad guide books and erect plaques everywhere and think Ruskin had a point.  It’s time to get angry with Prince Charles – the Dark Lord, and his toady friend Richard Rogers, who thinks we should all live in shoe-boxes.  This collection of bigots are trying to keep us in our place.  They have damaged the lives of millions of people.  Now they must be stopped.

Martin Durkin is a documentary film director and TV producer based in the UK.

Photo from Bigstockphoto.com.

In the last years of his life Dr. Martin Luther King expanded his focus from political and civil rights to include economic justice. Noting that the majority of America’s poor were white King decried the already huge gaps between rich and poor, calling for “radical changes in the structure of our society,” including a massive urban jobs program.

If King were alive today, he would have plenty of reason to take pride in the success of his struggle for human rights. Yet he would surely be disheartened at the economic situation among African-Americans and other racial minorities. African-American unemployment, for example, is at its worst level in more than three decades. While African-Americans make up 12% of the nation’s population, they account for 21% of the nation’s unemployed. Unemployment for black men stands at a staggeringly high 19.1%, and the Economic Policy Institute estimates that overall black unemployment will remain well above 10% till at least 2014.

The black middle class is also under siege. The gap in net worth of minority households compared with whites is greater today than in 2005. White households may have lost 16% of their net worth in recent years, but African-Americans have lost 53%, and Latinos 66%. The recent decline in public sector jobs across the country could deepen these negative trends; blacks are 30% more likely to be government employees.

Some of these problems stem from the larger economic crisis. The collapse of the real estate bubble, for example, has disproportionally affected minority groups, particularly Hispanics. Yet many of them are tied to shifts in government policy. The Obama administration could help ameliorate some of the pain minorities are feeling in the jobs sector, but its focus on white-collar information jobs, academia and the green economy has done little to help this already underserved community.

But will these failures have political consequences in 2012? It’s hard to say.

Despite the poor economic news, approval of the current administration — headed by an African-American President, Barack Obama -  stands at 84% among African-Americans even as it has weakened among whites.

The situation among Latinos, the nation’s largest ethnic minority, is somewhat more complex. Throughout the ’90s and the first seven years of the new millennium, Latinos enjoyed steady advances in everything from business formation to home ownership.  But the real estate collapse disproportionately devastated Latinos, whose net worth tended be tied to their houses as opposed to stocks and bonds. Latinos also were over-represented in the hard-hit construction and manufacturing sectors.

Conceivably, hard times could help the GOP a bit with Latinos. In 2004 George W. Bush — a Texan with a seemingly simpatico attitude — captured more than 40% of their votes. But in 2008, Latinos strongly lined up behind Obama, who won roughly two-thirds of their vote. In 2010, Latinos shifted somewhat to the right, remaining strongly Democratic at 60% but significantly down from 69% in 2006. Recent polls have shown presidential approval levels barely above 50% among Latino voters.

Perhaps a bigger problem, particularly with Latinos, will be getting them to vote in anything like the numbers seen in 2008. The Obama administration might recapture their support by pointing out that their economic calamities originated during the Bush administration. It can also make the point that in the short run ameliorative steps taken by the president and Congressional Democrats — such as extending unemployment benefits — have aided minorities disproportionately.

But the biggest question is whether the current progressive agenda supports minority upward mobility. From its inception the Obama administration’s focus has been on the largely white information economy, notably boosting universities and the green-industrial complex based in places like Silicon Valley. The Obama team’s decision to surrender working class whites to appeal to what Democratic strategists call the “mass upper middle class” makes political sense but could lead to problems for an American working class that is itself increasingly minority.

An emphasis on green industries and strong across-the-board regulation often works against traditional industries like heavy manufacturing, warehousing and fossil fuel development that historically have employed many minorities. Opposing development of new petrochemical plants and such things as the XL Pipeline — opposed by many greens and their allies in the Obama Administration — could reduce new opportunities for minority workers, many of them unionized, particularly in the heavily African-American, and increasingly Latino, Gulf region.

Modern-day progressivism’s primary laboratory, California, tells a cautionary tale. The draconian green legislation enacted under former Republican Gov. Arnold Schwarzenegger has hit the state’s manufacturing and construction industries far more than the national average. Even more troubling: a new report from the Public Policy Institute of California found that this region’s affluent, largely white population has expanded far more quickly than the national average.

More important is the dissatisfaction among some Latino and African American Democrats that the current progressive regime. Writing recently in the Los Angeles Business Journal, Roderick Wright, a Democratic state senator from south Los Angeles argues draconian environmental laws have seriously undermined job creation in his heavily minority, working-class districts.

Congressman Dennis Cardoza, a Portuguese-American who represents a heavily Latino district in the San Joaquin Valley, also recently lambasted President Obama for neglecting the concerns of “real people.” Cardoza claimed that the president has been particularly deaf in addressing “the environmental, resources, housing and employment areas.” This frustration is understandable given that Cardoza’s Central Valley district suffers from among the nation’s highest unemployment rates.

Sadly the GOP has done little to address these failings. Republican pandering to nativist constituencies will contain Latino willingness to hear the party’s message. Old links to racist groups (in the case of Ron Paul) or possession of a tin ear (Newt Gingrich) does neither the GOP nor the more important cause of political competition a great service.

A hard focus on economic growth and opportunity by minorities might not win accolades from the mainstream press, academia or top party cadres. Yet if we wish to see Dr. King’s real dream extended beyond a relatively small number of the gifted few, minority voters should start challenging Obama’s and the other candidates’ economic agenda — or they can expect their support and their futures to again be taken for granted.

This piece originally appeared at Forbes.com.

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

Photo from U.S. National Archives and Records Administration.

An interview in Social Intelligence with Neil Howe on the changing nature of human population growth and its implications for politics, culture, and business.

Headlines around the world are trumpeting the United Nations’ announcement that the world population is now hitting seven billion and may reach eight billion in another 14 years. Yet lost in much of the commentary is any understanding of how the dynamics of population growth are fundamentally changing and what this means for the composition of the workforce, consumption patterns, and the general direction of society. To glean insight into these questions, SI interviewed LifeCourse founder and president Neil Howe, who has spoken and published widely on these topics over the last three decades.

SI: Neil, before we talk about the population outlook today, can you give us a brief primer on the demographic trends that got us here?
NH: Sure. The first 500,000 years or so can be summarized in a sentence. Women generally had six or more kids, but many if not most of them died young, so human population hardly grew. For most people, life may not have been solitary—but it was poor, nasty, brutish, and short. Then, about 300 years ago, there arrived the so-called “first demographic transition,” an era when mortality rates began to decline. That sparked a great population surge, particularly in Europe, North America, and China, beginning in the 1700s. This population explosion gave rise, particularly by the time of the French Revolution, to thinkers like Thomas Malthus. He famously theorized that human population growth would inevitably lead to more and more competition for food and other natural resources so that mankind would always be gripped in a struggle for subsistence.

SI: But it didn’t turn out that way…
NH: No, it didn’t. Eventually people began to realize that they didn’t need to have so many children just to ensure that two or three survived. Thus began the so-called “second demographic revolution.” Birthrates began to decline in the late nineteenth and twentieth centuries, initially only in western societies. Meanwhile, markets and science and new notions of progress brought us the Industrial Revolution and dramatic improvements in the productivity of agriculture. Bottom line? Because the rate of population growth decelerated and per-capita living standards rose, the Malthusian nightmare never happened. Our higher living standards produced public health measures and medicines that drastically cut child mortality, which has kept the rate of population growth from falling as fast as it otherwise might have. Even so, even as the numbers of people on the planet continued to rise, global living standards have continued to rise even faster.

SI: Then why did we hear so much alarm in the late 1960s and ‘70s about the coming “Population Bomb?”
NH: You are referring to Paul Ehrlich’s bestseller, which back then achieved enormous influence throughout the world. Everyone pointed to the book-cover image of hordes of people being crowded off the edge of continents. Many who came of age reading Ehrlich simply assumed that this was our future. At that time, world population growth, having slumped in the 1930s and ‘40s, was again growing rapidly. Not only did it seem like the American postwar “baby boom” would go on forever, but dramatic declines in child and infant mortality in places like India and China were triggering an explosive acceleration in population growth throughout what was then known as the “Third World.”

SI: So what happened?
NH: Well, all these trends turned out to be temporary. What Ehrlich and many others missed was the dramatic further decline in birthrates that would soon come. The American baby boom turned into the baby bust, resulting in today’s smallish Generation X—whose much smaller numbers of native-born U.S. births per year were later hidden, to some extent, by higher rates of immigration. Birthrates fell even more dramatically in Europe, Asia, and the former Soviet Union, and unlike in the United States, those birthrates stayed low. In fact, they fell well below the level needed to sustain their populations over time. Russia is now experiencing the steepest sustained population decline of any society since the bubonic plague. Japan is now in its fourth year of depopulation. And in recent years, the phenomenon demographers call “sub-replacement fertility” has even spread to many developing countries, including Brazil and parts of the Middle East, including Iran.

SI: But then why is the United Nations telling us that world population will grow from seven to eight billion in just the next 14 years?
NH: Partly it’s because there are some regions where the birthrates are still comparatively high, such as sub-Saharan Africa. The U.N. believes these rates are sustainable. I believe they aren’t. Do you really think that Nigeria in 2050 will have twice the population of Western Europe? It’s also because we are still facing a population explosion of seniors around the world. As my LifeCourse colleague, Phil Longman, recently noted in an article for Foreign Policy magazine, the U.N. now projects that over the next 40 years more than half of the world’s projected population growth will come from increases in the number of people over 60, while only 6 percent will come from people under 30. In fact, the U.N. projects that, by 2025, the population of children under 5, already in steep decline in most developed countries, will actually start falling globally. And that’s even after assuming a substantial rebound in birth rates in the developed world.

SI: So if remaining population growth doesn’t come from more children, that must mean we are all living much longer?
NH: That’s part of the explanation. But it’s mostly because yesterday’s youth bulges, like a pig moving through a python, are now or soon will be swelling the ranks of the old, just as they once swelled the ranks of youth and later of the middle-aged. So population grows even without any increase in the number of children. After these aging Boomers pass on, however, we face the very real prospect that world population will begin to decline. It is easy to imagine that we may never get to that eight billionth person on earth.

SI: What’s behind this global “birth dearth?”
NH: There are a lot of theories. The main one is that the traditional motivations for childbearing are no longer as strong in modernizing societies. Children used to be an economic asset to their parents. They helped on the farm. Now, with more than half the world’s population living in urban areas, children are no longer an economic asset for most people, but an avoidable and increasingly expensive liability. Having lots of children also used to be a smart strategy to provide for one’s security in old age. The advent of Social Security and private pension plans has lessened that motive.

SI: Yes, but we hear constantly these days about how pension plans are going broke.
NH: That’s not a coincidence. Population aging means there are fewer workers to support each retiree, and that has all kinds of implications, not just for pension finance, but for the economy as a whole. In places like Greece, Spain, and Italy, we are looking at societies in which, by the mid-2030s, half the population will be over 50—and in which more people will be celebrating their 80th birthdays each year than will be born. How are things going to work out politically when a decisive majority of the voting age population will be retired or near retirement? Already, the inversion of the age pyramid is the underlying story behind most of the economic turmoil facing Europe today. Slow growing or shrinking workforces diminish consumer demand, forcing capital to take evermore risks in search of reasonable returns. While demography is not destiny, it’s the tide in which we all must swim.

SI: How does this affect the family life?
NH: If you have a society where fertility is half the replacement rate (like in Italy, Bulgaria, or South Korea), in two generations you end up with a society in which the typical young adult not only has no siblings, but also has no cousins, no aunts, no uncles. Most young people will have two living parents, and four grandparents, but no other blood relations. In China, they call it the 4-2-1 problem, where one child is meant to support all of them.

SI: That raises interesting questions of what a society of single children will be like.
NH: Extended families are one of the basic institutions that individuals rely on as a social safety net in times of trouble—unemployment, hunger, sickness, disease. It’s the basic institution for socialization. It’s interesting to think about a world where these nuclear families are incredibly small and often fatherless, and the extended family doesn’t exist at all. In America, our extended families remain strong—and are getting stronger, due to generational forces. But what about extreme low-fertility societies, where only-children are the established norm? By definition, the extended family will evaporate. Who will fill the void? Will government rush in to provide benefits the extended family can no longer provide? If so, how can government afford to step in when the supply of taxpayers is shrinking compared to the supply of dependent elders? In these societies, we may have to look for the evolution of new, informal institutions that will take the place of both the extended family and the welfare state.

SI: In China, there’s the stereotype of the “Little Emperor.” What will be the dominant personality traits of a generation of only children?
NH: Social science finds only-children and first-borns do tend to have specific personality traits. Some are positive. For example, only-children and first-borns are associated with higher achievement, higher measured IQ, and a higher sense of overall planning and drive. But there are negatives as well. Research on only-children shows they tend to be less attuned to the need to please others, and less willing to be team players. You can draw a portrait of a society made up mainly of only-children and first-borns as being a bit more self-absorbed and a bit less accustomed to reaching out to strangers.

SI: Can we also expect that with fewer young people we’ll have fewer entrepreneurs?
NH: Entrepreneurship is negatively correlated with age. New businesses and new ideas generally come from young adults. But that’s not the only aspect of economic behavior that will be affected. When you’re in your 20s and 30s, it’s easier to change jobs and move to new places, lowering what economists call “frictional unemployment.” Today, I have no doubt that unemployment in the U.S. would be lower if we didn’t have such a high percentage of the population that is middle-aged or older, and thus unwilling or unable to assume risks, move to a new location, and acquire the skills needed to adjust to a rapidly changing workplace.

SI: What does that say for the overall picture, globally?
NH: In some of Western Europe’s societies, the working-age population may be declining by a percent or a percent and a half a year by the 2030s and ‘40s. That may wipe out any gains from productivity growth, so you might find that real GDP stays flat even with robust innovation. The declining number of workers will cancel out whatever growth might come from automation, for example. So even at full employment, GDP no longer grows. We already see this prospect dawning in all the worries over the Euro, as EU leaders suddenly realize it’s very hard for nations like Italy to bring down their debt-to-GDP ratios if their projected GDPs are no longer expected to grow—even after the recession ends. But that’s not all. Economic historians often point to a broader dysfunction that typically overtakes zero-growth economies.

SI: Are you talking about the 1930s, for example?
NH: Yes. Or much longer eras, like the fifteenth century in Western Europe. Historians observe that in a world in which businesses are no longer carving out new markets and industry is no longer growing, leaders gravitate toward a psychology of risk aversion. Companies just want to protect their current revenue, and industries just want to protect their “given” customer base against encroachment. It’s a world that favors monopolies, guilds, cartels, sweetheart deals with political rulers, and protection against imports. This trend may be further reinforced by the predominance of single children and by the emergence of an older workforce. Of course, voters will also be older, leading policy makers to take fewer chances and be less enterprising with changes in public policies. The biggest challenge will be in very low-fertility societies—Japan, China, Southern Europe, and across the former Soviet Union.

SI: You are painting a pretty gloomy picture here.
NH: Yes and no. There are real challenges presented by global aging, particularly in the areas of pension and health care finance. And we’ll have to get used to lower rates of GDP growth. In the U.S., we’ll probably also see lower rates of immigration, both because of the sharp falloff in birthrates in Mexico and throughout Latin America, and because aging societies tend towards xenophobia. But there are real opportunities as well, not only for society, but also for firms and individuals who see these trends coming and know how to offer appropriate products and services. That means, for example, not just tapping into the exploding demand from older consumers, but understanding how tomorrow’s generation of seniors will have different needs, means, and preferences than seniors in the past.

SI: So, you’re saying that just because we’ll have more old people, we shouldn’t expect an explosion in Oldsmobile sales?
NH: That’s one way to think of it. Concretely, one needs to understand not just that the 65+ population will be the fastest-growing demographic group in most countries for decades to come. One also needs to understand that members of this older population belong to a particular generation. In the U.S., we call them Baby Boomers, and they have very particular ideas about the roles they want to play in later life, while their children and grandchildren also have particular ideas about the roles this generation of elders should play. People who understand how global aging and generational change intersect will do quite well in the world that’s coming, whether they are politicians, inventors of new technology, or creators of culture.  So when we discuss Boomers in SI, readers should keep in mind the larger context of global aging, which lends even greater weight to these generational trends.

Social Intelligence v1, n6 (LifeCourse Associates, 2011).

For California’s beleaguered high-speed rail project, last week brought plenty of  surprises and challenges.  Dominating the headlines were the resignations of several top officials of the High-Speed Rail Authority (CHSRA). Among them were board chairman Tom Umberg, CEO Roelof van Ark, board member Matthew Toledo, Deputy Director (Environment) Dan Leavitt and press secretary Rachel Wall. Dan Richard, a respected and trusted advisor of Gov. Jerry Brown, appointed to the Board last year, is expected to assume chairmanship of the Board (Umberg remains as a member of the board).

The past week also saw the release of a fresh critique of CHSRA’s business plan and an avalanche of criticism by influential commentators and analysts. The critique, entitled Twelve Misleading Statements on Finance and Economic Issue in the CHSRA’s Draft 2012 Business Plan, received wide distribution among state legislators and senior officials in Gov. Brown’s administration. It was authored by a group of independent experts who have closely followed the project over the past two years — Alain C. Enthoven, William C. Grindley, William H. Warren, Michael G. Brownrigg and Alan H. Bushell. The report challenges methodically one by one the credibility of the business plan’s key assumptions concerning the project’s construction costs and financing; revenues, ridership and operational costs; and societal benefits. (http://www.cc-hsr.org)

Last week's press commentaries added to the climate of skepticism that is increasingly engulfing the project. In close succession, there appeared a January 8 column by the well known Sacramento Bee columnist, Dan Walters (It’s Time to Kill California’s Bullet Train Boondoggle); a January 9 op-ed in The Washington Post by the newspaper’s editorial writer Charles Lane (California’s High-Speed Rail to Nowhere); and a January 10 piece in The Wall Street Journal by Wendell Cox and Joseph Vranich (California’s High-Speed Rail Fibs).

An Orange County Register editorial on January 12 further underscored the widespread opposition to the project by the state’s newspapers. The editorial sounded alarm about legislative attempts to fast-track the HSR project by exempting it from environmental review (Rep. Feuer’s Assembly Bill 1444) Waiving environmental regulations can speed project approval and undermine legal challenges, pointed the editorial. The HSR project already faces multiple court challenges on environmental grounds, with more suits likely.

Even the Sierra Club has turned critical."The draft business plan does not leave us feeling optimistic about the viability of the current high-speed rail program," wrote Kathryn Phillips, Director of Sierra Club California in a January 13 letter to the Authority. "We urge the HSRA to reconsider its business plan."

Departure of key personnel could mark a new beginning

The unexpected departure of the Authority’s top officials has added to a series of reversals experienced by the project in recent days. Most damaging has been a scathing report by the independent Peer Review Group that pronounced the Authority’s plan "not financially feasible" and warned of "immense financial risk."  Adding to it has been a growing chorus of skeptical lawmakers and further news of declining public support (a SurveyUSA news poll showing only 33% of voters in favor of the bond sale).

The abrupt mass resignations of senior management are seen as a bid by Governor Brown to assert a tighter control over a project that is facing a critical first test later this spring when the legislature will be asked to vote the first $2.7 billion in bonds to start the initial 130-mile stretch of the line in the Central Valley. Last week, Brown also announced that he intends to fold the Authority into a new state transportation agency, thus placing the project under more direct supervision of the Governor.

So far, Gov. Brown has maintained steadfast support of the project, but his recent actions suggest that he is sensitive to public opinion and to the political winds blowing from the state capitol. Many lawmakers, some from the Governor’s own party, counsel against rushing ahead with construction and suggest taking the time to thoroughly rethink the business plan. They include Sen. Alan Lowenthal (D), chairman of the select committee on high-speed rail; Sen. Mark DeSaulnier (D), chairman of the transportation committee; and Sen. Joe Simitian (D), chairman of the budget subcommittee overseeing transportation. The dim prospects for any further federal funds or for private money to support the project beyond the "Initial Construction Section" must also weigh heavily in the Governor's assessment of the project's long-term viability.  

In the meantime, changes may be expected in the Rail Authority’s management style. Those who know the incoming chairman well look forward to an agency that will be less confrontational, more respectful of its critics and more attentive to the legislators. They hope the Authority will be more willing to reach out and build bridges to citizen groups and will assert more control over its contractors.

Only time will tell whether last week’s events represent a true turning point for this divisive initiative. However, multiple signs coming out of Sacramento give people reasons to hope that real changes in direction are indeed underway.

Ken Orski has worked professionally in the field of transportation for over 30 years.

CA route map by Wikipedia user CountZ.

Adding nearly 119,000 people in 2011, Florida has capped a decade of steady population increase  to see the state grow 19% since 2000.  Despite 2009, an historic year where more people left than arrived, the overall net growth of Florida has yielded two additional congressional seats, moving the state well on its way towards the becoming third most populous state in the nation.  This ascendancy brings new responsibility to the shoulders of the state’s leaders, and the direction this state takes in the coming years will depend upon how Florida reacts to this influx of new population.  It is time for true leadership to find appropriate voice for our state on the national scene.

Contrary to the predictions of many within the urbanist intelligentsia, Florida’s farm counties grew the fastest. Osceola County, just south of bustling Orlando, grew by 55%; sleepy Sumter County, northwest of Orlando, grew by 75%; and Flagler County, home to historic St. Augustine, nearly doubled in population. Tampa, Orlando, and Miami have each seen their healthy share of immigration, but Florida’s rural areas have dramatically increased their appeal over a decade ago.

At first this trend might be puzzling.  Lacking urban amenities such as museums, transit, and Starbucks, parts of rural Florida seem almost timeless.  Wildwood and Leesburg, nestled in the center of Florida, lack both beaches and theme parks.  They have one thing, however, that the urban areas do not have:  affordable housing.  And this is the elusive reality that must be turned around by Florida’s leadership if the state is to grow in a responsible manner.

The Miami-Dade market has plenty of supply, but the average home lists for $509,000 .  Up in Wildwood, the home lists for $175,000, and you get a lot more house for your money.  People are voting with their feet for affordability.

It’s not the price alone that seems to be putting people off, however.  Naples, which lists homes even higher than Miami, saw growth over the past ten years at a pace two and a half times that of Miami, and is expected to continue to grow at the same pace through 2015.  Anecdotally, it seems that newcomers have relocated to their vacation homes after selling off their other high-priced property, usually in the north. They sometimes reduced their expectations of what they can receive for their old houses and then permanently located where they prefer to live. If the buyers are older, they still likely made a nice profit over the past few decades.

In Orange County, meanwhile, relieved realtors are finally starting to say goodbye to distressed properties.  Appraiser Lee Barnes commented that “foreclosures and short sales are 40% fewer, compared to this time last year,” and in an economy fueled by growth, the welcome sight of occupied rooftops means that commercial real estate is beginning to come back.  In fact, Orlando is near the top of the list in expected home price gains for 2012, a dramatic turnaround for the region.

Florida’s comeback is timed with some key changes in regulating real estate development.  With state oversight all but vanquished by the governor, starving local counties welcome the property tax dollars associated with new growth.  No other revenue, apart from a sales tax, provides much cash to operate government in the Sunshine State. This makes growth a priority.

But economic activity occurs in two forms:  growth (making more stuff) and development (making stuff better).  Quietly, in the past decade, Florida has added biomedical research clusters to its twin engines of growth and tourism, and this promises to increase greater resilience to the state economy.

Some signs, however, point to Florida abandoning this strategy and continuing its boom-bust mentality.  The Governor, already warning the legislature of budget cuts in 2012, has expressed disappointment that the job creation return is poor on the State’s venture capital invested in bringing Scripps, Nemours, and other cutting-edge research organizations. He claims that are simply not adding jobs fast enough for his taste.  Abandoning these investments could mean that the organizations reduce their presence or even abandon the state.

At the same time, Florida’s cities seem to be uncertain about how to tackle the problem of adding density without reducing affordability.  Land prices haven’t wavered much in the recession, with stubborn property owners holding on to assets that won’t sell, and they may benefit from this land-banking strategy in the long run.  Many who escape the Rust Belt and come to Florida express shock at the cost of living in the Sunshine State and are further dismayed over the quality of schools and surprising amount of congestion.  This mismatch between cost of living and quality of life may be part of the reason why Florida’s five largest cities were listed among the nation’s “saddest” in a recent Time poll .

Casino gambling, a typical 1990s way to boost revenue, is being entertained by the Legislature, but other ideas should be considered as well.  For one thing, investment in the future means a better education system, perhaps a higher priority than ostrich food subsidies (currently exempt from state sales tax ).  Closing tax loopholes and fixing some long-broken parts of Florida’s tax code will help gain some badly-needed revenue.

Very large infrastructure projects are also important to make Florida competitive.  On the east coast, NASA’s 60-year-old facilities need a major overhaul to continue providing America a spaceport for the 21st century and to pave the way for private space exploration.  This will maintain the deep investment in human capital of which Floridians were once justly proud.  The spaceport has a great deal of synergy with the National Simulation Center, located in Orlando, which is currently the country’s premier provider of military simulation and training.

In more than one region, the Florida Venture Capital Act has brought world-class biomedical research laboratories, making dramatic advancements in cancer, diabetes, children’s health, and other key areas.  Already surging ahead and competing with area like Boston’s Research Center and the Silicon Valley, Florida must keep its edge in this field by continuing investment in the Venture Capital Fund.

On the west coast, the Tampa Port Authority is already preparing for the widening of the Panama Canal, working in collaboration with ports of Mobile and Houston to partner with ocean carriers.  Continuing this investment and modernizing the logistics of truck and railroad traffic into the port is critical to make this economic engine prevail in the 21st century.

Such infrastructure investment will improve Florida’s already existing assets, allowing for prosperity and upward mobility to occur within the state.  Competing with Texas will be difficult, given Florida’s lack of petrochemical resources, but the state’s native industry, tourism, has already made it a world-class destination. Florida’s leadership has already entered the national stage by saying “no” to high speed rail, but it has yet to define what it will say “yes” to.  Without intelligent citizen input, the state will likely fall back on its traditional pattern of being a passive receiver of investment and people, but not a creator of great new enterprises. 

In contrast to states like California and Texas, Florida has been willing to be eternally passive; Disney World is a classic example.  Florida, a grateful recipient of this California enterprise, has benefitted secondarily, but the real power of this company still resides in Burbank.  This story is played out over and over again, with real estate developers from Dallas and Atlanta continuing to define the face of the state, aided and abetted by Wall Street investors who see Florida primarily as a waterfront real estate asset with some moderate margins available in between coasts.

It is time for Florida to start doing, instead of being done to.  With investment in real infrastructure, good education and intelligent leadership, Florida can assume its responsibility as one of America’s new high-profile states, capable of exporting science, technology, and culture.  Our population growth contains within it the seeds of a bright future once we fix what is broken about our beautiful state.

Richard Reep is an Architect and artist living in Winter Park, Florida. His practice has centered around hospitality-driven mixed use, and has contributed in various capacities to urban mixed-use projects, both nationally and internationally, for the last 25 years.

Photo courtesy of BigStockPhoto.com.

It is well known that home ownership has declined in the United States from the peak of the housing bubble. According to Current Population Survey data, the national home ownership rate fell 2.9 percentage points from the peak of the bubble (4th quarter 2004) to the third quarter of 2011.

It is less well understood, however, that the spurt in home ownership was, like the housing bubble, an aberration. Looking over the data from the 2010 census, it seems clear that since 2000 the actual decline was a much smaller: 0.8 percentage points from the 2000 census. In fact the current home ownership rate tracks fairly well with that of the post 1960 and the entire pre-bubble period.

The End of Home Ownership? Analysts such as Richard Florida suggest an end to the preference for home ownership, citing the losses from the bubble, which were, in fact, an aberration. Most recently, Xavier University's Michael F. Ford wrote in the Washington Postabout home ownership having been driven to 69% by "guarantees" and "tax breaks," such as the mortgage interest deduction. He notes that this "spending spree" led to a loss of $6 trillion in US real estate value.

Ford does not mention the fact that home ownership had hovered between 60% and 65% for more than three decades before the bubble, without suffering any such losses. Nor does he mention the roles played by Fannie, Freddie and Frank (D-Massachusetts), along with others in Washington, or the related "drunken sailor" mortgage policies concocted by lenders and Wall Street that anyone familiar with credit should have known could only lead to disaster. This was obvious to many observers, although shockingly not to the Federal Reserve Board, as recent reports indicate .

There is no doubt that the "spending spree" led to the housing bust and triggered the Great Financial Crisis. However it was not the long-standing ownership support programs of the federal government that were primarily to blame. As late as the beginning of the decade, there was no bubble and the median multiple in major metropolitan areas averaged 2.9, within the maximum affordability rating of 3.0. The "spending spree" itself was a rational response to policies that turned housing into the equivalent of a speculative commodities market, with destructive results, in certain large markets. Critically the bubble did not appear in many others.

Speculation and the "Bubble States:" The extent to which speculation fueled house price increases is the subject of a recent Federal Reserve Bank of New York paper by Andrew Haughwout, Donghoon Lee, Joseph Tracy and Wilbert van der Klaauw. The researchers examine investment, or speculation in real estate markets, during the housing bubble. Investors buy houses that they do not intend to live in for the purpose of making money. In normal times, this investment is principally for rental income or long term capital gains. However, in the highly charged housing markets that developed in some metropolitan areas, prices rose so rapidly, that "flipping" (short term ownership) became very profitable, at least for some.

Pointing out that "The recent financial crisis—the worst in eighty years—had its origins in the enormous increase and subsequent collapse in housing prices during the 2000s," the New York Fed researchers show that speculative activity was much greater in California, Florida, Arizona and Nevada (which they label the "bubble states") than elsewhere. My analysis indicates that two-thirds of the house value drop in the nation before the Lehman Brothers collapse (September 15, 2008) occurred in the four "bubble states." According to the researchers, this greater speculative activity in these markets made the market more instable because unlike owner-occupiers, investors are far more likely to default on mortgage loans.

Missing the Geography of Speculation (the Geography of "Smart Growth"): The New York Fed research, however, ignores the geography of speculation. Why was speculation was so much more rampant in the bubble states? There is no reason to believe that residents of California, Florida, Arizona or Nevada are any less interested in making money or, in general, any more greedy. Yet speculators largely stayed out of markets in high demand areas, such as Dallas-Fort Worth, Houston and Indianapolis. In fact, in large parts of the nation, there was little speculative activity. In these markets prices were not rising inordinately so speculators did not bother with them. Instead they focused on more volatile markets where prices were already rising strongly, further swelling local price increases.

The geography of speculation corresponds largely to the geography of excessive land use restrictions, which created the shortage of land for housing that drove the prices up in the four bubble states (Note). It is a fundamental principle of economics that prices tend to rise where desired goods are in short supply.

In California and Florida, restrictive land use policies (smart growth or growth management) created a shortage of land for new housing relative to demand. The largest metropolitan areas of Nevada (Las Vegas) and Arizona (Phoenix) are surrounded by government owned land that was auctioned for development at such a slow rate that prices rose by more than five times during the bubble.

Astonishingly, having missed the geography of speculation, the New York Fed researchers suggest that a solution is to regulate speculation. There is a much simpler answer, which Florida has already implemented which is to repeal the restrictive land use regulations, without which inordinately speculative profits cannot occur.

Meanwhile, as the speculators have been driven out of the market, and despite federal government efforts to prop-up the artificially high house prices, values have fallen to below 2000 levels for the first time (Figure 1). Based upon Federal Reserve Board and Census Bureau data, it is estimated that the average owner-occupied house value in 2011 (three quarters) has fallen to $211,000, which is down from a peak of approximately $345,000 in 2006 and $222,000 in 2000 (adjusted for inflation).

So is Ownership now doomed? Yet the home ownership naysayers have little to cheer. Yes, home ownership dropped in the last decade. However, all of the loss was in mobile homes and boats. Even so, the number of mobile home owners remained greater than home owners living in apartments, including condominiums (Figure 2). In fact there was a slight increase in the share of households owning their own homes, if mobile homes and boats are excluded (Figure 3), with a rise from 60.6% in 2000 to 60.9% in 2010.

There were 5,057,000 more home owners in 2010 than in 2000, and perhaps more surprisingly, 5,119,000 more home owners occupying detached housing. Detached, attached (town house) and apartment ownership each increased over the past decade (Figure 4). Contrary to new urbanist theoreticians, detached housing – not urban condos – overall accounted for the most housing growth, both owner-occupied and rentals.

Xavier's Ford calls the American Dream of home ownership a myth and even goes so far as to suggest that home ownership is "more important to special interests than it is to most Americans." In fact, Ford's interpretation is delusional. That home ownership continued its advance, however modestly, in the face of the worst economic downturn in 80 years, reveals the durability and, indeed the reality of home ownership as an American Dream.

Photo:  Preventing speculation (New Development, Dallas-Fort Worth suburbs)

Note: Overall, the bubble states and other restrictively regulated metropolitan areas accounted for more than 90% of the pre-Lehman Brothers loss.

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

The vast majority of Americans believe the country is heading in the wrong direction, and, according to a 2011 Pew Survey, close to a majority feel that China has already surpassed the U.S. as an economic power.

These views echo those of the punditry, right and left, who see the U.S. on the road to inevitable decline.  Yet the reality is quite different. A confluence of largely unnoticed economic, demographic and political trends has put the U.S. in a far more favorable position than its rivals. Rather than the end of preeminence, America may well be entering  a renaissance.

Just survey the globe. The European Union’s prolonged crisis will likely end in further decline. Aging Japan has long passed its prime, its market share receding in everything from autos to high tech.  China’s impressive economic juggernaut has slowed down, and the Middle Kingdom faces increased social instability, environmental degradation and a creaky one-party dictatorship.

While the U.S. has its challenges, it is positioned to achieve a more solid long-term   trajectory than its European and Asian rivals. What it lacks, however, is a strong political leadership capable of seizing this opportunity.

Resources

Energy constitutes the biggest ace in the hole for the U.S. For almost half a century, an enormous fossil fuel bill that still accounts for 40% of the nation’s trade deficit has hampered economic growth. Now that situation is changing rapidly.

Due to vast new finds and improved technology to exploit them, the U.S. is now the world’s largest producer of natural gas and could emerge as the leading oil producer by 2017. Reserves of natural gas — a clean-burning fuel — are estimated at 100 years supply and could generate more than 1.5 million new jobs over the next two decades.

The U.S. agricultural sector is also booming, with exports reaching a record $135.5 billion in 2011. With global demand increasing, sustained growth  will continue across America’s fertile agricultural regions.

Manufacturing

The other big game changer is manufacturing. As President Barack Obama recently acknowledged, this is America’s “moment” to seize the industrial initiative. U.S. manufacturers have expanded their payrolls for two straight years, and they have increased production while Japan, Germany, China and Brazil have scaled back.

A recent survey of manufacturing CEOs revealed that 85% believed production could shift soon from overseas. Both foreign and domestic manufacturers are alarmed about rising wages and labor unrest in China. Some important Japanese, German and Korean companies also have concerns about China’s policies that favor local firms and abscond with investor’s technology.

Foreign Investment

Rising foreign investment reflects the new American competitiveness. Since 2008 foreign direct investment to Germany, France, Japan and Korea has stagnated; in 2009 overall investment in the E.U. dropped 36%.

In contrast, in 2010 foreign investment in the U.S. rose 49%, mostly coming from Canada, Europe, and Japan. Industrial investment rose $30 billion just between 2009 and 2010, while investment in the energy sector more than tripled to $20 billion.

The Information Sector

In the information sector, American domination continues to mount, contrary to predictions of decline over the past two decades. Although high-tech manufacturing has shifted largely to Asia, Americans rule the increasingly strategic software sector.   American-based companies, who constitute more than two-thirds of the world’s 500 largest software companies, including  nine of the top ten.

Outside the U.S., there are no significant equivalents of Apple, Google, Microsoft, Amazon and Facebook. Hollywood, for its part, rules the entertainment world, producing 40% of world’s audiovisual exports, a dominion that troubles China’s President Hu Jintao, who recently complained  that the “cultural fields” represent “the focal area” for Western “infiltration”.

Demographics

The Great Recessionhas slowed population growth everywhere, but the U.S. maintains the   youngest and most vibrant demographic profile of any advanced country. Between 1980 and 2010, the U.S population expanded by 75 million to over 300 million. In contrast many European countries, including Germany, have suffered stagnant growth, while in Russia and Japan populations have already started declining.

The disastrous fiscal implications of slow or negative population growth are evident in Greece, Spain and Italy, all of which suffer among the world’s lowest fertility rates. Rapid aging also will soon catch up with Germany. By 2030, Germany will have 48 retirees for every 100 workers — that’s barely two workers per retiree. The numbers are even worse in Japan: 53 retirees for every 100 workers by 2030.

Political Factors

Given the ineptitude of the last two administrations, enthusiasm about America’s political system is hard to justify. But our constitutional systems of laws and checks on central power remain a critical advantage. Immigration has declined with the recession, but the U.S. can expect to welcome religious and political exiles — such as Middle Eastern Christians displaced by   the “Arab Spring” — as well as Greeks and Irish fleeing Europe’s economic decline.

Many from Russia and China are seeking to immigrate to the United States, Canada or Australia in order to protect property or just live a freer life. Indeed, among the 20,000 Chinese with incomes over 100 million Yuan ($15 million), 27% have already emigrated and another 47% have said they were considering it, according to a report by China Merchants Bank and U.S. consultants Bain & Co. published in April.

Needed from Washington: A New American Strategy

Sadly no leading politician or political party seems ready to   embrace the country’s new strategic advantages.  Many on the left may find the very notion distasteful, having    swallowed declinism with their academic mother’s milk. The president himself dislikes the notion of American “exceptionalism.” Many key Obama backers like SEIU boss Andy Stern and former auto czar Steven Rattner, embrace the superiority of China’s authoritarian system. Others embrace Europe and even Japan as models for an aging superpower.

Worse still: Some Obama policies work against the well springs of national resurgence.   Threats to raise income taxes on families making over $250,000 directly threatens the aspiring entrepreneurial class more than the real “rich” whose fortunes are protected by low capital gains taxes and family trusts. Most critical: The administration’s hostility to fossil fuel represents a direct threat to the country’s greatest new source of advantage and threatens to strangle America’s recovery in its infancy.

Not that the Republicans are any less clueless. Many reject the infrastructure needed by an expanding economy — ports, roads, bridges as well as worker training and support for basic research — as mere “pork.” Budget restraint and fiscal discipline are important, but preparing the country for more rapid economic growth requires an active, supportive government.

Republicans also tend to view immigration as something akin to a hostile invasion. Yet many key industries — notably manufacturing and high tech — rely heavily on immigrant entrepreneurship, intelligence and work values. Running against immigration constitutes an assault on the nation’s increasingly diverse demographics.

So this is where we now sit.  With all the essential elements for a strong, sustained recovery place, the big question is whether we will find political leaders capable of tapping this country’s phenomenal potential.

This piece originally appeared at Forbes.com.

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

Photo from BigStockPhoto.com.

All science fiction agrees. History is leading to the unification of earth. The united world may be governed by benign world federalism or by a dystopian global tyranny. But the modern literature of prophecy is clear: the age of competing nation-states is coming to an end. There are no visions of the future in popular culture in which advanced technology is combined with the continued sovereignty and competition of nation-states like China, India, and the United States or blocs like the European Union. The only near-equivalent is George Orwell's nightmare vision, in 1984, of endless rivalry among the three totalitarian blocs of Oceania, Eurasia, and Eastasia.

Most educated people today are similarly in accord, associating historical progress with the increasing scale of our moral and political loyalties. Individuals are liberated from the communities into which they happened to be born. The tribe gives way to the nation and the nation gives way to humanity. History will soon culminate in a secular millennium in which emancipated individuals will be citizens of a postnational, global community.

Since the late 19th century, hopeful visions of the future have almost always been identified with the transcendence of nation-states. In the early 1900s, many in the West looked forward to the fulfillment of Alfred Tennyson's vision in "Locksley Hall" (1842) of "the Parliament of man, the Federation of the world." Wendell Willkie predicted in 1943 that World War II would be followed by a new age of unity given its title by his book: One World. The fall of the Berlin Wall triggered yet another wave of claims that a postnational epoch was dawning. These forecasts took crude forms, like Thomas L. Friedman's inaccurate depiction of a global market compelling the convergence of national policies, or sophisticated ones, like the British diplomat Robert Cooper's claim that premodern and modern societies would give way gradually to postmodern societies.1

Although philosophical cosmopolitanism today is generally associated with secular elites, its roots are religious. The idea that all human beings belong to a single moral community was part of ancient Stoicism. But the Stoics did not believe in progress. Instead, they envisioned a cyclic universe, like that of Hinduism, in which the world was periodically incinerated and re-created. The combination of progress and cosmopolitanism comes from the apocalyptic tradition in Zoroastrianism, which influenced apocalyptic Second Temple Judaism, Christianity, and Islam. According to this school of thought, at some point probably in the near future, history would be brought to an end by God whose direct rule would replace the division of humanity among languages and nationalities that the Biblical tradition explained with the myth of Babel.

The combination of moral cosmopolitanism with unidirectional progress constitutes Christianity's greatest legacy to the secular intelligentsia. The idea that a moral person must not be a selfish localist or nationalist, but must take a personal interest in the well-being of poor, suffering, far-away people was a Christian notion long before it informed the view of secular intellectuals of themselves as world citizens who have transcended petty local loyalties and interests. In its secularized version, Providence takes the form of social forces like the economy and culture, but the result is the same: the formation of a single planetary community free from ethnocentrism, wars, and trade conflicts. This kind of secular providentialism informs the philosophies of numerous thinkers including Immanuel Kant, G.W.F. Hegel, Karl Marx, and more recently Martha Nussbaum, Ulrich Beck, Peter Singer, and Kwame Anthony Appiah.

The underlying providential structure of cosmopolitanism explains the combination of certitude and moral fervor found among liberal and socialist one-worlders. In Christianity, to deny God's providential plan for the world is a sin, as it is to obstruct the unfolding of that plan. The same is the case in secular providentialism. Globalist liberals and socialists predict that a single cosmopolitan society will inevitably be brought about by irresistible social forces and then condemn anyone­ -- nationalist or capitalist -- who resists those forces. Postnational liberals tell us that the nation-state is withering away and then condemn those who defend national sovereignty for delaying the allegedly inevitable postnational future. The sun will rise tomorrow precisely at 7:00 a.m., therefore we must help it rise and fight those who would prevent its rising.

1.
Contemporary cosmopolitanism, in defiance of Hume, combines an "ought" with an "is." The "ought" is the view that the nation-state is a parochial form of organization and should be replaced by broader, more inclusive loyalties. The "is" takes the form of the claim that the nation-state is destined to wither away because of irresistible technological or economic forces, whether we like it or not.

But the trends proffered as evidence of a historic shift toward postnational cosmopolitanism are in fact consistent with the persistence of the nation-state as the main actor in world politics. Changes in the global economy, most significantly, are not signs of cosmopolitanism. The popular conception of globalization is overly simple and misleading. As Alan M. Rugman has pointed out, instead of a single global market there is today a somewhat Balkanized world economy organized around the "triad" of Europe, North America, and East Asia.2

The emerging world economy is highly regionalized and remains connected to the nation-state. While some industries, like computer electronics manufacturing, are truly global, others, like the automobile industry, are dominated by corporations with most of their production and sales based in one of the three major blocs. New blocs might join the existing triad -- India-centered South Asia, for example -- but it is naïve to think that all barriers to the free flow of capital, goods, and labor among countries and regions will disappear.

Even multinational corporations turn out to be not quite so multinational. The 100 largest multinationals in 2008 held 57 percent of their total assets and 58 percent of their total employment abroad, with foreign sales making up 61 percent of their total.3 But this merely means that most multinationals are half-global, at best. The typical multinational still has a distinct national identity, with around half of its assets, employment, and sales within its home market. In fact, very few multinational corporations conduct an overwhelming majority of their business outside of their home countries.

The domination of global commerce by corporations based in the United States, Japan, and Germany -- the three most populous industrial democracies -- shows the importance of a large domestic market as a base for multinational sales and operations. Despite the celebration of global corporations by libertarians and their denunciation by leftists and populists, global companies possess national identities after all. Even financial globalization proved more superficial than advertised: major global banks turned to their national governments for bailouts following the 2008 financial crisis.

The temporary influence of the Washington Consensus notwithstanding, the epoch of economic nationalism never ended. Outside of the Anglophone countries, this is the age of mercantilism. Instead of tariffs, post-1945 mercantilist nations have used subsidies (Europe and the United States); non-tariff barriers (Japan); and currency "tariffs," subsidies, and state-directed credit (China) to protect domestic markets and support export-oriented sectors of their economies. Mercantilism cannot work without a "patsy," and the United States agreed during the Cold War and post-Cold War period to play the role of consumer of first resort for mercantilist nations. This decision was based, partly on libertarian ideology, but mainly on national strategy, to encourage first Japan and West Germany and then China to become one-dimensional civilian manufacturing powers instead of rival military powers. In the long run, it is more likely that the United States -- the world's most protectionist nation before 1945 -- will move back toward mercantilism than it is that China, Japan, and Germany will adopt the economics of the late Milton Friedman.

Current trends in immigration do not support the cosmopolitan claim that national borders are breaking down. Neither the fact that a country like the United States chooses to admit large numbers of legal immigrants nor the fact that it chooses to tolerate large numbers of illegalimmigrants demonstrates that it is powerless to do otherwise. With respect to transnational flows of labor, all advanced industrial countries, including the United States, have undertaken actions -- ranging from issuing national identity cards to building border fences -- to secure their borders and airports against illegal immigrants. The assertion of effective state control over immigration is driven, in part, by fear of international terrorism, but also by a backlash against poor immigrants among native-born citizens of developed countries -- a backlash that is likely to deepen if the Great Recession is prolonged over many years.

At the same time that advanced countries are seeking to reduce unwanted immigration, many are competing for skilled immigrants. Britain, Australia, and Canada, for example, have adopted a "points system" in which educated immigrants are favored over the uneducated. When these trends are put together, the result is the opposite of the borderless world with free flows of labor predicted by prophets of globalization a decade ago. Most countries in the 21st century are likely to combine a tough attitude toward illegal immigration with selective legal immigration favoring skilled workers.

What about the political trends of the 21st century? The historical pattern is clear. The breakup of the Habsburg and Ottoman empires after World War I produced many new nation-states and some new multinational states, like Yugoslavia. Following World War II, the decolonization of the European empires in Asia and Africa produced dozens of new states, some of them multinational (like Nigeria and Pakistan, which may themselves break apart like Yugoslavia). With the dissolution of the Soviet Union and Yugoslavia, new states were again added to the United Nations General Assembly. It is a safe bet that the maps of the world in 2050 and 2100 will show still more independent countries than exist today.

The conventional wisdom of today's cosmopolitans holds that ethnocultural nationalism is a barbaric relic of an earlier stage of civilization and that as enlightenment and prosperity spread, people become more cosmopolitan. But far from being moribund, nationalism -- defined not as aggression or xenophobia, but as a preference for the nation-state as the unit of legitimate government -- remains the most powerful force in global politics for the third century in a row.
Thus nationalism is not atavistic; indeed, it is modern -- just as modern as industrialism and urbanism. The trend of reorganizing a world of premodern dynastic empires and city-states into a world of nation-states, in which most (though not all) states are identified with a majority ethnocultural group, has paralleled the conversion, in the economic realm, of an agrarian world into an industrial world.

As societies become urban and industrial, village societies give way to anonymous urban societies in which individuals identify with larger "imagined communities." These need not be national -- Islamists, for example, identify with the imagined community of the Muslim ummah. But the community that has proven most effective in attracting the loyalty of individuals in modern, large-scale societies is the nation, which can be defined minimally in terms of shared language and customs, as in most liberal democracies, or maximally, in terms of shared "race" and/or religion, as in illiberal nationalism.

It follows that as people become more educated and more prosperous they are more likely to prefer to be members of the majority in a nation-state rather than minorities in someone else's nation-state or one of several squabbling nationalities in a multinational state. As the world grows richer, movements by stateless nations, from the Scots to the Kurds, to obtain nation-states of their own, whether by peaceful or violent means, are likely to increase, not decrease.
Arguably, we are still in the early stages of the technological era in economics and the era of the nation-state in politics. In the most likely scenario, the 21st century will witness the completion of two trends that have been underway since the 18th -- the conversion of all humanity from an agrarian lifestyle to an urban-industrial one, and the replacement of premodern forms of political organization almost everywhere by nation-states.

2.
In recognizing the continuing, and likely expanding, hegemony of the nation-state as the primary unit of global political, economic, and social organization, we need not deny the simultaneous expansion of cosmopolitan sympathies. Liberalization of government controls on trade and finance, greater cross-border immigration and global travel, and the constitution of something approaching a global public through mass media communication of serial cosmopol­itan "moments" all contribute to the spread of cosmopolitan sentiments. But those sympathies are likely to continue to exist alongside national identities and allegiances.

To be sure, global initiatives such as the Millennium Development Goals and other antipoverty programs, as well as post-Cold War military interventions in the former Yugoslavia, Iraq, Afghanistan, and Libya have been justified, to some extent, on cosmopolitan grounds. The US intervention in Libya, to take one recent example, appears to have involved a protracted debate within the Obama Administration between advocates of the cosmopolitan notion of "Responsibility to Protect" (R2P) and pragmatists opposed to the application of US military power in conflicts where there is no clear national interest. In this debate, the cosmopolitans appear to have prevailed.

But we should be careful not to read too much into these examples. In virtually every case, the nation-state remains the institution through which economic and military resources are deployed in service of cosmopolitan objectives. In many cases, it is often difficult to disentangle where national interest ends and cosmopolitan interest begins. The wars in the Balkans and the Middle East can just as easily be explained in terms of the national interests of the United States and its allies in defeating sponsors of terrorist attacks (Afghanistan), securing US regional military hegemony (Iraq and Libya), and averting destabilizing flows of refugees to Europe (a motivation behind European participation in the Balkan and Libyan wars), as through cosmopolitan ones. As such, even where cosmopolitan sentiments succeed in galvanizing national or international action in response to global and regional challenges, those responses are likely to only further establish the nation-state as the focal point for making those decisions and the primary institution through which such interventions are likely to be carried out.

The resulting organization of global affairs is better explained by liberal internationalism than by cosmopolitanism. In this view, nation-states, rather than individuals, corporations, or non-governmental organizations (NGOs), will continue to be the main actors in world politics (though certainly not the only ones) for generations to come. Liberal internationalists maintain that all human beings have inalienable rights, which should be secured by governments resting on their consent. While those rights-securing governments may take various forms, the nation-state is the largest unit that has been able to combine effective government with a sense of solidarity among its citizens. The nation to which the state corresponds can be defined broadly, in terms of a shared culture and language, and it can be generous to minority nationalities that may share its territories. But there is a point at which linguistic and cultural diversity undermine the minimum of community needed to maintain a sense of shared citizenship. A global government would be a Tower of Babel which few would be willing to obey, to provide with taxes, or to support with military service.

Liberal internationalism answers the question of how the world can be organized, if each people, however defined, has a right to its own sovereign, accountable nation-state. The alternative to both Hobbesian anarchy and global cosmopolitanism is cooperation by nation-states. This cooperation can take the form of international law, international arbitration, and international agencies, as well as military alliances and concerts of power. But international is not supranational. Countries may delegate powers to international agencies for some purposes, but as long as the delegations are revocable, they are not surrendering sovereignty.

3.
The most important distinctions in 21st century world politics will be based on scale. By the middle of this century, the greatest powers may eventually be those, such as China, India, and the United States, which combine (or will combine) at least moderately developed industrial economies with populations of half a billion people or more. 

The US investment bank Goldman Sachs predicts that by 2050 China will have the largest economy in the world, followed by the United States and India. The next tier might be occupied by Russia, Brazil, and Japan, and a third tier would include Germany, Britain, and other once-mighty European economic powers.4 Just as the Italian city-states of the Renaissance were dwarfed and marginalized by the national monarchies north of the Alps in the 16th and 17th centuries, so the large nation-states of the past -- Britain, France, Germany, Russia, and Japan -- will be overshadowed by the titans of the 21st and 22nd centuries.

The United States will owe its position in the club of titans to its immigration-fed population growth, which could produce an American population of 400-600 million by 2050. The 2010 medium fertility estimations of the United Nations suggested that in 2050 the most populous nations would be India (1.7 billion) and China (1.3 billion), followed by the United States (400 million), Nigeria (400 million), and Indonesia (300 million).5 It is Europe, not the United States, which faces a significant decline in relative population, wealth, and power. Europe, which accounted for 22 percent of the world's population in 1945 and 12 percent in 2000, may have only 6 percent in 2050. Because GDP is based on working-age population and productivity, even though Europeans will grow richer, the European share of the global economy may decline from 22 percent today -- roughly comparable to that of the United States -- to only 12 percent in 2050.6

In modern industrial societies, technology and politics combine in what Edward Luttwak has called "geoeconomics." Technological economies of scale reward big enterprises in large, unified markets. As champions of the global market ceaselessly point out, technological and commercial economies of scale are best realized at the global level. But psychological and political economies of scale are best realized by nation-states.

In theory, both economic and political economies of scale could be realized by multinational blocs, but in practice this outcome is unlikely. As early as the 1840s, British and French observers speculated that the future would be dominated by two giant states, the United States and Russia. The imperialism of the industrial era, from the 1870s to World War II, was (among other things) an attempt by medium-sized nation-states like Britain, France, Germany, Italy, and Japan to create economic areas comparable in scale to those that existed inside the borders of the United States and Tsarist Russia (later the Soviet Union).

After World War II, largely at the insistence of the United States, the international system outlawed old-fashioned empire building. But even if 20th century history had taken a different course, it is doubtful that multinational empires, held together by repression and, in the case of maritime empires like the British and Japanese, separated by oceans, could have competed in the long run with giant nation-states.

The former Western European imperial powers have sought to achieve the same result by partially pooling their sovereignty in the European Union. But European countries retain their sovereignty in foreign policy, rendering a unified voice impossible in conflicts including the Balkan wars, the Iraq War, and the Libyan War. Meanwhile, the Greek financial crisis has proven that the European Union lacks the overarching central economic institutions, like a central bank with emergency lending capabilities, necessary to function as an efficient monetary and commercial union. Because of popular resistance to further political integration, the European Union is no more likely to be the successful equivalent of a giant nation-state than the former European empires proved to be.

Psychological economies of scale favor nation-states with a strong sense of solidarity among their citizens that makes them willing to fight in wars, pay taxes, and tolerate redistribution for the common good. China, with its overwhelming Han majority, has a far greater sense of national identity and solidarity than much smaller multinational states like Canada and Belgium, which are in danger of breaking up along ethno-national lines as Yugoslavia and Czechoslovakia have done.

It follows, then, that in the future, as in the past, the economic gains from scale will be reaped chiefly by entities with immense, free, internal markets congruent with political boundaries. Concerns about national security and domestic distribution will always constrain market integration among nation-states. In a post-imperial, post-dynastic world, the most successful great powers will be very big nation-states.

4.
Contrary to the claims of the prophets of cosmopolitanism, the world is likely to remain divided among great sovereign powers for ages to come. Sometimes they will compete, at other times they will collaborate, but they are unlikely to sacrifice their sovereignty by merging into a single global government; if one were established, by force or intimidation, it would probably break apart quickly.

The ideas of postmodernity and second modernity appeal primarily to thinkers in European nations where it is necessary to transcend and pool sovereignty in order to compete with huge nation-states like the United States and China. Large nation-states, in contrast, are powerful on the basis of their internal populations, resources, and economies, so it is unsurprising that they see no benefit in surrendering their sovereign powers to supranational organizations dominated by smaller countries. In a world of sovereign nation-states, the biggest nation-states are more sovereign than the others. Unilateralism is natural for the great powers. Whales do not consult the barnacles on their sides or the schools of small fish who swim in their wake.

The rise of the giants is likely to lead to less, not more, emphasis on international organizations like the United Nations and the World Trade Organization. If the United States, China, and India account for much of the world economy in fifty to a hundred years, then they may prefer setting the rules of world trade and investment by bilateral or trilateral negotiations. Why should giants consult with dozens or hundreds of pygmies before acting? International law has traditionally been championed by small- or moderate-sized, neutral countries (including the United States in the 19th century). Its influence may decline in an age in which a few titanic continental states have hundreds of millions or billions of inhabitants.

Unfortunately, cosmopolitanism is not simply a quaint, harmless religious faith held by global elites. Confusing the cosmopolitan "ought" with the cosmopolitan "is" results in all sorts of disastrously wrongheaded policies. If, for example, the world really is on the verge of full economic and political integration, then outsourcing all US manufacturing capacity to China might make sense in the same way that it might be reasonable for a state like California to outsource all of its manufacturing capacity to other US states. They share the same tax, regulatory, and social welfare systems; they make shared national investments in infrastructure and education; and they share the same military and national security interests. But in a world in which nation-states are likely to continue to retain their sovereignty and in which economic nationalism continues to reign, trade and investment policies that presuppose a borderless world make no sense at all.

The cosmopolitan error has similarly distorted international efforts to address global challenges. International climate policy has persistently foundered upon the basic realities of an international political economy that continues to be defined by the interests of national economies. International development and antipoverty efforts in recent decades have similarly failed to align themselves with the basic economic interests of donor economies. As such, the cosmopolitan error has had real consequences for both national efforts to build healthy, equitable economies and international efforts to address serious global problems and risks.

The frequently-made argument that extensive supranational cooperation is necessary to solve global problems is incorrect. Without question, destructive, zero-sum national rivalries are a threat to a peaceful and prosperous world -- on this point, liberal internationalists and liberal cosmopolitans can agree.

Fortunately, most of the world-order goals of cosmopolitanism can be achieved by enlightened liberal internationalism without the need to sacrifice or weaken the democratic nation-state, the organization in which most of the progress toward equality and economic security over the last three centuries has taken place. Contrary to the commonly held views of pundits and science-fiction­­ writers, a world government or a true global market is unlikely to emerge in the foreseeable future. But a successful and enlightened liberal internationalism would permit us to enjoy the benefits of both without the costs of either. 

This piece was first published by the Breakthrough Journal.

Michael Lind is Policy Director of the Economic Growth Program at the New America Foundation and author of The Next American Nation.

Photo by BigStockPhoto.com.

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1. Friedman, Thomas. 2005. The World is Flat: A Brief History of the Twenty-first Century. New York: Farrar, Straus and Giroux; Cooper, Robert. 2000. The Postmodern State and the World Order. London: Demos. (back)

2. Rugman, Alan. 2001. The Myth of Globalization: Why Global Strategy is a Myth and How to Profit from the Realities of Regional Markets. AMACOM. (back)

3. Nolan, Peter and Jin Zhang. 2010. "Global Capitalism After the Financial Crisis." New Left Review 64. July/Aug (102). (back)

4. Wilson, Dominic and Roopa Purushothaman. 2003. "Dreaming with BRICS: The Path to 2050." Global Economics Paper Number 99. Goldman Sachs. October 1.(back)

5. United Nations. 2010. Population Division of the Department of Economic and Social Affairs of the United Nations Secretariat. World Population Prospects: The 2010 Revision. (back)

6. Institut Francais des Relations Internationales (IFRI) 2002. "Le Commerce Mondiale au XXIe siecle [World Trade in the 21st Century] Scenarios for the European Union."; Walker, Martin. 2003. "French Study Says Europe Fading," UPI, May 14. (back)

Demographia and Performanceurbanplanning.org  have just released the 8th Annual Demographia International Housing Affordability Survey, with an introduction by Professor Robert Bruegmann of the University of Illinois at Chicago and author of Sprawl: A Compact History. The Survey is unique in providing cross-national housing affordability comparisons using the median house price data from leading indexes in Australia, Canada, Hong Kong, Ireland, New Zealand, the United Kingdom and the United States.

The Demographia International Housing Affordability Survey employs the “Median Multiple” (median house price divided by gross annual median household income, before taxes) to rate housing affordability (Table 1). The Median Multiple is widely used for evaluating urban markets, and has been recommended by the World Bank and the United Nations and is used by the Harvard University Joint Center on Housing.

Historically, the Median Multiple has been remarkably similar in Australia, Canada, Ireland, New Zealand, the United Kingdom and the United States, with median house prices having generally been from 2.0 to 3.0 times median household incomes (historical data has not been identified for Hong Kong). This affordability relationship continues in many housing markets of the United States and Canada. However, the Median Multiple has escalated sharply in the past decade in Australia, Ireland, New Zealand, and the United Kingdom and in some markets of Canada and the United States. There has also been a substantial loss in affordability in recent years in Hong Kong.

Housing Affordability in 2011

Housing affordability was little changed in 2011, with the most affordable markets being in the United States, Canada and Ireland. The United Kingdom, Australia, New Zealand and Hong Kong continue to experience pervasive unaffordability (Figure 1).

The Survey covers325 metropolitan markets, including the 81 major markets with more than 1,000,000 population (Table and Chart Attached). There were 24 affordable major markets, 20 moderately unaffordable major markets, 13 seriously unaffordable major markets and 24 severely unaffordable major markets (Table 2). The severely unaffordable major markets were principally in the United Kingdom (8), the United States (6), and Australia (5). Hong Kong was severely unaffordable and there were three severely unaffordable major markets in Canada and one in New Zealand (Table 2). Australia had the highest major market Median Multiple outside Hong Kong (Figure 2).

The most affordable major market was Detroit, with a Median Multiple of 1.4. This Median Multiple is artificially low, arising from the collapse of housing demand in the most severely depressed major market in the United States. There were another 22 affordable major markets, the most affordable of which were Atlanta, Phoenix, Rochester, Cincinnati, Cleveland and Las Vegas. The strong growth markets of Dallas-Fort Worth, Houston, Orlando, Jacksonville, Nashville, Oklahoma City, Sacramento and Indianapolis also achieved affordable ratings.

All major markets in Australia and New Zealand, as well as Hong Kong were severely unaffordable.
Hong Kong was the least affordable major market (ranked 81st), with a median multiple of 12.6. Vancouver was second most unaffordable, at 10.6 (ranked 80th). Sydney was the third most unaffordable, at 9.2 (ranked 79th).  Melbourne and Plymouth & Devon all had Median Multiples above 7.0.

Among all 325 markets surveyed, there were 128 affordable markets, 117 in the United States, 9 in Canada and 2 in Ireland. There were 71 severely unaffordable markets, principally concentrated in Australia and the United Kingdom (Table 3). Honolulu and Bournemouth & Dorsett (8.7) were the least affordable outside the major markets.

Preserving the "Ideal of a Property Owning Democracy"

One of the principal accomplishments of high-income world societies has been the expansion of property ownership and home ownership to the majority of the population. At the same time, there are dark economic clouds on the horizon. Governments in high income nations are faced with some of the most challenging times in their history. In this environment, the property owning middle class is likely to face significant challenges in the longer run. Since housing is largest element in household budgets, unaffordable housing is a serious threat to the standard of living.

At the same time, the economic evidence shows that more restrictive land use regulations, such as urban growth boundaries, have been an important factor in the deterioration of housing affordability. On this point, economist Anthony Downs of The Brookings Institution stressed the importance of maintaining the "principle of competitive land supply." The escalation of house prices relative to incomes, from Sydney and Vancouver to London and across California testify to the failure of planning to maintain that principle. The record shows that smart growth (urban consolidation and compact cities policies) is incompatible with housing affordability.

But there are signs of hope. Florida repealed its growth management law ("smart growth") in 2011. Further, a recent New Zealand government report outlined the importance of a competitive land supply in restoring housing affordability to that nation.

Four decades ago, urbanologist Peter Hall expressed concern about the threat of such policies to the "ideal of a property owning democracy." The Demographia International Housing Affordability Survey is dedicated to younger generations who have right to expect they will live as well or better than their parents. In large measure due to land use planning that has made housing unaffordable, they may not.

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

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Note: The 8th Annual Demographia International Housing Affordability Survey is sponsored in Canada by the Frontier Centre for Public Policy.

Photo: Suburban Montréal (by author)

Mitt Romney’s collapse in South Carolina reflects the larger, long-term decline of the American patrician class he represents. That decline was accelerated by the 2008 financial meltdown that resulted in both the wave of populist anger now being channeled by Romney’s Republican competitors, and the rise of the new post-industrial elite championed by President Obama.

Defined by inherited wealth, property and (like the original Roman patricians) a certain sense of propriety, Romney’s once dominant class has become increasingly marginalized as the bond between its interests and those of the rest of the nation has been effaced.

The son of top corporate executive and former Michigan Governor George Romney, Mitt holds joint degrees from Harvard’s law and business schools and enjoyed a lucrative career in private equity—a pedigree that may prove a bigger liability in the increasingly working-class Republican Party than his supposed social moderation. Both Newt Gingrich, who bested Romney in South Carolina, and Rick Santorum, who edged Romney in Iowa, successfully stressed their middle-class roots in a way impossible for him to imitate.

Romney’s Mormonism may be a departure from the old Protestant aristocracy, but the former Massachusetts governor epitomizes both the traditional strengths (a sense of modesty and self-control, a pristine personal life and lack of ostentation) and the weaknesses (an inability to personally connect with those less fortunate, less able or less educated) of the patricians. Perhaps nothing illustrates those weaknesses better than the inability of the richest major party candidate in a generation to comprehend how his scandalously low personal income tax rate and his use of offshore tax havens might offend voters, particularly in an economically ravaged state like South Carolina.

In a general election, against a far more disciplined foe than his party rivals, Romney’s patrician values could pose a mortal danger to the Republican cause—although perhaps not as lethal as the weaknesses of his rather pathetic GOP opponents. But in the primary Gingrich, Santorum and even Ron Paul have the advantage of those with little to lose. They can demagogue the national media class as “elitist” in ways that would not come naturally to the refined Mitt, or play well in the general election.

The decline of the patricians has been occurring slowly for decades as the interests of the wealthiest have diverged from those of ordinary Americans. In the country’s first two centuries, some common ground joined the traditional conservatives who made up the bulk of the moneyed class and who spearheaded the quest for national power and economic expansion with the muscular progressivism epitomized by the two President Roosevelts. The forgers of American preeminence in the business world—Henry Ford and Alfred Sloan, the Rockefellers, Thomas J. Watson of IBM, David Packard and Bill Hewlett—embraced the ideal of growth where enriching themselves meant creating unprecedented opportunities for hundreds of thousands of Americans. These men built and financed things—from oil wells and high-tech instruments to autos and suburban tract houses—essential to the prosperity of the working and middle classes they employed and depended on to purchase their products.

But the last successful product of this class, John Kennedy, was elected more than a half century ago, to lead a nation that was ascendant, confident and economically vibrant. In the ensuing decades patrician politicians, particularly George W. Bush and his 2004 opponent, John Kerry, lacked the self-confidence and charisma to transcend their class. In contrast, the two most popular and accomplished politicians of recent decades, Ronald Reagan and Bill Clinton, were self-made men from the working class with a great facility for establishing a clear connection with a vast portion of the electorate.

This patrician decline occurred at the state and local level as well. In New York, the old WASP establishment epitomized by Citibank’s Walter Wriston was deeply engaged in the fate of the region. Wriston once explained to me that before the 1980s banks had depended heavily on the New York public primary schools and especially the City University for employees; but as finance unmoored from the rest of the economy in its “go-go” period of derivatives and other abstract financial instruments it found itself less anchored to the rest of Gotham’s economy. In the new financial world, employers had little need for competent “ordinary” public school graduates as employees but rather courted “rocket scientists” with primarily Ivy League, Stanford or MIT pedigrees.

A similar pattern can be seen in California. The founders of the Golden State’s great aerospace, semiconductor and computer firms, the great suburban developers and even Hollywood moguls employed tens of thousands of skilled workers. Now few new facilities are built in the state, and few well-paying jobs outside of government exist for those without an elite education. When tech firms create middle-income jobs, they are increasingly located abroad or in other, cheaper states. The winners of each tech “boom” tend for the most part to be graduates of elite schools like Stanford rather than places like San Jose State. The idea that captains of industry and common citizens were in a significant sense “in the same boat” has disappeared—one of the common complaints that seemed to bridge the Tea Party and the erstwhile Wall Street occupiers.

Given how little the patrician class now provides to the rest of the country, it’s not surprising that public esteem for them has plummeted, particularly in the ongoing aftermath of the Wall Street meltdown of 2008. According to a recent Gallup survey, less than one in four Americans express any confidence in the primary institutions traditionally dominated by the patrician class—big business and the Wall Street banks. In contrast, roughly half or more expressed confidence in small business, the police and the military, areas where the patrician class is rarely present these days.

Seen in that light, it’s no surprise then that Republican voters preferred a Pennsylvania working-class warrior like Rick Santorum in Iowa and even as unlikely a self-identified champion of the middle class as Gingrich in South Carolina over the refined resume of a private equity executive.

The demise of the patrician class could be more palatable if it signaled the restoration of middle- or working-class political power in America. But the real winners here are not likely to be the largely suburban masses but a new, heavily urban littoral ruling class. Of course, the politically potent liberals who populate these urban areas live amidst far greater income inequality than the non-coastal, red-state “rubes.” Epitomized by Barack Obama, this ascendant force draws its strength largely from high reaches of academia, the media, the environmental lobby and, increasingly, the digital billionaires of Silicon Valley.

Like the old patricians, this new group shares a basic ideology. Indeed they can be seen as something of a clerisy—members of a secular congregation whose shared faith is in a society run by experts such as themselves according to the dictates of accepted science. That those experts would profit from their own advice is seen as merely part of a virtuous circle, scarcely worth the notice of the high-minded citizens scientifically calculating the common good. For the most part, the clerisy believes not so much in economic growth but in enforcing an agenda of ever-increasing urban density, racial redress, cultural experimentation and “green” energy. Obama reigns largely as high priest of this class.

The clerisy’s geographic base includes much of what was, a century ago, largely patrician-dominated turf: upper-income urban neighborhoods, high-end suburbs, and university communities. The difference now is that these areas have all expanded rapidly, due in large part to the growth of science-based industry and, perhaps more important, the money passed from patricians to their offspring. This money also funds many in the burgeoning nonprofit sector which employs many in the clerisy and often promotes their agenda.

Not surprisingly, all five of the largest donors to the Obama campaign—Microsoft, Comcast, the University of California, Harvard University and Google—represent the clerisy’s bases in academe and the information sector. Not a manufacturing, construction or traditional energy company made the top of the list.

The rise of this post-industrial ruling class may be the most tragic result of patrician decline. As bad or even evil as old patricians like Andrew Carnegie, Henry Ford and John Rockefeller could be, they were also generally nationalists who believed in economic growth and progress. Carnegie endowed not only concert halls and art galleries but libraries and institutes to help better middle- and working-class Americans even in small towns and rural hamlets. Teddy Roosevelt, a different sort of patrician, cleaned up New York’s police department, volunteered for the army and modernized the navy.

Most important, as employers, the old patricians understood the need for basic education and training for their workers. In contrast, the clerisy has little needed for the basically educated, but only an approving claque and faithful servants. Many members of the rising new elite and their well-off employees depends on non-profits or family trusts for income so that their economic interests lie primarily in asset inflation, whether in real estate or equities. No surprise then that the businesses with which they most identify are media and social media companies that outside of the odd receptionist employ largely the best educated and affluent. Significantly, these companies’ stocks provide huge increases in wealth without causing any direct harm to their holders’ delicate environmental and aesthetic sensibilities. After all, the environmental impact of a computer company can easily be shifted out of the view of the Bay Area, as for instance Apple functions as an ideas company in the United States, and a manufacturer in China.

In contrast, the clerisy generally feels indifferent or even contemptuous toward the basic industries—home building, fossil fuel energy, basic manufacturing—that still provide the best route to increased wealth and opportunity for the middle and working classes. The rejection of the XL Keystone project by Obama last week represents just the most obvious expression of this agenda. In a second term, we may see this approach amplified as the EPA and other government agencies seek to regulate any tangibly based economic growth.

In this sense, then, the decline of the patrician class—like their antecedents in the late Roman Republic—represents something of a tragedy for the rest of us. With the middle and working classes divided by social and cultural issues and with no credible champion for their economic concerns, power may simply shift to the clerisy, supported by their media enablers. As the Who once famously put it: “Meet the new boss, same as the old boss.”

No matter how much we might dislike Mitt Romney and his aristocratic ilk, we may someday look back at him and his class with something approaching nostalgia.

This piece originally appeared at TheDailyBeast..

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

Photo from BigStockPhoto.com.

The UK Government’s Department for Communities and Local Government (DCLG) announced that there were only 127,780 new housing completions last year in Britain. British house building activity is down to levels of after the First World War, when reliable industrial records began, and still falling. In 1921 the British population was nearly back up to 43 million following the slaughter of the First World War. In 2011 the population of England, Wales, and Scotland is approaching 61 million people. By 2031 the British population is expected to be closer to 70 million. With such existing unmet and growing demand for new housing the DCLG, the Government department that runs the Planning System should be busy finding ways to allow developers to build.

Many feared that the National Planning Policy Framework (NPPF), prepared by the DCLG for an expected release in January 2012 would be a developer’s charter. We wish it was a developer’s charter! The NPPF continues planning policies, supported by all Parliamentary political parties, which continue to frustrate volume housebuilding. Developers have to prove that their proposals for house building are not merely about building useful homes at a profit, but are “sustainable development” when measured against disputable social and environmental criteria. No developer is free to build on their own land without first having to obtain planning approval from an array of third party interests all insisting on their interpretation of the moral idealism of sustainability.

This makes the NPPF an anti-development charter for all those who oppose house building and population growth. Anyone can claim that more house building and more households are unsustainable in their area, in the effort to stop a project which they don’t approve of.

The NPPF will do nothing to challenge the power of contemporary anti-development campaigners, who are well known. Anne Power, Lord Richard Rogers and other members of New Labour’s Urban Task Force (UTF) have correctly identified themselves as allied to the “Hands off Our Land” campaign run by The Daily Telegraph, the Conservative supporting newspaper.  The UTF favors a continuing commitment to ‘… reclaiming brownfield sites and re-densifying cities.’ To build only on previously developed land is the green ideal of the UTF and the “Hands off Our Land” campaign.

We all know where these policies lead. Not to a golden age of regeneration for all, but to lucrative property investment for those with access to sufficient capital and the right connections to steer themselves through the planning system to obtain approvals. The volume of Greenfield land developed declined dramatically under New Labour. The present Conservative led Coalition Government continues the practice of obstructing development on Greenfield land.

Between 2000 and 2006 the total area of land built on for new housing fell by 23%, with a 42% fall in the annual amount of Greenfield land used. In 2010 76% of all housing was built on previously developed Brownfield land, a slight decrease from the 80% in 2009. Only 2% of housing was built on the Green Belts around major cities and towns. The Green Belt in England covers 13% of the land, or twice the area already developed for housing. Small wonder that the price of the shrinking supply of land with a prospect of being approved for sustainable development remains inflated.

House building was only increased from the low point of 2001 by increasing the density of development in the cities. Average densities rose from 25 dwellings per hectare (dph) in 2000, to 43 dph by 2010. In London the average density for new housing is much higher, at 115 dph in 2010.

Densification policies considered sustainable have meant that the majority of the working British public can no longer buy a new house with a garden, in ways that previous generations may have taken for granted. Instead the plan has been to squeeze more new households into less space. UTF supporters and the DCLG imagined they were regenerating cities and saving the planet for all of society. Like traditional Conservatives they mean to keep developers and the population off Britain’s ample supply of otherwise redundant farmland.

The Daily Telegraph’s campaign, best articulated by the conservative anti-growth philosopher Roger Scruton, is clearly the flip side of the UTF’s densification argument. He is happy as long as the population is kept away from the countryside he loves. ‘Thank God for obstacles to economic growth,’ says Scruton.

Scruton speaks for the comfortable who already enjoy plenty of space. The Daily Telegraph’s campaign is ultimately concerned that existing housing markets are protected, sustained through the division between Town and Country, and moralised as a concern for environment and heritage. New Labour supporters are more likely to read The Guardian, but its more middle-class readership finds nothing to object to in The Daily Telegraph’s campaign, in order to restrict the “sprawl” of suburbia and halt the imagined damage this will do to the environment and urban communities. The Guardian’s readership formed the bed-rock of New Labour’s support, and back Next Labour. The working class may have deserted Labour, but is depoliticized and passive. The Guardian and The Daily Telegraph – still supposed by many to be at opposite ends of the old-fashioned and defunct ideological spectrum of Left and Right – prove closer than either cares to think.

Labour Members of Parliament have traditionally feared the “flight to the suburbs” lest they lose voters and the associated tax revenue. The planning system has proved very effective in maintaining the political geography of Britain. Labour politicians negotiate their political dependency on urban containment with a Red-Green stance in urban areas, without threatening the Blue-Green interests of those who want to keep development out of the countryside. All depend on the denial of development rights that date from the 1947 Town and Country Planning Act, and which the NPPF reinforces.

Meanwhile working class families are squeezed into what little Twentieth Century suburbia is still affordable, competing unsuccessfully with the more affluent for ownership of this increasingly scarce and valued commodity. What new housing is built is at higher density, usually on the least attractive sites. That is land previously occupied by factories, old infrastructure, and utilities, or by council housing estates re-developed at higher densities. Yet even these unpopular sites enter the inflated British housing market, sustained through a chronic lack of house building.

The working class is caught in a political crusher made manifest through the planning system. The Red-Greens, who may imagine themselves on a new Left, gentrify towns and cities with “sustainable redevelopment”, and the Blue-Greens, who persist with being on the Right, protect their landscape for their exclusive enjoyment. Meanwhile the majority of home owners have come to depend on the inflated and unaffordable housing market. New Labour needed this house price inflation to allow the owner occupying majority to supplement inadequate wages by withdrawing equity from their homes. So does the Coalition. Deliberate or not, The Daily Telegraph’s commitment to building fewer new homes will stabilise what we have called the Housing Trilemma.

Our current predicament may be thought of as a Trilemma, in which house price inflation supports burdensome mortgage lending and private debt, while households in the owner occupied sector accept low quality housing conditions. High rents shadow private sector housing costs, and private rental housing quality is often of the lowest quality. Many in Britain, including the majority of the home owning middle class, are dependent on the Housing Trilemma remaining stable.

The planning system serves well in protecting the interests of existing home owners. Behind the NPPF’s moral idealism of sustainability, the immediate instrumental objective is to restrict new housing supply to avoid destabilising housing markets.  Appearing as a moral mission to save the planet from developers, the NPPF and the denial of development rights sustains the Housing Trilemma. Debt is secured, but housing remains unaffordable, quality low, and house building activity is at an all time industrial low. This is not a conspiracy. It is a predicament.

When Britain’s elites talk about wanting to revive economic growth, they don’t mean a massive surge in new house building or an expansion of infrastructure. What they have in mind is a revival of financial services in The City, subject to uncertainties in the fragmenting Euro Zone, and the maintenance of high housing prices in the hope of more inflation to come. Meanwhile the countryside is kept pristine for the few who can afford access to it as a weekend retreat for the wealthy, including the pro-urban intelligentsia, in all their Red-Green-Blue moral plumage.

The Coalition could have challenged the Housing Trilemma. Instead they have reinforced it.

The result is predictable. Planning applications are falling in number and ambition. Only 25,000 new homes were approved in the second quarter of 2011 compared to 32,000 in the second quarter of 2010. This will be read by The Daily Telegraph campaign members as “proof” that there is no demand for development, inverting the causality. Money is being made out of an environmentally sanctioned scarcity rather than through increased productivity and innovation in a sector like house building and the wider construction industry. Britain’s already backward construction industry is further retarded, and it is becoming commonplace for social elites, and not only crazed nationalists, to blame immigration for housing shortages.

Britain’s economy needs growth, but is unlikely to get it from the house building sector. Britain too needs a dose of political reality while the pro-urban intelligentsia preen their green morality.

The Coalition cannot afford to confront the political problem of the Housing Trilemma if it is to sustain its fragile political base. Increasingly, only the elderly bother to vote and this equity rich group will be mostly satisfied with modest house price inflation as a hedge against general inflation, while savings in banks attract little return. Meanwhile an influential propertied elite still enjoys sustained house price inflation at the top of the market. They are anxious that environmental and heritage designations operate to enhance the exclusivity and enjoyment of their investments. The unelected charities, agencies and Non-Governmental Organisations that were aligned against the draft of the NPPF in July 2011 represent these elite interests. They may now back the redrafted 2012 NPPF with all its demands for sustainability. Their “Hands off Our Land” campaign has worked for them.

The NPPF means that house builders face a future in which building on Greenfield land is effectively considered an eco-crime. Only those who can develop Town Centre sites, perhaps as rental housing, or as luxury homes for the equity rich will thrive. Basically Britain is no longer building homes with gardens for sale to young working families on modest incomes.

If you are in a young working family, or hope to start one, the question is: What are you going to do about the housing predicament you and your friends face?

We have to face a stark reality. Sadly, there is no contemporary habit of young working families organising to demand housing collectively. Meanwhile the 2011 to 2012 production figures look set to be lower again, and the developmental uncertainties about to be articulated in a redraft of the NPPF in pursuit of sustainable development will further the decline in production.

Anticipating this feature of Britain’s ratcheting austerity does not make for a Happy New Year. Much depends on what the people of Britain, and particularly the young, do to demand that family houses are built at modest prices in places they want to live together. At present Britain fears a developer’s charter, even though the National Planning Policy Framework is nothing of the sort. Parliament might yet instead be in fear of people demanding cheap land on which to build a better place to live.

James Stevens is Strategic Planner at the Home Builders Federation, www.hbf.co.uk. Email him at james.stevens@hbf.co.uk. The views expressed are his own and not those of Home Builders Federation. Ian Abley is a site architect and runs the pro-development website audacity, www.audacity.org. Email him at abley@audacity.org. Together they organise the 250 New Towns Club, www.audacity.org/250-New-Towns-index.htm.

Nothing in the world today affects citizens more directly than the home in which they live.  And when it comes to housing no piece of recent research opens more interesting avenues of investigation than the Demographia International Housing Affordability Survey.

Individuals and families across the economic and social spectrum all over the world are eager to gain as much control as they can over the place where they live.  They wish to make sure it cannot be taken away from them arbitrarily; they wish to control who has access to it and who can benefit from it; and, as much as possible, they wish to protect it against negative influences in the larger community around it.   

This combination of goals sets up some inherent conflicts in every society.   What is good for a given individual or family is not necessarily good for a society as a whole, and what is good for society as a whole is not necessarily good for any given individual or family.  From this fundamental tension has sprung a bewildering set of arrangements for allocating and regulating land and residential structures on it.   At one end of the political spectrum have been societies in which land is owned in common and is supposed to be allocated to individuals and families on the basis of merit or need.  Such has been the case with many Utopian and Socialist societies.  At the other end of the spectrum have been societies where the individual ownership of land and homes is considered a bedrock condition of a democratic society, where ownership is widely dispersed, and individual rights and preferences have been zealously safeguarded from all but the most necessary intervention.   One of the best examples of this would have been the United States, Canada or Australia in the nineteenth century.  The trend over the last fifty years has been a convergence toward the middle of this spectrum as Socialist countries have abandoned the dream of complete common ownership and societies that traditionally were loath to interfere with individual property rights have adopted layer after layer of regulation intended to secure the health, safety and wellbeing of the larger society.

Given the fundamental importance of housing in all societies, it is remarkable how little we know about the results of housing policies in various parts of the world.   In my own field of architectural and urban history, for example, if you were to ask even some of the greatest experts to compare what an average house or apartment unit in any two given cities looked like at some date in the past or even the present, what it would cost to buy and to operate them and what regulations would affect them, it is very unlikely that the individual would have more than rudimentary hunches.  Historians can tell you in great detail about the palaces, townhouses and country estates of the powerful and wealthy, then and now, and about some of the efforts at reform housing by the government or charitable organizations, but at least until recently, the lack of information about how and where ordinary individuals live has been remarkable. 

Part of this neglect is due to a discredited but lingering attitude that history is made overwhelmingly by the rich and famous and not by the decisions of millions of ordinary citizens.  Part of it is simply that real estate ownership is now so dispersed and so intensely affected by local conditions that it is hard to quantify in ways that allow for comparative analysis.  Partly it has been due to a widespread belief that commerce and industry are the driving forces in the world economy and that housing is a by-product of the larger economy. This attitude is, of course, obviously wrong-headed, as the central role of residential real estate in the recent economic downturn has proved.  Residential real estate plays a huge and increasingly important role in the economy of every nation. 

Given the obvious importance of housing, what should public policy be and the role of the individual, the developer, governmental agencies?  Is there an optimal size for cities, for housing units?  How much land should housing occupy?  Should housing be separated from or integrated with other uses?  Should government promote one kind of residential tenure over another, individual home ownership over rental or various kinds of collective ownership over individual property, for example?   Have the citizens of a given city or nation underinvested or overinvested in housing?  Are housing prices in line or out of line with individual and family incomes?   Unfortunately there has been very little data for anyone trying to find answers to questions like these. 

It was against this backdrop that the appearance, in 2004, of the first international housing affordability survey by Wendell Cox and Hugh Pavletich was such a revelation.  It provided some of most reliable information ever compiled for those who wished to compare nations around the world with quite different housing policies.   Cox and Pavletich had their own point of view.  It is fair to say that both of them tend to favor market solutions to many of the most difficult questions about housing and how it is allocated and regulated, but their compilation of data, like the data found on Cox’s demographia.com website generally can stand on its own as one of the most impressive and reliable collections of comparative urban statistics to be found anywhere.

The issue that appears to have been the principle motivation to compile this data was the rise of various forms of “Smart Growth” policies around the world.  Whether these policies were intended to enhance the environment or limit sprawl, they clearly had an effect on the price of housing, but what these effects were was very much in dispute.  In the United States, for example, the question of whether the growth boundary around Portland, Oregon, has had an effect in raising housing prices, as some observers claim, or that the dual focus on development at the center and regulation at the edge has kept housing prices reasonable, has raged for a number of years now.  The same debate has been joined in many other places, for example in Australia where the recent rise in prices has been particularly sharp and, given the vast extent of the country, the urban containment policies particularly contentious.

Cox and Pavletich went out in search of the data they felt could answer questions of this kind.  Their conclusion, that the land use policies in places like coastal California, Vancouver, Britain and Australia, have dramatically driven up the cost of housing, and that the less intrusive policies of places like Atlanta and Houston has kept prices down has been controversial, but I think it is fair to say that a growing number of people who have looked at the figures have tended to agree that a good many well-meaning policies involving housing may be pushing up prices to such an extent that the negative side-effects are more harmful than the problems the policies were intended to correct.   These observers have also noted that measures that restrict land supply, slow growth in the immediate area where the policies are in place and push up housing prices can be very attractive to individuals who already own their own homes.

In any case, the figures presented in this survey, like the collection of data on demographia.com more generally, are endlessly fascinating and very important.  They provide some basis for exploring issues that will figure importantly in discussions of housing policy for decades to come.

Robert Bruegmann is professor emeritus of Art history, Architecture and Urban Planning at the University of Illinois at Chicago.
____

Note: This article appeared as the Introduction of the 8th Annual Demographia International Housing Affordability Survey, released January 22, 2012

To some, British Prime Minister David Cameron’s decision to demur from the new euro rescue plan has made the U.K. irrelevant on the world scene. Yet by moving away from the euro zone, Cameron did something more than reaffirm Britain’s opposition to a German-led Europe: He asserted Britain’s greater, historically grounded legacy as the center of the Anglophone world.

This obstinacy could end up maintaining the U.K.’s global importance by shifting its focus away from “the declining and irritable nations of the old world” and toward its legacy as the center of the English-speaking world.

Over time cultural ties generally prove more enduring than ideological or geographic ones. The 14th century Arab historian Ibn Khaldun once observed, “Only tribes held together by a group feeling can survive in a desert.” Throughout history, the most powerful, far-reaching cultures — namely the Greek, Roman, Arab, Chinese, Mongol and British empires — shared this intense kinship.

Like the world’s two other primary global tribes, the Chinese and Indians, Anglo share ancient and deep-seated affiliations. In contrast to the profoundly insular Japanese or the Germans, global tribes are transnational and transcend mere geography. They share not only economic ties but “group feelings” shaped by commonalities of food, language, history, spiritual and political ideals .

The British are “cousins” to Americans, Canadians, Australians and New Zealanders in ways the French, Germans and Italians are not. When young and educated British emigrate they generally head not to Germany or China but to other English-speaking countries. Retirees might seek out the Spanish or French Rivera, but those building careers go overwhelmingly to Anglophone countries.

Equally important may be the British connection to other former colonies like India, South Africa and Nigeria that, although not racially Caucasian, function largely in English and retain close ties to the mother country. Any close look at British interests and personal ties reflect the enduring nature of its tribal essence. London’s status as the world’s financial center — the critical reason for Cameron’s break with the E.U. — lies not primarily with Europe, but with its scattered former colonies. Britain is the world’s fourth largest investor and the top investor in the United States, which in turn serves as the U.K.’s biggest export market. The U.K. also plays an outsized role in South Africa, Singapore and India, where it is by far the largest European investor.

In this sense, the Anglosphere — including places like India — constitutes a kind of transnational family. Usually ignored or scoffed at by globe-trotting pundits and politicians who define the world by geographic proximity, these global linkages are more important than ever.

Consider the fate of the insular Japanese, who, without a large diaspora, have no recourse but to fall back into the relative obscurity of their home islands. Similarly, the E.U., particularly in its post-Christian,phase has no common tribal essence. Instead the continent seems to be breaking into at least three tribes: an austere neo-Hanseatic Nordic core, a spendthrift and effectively bankrupt Mediterranean south, and a troubled, rapidly depopulating eastern rim.

The drive to create a powerful European superstate lacks the girding of a common ideology and social norms that give the English-speaking world coherence. Whatever her ambitions, Germany’s Angela Merkel, Chancellor of a prosperous but rapidly aging and militarily weak country, seems more like a wily schoolmarm than an inspirational European leader. She’s no Caesar, Charlemagne or Napoleon who’s capable of uniting the continent by force of ideology, personality and power.

Given these fundamental flaws, Britain’s best course would be to focus on linkages to her offspring. Taken together the Anglosphere represent more than a quarter of world GDP, and the Queen’s tongue remains the dominant language of international business, science and diplomacy, utterly supplanting French, Russian and German even on the continent. The E.U. may have been constructed largely by French visionaries, but English is spoken by 41% of Europeans, while only 19% speak French.

More important still, the developing world is turning Anglophone. French schools have been closing even in former colonies such as Algeria, Rwanda and Vietnam, where students have protested against learning the old colonial tongue. English is being widely adopted in China, and it dominates the Gulf economy, where it serves as the dominant language of business in hubs such as Dubai. It is also, of course, the dominant language of India’s burgeoning middle class.

The linguistic dominance propels the Anglosphere’s dominion over such critical growth industries as technology and culture. Britain may no longer be an industrial superpower, but its media, research institutions, investment banks, courts and culture remain globally relevant. Nearly half the world’s sales of audio-visual products, for example, come from the English speaking world, with Britain constituting the second-largest exporter behind the U.S.

Technology follows a similar pattern. Three-fifths of global pharmaceutical-research spending comes from Britain and the U.S.; more than 450 of the top 500 software companies in the world are based in the Anglosphere. Out of the ten fastest-growing software companies, six are American and one is British.

This brain power is backed up by a treasure trove of natural resources. The U.K. itself may lack sufficient raw materials — after all that was what the empire was all about — but its diaspora countries, notably in North America and Oceania, account for much of the world’s food exports and, increasing, its supply of fossil fuel energy.

How about the thorny issue of politics? In the end, when there’s a crisis the Anglosphere countries can most rely on one another. Time and again, the British, Canadians and Australians have been the peoples who send troops and ships in concert with America. What country is a more American solid ally in Asia than the remarkable English-speaking enclave of Singapore?

Conversely, when Argentina seized the Falklands, Prime Minister Margaret Thatcher could count on logistical help, first and foremost, from the United States. And as the Australians contemplate an expanding Chinese military presence in their backyard, they look to the Americans to send in the maritime cavalry.

Sadly the critical nature of these linkages is not fully appreciated by the current U.S. administration. President Obama, the grandson of a Kenyan victimized by the brutal colonial regime, has dissed Britain repeatedly. Opposition to colonialism, of course, resonates with American tradition, but he perhaps went too far when he famously returned the bust of Winston Churchill sent by Tony Blair to President George W. Bush back to Britain.

More recently Obama has even poisoned the well against Canada, our greatest trade partner and continental soul mate, by rejecting the Keystone XL project. It’s as if he were urging Canada to align itself with China. What’s next a move to ban the import of Australian uranium or Uggs?

Yet the great strength of tribes, or families, lies in their ability to endure despite the most egregious family foolishness. Even a wayward president, or two, cannot tear asunder what has been hundreds of years in the making.

This piece originally appeared at Forbes.com.

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

Creative Commons photo by Flickr User "angies".

Perhaps nothing has more defined America and its promise than immigration. In the future, immigration and the consequent development of what Walt Whitman (1855: iv) called “a race of races” will remain one of the country’s greatest assets in the decades to come.

At a time when anti-immigrant fervor has been building, a number of states—including Arizona, Georgia, and Alabama—have enacted draconian laws aimed at apprehending undocumented immigrants. Those laws are widely seen even among legal immigrants and long-term residents as hostile to immigrants. Indeed, newcomers are already leaving those states. This Latino exodus has been happening in once-thriving neighborhoods in Gwinnett and Cobb counties in Georgia—as shown in business closures, arrest statistics, and declining church attendance—caused both by the economy and the increased immigration enforcement (Simmons 2010). Nationwide, there has been a declining number of unauthorized immigrants living in the United States, a decrease of 1 million from 2007 (Hoefer, Rytina, and Baker 2011).

These laws and other similar efforts could have long-term negative effects for many communities, particularly for local enterprises in sectors such as agriculture, construction, transportation, and hospitality, which are highly dependent on foreign labor. Other industries that would be negatively affected include the professional and related industries, as well as the service industry (Shapiro and Vellucci 2010).

But beyond specific industries, immigration may prove more important in the future than in the past. The three key elements behind this assessment are the global demographic slowdown, globalization of the world economy, and challenges to our own longterm economic and social sustainability. Immigration represents a key factor in determining whether the United States can avoid longterm stagnation and maintain its leadership role in the world economy. Overall we should be less concerned about too many newcomers than with the consequences of drastically reduced rates of immigration.

New Global Demographics
The developed world is entering an unprecedented era of largely unexpected demographic change. To the Baby Boomer generation, brought up on fears of overpopulation promoted in books such as Paul Ehrlich’s The Population Bomb, the idea of there being too few people seems almost absurd. Many xenophobes and anti-immigration activists still advocate a “national population policy” aimed at slowing population growth by strict limits on immigration.

Yet in sharp contrast to Ehrlich’s predictions, global population growth has not increased but slowed considerably over the past few decades. Global population growth rates of 2 percent in the 1960s have dropped to less than half that rate, and past projections of the number of earth’s human residents in 2000 overshot the mark by more than 200 million.

That pattern is likely to continue, with annual population growth rates declining to less than 0.8 percent by 2025, largely due to an unanticipated drop in birth rates in developing countries such as Mexico and Iran. Those declines can be attributed to increased urbanization, the education of women and their entrance into the workforce, and greater secularization. Close to half the world’s population, notes demographer Nicholas Eberstadt (2010), lives in countries with birth rates below the replacement level. Rather than out-of-control births, the world is experiencing a “fertility implosion.”

Overall what author Phil Longman (2010) calls a “gray tsunami” will be sweeping the planet, with more than half of all of the population growth coming from the number of people over 60 while only 6 percent will be from people under 30. The battle of the future, including in the developing world, will be to maintain large enough workforces required for the economic growth needed to care for the elderly (Longman 2011).

Those growth numbers could plunge further if slow economic growth, particularly in advanced countries, persuades couples to postpone having families, perhaps permanently. This factor may already have contributed to slow population growth in Europe and Japan, which have suffered low growth rates over the past two decades. In fact, the annual growth rate in the 2000s for eastern Europe was _0.1 percent and is expected to decline to _0.2 percent in the 2010s and _0.33 percent in the 2020s. For western Europe the same trend is projected—from 0.46 in the 2000s to 0.29 in the 2010s, and 0.18 in the 2020s. In the case of Japan, since 2010 the total population has begun to decline, with fewer births than deaths (U.S. Census Bureau 2011).

But even in better economic conditions, the prospect is for continued slowing and even reversal of population growth, particularly in the most advanced countries in East Asia and Europe, where rapid aging, dramatically reduced marriage rates and low birth rates are now the norm (The Economist 2011).

Today, among the major countries in the world, only the United States produces enough children to reach near replacement—a case of what demographer Eberstadt (2010) calls “demographic exceptionalism.”

Although native-born Americans do not create enough children to sustain the population, immigrants and their offspring make up the difference. For example, the Mexican-American population grew more as a result of births (7.2 million) in the past decade than as a result of new immigrants (4.2 million) (Pew Hispanic Center 2011).

In the next several decades, the fate of Western countries may well depend on their ability to make social and economic room for people most of whose origins lie outside Europe (Rifkin 2004: 256_57; Eberstadt 2001: 123). Yet given Europe’s current considerable problems integrating its immigrants, particularly Muslims, the continent seems ill-disposed to open its doors further; Denmark and the Netherlands are considering measures to sharply restrict immigration (Feller 2005). Even more dire may be the situation in countries such as China, Japan, and Korea, which are culturally resistant to diversity.

In comparison, the U.S. record of healthy and sustained immigration marks a major competitive advantage. The largest immigrant population, Mexican American, is younger and has higher fertility rates than other groups. The median age of Mexican Americans in the United States is 25, compared to 30 for non-Mexican-origin Hispanics, 32 for blacks, 35 for Asians, and 41 for whites. The typical Mexican American woman has given birth to more children (2.5) than a similar aged non-Mexican Hispanic (1.9), black (2.0), white (1.8), or Asian (1.8) woman (Pew Hispanic Center 2011).

Mexican and other immigrants are one key reason why America boasts a fertility rate 50 percent higher than Russia, Germany, or Japan, and well above that of China, Italy, Singapore, Korea, and virtually all of eastern Europe (The Economist 2002; United Nations 2005; Longman 2004: 60). Consequently, it is widely believed America’s workforce will continue to grow even as that of Japan, Europe, Korea, and eventually even China will start to shrink. Between 2000 and 2050, for example, the U.S. workforce is projected to grow by over 40 percent, while that of China shrinks by 10 percent, the EU by 25 percent and, most remarkably, Japan’s by over 40 percent (U.S. Census Bureau International Database).

Over time the impact of an older population could prove ruinous to these economies both in terms of consumption and growth and perhaps more importantly in terms of their ability to support retirees.

By 2050, barely one in five Americans will be over 60 while the proportion in Japan, Germany, and Korea will be closer to two in five (Longman 2004: 53).

Lower birth rates in poorer countries such as Brazil can be seen as beneficial, offering significant short-term economic and social benefits (Gorney 2001). In advanced countries, however, a rapidly aging or decreasing population does not bode well for societal or economic health, whereas a still growing population offers the hope of expanding markets, new workers, and entrepreneurial innovation (Sheram and Soubbotina 2000).

Too Few Immigrants?
In public perception and in many state legislatures there has been a growing sense that the United States receives far too many immigrants. That view is particularly understandable during a period of deep economic pessimism and wrenching change. Yet in reality, under current conditions, the problem may soon be too little as opposed to too much immigration.

Although the foreign-born population in the United States grew by 10 million over the past decade, few have noted that immigration has entered into what could be a secular decline. Take, for example, illegal immigration, which is most noxious to many policymakers, particularly on the right. According to the U.S. Department of Homeland Security (DHS 2011), an estimated net 3 million undocumented immigrants entered the country in the five-year period between 2000 and 2004, but that number fell by two-thirds, to under 1 million between 2005 and 2009 (Hoefer, Rytina, and Baker 2011).

To some extent, stricter enforcement has been one reason for this drop-off (Cave 2011, Stevenson 2011). But a look at legal immigration also shows a decline. The number of Mexicans obtaining legal permanent resident status declined from the decade of the 1990s to 2000s by more than 1 million (2.76 million compared to 1.70 million), according to the Department of Homeland Security (DHS 2011). Indeed, since 2008 there has been a precipitous reduction in the number of naturalizations. In 2008 there were over 1 million naturalizations; in 2010 there were barely 600,000, a remarkable 40 percent drop (DHS 2011: Table 20).

The reduction in immigration and naturalization extend well beyond Mexico, which accounts for roughly 30 percent of all U.S. immigrants (Grieco and Trevelyan 2010). Asian naturalization rates, for example, have been dropping since the mid-2000s, and in 2010 fell to 250,000 compared to 330,000 in 2008, a 24 percent drop. Similar falloffs can be seen across America and Europe (65 percent drop for North America, 31 percent for South America, and 28 percent for Europe). In fact the only place from which naturalizations are on the rise appears to be Africa, with an 18 percent increase (DHS 2011: Table 21).

Why is this happening? One likely reason is that the world demographic slowdown has moved from advanced countries to traditional sources of immigrants such as China, India, Mexico, and the rest of Latin America. Mexico’s birth rate, for example, has declined from 6.8 children per woman in 1970 to roughly 2 children per woman in 2011 (The Economist 2010). Meanwhile, the number of Mexicans annually leaving Mexico for the United States declined from more than 1 million in 2006 to 404,000 in 2010, a 60 percent reduction (Pew Hispanic Center 2011).

This trend means that the number of future job seekers will be greatly diminished. In fact, in the 1990s Mexico was adding about 1 million potential job seekers annually. By 2007, the new potential job seekers declined to about 800,000 annually, and it is expected to drop to 300,000 by 2030, which will likely further slow Mexican immigration (Cave 2011).

A second major cause lies with the improved economy in many developing countries. In Mexico, employment and educational opportunities have improved since 2000. Both per capita gross domestic product and family income have climbed by more than 45 percent over the past 10 years. Not only are there fewer children to emigrate, but there is more opportunity for those who chose to remain (Magnini 2011).

These factors apply even more to immigration from Asia. Not only are birth rates lower there, but Asia also boasts some of the world’s fastest growing economies, from China and India to a host of smaller states in East Asia. As a result, immigrants (many of them well educated and entrepreneurial) who, in earlier years, might have felt the need to come to the United States now can find ample opportunities at home. Not surprisingly, naturalizations dropped 51 percent between 2008 and 2010 for immigrants from South Korea, 35 percent from Taiwan, 15 percent from China, and 7 percent from India (DHS 2011: Table 21).

The current economic crisis in the United States has contributed to the decision of Mexicans to stay in their country. That decision is particularly connected to troubles in housing and construction, industries that have been major sources of employment to both legal and illegal immigrants (Mataconis 2011). Hispanic immigrants have suffered a disproportionate share of job losses in the construction, agriculture, forestry, fishing, and manufacturing industries (Park 2009).

Over time that trend could create a labor shortage, notes John Skrentny, director of the Center for Comparative Immigration Studies at the University of California San Diego (Aguilera 2011). Already 40 states, reported in the last census, have fewer children than in 2000. Those that did not, such as Texas, can attribute much of their growth to immigrants and their offspring. “The new engines of growth in America’s population are Hispanics, Asians and other minorities,” notes demographer Bill Frey (Yen 2011).

Still the Multiracial Superpower?
A continued decline in immigration could undermine American competitiveness in other ways. Immigration has driven America’s successful evolution toward a society that will eventually be majority nonwhite, a factor that could prove critical in U.S. relations with developing nations, who will dominate the world’s economic growth for the foreseeable future (Cannadine 2002: 23; Kennedy 1993: 23).

Immigration represents much of what makes America different. This feature is particularly evident in relation to the Muslim world. In Europe, unemployment among immigrants from Muslim countries is often at least twice that of the native-born—and Muslims are deeply alienated. In contrast, American Muslims seem to be integrating with remarkably rapidity. More than four in five are registered to vote, a sure sign of civic involvement. Almost three-quarters say they have never been discriminated against (Manji 2007, MacFarquhar 2006, Valla 2007).

Such well-educated and entrepreneurial newcomers constitute a unique asset in a shifting global economy that relies on skilled workers and is increasingly tied to developing countries. Even today, the United States is by far the largest recipient of educated immigrants from these countries and attracts twice as many foreign students as any other country, with nearly two out of three coming from Asia (Docquier and Marfouk 2004).

Keeping a large portion of these immigrants should be a national goal and should not be difficult—given a proactive immigration policy, opportunities for advancement, better housing, political freedoms, and economic growth. Over the past two decades no country has proven as successful as the United States in retaining skilled foreign immigrants (Flora 2006; Sum, Harrington, and Khatiwada 2006; Anderson 2006).

By far the majority of America’s immigrants, both undocumented and legal, come from developing countries: China, India, Mexico, the Philippines, and the Middle East. Since roughly four in five immigrants come from nonwhite countries, by the early 2000s the majority of new workers entering the labor force were nonwhite. By 2039, due largely to immigrants and their offspring, the majority of working-age Americans will be nonwhite (Fraser 2004, Roberts 2008).

The role of America’s non-Western emigrants—Indian and Middle Eastern entrepreneurs, African intellectuals and scientists, Chinese technologists, and Mexican skilled workers—cannot be easily overestimated. Even as they return home, often as U.S. citizens, they retain strong familial and business ties to this country. Their ties here testify to America’s special ability to integrate all varieties of people into its society (Kurlantzick 2007: 9; Legrain 2007: 196).

The Entrepreneurial Force of 21st Century America
The greatest impact of immigration will be felt in the economy. Nowhere is this more critical than in the all-important entrepreneurial sphere. Immigrants by nature tend to be entrepreneurial as most come to America to find a better life for themselves and their families. The immigrant role in creating new business has been particularly critical during the current recession. According to a recent Kauffman Foundation report, the foreign-born were the one bright spot in the otherwise shell-shocked U.S. entrepreneurial sector. Overall, immigrants have boosted their share of new entrepreneurs from 13.4 percent in 1996 to nearly 30 percent in 2010 (Reedy 2011).

Immigrant commerce manifests itself most visibly in the proliferation of small stores, restaurants, food-processing businesses, garment factories, and trucking lines, as well as in high-tech and financial services. Immigrants are more likely to start a new business than native-born Americans. The number of self-employed immigrants has grown even in New York City, where the number of self-employed among the native-born has dropped (Bowles and Colton 2007).

Some of the country’s highest rates of entrepreneurship are found among immigrants from the Middle East, the countries of the former Soviet Union, Cuba, and Korea. These entrepreneurs can be found in a broad array of industries, including food and retailing as well as manufacturing and technology (Fairlie and Meyer 1996, Bowles and Colton 2007).

Perhaps most remarkable has been the movement of Asians into the technology industry. Between 1990 and 2005, immigrants mostly from the Chinese diaspora and from India started one of every four U.S. venture-backed public companies. In California, they account for a majority of such firms, particularly in technology (Anderson and Platzer 2006). Although many of these companies are small, a significant number have also become sizable, including Sun Microsystems, Yahoo, AST Research, and Solectron.

But it would be a mistake to see immigrant entrepreneurs as relevant largely to big cities and traditional technology hubs. Beginning in the 1990s, immigrants rapidly moved into regions once considered inhospitable to newcomers, particularly nonwhites—namely, the exurbs, Southeast, and Great Plains (Jacoby 2004: xxvii; Pickel and Clarke 2007).

Like other Americans, they are finding opportunities increasingly in regions where home prices are low and the business climate more conducive to entrepreneurs (Millman and Pinkston 2001, Spivak 2010). Many of the areas with the rapidly growing entrepreneurial classes among minorities—places like Atlanta, Nashville, Houston, and Dallas—are regions with diffuse, multipolar and heavily suburbanized land patterns. The strip mall, much detested among urban aesthetes and planners, often serves as “the immigrants’ friend,” in the words of Houston architect Tim Cisneros (Kotkin 2011).

Policy Prescriptions: Sustaining and Reforming the American Model
Given their contributions to our overall economic and demographic vitality, the current downturn in U.S. immigration should be a major concern to American policymakers. Although steps to curb illegal immigration may well be justified, the United States needs to start devising policies that encourage legal immigrants to come here and stay. This is particularly true for skilled and entrepreneurial newcomers.

Policymakers need to think much more about what happens to these potential immigrants. If there is a notion that America is not welcoming for newcomers, we could move toward a paradigm in which people come to the United States for relatively a brief stay, then head back home once they have achieved their educational or career goals—something already occurring with educated migrants, and even citizens, from booming economies such as China and India (Wadwha 2009). If this pattern becomes predominant, America would lose much of its competitive edge and its claims to still being an “exceptional” country.

Economic growth is a prerequisite for many things, and continued strong immigration is one of them. But certainly more can be done to encourage college and graduate school students to become citizens. The United States should make efforts to keep entrepreneurs and all kinds of skilled workers, whom the country will need, particularly as the Baby Boom generation retires. The current recession has had a devastating effect on the long-term finances of Social Security and Medicare, now expected to run out of funds earlier than forecasted. This will affect the 78 million Baby Boomers retiring over the next two decades at a time when immigrants will play key roles in the U.S. economy as taxpayers, workers, consumers, and homebuyers (Ewing 2009).

Ultimately how America approaches immigration will have much to do with future development. We could turn inward (Hanson 2002; Huntington 1996: 204–06), hoping to salvage the older notions of an Anglo-Saxon national identity from ethnic encroachment by those who, in Pat Buchanan’s phrase, are not “melting and reforming” (Buchanan 2002: 12). Or we could follow the welfare state model of Europe, as many on the left prefer, becoming a permanently slow growth country with a rapidly aging population.

Neither of these scenarios is worthy of America. Our great genius as a country has been in our ability to integrate newcomers culturally as well as economically. Within a generation or two the overwhelming majority of Latinos lose their primary allegiance to their mother country and 97 percent consider America their home country (Winograd and Hais 2008: 95; Preston 2007b). They also embrace English—only 7 percent of second-generation Californian Latinos speak Spanish as their primary language (Hakimzadeh and Cohen 2007, Preston 2007a). Latinos also represent a growing portion of the U.S. military, hardly a sign of disaffection from the national culture (Rodriguez 2004, Porter 2002).

If attitudes harden against immigration, America will sacrifice much of its demographic and cultural uniqueness. We would also suffer the loss of a major source of entrepreneurial growth and innovation.

Essentially, the United States must remain an open economy and an open society if it wishes to retain its standing as the “land of the free.” A rational immigration policy would work against a scenario of rapid aging, stagnant population growth, labor shortages, and declining entrepreneurship, which are likely to afflict Europe and Asia. By remaining the world’s leading immigrant country, America would assure its future as the world’s beacon of liberty and prosperity.

This piece originally appeared in The Cato Journal..

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

Photo from BigStockPhoto.com.

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Anderson, K. W. (2006) “A Decline in Foreign Students Is Reversed.” New York Times (13 November).

Anderson, S., and Platzer, M. (2006) “American Made: The Impact of Immigrant Entrepreneurs on U.S. Competitiveness.” Arlington, Va.: National Venture Capital Association. Available at www.nvca.org/index.php?option=com_content&view=article&id=254&Itemid=103.

Bowles, J., and Colton, T. (2007) “A World of Opportunity.” New York: Center for an Urban Future (February). Available at www.nycfuture.org/images_pdfs/pdfs/IE-final.pdf.

Buchanan, P. (2002) The Death of the West: How Dying Populations and Immigrant Invasions Imperil Our Country and Civilization.New York: Thomas Dunne.

Cannadine, D. (2002) Ornamentalism: How the British Saw Their Empire. New York: Oxford University Press.

Cave, D. (2011) “Better Lives for Mexicans Cut Allure of Going North.” New York Times (6 July).

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Docquier, F., and Marfouk, A. (2004) “Measuring the International Mobility of Skilled Workers (1990–2000).” Policy Research Working Paper No. 3381. Washington: World Bank.

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(2010) “The Demographic Future: What Population Growth—and Decline—Means for the Global Economy.” Foreign Policy (November/December).

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Fraser, N. (2004) “The New Americans.” BBC News (2 April).

Bookstores and libraries have long played a central role in fostering a deeper appreciation of knowledge, and in lifelong learning. Increasingly, these places are also filling another critical need in our communities, by providing a haven for those seeking a communal connection in an ever-more isolated world.

Ray Oldenburg, author of The Great Good Place, coined the term “third place” to describe any environment outside of the home and the workplace (first and second places, respectively) where people gather for deeper interpersonal connection. Third places include, for example, places of worship, community centers, and even diners or pubs frequented by the “locals.”

Third places, according to Oldenburg, are vitally important to the social fabric of communities because they facilitate the healthy exchange of ideas and provide a public venue for civil debate and community engagement.

Libraries and bookstores clearly are long-time ‘third places’ That shouldn’t be a surprise, given that books serve as the lingua franca of new ideas. Notice, though, that these establishments frequently provide coffee bars, meeting rooms, Wi-Fi access, public computer terminals, and other amenities. They serve as accessible retreats for community groups and clubs, offices for transitioning job-seekers or home-based business owners, logical meeting places for children’s literacy organizations, havens for latchkey kids, and bases of operation for homeless men and women as they try to reintegrate into the community. These are the features, probably more so than the rows of books and racks of periodicals, which grant libraries and bookstores their ‘third places’ status.

Libraries have been hit hard by the proliferation of home-based Internet access and digitized material. The impact is exacerbated by state and local budget cuts that place some libraries in a vicious downward spiral — reduced foot traffic from those with other options often is held out as “evidence” of library irrelevance, leading to more budget and staff cuts and further reduced access for those who need it.

Large libraries in major urban centers are particularly vulnerable, with their cavernous buildings and row upon row of books that are rarely touched. If libraries are to survive, city leaders and library boards must continue to explore creative solutions for the changing needs of their patrons. As economists would put it, they must “drive demand” for expanded library services.

A great example of success with this approach is the Martin Luther King, Jr. Library (www.sjlibrary.org) in San Jose, California. It purports to be the only institution of its kind: It serves as the primary library for both a major university and a major city. This joint partnership between the city of San Jose and San Jose State University was announced in 1997, and the primary building opened in 2003. It boasts over 7 floors and 1.6 million books. There are also dedicated rooms for quiet study sessions, teen activities and multimedia access. In effect, SJSU students have access to all the popular features of a typical public library, while the public has access to all the academic resources of a university library. The entire community is well served by this far-sighted collaboration.

It represents the convergence that is taking place between the traditional role that libraries have long played and the virtual world. According to a study funded by the American Library Association in conjunction with the Bill and Melinda Gates Foundation, the number of U.S. libraries nationwide offering public Internet access has ballooned from under 13% in 1994 to nearly 100% today. What this suggests is that the role of libraries as technology hubs is increasingly supplanting their function as simply a repository of books.

The use of community space in libraries to access technology is particularly vital for low-income residents and for individuals in small towns where the library may be the only connection point for free Wi-Fi access.

Bookstores are confronting the dual challenge of staying both vital and profitable. The most successful brick and mortar bookstores have evolved into third places. Once just exclusively retail outlets, they now are quasi-library/community gathering spots with onsite coffee shops and free Wi-Fi access. While bookstores have always attracted those who wish to browse and kill time, they now also draw others, laden with backpacks, to research, write, and study. Bookstore-based reading groups abound.

But even when a bookstore embraces its role as a third place institution, its viability is not guaranteed. The bankruptcy and closure of more than 600 outlets of Borders Books nationwide is evidence of a shakeout in the retail book industry, amid the proliferation of electronic book portals such as Amazon, Apple and Google. Independent bookstores especially have struggled to maintain their niche in the marketplace (although they may have more flexibility to quickly embrace third place-related amenities).

The lesson in this case is that capitalism can be harsh. For example, Amazon’s controversial price comparison tool allows shoppers to scan bar codes to check prices at rival brick and mortar and online stores. But capitalism also encourages differentiation. As every good business owner knows, becoming a commodity dealer and competing only on price usually is a recipe for failure.

Rather, libraries should be more like bookstores, creating an inviting, leisurely environment. Bookstores should be more like libraries, providing community rooms and programs.

Both should think creatively about how to provide the things that online sellers cannot. That includes, of course, the pleasures of shelf browsing as opposed to web-based browsing. But beyond that, the most successful libraries and bookstores will embrace the opportunities for relevance that their special third place status enables.

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Michael Scott is a speaker and co-host of the Internet radio show Bookmark Radio. He can be reached at michael@bookmarkradio.com. Photo by the author of the Tattered Cover bookstore in Denver, Colorado.