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Infinite Suburbia

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The following is an excerpt from the introduction of Infinite Suburbia, a collection edited by Alan M. Berger and Joel Kotkin, with Celina Balderas Guzaman:

"Global urbanization is heading toward infinite suburbia. Around the world, the vast majority of people are moving to cities not to inhabit their centers but to suburbanize their peripheries. Thus, when the United Nations projects the number of future "urban" residents, or when researchers quantify the amount of land that will soon be "urbanized," these figures largely reflect the unprecedented suburban expansion of global cities. By 2030, an estimated nearly half a million square miles (1.2 million square kilometers) of land worldwide will become urbanized, especially in Asia, Africa, and Latin America. In the United States alone, an additional 85,000 square miles (220,000 square kilometers) of rural land will be urbanized between 2003 and 2030. Given that these figures represent the conversion of currently rural land at the urban fringe, these lands are slated to become future suburbias. Even so, many countries are already majority suburban. In the United States, 69 percent of the population lives in suburbs. As late as 2010, over 75 percent of American jobs lay outside the urban core. Many other developed countries are also majority-suburban. In the Global South, it is estimated 45 percent of the 1.4 billion people who become new urban residents will settle in peri-urban suburbs. The sheer magnitude of land conversion taking place, coupled with the fact that the majority of the world’s population already lives in suburbs, demands that new attention and creative energy be devoted to the imminent suburban expansion."

Infinite Suburbia will be available for sale this week through the Princeton Architectural Press website. You can find the link here.






















Protecting Cities in Fire-Prone Regions

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If you live in a fire-prone area, which includes most of California, it is not a good idea to allow ivy and other plants to cover the sides of your building, as this winery and this church did near Santa Rosa. Both were lost to last week’s wildfires.

Similarly, if you are a legislator in a fire-prone state, it is not a good idea to outlaw fire-resistant developments. As now-retired Forest Service researcher Jack Cohen relates in the above video, one requirement for making your home fire-safe is to have no large flammable structures within 100 feet of the home. That pretty much means people should build on one-acre or larger lots.

But in California, the nation’s most fire-prone state, urban planners’ mania for density has led the legislature to effectively outlaw such low-density development. Santa Rosa’s Coffey Park neighborhood consisted of conventionally sized suburban homes on 50-by-100-foot lots–small for a modern suburb–resulting in many houses being only a few feet apart from one another. If one house caught fire during a dry spell, the intense radiant heat would be sure to set off the next home. As a result, the neighborhood is now a smoking ruin.

As the Antiplanner noted a decade ago, California developers have built shelter-in-place neighborhoods that are so fire-resistant that it is safer for residents to stay in their homes than to evacuate. Wildfires have swept by these neighborhoods and not harmed a single home.

Sadly, this technique has been criticized by even the California Department of Forestry, which argues that making homes fire-safe will just encourage people to live in fire-prone areas (meaning almost all of California). They suggested that people build their homes closer together to make them “easier to protect.” That didn’t work very well in Santa Rosa.

If California had allowed urban areas to grow in the modern way, with density at the center and increasingly low densities at the edges, then a ring of low-density, shelter-in-place neighborhoods around Santa Rosa and other cities could have provided a fire break protecting the denser developments. But this is practically forbidden in California. So, we will get more disasters like the one in Santa Rosa and the 1991 Oakland Hills firestorm.

This piece first appeared on The Antiplanner.

Randal O’Toole is a senior fellow with the Cato Institute specializing in land use and transportation policy. He has written several books demonstrating the futility of government planning. Prior to working for Cato, he taught environmental economics at Yale, UC Berkeley, and Utah State University.

Photo: Homes burned by a wildfire are seen, Oct. 11, 2017, in Santa Rosa, California via VOA News.

Why Small, Struggling Cities Don’t Need “Talent”

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I recently recorded a podcast with my colleague Steve Eide in which he argued against the idea that attracting high talented people into government is what was needed for smaller, post-industrial cities.

I enjoy jousting with Steve on a variety of topics. He favors more aggressive state oversight of cities. As a rule I’m less sanguine about that. Because we come at the world from different perspectives, I’m often challenged by his provocative contrarian ideas.

To wit, he took his “against talent” thesis and wrote it up for the American Conservative. Some of this is standard conservative takes on things like public sector unions, but there are a number of ideas sure to get people arguing:

Any unbiased observer of our cities can see that mediocrity is the salient characteristic of the typical local American politician. Another important problem in small and mid-sized cities is that they are poor and in need of revitalization, especially in Rust Belt areas. A natural conclusion to draw from the coincidence of inept leadership and socioeconomic decay is that better leaders are needed. But in the poorest, most troubled cities, talented leadership is not much of an asset, and it can be a liability. Talent does real harm by raising false expectations of a revival—distracting from mundane yet essential operational matters, and forestalling state intervention at critical junctures.

….

When public-spirited reformers call for better leadership for cities, they typically have in mind a collection of qualities that are more likely to be possessed by an outsider. They are not sounding the call for everyone to get behind this or that city councilmember, someone who got his start as a campaign worker to some local hack and has patiently waited his turn. Instead, they want someone with experience and/or education that most of the local crowd does not have, derived perhaps from service in the private sector or government at the federal or state level. This is likely to be someone who did not come up through the ranks and can thus apply a novel approach to longstanding challenges; who admires innovation; who can envision a solution to every problem, instead of a problem with every solution.

….

But there’s no such thing as a right to revitalization. City reformers call for inspired leadership because they see it as a condition of revitalization, but what if that’s impossible? Our conception of urban renaissance is unduly influenced by the experience of a small handful of large cities. If you look past New York, San Francisco and Boston, and survey their dozens of small and mid-sized Rust Belt peers, it is very difficult to find an example of true revitalization. In a forthcoming research report, I survey 96 major poor cities in the Rust Belt and find that every single one has seen its poverty rate increase since 1970.

….

Perhaps the biggest problem with the talented-outsider mayor is that he is apt to get ideas. He may be more educated than the local doofuses, but that does not mean he is fully enlightened. It’s a case where a little knowledge can become a dangerous thing. State and local politicians who are known as big thinkers will always be strong candidates for a “public official of the year” award from Governing magazine or singled out as one of “America’s 11 Most Interesting Mayors” by Politico. New York and DC-based reporters from national publications are naturally attracted to mayors who can speak the language of urbanism.

But too much of urbanists’ advice for small and mid-sized cities consists of trying to impose lessons from successful top tier cities such as New York, Washington, San Francisco and Boston. Poor small and mid-sized cities should spend more time comparing themselves to other poor, small, and mid-sized cities. If you’ve lost half your population since 1950, you probably don’t have an affordable housing crisis; you’re not grappling with the challenges of density but rather a lack of density. If you have no wealth to redistribute in the first place, then Bill de Blasio can teach you little about the joys of redistribution.

….

“Flexibility,” like “innovation,” may be a core value in Silicon Valley, but it’s frequently a bad thing in the world of municipal finance. Remember all the encomiums to “boring banking” in the wake of the 2008 financial crisis? Often enough, the same principle applies for how to run a city.

Click through to read the whole thing.

This piece originally appeared on Urbanophile.

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

Photo: CT Senate Democrats, CC BY-NC-ND 2.0

Anaheim Transit: Suck It Up

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When I was a kid back in 1971 I lived in Anaheim, California where my mom was a waitress at a local amusement park. Exploring Orange County as an adult recently it all felt more or less the same as I remembered – only more so. The primary adjective has always been beige. The last vestiges of orange groves that still lingered in my youth are long gone, but the tidy neighborhoods of modest tract homes, strip malls, and motels are all still there behind the shiny new stuff.

I was asked to write about Orange County as part of a land use and transportation conference so I went straight to the new ARTIC intermodal transit center. The boosters for ARTIC use words like “iconic,” “transformative,” “unique,” “prestigious,” and “catalytic” to describe the transit hub. There’s a lot of talk about the cooperation of numerous agencies and private firms that all collaborated to make the $185 million project happen. The structure is about getting people excited about Anaheim. The nuts and bolts of transportation itself are peripheral.

Cut to the poor bastard out there somewhere on an anonymous street in Orange County waiting (and waiting, and waiting) for a bus to arrive so he can catch his transfer and get from Point A to Point B. The really transformative thing that would get him excited about transit would be more frequent service and a trip that took twenty minutes instead of an hour and a half. ARTIC does nothing for him. But that was never the point. ARTIC isn’t about transit.

I was staying in nearby Garden Grove six miles away from ARTIC and I decided to test the process of moving around Orange County by public transit. An internet query described a trip of an hour and five minutes by bus. I sat at a bus stop and waited with my fellow travelers and chatted with them about their daily experience. The bus got them where they needed to go, but it wasn’t great. After thirty minutes the bus appeared. I calculated the wait for the transfer along the way and then the trip back again and realized the bus would suck up three hours of my day. And I was going to be cutting it close for an appointment that afternoon.

Traveling by bike was going to take thirty seven minutes and it was all flat. I live in a transit rich neighborhood in San Francisco and I prefer my bike to transit most of the time. But as an out-of-town visitor I didn’t have a bike. I searched for bike rental facilities and there weren’t any near me. And there was the reality that most of the trip would be on the side of high speed eight lane arterials. It would have been doable, but not amazingly fun.

Driving the six miles to ARTIC would take thirteen minutes so I walked back to my car. Here’s where I got a glimpse in to the prevailing culture of Orange County. I parked on a quiet residential side street and when I reached my car a note had been left on my wind shield. I was parked legally on a public street that had no restrictions. I wasn’t blocking anyone’s access and the street was mostly empty. The house in question had a two car garage and a driveway that could accommodate half a dozen vehicles. The parking problem wasn’t physical. It was emotional. Suburbanites don’t like their psychic space interfered with by interlopers. This goes a long way to explaining the transportation dynamics in the region.


Google


Google


Google


Google

ARTIC is so big that it’s easier to get a feel for the place on Google rather than on the ground. The train platform is at one end, the bus stops are on either side, there’s a bike path along one edge of the property, and parking is everywhere. You’ll notice that the elegant structure itself has no real function. It’s purely decorative and designed to make a statement on the skyline. It could be replaced by a few porta-potties and a food truck and the transit stuff would be totally unaffected.


Google

Notice the transit hub is in the middle of absolutely nothing. The site is bound by the Santa Ana River on one side, a giant freeway on the other, and massive parking lots for Angel’s Stadium and Honda Center. I dare anyone to walk from one of these buildings to another. Even if I had managed to take a bus or train to ARTIC the destination wouldn’t have rewarded the effort.


Google

During the boom of the early 2000s plans were drawn up to transform the aging industrial properties in the area to higher value residential, commercial, and professional uses. The authorities in Anaheim built ARTIC as a shiny temple to lever development of the nascent urban center called the Platinum Triangle. Those plans crashed with the 2008 financial crisis and are only now ramping back up.

The predominant design criteria for most of these new buildings involves suburban expectations. The interiors of the apartments as well as the private amenities within these complexes are quite nice and reflect the kinds of things affluent people have come to expect from single family homes in gated communities: greenery, swimming pools, convenient parking, privacy and security protocols. It’s all just been super sized at higher density. But when you’re outside of these buildings you stand between fortified shrubbery and ten lanes of traffic. People drive to the parking deck at the shopping mall or office park which is also hermetically sealed. It ain’t Paris.

Ridership at ARTIC is considerably lower than anticipated for the simple reason that the physical environment is brutal for anyone who isn’t in a car – and that isn’t likely to change for a very long time. The density is coming. The urbanism isn’t. As I explored these new complexes I discovered that each of the lobbies and sales offices were accessed by the parking garage rather than the street. No one expects future residents to ever arrive on foot. This is Orange County… I talked to many of the low wage workers like the parking attendants. They all live in other more affordable cities at some distance. I asked them if they take transit. Not if they can possibly avoid it.

Here’s how transit really works in Anaheim. Specific vehicle fleets take certain kinds of people to particular sorts of destinations. Both the populations and the destinations are cherry picked. The right kinds of people get to where they need to go quickly and efficiently. Everyone else… Suck it up.

This piece first appeared on Granola Shotgun.

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

Highest Cost Rental Markets: Even Worse for Buyers

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There is considerable concern about rising rents, especially in the most expensive US housing markets. Yet as tough as rising rents are, the high rent markets are also plagued by even higher house costs relative to the rest of the nation. As a result, progressing from renting to buying is all the more difficult in these areas.

This is illustrated by American Community Survey data for the nation's 53 major housing markets (metropolitan areas with more than 1,000,000 residents). The range in median contract rent between the major housing markets 3.1 times, with San Jose being the most expensive and Rochester the least. The range in median house values was more than double that, at 6.6 times, between highest cost San Jose and lowest cost Pittsburgh. Thus, house prices in the most expensive markets tend to be far higher in relation to rents than in the less expensive markets.

The rising difference between house values and rents was noted last year in The House Prices are Too Damned High, which showed that from 1969 to 2015, the difference in the range between rentals and house values rose from 51 percentage points to 375 percentage points (Figure 1). It is no coincidence that 1969 was the last census data before far more strict land use regulations were implemented in some major housing markets.

The House Value-to-Rent Ratio

This is illustrated by the median house value-to-rent ratio, which is calculated by dividing the median house value by the median contract rent per year (monthly times 12). Overall in 2016, the median contract rent was $841 in the United States, while the median house value was $205,000. This calculates to a value-to-rent ratio of 20.3.

Where Housing Aspiration is Most Challenging

California, long home to house prices far above the rest of the nation dominates the list of housing markets in which it is hardest for buyers to move up to home ownership. The worst market is the San Francisco metropolitan area, where the median house value in 2016 was nearly 40 times the median annual rent (39.6) and nearly twice the national figure of 20.3. San Jose is the second worst market, with a value-to-rent ratio of 38.7. Los Angeles is third where the median house value is 36.9 times the median annual rent. There is a larger gap down to San Diego, ranked fourth worst, where there is a median value-to-rent ratio of 31.1. Sacramento is also in the least friendly five for renters aspiring to be buyers, with a value-to-rent ratio of 29.6. This may be a surprising finding and is discussed further below. California's other major market, Riverside-San Bernardino does better, ranking 13th worst, with a value-to-rent ratio of 24.5.

Even with New York's notoriously high rents, it did not muscle out California in the worst five. New York's s value-to-rent ratio was 29.5 The balance of the 10 markets in which moving from renting to buying is most difficult also includes #7 Boston (28.1), #8 Portland (27.9), #9 Providence (27.7) and #10 Seattle (27.2).

Comparison with Demographia Housing Affordability Ratings

The eleven housing markets with the highest value-to-rent ratios have ratings of "severely unaffordable" in the 13th Annual Demographia International Housing Affordability Survey. This is the least affordable rating (Figure 2) and indicates a median multiple of 5.1 or higher (median house price divided by median household income). The 12th highest value-to-rent ratio is in Salt Lake City, which is rated "seriously unaffordable," the second most unaffordable category. Thirteenth ranked Riverside-San Bernardino was the only other severely unaffordable major U.S. housing market in the Demographia survey.

Each of the severely unaffordable markets have land use restrictions that make it virtually impossible to build the low-cost suburban tract housing crucial to retaining housing affordability. In such markets, Buildzoon.coms' economist Issi Romem has shown that house values have become detached from construction costs, largely the result of rising land prices (which are associated with stronger land use regulation, especially urban containment policy).

The Surprising Case of Sacramento

Sacramento's high cost housing may come as a surprise. Sacramento has often "slipped under the radar" as a severely unaffordable market, yet was so from 2004 through 2008.Sacramento had reached a median multiple of 6.8 in 2005 before the housing bust and was less affordable than Vancouver, the third least affordable housing market out of nine nations rated in 2016 by Demographia. Sacramento again became severely unaffordable in last year's Demographia survey reaching a median multiple of 5.1. But there is reason for concern in Sacramento, which has seen its median multiple rise from 2.9 to 5.1 in just four years. Any continuation of such this trend could result in a material deterioration of Sacramento's value-to-rent ratio, made all the more likely by California's overly restricted housing and land use regulations.

The Value-to-Rent Ratio and Inequality

Rising inequality is a widespread concern. Yet, as researchers have shown, much of the expanding inequality is centered in the value of owned housing, which has been associated with more restrictive land and housing regulation. In the United States, the price is being paid for by younger households, who are faced with greater student loan debts and a less lucrative economy. It is also paid for by ethnic minority households, whose more limited incomes are making the jump to home ownership even more difficult (See: Progressive Cities: Home of the Worst Housing Inequality).






Median House Value to Median Contract Rent Ratios
53 Major US Housing Markets (Metropolitan Areas)
Worst Markets for Moving from Renting to Buying
RankHousing Market (Metropolitan Area)Value-to-Rent RatioMedian Contract Rent (Monthly)Median House ValueHousing Affordabilty Rating
1San Francisco-Oakland, CA39.56$1,677$796,100Severely Unaffordable
2San Jose, CA38.69$1,964$911,900Severely Unaffordable
3Los Angeles, CA36.92$1,305$578,200Severely Unaffordable
4San Diego, CA31.07$1,415$527,600Severely Unaffordable
5Sacramento, CA29.62$1,022$363,300Severely Unaffordable
6New York, NY-NJ-PA29.05$1,223$426,300Severely Unaffordable
7Boston, MA-NH28.14$1,222$412,700Severely Unaffordable
8Portland, OR-WA27.89$1,031$345,000Severely Unaffordable
9Providence, RI-MA27.77$796$265,300Seriously Unaffordable
10Seattle, WA27.23$1,198$391,500Severely Unaffordable
11Denver, CO24.79$1,174$349,200Severely Unaffordable
12Salt Lake City, UT24.60$907$267,800Moderately Unaffordable
13Riverside-San Bernardino, CA24.47$1,086$318,900Severely Unaffordable
14Washington, DC-VA-MD-WV23.74$1,444$411,400Seriously Unaffordable
15Baltimore, MD23.21$1,055$293,900Moderately Unaffordable
16Milwaukee,WI23.07$737$204,000Seriously Unaffordable
17Hartford, CT22.83$903$247,400Moderately Unaffordable
18Raleigh, NC22.56$878$237,700Moderately Unaffordable
19Philadelphia, PA-NJ-DE-MD22.27$919$245,600Moderately Unaffordable
20Las Vegas, NV22.06$883$233,700Seriously Unaffordable
21Phoenix, AZ21.97$876$231,000Seriously Unaffordable
22Richmond, VA21.81$868$227,200Moderately Unaffordable
23Minneapolis-St. Paul, MN-WI21.64$926$240,500Moderately Unaffordable
24Virginia Beach-Norfolk, VA-NC21.27$940$239,900Moderately Unaffordable
25Austin, TX21.20$1,035$263,300Seriously Unaffordable
26Cincinnati, OH-KY-IN21.08$653$165,200Affordable
27Nashville, TN21.00$829$208,900Moderately Unaffordable
28Louisville, KY-IN20.94$645$162,100Moderately Unaffordable
29St. Louis,, MO-IL20.64$683$169,200Affordable
30Chicago, IL-IN-WI20.60$930$229,900Moderately Unaffordable
31Kansas City, MO-KS20.38$711$173,900Affordable
32Columbus, OH20.15$712$172,200Affordable
33Birmingham, AL20.15$637$154,000Moderately Unaffordable
34New Orleans. LA19.89$788$188,100Moderately Unaffordable
35Oklahoma City, OK19.86$647$154,200Affordable
36Tucson, AZ19.82$716$170,300Moderately Unaffordable
37Charlotte, NC-SC19.77$793$188,100Moderately Unaffordable
38Pittsburgh, PA19.62$631$148,600Affordable
39Miami, FL19.36$1,122$260,600Severely Unaffordable
40Grand Rapids, MI19.20$714$164,500Affordable
41Atlanta, GA18.72$880$197,700Moderately Unaffordable
42Buffalo, NY18.63$636$142,200Affordable
43Cleveland, OH18.47$659$146,100Affordable
44Indianapolis. IN18.43$694$153,500Affordable
45Detroit,  MI18.37$729$160,700Affordable
46Jacksonville, FL18.33$853$187,600Moderately Unaffordable
47Dallas-Fort Worth, TX18.13$869$189,100Moderately Unaffordable
48Orlando, FL17.72$948$201,600Seriously Unaffordable
49Memphis, TN-MS-AR17.69$671$142,400Moderately Unaffordable
50Houston, TX17.36$871$181,400Moderately Unaffordable
51San Antonio, TX16.65$802$160,200Moderately Unaffordable
52Tampa-St. Petersburg, FL16.61$879$175,200Seriously Unaffordable
53Rochester, NY15.97$725$138,900Affordable
Sources: American Community Survey 2016, 13th Annual Demographia International Housing Affordability Survey.

 

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

Photograph: Sacramento - One of 5 most difficult markets for moving from renting to buying.

Is There A Civilization War Going On?

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“Civilizations die from suicide, not by murder.” — Arnold J. Toynbee

From the heart of Europe to North America, nativism, sometimes tinged by white nationalist extremism, is on the rise. In recent elections, parties identified, sometimes correctly, as alt-right have made serious gains in Germany, Austria and the Czech Republic, pushing even centrist parties in their direction. The election of Donald Trump can also be part of this movement.

Why is this occurring? There are economic causes to be sure, but perhaps the best explanation is cultural, reflecting a sense, not totally incorrect, that western civilization is on the decline, a movement as much self-inflicted as put upon.

French intellectuals first to see the trend

In 1973 a cranky French intellectual, Jean Raspail, published a speculative novel, “The Camp of the Saints,” which depicted a Europe overrun by refugees from the developing world. In 2015 another cranky Frenchman, Michael Houellenbecq, wrote a bestseller, “Submission,” which predicted much the same thing, ending with the installation of an Islamist government in France.

Both novels place the blame for the collapse of the Western liberal state not on the immigrants but on cultural, political and business leaders all too reluctant to stand up for their own civilization. This is reflected in such things as declining respect for free speech, the importance of citizenship, and even the weakening of the family, an institution now rejected as bad for the environment and even less enlightened than singlehood.

Critically, the assault on traditional liberalism has come mostly not from the reactionary bestiary, but elements of the often-cossetted left. It is not rightist fascism that threatens most but its pre-condition, the systematic undermining of liberal society from within.

Read the entire piece at The Orange County Register.

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

Photo: JÄNNICK Jérémy [CC BY 3.0], via Wikimedia Commons

Chicago's Story Of Population Loss Is Becoming An Exclusive About Black Population Loss

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Population estimates released last week by the U.S. Census Bureau show that Chicago’s population has declined for the third year in row.

According to the latest estimates, Chicago’s population fell by about 350 in 2014, by just under 5,000 in 2015 and by more than 8,600 in 2016. Among the nation’s 50 largest cities, Chicago is the only city to lose population each year since 2013 and for those population losses to worsen each time.

The recent population decline pales in comparison to the losses of the previous decade—when the city averaged a decline of 20,000 a year. Still, it’s a sign that the city has not completely escaped its earlier struggles, and it puts Chicago in some dubious company. The next three largest cities to also have lost population each of the past three years and for those losses to worsen each time are Cleveland, St. Louis and Buffalo—a trio of cities that have become known as cities in decline.

And Chicago shares that distinction with several of it closest neighbors including Cicero, Des Plaines, Evanston, Skokie, and Tinley Park. In all, Illinois is home to 174 municipalities that have suffered growing population losses each of the past three years, the most of any state in the nation.

However, a Metropolitan Planning Council analysis of other recent census data shows that Chicago's story of population loss is becoming exclusively a story about black population loss—in the forms of individuals and communities.

While other groups and communities in Chicago that witnessed population loss in the previous decade have rebounded, the city has continued to lose black residents and experience population decline in black communities.

From 2000 to 2010, the African American population in Chicago declined by 180,000. However, the city’s white population also fell by more than 50,000. According to the Census Bureau’s annual American Community Survey, Chicago’s black population has continued to slide, falling by nearly 60,000 from 2010 to 2015, while the numbers for Asians, Latinos and whites have all grown.

In addition, from 2000 to 2010, the city’s majority-black community areas on the south and west sides collectively witnessed a net loss of nearly 125,000 people. Community areas with no racial majority declined by more than 51,000 and majority-Latino communities collectively fell by more than 37,000 in population.

But a comparison of five-year American Community Survey datasets, for 2006-2010 and 2011-2015, the most recent community-level census data available, shows that majority-black community areas are the only communities that collectively lost population—a drop of nearly 40,000—between those periods. Furthermore, among the 15 communities with the highest percentage drops in population between those periods, 14 of them were majority black. In the map below, communities shaded in red and yellow lost population. The communities shaded in green and purple gained population.

And while the story of population loss varies by demographic so does the picture of where people relocate when they leave Chicago and Cook County, shows an MPC analysis of census microdata provided by the University of Minnesota.

From 2006 through 2015, an estimated total of nearly 1.8 million people have relocated from Cook County. About 660,000 of them remained in the tri-state Chicago metropolitan area and roughly 1.1 million moved to other parts of the country.

However, the destinations varied by the race and ethnicity of the individuals relocating, suggesting that their motivations for leaving the city and county may have also varied.

Among the individuals who left Cook County but remained in metro Chicago, the top destination was DuPage County for Asians. However, it was northwest Indiana (Jasper, Lake, Newton and Porter counties) for African Americans. And it was a collection of five collar counties (Grundy, Kane, Kendall, McHenry and Will counties) for both Latinos and whites.

Among those leaving metro Chicago altogether, the top metro area destinations were New York City, Los Angeles and San Francisco-Oakland for Asians. The top metro destinations for blacks were Atlanta, Minneapolis-St. Paul and Dallas-Ft. Worth. For Latinos, they were Houston, Dallas-Ft. Worth and Tampa-St. Petersburg. And the top metro destinations for whites were New York City, Los Angeles and Phoenix.

Those top three relocation choices outside metro Chicago for African Americans and Latinos leaving Cook County all have lower levels of racial segregation than metro Chicago, according to an analysis conducted by the Urban Institute as a part of the Cost of Segregation project, a joint effort with MPC.

While metro Chicago ranked 9th in 2010 in Latino-white segregation, the areas surrounding Houston, Dallas and Tampa ranked 20th, 28th and 52nd, respectively.

And while metro Chicago ranked 10th in 2010 in black-white segregation among the nation's 100 largest metros, the areas surrounding Atlanta, Minneapolis and Dallas ranked 41st, 61st and 58th, respectively.

Eight of the principal cities, including Chicago, in the 10 regions with the highest levels of black-white segregation lost population in 2016. Conversely, all of the principal cities in the 10 regions with the lowest levels of black-white segregation gained population in 2016.

This piece originally appeared on Metroplanning.org.

Alden Loury is Director of Research and Evaluation at the Metropolitan Planning Council.

Photo: Flickr user Robin Amer (CC)

RBC Report Highlights Increasing Housing Affordability Challenges in Canada

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Households could face even greater housing affordability challenges in the years to come, according to the September 2017 RBC Economics (RBC) Housing Trends and Affordability report. In noting that "The days of ultra low interest rates in Canada are over,” RBC suggests that the two recent overnight interest rate increases by the Bank of Canada “are just the beginning of the hiking campaign.” RBC expects the Bank to increase rates another full one percentage point by the end of 2018. These higher interest rates would flow through to the housing finance market, with ominous implications for households seeking mortgages and those renewing existing mortgages.

RBC estimates that a one percentage point increase in interest rates could raise the costs of home ownership up by nearly seven percent relative to household incomes in the Vancouver metropolitan area (CMA). Ownership costs would rise more than six percent in the Toronto CMA. These would be substantial increases that many household would not be able to afford. To estimate that, we took the median household incomes from the 2016 Census and adjusted them upward to estimate their present level with weekly earnings data.

In both Vancouver and Toronto, households acquiring or renewing mortgages would need to find between $4,500 and $5,000 more by 2019 — and that’s assuming that house prices to not rise further (an optimistic assumption).

Of course, none of this is terribly surprising. Vancouver’s house prices have been well above levels justified by any rational set of economic fundamentals for decades. In Toronto, the problem goes back to about 2000. But the surprise is Victoria, which ranks third among housing markets threatened by the expected interest rate increases. A one-point increase in mortgage interest rates would set the median income household back about $3,400 in Victoria, more than the $2,900 in Calgary and well above the other major CMAs of Ottawa-Gatineau. Edmonton and Montréal, where increases would be around $2,000. In the next larger markets, Winnipeg and Québec, the increase would be between $1,400 and $1,500 (Figure). This is not to suggest that housing trends have been healthy in either Winnipeg or Quebec, where Frontier’s Canada’s Middle-Income Housing Affordability Crisisrevealed house prices to have risen nearly four times as fast as incomes between 2000 and 2015.

Meanwhile, even before mortgage rates rise higher, the housing affordability crisis is severe. In Vancouver, where the 115 percent of the pre-tax median income household would be required to pay the mortgage on the average priced detached house. RBC assumes a down-payment of 25 percent, so for the many buyers with less than a 25 percent down payment, even more income would be required.

RBC noted some improvement in housing affordability in Vancouver following imposition of the foreign buyers tax in 2016. “RBC said that there improvements, made little difference for most buyers—owning a home at market price is still out of the reach of most Vancouver households.”

RBC also attributed much of the housing affordability deterioration in Victoria as a reaction to the foreign buyers tax in Vancouver. RBC estimates that the median household would require 63.2 percent of its income to purchase the average detached house. This is more than 10 percentage points more than in Calgary, which itself saw house prices rise more than twice as much as its rapidly increasing incomes between 2000 and 2015.

In Toronto, RBC estimates that the median income household would need 92.4 percent of its income to pay for the average priced detached house.

Meanwhile, the housing affordability crisis has drawn the attention of the Trudeau government. According to Bloomberg News, the Canada Mortgage and Housing Corporation (CMHC) prepared a for Families Minister Jean-Yves Duclos that attributed only 40 percent of the Toronto house price increases since 2010 on the economic fundamentals, such as including population, incomes and borrowing costs. The rest was attributed to supply constraints and speculation. That is hardly surprising, since in the urban containment policy environment of Toronto, the very purpose is to block the greenfield supply of new houses that is a prerequisite to keeping housing affordable. And, speculators are naturally drawn to markets where prices are increasing rapidly.

The federal government may have little, if any power to solve the problem, since the supply constraints are established at the provincial level. But, the Trudeau government’s concern is appropriate. Similar land use regulations have been shown to retard US economic growth in economic studies and much of the rising wealth inequality identified by French economist Thomas Piketty has been attributed to rising house prices in more highly regulated environments.

It is imperative for provincial authorities to begin implementing measures to liberalize the supply of land. Short of that, prices are likely to continue rising and fewer in the next generation will live as well as their parents did.

This piece originally appeared as a Frontier Centre for Public Policy commentary.

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

Photograph: Toronto
https://upload.wikimedia.org/wikipedia/en/b/b4/Toronto_ON_Toronto_Skylin...


Why Is the Trump Administration Promoting Further Economic and Media Centralization?

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The Federal Communications Commission is planning to lift ownership restrictions on local media. This would allow, for example, ownership of multiple major TV stations in the same market by the same company:

In recent years, the local TV station business has consolidated rapidly, driven by both the growing fees that cable and satellite companies pay for the right to retransmit broadcast signals—bigger station groups can extract higher fees—and increasing competition from the internet. That has led to the emergence of a handful of “super groups” like Sinclair Broadcast Group , which today reaches 45.6% of television households, according to Kagan, a media research group within S&P Global Market Intelligence.

Relaxing regulations on local TV station ownership likely would spark a “bonanza” of dealmaking among station owners, according to station broker Larry Patrick, particularly among the independent station groups that don’t share ownership with broadcast networks like ABC or Fox.

The FCC has also repealed the “main studio rule.” This rule required radio and TV stations to maintain a staffed local physical studio capable of originating programming. Regarding that republican FCC chairman Aji Pai wrote:

At our October meeting, we’ll also take another step toward the long-overdue modernization of rules governing the media industry. Following up on our Notice of Proposed Rulemaking in May, we’ll vote on an order that would eliminate the “main studio rule.” This rule requires each AM, FM and TV broadcast station to maintain a main studio in or near its community of license. This requirement dates to 1939, and was enacted in part to ensure that stations would stay accessible and responsive to the public. But today, this rule is unnecessary; most consumers get in touch with stations over the phone or through electronic means, stations’ public inspection files are mostly online, and technology enables stations to produce local news without a nearby studio. Additionally, the rule can impose major costs on broadcasters. Eliminating it would make it easier for new broadcast stations to operate in small towns and rural communities. It would also allow broadcasters to spend money currently used to comply with the rule on local programming, newsgathering, and other activities to better serve the public.

If you believe permitting further media consolidation and eliminating local studios is going to result in more local newsgathering and programming, I’ve got a bridge to sell you.

If we take a step back for a minute, we see that in community after community across America, the local institutions that once sustained them as viable places have been gutted or disappeared entirely: local banks, local stores, the local newspaper, manufacturing plants, etc. Some of these were lost due to technology and productivity improvements. In others, some people blame globalization.

But while globalization is well known and well-discussed as a force, there’s another one that’s less talked about. It overlapped with globalization, though started earlier. It was accelerated by globalization, but it is something that was happening anyway. That trend is the centralization of a number of American industries. I explained this in 2010 in a section of a post called “The Nationalization Age”, which I’ll quote in full:

Everyone knows about the [1990s era] tech revolution, but there was a concurrent development that was in many ways equally important. This was the nationalization of business.

Think again back to the 1980’s in a mid-sized or small city. Your hometown probably had three or so major locally based, publicly traded banks. Your state probably severely limited their ability to open branches, so the market was highly fragmented. Your town probably had a couple department stores that were either part of local or regional chains. This might have been true of discounters or even fast food restaurants. The local gas and electric companies were locally based. Only Ma Bell pre-1984 was a national utility, and a heavily regulated one. In short, while may industrial businesses were national in scope, there were still a huge number of industries that were incredibly fragmented into local or regional markets.

The deregulation of the 80’s and 90’s ended that. The end of restrictive banking laws put us where we are today, with a handful of major nationwide banks like JP Morgan Chase, along with a few odd surviving “super-regionals”. Utilities have been sold off. Department stores merged out of existence, perhaps most poignantly illustrated by the rebranding of Marshall Field’s flagship store in Chicago as Macy’s. Macy’s is truly America’s department store now. Wal-Mart and Target, once regional chains, are now ubiquitous. So too Walgreens, CVS, Home Depot, etc.

In short, the business landscape of your city likely changed radically during the 1990’s, as large numbers of locally based businesses, businesses whose executives formed the leadership class of the community, were bought out. (I wrote about one implication of this in my piece “The Decline of Civic Leadership Culture.”)

This also, incidentally, transformed the professional services industry. In 1990 virtually all of these industries were city office based. To be the office managing partner of the biggest office or headquarters city was a huge deal. But in the 90’s, as business changed, and as the level business domain expertise required to integrate technology into business strategies, processes, and organizations became much, much higher, all of these industries restructured into national practices based around industries, with P&L responsibility resting with the industry sector leads. That’s one reason I spent so much time on airplanes in my career.

Of course, this disproportionately benefited large cities in the middle of the country with big airports, where you could base lots of people and fly them conveniently around. Two big winners: Chicago and Dallas.

With so many businesses now large scale, deregulation continuing in vogue, and a post-Cold War end of history euphoria in the air, the stage was set for future liberalization of international trade regimes. Your local bank or store probably didn’t care much about international markets, but Citigroup and Wal-Mart sure did.

There were multiple factors prompting the roll-ups of one sector after another, but one of them was undoubtedly deliberate government policy. In many of these sectors, state and federal regulations were specifically designed to create a fragmented market and keep institutions locally based. The idea that all the banks in your town would be owned by companies in your state capital, much less New York, was anathema.

These rollups did coincide with a nice boom in the 1990s, but since 2000 results have just plain been bad. Barack Obama was the first president since Herbert Hoover to never once hit 3 percent annual GDP growth. President Bush’s economic record was likewise dismal. Job growth in the U.S. since 2000 has averaged 0.5 percent per year, compared to 1.9 percent during the 1980s and 1.9 percent during the 1990s. (Recent years have seen better growth rates than this anemic average.) And real median incomes are lower today than in 2000. Maybe these policies, globalization, etc. didn’t cause these bad results, but results subsequent to these rollups certainly don’t give a ringing endorsement.

When we think about the rise of the coastal and global city economies, we always hear about density, talent concentrations, collisions, and many other things. What we don’t hear about is the way that we specifically eliminated government policies that were designed to keep a handful of coastal cities like New York from dominating the economic life of the country. The centralization of industries in these cities, along with the rise of global city services, etc. is a big part of what made them so prosperous today. They may not have the lion’s hard of employment, but they extracting an outsize share of the value.

While the President doesn’t directly control the FCC, I find it amazing that the administration of the guy who was elected president in large part because of the hollowing out of communities across the interior in part driven by this centralization would be promoting even more of it. Especially in media, where the collapse of newspapers and such has already had a profoundly negative effect on civic life.

All of this may lead to great economy efficiency in some macro sense. But we’ve already seen the price paid by the loss of these local institutions. Too many cities went from being branch plant towns to being branch everything towns – with no plant anymore.

The coastal folks who are appalled at populism might do well to consider their own role in creating the conditions that brought it about. And the Trump administration should seriously reconsider any regulatory moves designed to actively facilitate further economic concentration in the country.

This piece originally appeared on Urbanophile.

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

2nd Quarter Home Price Indices

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Someone just paid $1.1 million for a tear-down/fixer-upper in Mountain View, California. That’s not really news, as prices in Silicon Valley have been increasingly outrageous. What’s news is that they bought the house with the provisos that the existing owner will get to live there for seven years; the buyer didn’t get to see the interior of the home; and the buyer is required to make improvements before closing on the home. As the San Francisco Chronicle says, the new owner probably figures it will take seven years to get the permits to rebuild the house anyway.

The problem for the buyer is that the same forces that have made housing prices rise in Silicon Valley–namely the urban-growth boundaries adopted by San Mateo and Santa Clara counties–have also made prices more volatile. In other words, what goes up will come down. As shown in the chart above, San Jose prices today are already higher than they were at the peak of the 2006 housing bubble, indicating that another bubble is likely to deflate fairly soon.

The above chart is based on the latest home price indices published by the Federal Housing Finance Agency, and in particular the all-transactions index for metropolitan areas. These data are collected using the Case-Shiller method, but cover more areas than the official Case-Shiller index.

The Antiplanner has modified this file, and the one for states, to make it easy to make charts such as the one above for any group of up to six metropolitan areas or states. Simply download the Antiplanner’s files for metropolitan areas and/or states and go to cells AQ72 for the metropolitan areas file and BO212 for the states file for instructions on modifying the charts. The metropolitan areas file can make charts showing both nominal and inflation-adjusted indices; the states file just does inflation-adjusted indices.

This piece first appeared on The Antiplanner.

Randal O’Toole is a senior fellow with the Cato Institute specializing in land use and transportation policy. He has written several books demonstrating the futility of government planning. Prior to working for Cato, he taught environmental economics at Yale, UC Berkeley, and Utah State University.

Photo: Runner1928 [CC BY-SA 3.0], via Wikimedia Commons

What Happens After Half Your Town Burns Down?

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Last month I wrote about how insurance companies are getting ahead of the curve by preemptively dropping coverage and/or significantly raising the cost of policies for properties believed to be at increased risk. Less than four weeks later forest fires ripped through Sonoma and Napa counties and destroyed 7,000 structures – most of them single family homes. These fires are now ranked as the most destructive and expensive in California history. Too many things were built in a place that guaranteed tragedy sooner or later.

A city planner friend down in southern California e-mailed me and asked how local authorities will respond in the aftermath. The hardest hit towns like Santa Rosa already had a massive housing shortage and affordability problem before the fires. The loss of so many homes has only made a bad situation worse. The surviving stock of properties and rental accommodations will only become more expensive as the market tightens up even more. Will zoning regulations and building codes be relaxed in order to allow more properties to be built quickly, or will the devastation trigger new rules and restrictions that make reconstruction even harder at higher prices? I answered, “All of the above.”

Upscale resort hotels, luxury subdivisions, corporate office parks, and national chain stores have the financial resources and political clout to put things back together one way or another. It will take a few years, but these places will be rebuilt to an even higher standard as happened in the Oakland Hills fire of 1991.

I found this guy digging through the rubble of his pizza shop looking for anything salvageable. He was optimistic that insurance would allow him to rebuild. I asked about city regulations and he felt certain that Santa Rosa authorities would expedite his paperwork in a spirit of civic solidarity and economic self preservation.

Residents of the Journey’s End Mobile Home Park will most likely have an entirely different trajectory. Owners of individual trailers may (or may not) have sufficient insurance or personal savings to rebuild, but they never owned the land under them. The chances that they will ever return to this spot again are very close to zero. Whoever does own the land has just been given a unique opportunity to redevelop the site at a much higher value. The city will encourage the upzoning of the property for all the usual reasons: economic development, job creation, revenue enhancement, et cetera. The previous inhabitants will find their way to new homes – probably in other states entirely.

This same friend once explained the dynamics of city council meetings where the fire marshal announces to the assembled officials that the fire code is written in the blood of fallen fire fighters. Who’s going to argue with that? So we get regulations that include extra wide roads that allow the world’s largest fire engines to race at high speed to get to fires quickly, mandatory fire sprinklers in every new building in the state of California – including single family homes, and buildings that are all spaced far apart from each other to keep fires from spreading. These measures very effectively help prevent or contain certain kinds of individual fires. Then again, this land use pattern guarantees a population that’s spread out all over the hills and valleys with an endless rural/urban interface that makes really big fires of this kind inevitable. Pick your poison…

Ten lane freeways and enormous parking lots make excellent fire breaks. But burning embers from massive forest fires were carried on the wind to distant locations where they ignited new fires.

Scattered around Santa Rosa are the burnt out husks of shops and homes that went up in flames at random. The dispersed nature of so many fires in multiple hopscotch locations made fire fighting that much more difficult.

Spend any time at all on web sites devoted to emergency preparedness and the overall impression you get is one of city centers as doomed pits of despair and festering evil that need to be avoided at all costs. Even people in suburbs at a fair distance from downtown are warned about the perils associated with desperate hoards of marauding city folks pouring over the landscape in an exodus from urban destruction. In this particular case it was people from the countryside that fled to safety and cleaner air with me and my neighbors here in San Francisco. You just never know…

This piece first appeared on Granola Shotgun.

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

The GOP Establishment No Bargain Either

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Perhaps nothing has been more ironic than the canonization of respectable, moderate-seeming Republicans. People like Mitt Romney and the Bush family, once castigated as practitioners of unmitigated greed or even Hitlerian fascists, have suddenly become laudable in the mainstream media.

In this environment, even the perhaps rightly named Jeff Flake, whose popularity in his state was a rousing 18 percent, or Tennessee’s Bob Corker, now get praise from Democrats largely because they revile Donald Trump. But the much commented fall of what Slate calls “principled conservatism” reflects not more than the malicious work of Trump but largely the fundamental failure of the established right.

What doomed the GOP establishment?

The first disaster for the establishment GOP came with the embrace of the interventionist dogma of neo-conservatism, infuriating both the McGovernite left and traditional Republicans. The GOP has identified itself both with the endless Afghanistan imbroglio and consistently unpopular war in Iraq.

America lost many of its young people, and billions in treasure, to fulfill the neo-con crusade. The electorate was not enthusiastic, one reason they voted for an inexperienced Barack Obama and against a genuine war hero in John McCain.

The right half of the country generally favors a strong military but wants soldiers to defend the homeland, not engage in an ideological struggle. Defeat the Soviet Union without a major war, as Reagan could claim, or kill Bin Laden, as Obama accomplished, or annihilate much of ISIS, as Trump has done, seems a winning approach. Spending endless billions on corrupt governments who cannot even control much of their populace, not so much.

Read the entire piece at The Orange County Register.

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

Photo: U.S. Sen Bob Corker, R.-Tenn. by U.S. Embassy Moldova, via Flickr, using CC License.

The Changing Urban Patterns in College Degreed Younger Adults

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While doing some research for a forthcoming presentation, I was looking at some data about younger people with college degrees and put together some maps I’ll share with you today.

The Census Bureau tracks educational attainment by age cohort. I decided to look at 25-34 year olds with a bachelors degree or higher. This is roughly today’s “young, educated Millennial” segment. Here is a chart showing the change in the share of 25-34yos with degrees between 2000 and 2016:

Keep in mind these aren’t the same people – this is not a longitudinal study. The 25-34yos in 2000 are Generation X – my generation. This is simply a look at how the concentration of people in that age group has shifted over time. (To interpret the scale, multiply by 100 and that’s the percentage point change in college degree attainment).

You can see right away that the big increases here are in the “usual suspect” cities: NYC, Boston, DC, Bay Area, LA, Seattle, Portland, Chicago. Also Pittsburgh’s brain gain is shown and also a great showing for Nashville.

Some metro areas – the ones in red – actually saw a decline in educational attainment in that age group. Not good.

Because the nation as a whole grew more educated during that time, another way to look at it is the change in college degree attainment vs. the national change for that age group, which was 7.4 percentage points. Because of some system quirks, the color scheme is different on this one. Blue is a change higher than the national average, purple is a change below the national average.

Interesting to say the least.

Now there are many caveats on this. One, your ability to grow your share of people with college degrees in part depends on your base. Pittsburgh started with low share in that age range. It’s a lot harder to post gains when you’re already high. So some of these coastal markets may slow down in growth over time. After all, you can’t get above 100% by definition.

Secondly, this is the share of people with college degrees, not the total people with college degrees. Partisans of Texas or Atlanta will be quick to note that they grew so much total population that their total number of people with degrees went up a lot more than some of these coastal cities. That’s true.

But it’s obvious these maps are telling us something important about what’s been happening in America. It helps us understand why, for example, Pittsburgh became a hot story and tech center. Or why Nashville went from just another Sunbelt sprawlburg to a hip and trendy city. Or the boom in Chicago’s Loop. The poor showing by Atlanta foots to its per capita income erosion vs. the national average and weak per capita GDP figures.

While the total number of people with degree matters, the share also matters. A city dominated by highly educated people will have a different culture, attitude, etc. vs. one where interests are more divided between highly educated and lesser educated, for example. Something of the divergence between coastal elite cities and the interior is illuminated, if not necessarily in causal form. There have been some very divergent trends in demographics in these places.

This piece originally appeared on Urbanophile.

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

Photo: Aaron Hawkins, via Flickr, using CC License.

A US Home Ownership Turn Around?

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The Census Bureau reports that home ownership in the United States rose to 63.9 percent in the third quarter of 2017. This continues a rising trend since the second quarter of 2016, when home ownership had dropped to 62.9. This equaled the previous low of 51 years before (1965), just a year after annual data reporting began. Home ownership peaked at 69.2 percent during the housing bubble and had been generally declining since late 2006 (Figure).

Home Ownership and the Housing Bubble

Overall the drop in home ownership from 69.2 percent to the modestly recovering 63.9 percent is substantial. However, the last two decades have been unrepresentative of US home ownership. Any comparison of the declining recent rates must be considered in light of the Great Financial Crisis. The authors of a Federal Reserve Bank of San Francisco working paper (Paolo Gelain of the European Central Bank and Norges Bank, Kevin J. Lansing of the Federal Reserve Bank of San Francisco and Gisle J. Natvik of the BI Norwegian Business School) expressed the view that the "U.S. housing boom was a classic speculative bubble involving naive projections about future asset values, imprudent lending against risky collateral, and ineffective regulatory oversight."

There was plenty of blame to go around. Regulators at the very top failed to recognize the seriousness of the problem. Mortgage lenders so weakened lending standards that qualifying households insufficient financial means were soon to default. Then there was "securitization," which researchers have associated with higher default rates (Benjamin J. Keys of the University of Michigan, Tanmoy Mukherjee of Sorin Capital Management. Amit Seru of the University of Chicago and Vikrant Vig of the London Business School).

With their focus on national level data, another government failure was missed by economists, geographic differences between the worst housing cost escalation and losses to the metropolitan areas with more stringent land use regulation. Indeed, if the more stringently regulated metropolitan areas had replicated the price trends of the traditionally regulated markets, the financial losses nationwide might have been 75 percent less. The result would certainly have been a less severe economic decline, or the Great Financial Crisis might have been avoided altogether.

The losses were substantial. In the less than two years between April of 2007 and January of 2009, household wealth dropped $13 trillion. This was a loss nearly as great as the gross domestic product at the time ($14.5 trillion), and was equal to $125,000 per household. True enough, this loss was recovered by the end of 2012. But, as happens in any recovery, the losers do not necessarily recover their losses.

At the same time, there is increasing concern about rising inequality, especially after publication of Thomas Piketty's Capital in the 21st Century. Matthew Rognlie, now of Northwestern University, found that virtually all of the increased wealth inequality has been in housing equity. More recently, Gianni La Cava of the Bank for International Settlements (the "central bank of central banks") concluded that the rising income equality in the United States is "concentrated in states that are constrained in terms of new housing supply."

Comparing to Relevant History

Thus, the appropriate comparison for today's home ownership rate is not the debacle of last two decades. It is rather the success of the decades before, which saw a nearly 50 percent increase relative to pre-World War II home ownership rates from 44 percent in 1940 to 64 percent in 1970. The current 63.9 percent home ownership rate is nearly as high as the average annual rate of 64.3 percent from 1964 to 1994. The maximum home ownership rate during those three decades of apparently successful regulation and competent mortgage industry management was only 1.7 percentage point higher than today (65.6 in 1980). Indicating the far greater market volatility of the past two decades, with the bubble, bust and regulatory overreach, the 2007 peak was more than three times higher than in 2017 (5.3 percentage points). Today's home ownership rate is in the historic "ballpark."

The Future?

The important question is where does home ownership go from here. There is no question that the recent increase is an improvement. Another 15 months as successful as the last 15 would raise the rate to a level exceeded only five times between 1964 and 1995. And, there still remains a clear preference for home ownership.

There are, however, serious potential headwinds. Younger households are saddled with unprecedented levels of student debt. Household income growth has been muted, to say the least. Perhaps the most pessimistic scenario has been presented (among other more optimistic scenarios) by Arthur Acolin (University of Southern California), Laurie S. Goodman (Urban Institute) and Susan M. Wachter (University of Pennsylvania), who suggested that if the rest of the nation followed California's experience, the national home ownership rate could drop to 50 percent by 2050.

House prices in California have escalated in an unprecedented manner, in large measure due to land use regulations making it largely impossible to deliver new housing for the "minimum profitable production costs," as shown by economists Edward Glaeser of Harvard and Joseph Gyouko of the University of Pennsylvania). Substantial urban fringe land use restrictions make construction of tract housing at historical housing affordability ratios virtually impossible.

Avoiding California, etc.

With its far stronger land use regulation, implemented in recent decades, California's house prices relative to incomes ("median multiple") have skyrocketed to 135 percent above those in markets where there is more liberal, traditional land use regulation. Each of California's major metropolitan areas are now rated as severely unaffordable (the worst category of affordability) in the 13th Annual Demographia Housing Affordability Survey. Before California abandoned traditional regulation, its income adjusted house prices were only 30 percent higher than in the traditionally regulated markets.

The problem goes beyond home ownership. California has the highest gap between the costs of renting and buying in California than elsewhere in the nation (the price-to-rent ratio). Among the 53 major metropolitan areas, San Francisco, San Jose, Los Angeles, San Diego and Sacramento show the largest affordability gap between renting and buying. That makes home ownership doubly challenging for would-be first time buyers.

A future in which only 50 percent of households could afford houses would mean considerably less affluent middle-income households and higher poverty rates. It would stunt economic growth, because both the many more renters and buyers paying more would have less discretionary income to buy other goods and services. This could retard economic growth, as Chang-Tai Hseih and Enrico Moretti have already found to have happened, even with stringent regulation that has been somewhat limited geographically (beyond California to markets most notably like Portland, Seattle, Denver, and Miami).

Of course, maintaining the normal home ownership rates of the last past half-century will require strong economic growth, and the return of three percent growth over the past two quarters is a good start in the right direction. But there is much more to the equation that national economic policy.

States, localities and metropolitan areas have an important role to play. It will be important for governments in traditionally regulated metropolitan areas to avoid the policies of California and the other stringently regulated markets. This could also be challenging, because of the strong proclivity of urban planners to impose the stringent urban containment policies that have been associated with destroyed housing affordability from Sydney to Hong Kong, Toronto, London and Auckland. Should they fail, the most pessimistic predictions might come true. This would be as unavoidable and unnecessary as the Great Financial Crisis. And the human costs would be considerable.

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

Photograph: Suburban Minneapolis-St. Paul (by author)

Economic Nationalism and the Half-Life of Deindustrialization

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In a 60 Minutes interview in September, Steven Bannon touted his form of economic nationalism and suggested that Democrats like Senator Sherrod Brown and U.S Representative Tim Ryan understood his economic vision, even if they didn’t agree with him. It was fitting that he name-checked Brown and Ryan, as both come from Northeast Ohio, where the history of deindustrialization began 40 years ago this fall. On September 19th, 1977 — known locally as “Black Monday” — Youngstown Sheet and Tube announced that it was shutting down, kicking off a wave of steel mill closings that would displace more than 40,000 area workers basic steel and steel-related industries.

At the time, some explained deindustrialization as part of the “natural economic order.” Borrowing the term from Joseph Schumpeter, economists and business leaders saw the closings as part of an evolutionary process, a form of “creative destruction” that caused temporary hardships but would lead both capital and labor to more productive activities. While commentators acknowledged that the process was difficult and uncomfortable, they insisted that the ultimate outcome would be economic growth and a higher standard of living.

Eager to validate such promises, local leaders brought in an array of speakers, including Irving Kristol and Michael Novak from the American Enterprise Institute, who gave public lectures at Youngstown State University. Both insisted that the Mahoning Valley would prosper over time as new industries took root and workers retrained for new jobs. It was all part of what Novak called The Spirit of Democratic Capitalism.

But as time passed, the Mahoning Valley continued to decline economically and to lose population. Journalists and scholars stopped asking “when will Youngstown recover?” and started trying to explain what was wrong with this community. Some blamed the region’s decline on political corruption, union contracts that gave workers too much, or the out-of-date skills of the local workforce. By the 1990s, the idealism of creative destruction had been replaced by the politics of resentment, perhaps most clearly represented by Congressman James Traficant, the first modern politician who voiced a version of economic nationalism and has sometimes been compared with Donald Trump.

The politics of resentment were also fueled by a parade of presidential candidates, each promising to address the problems caused by economic restructuring, and each failing to do so. The most infamous of those was Bill Clinton, whose support of NAFTA, the war on drugs, and welfare reform still generates resentment from voters in this area. As Hillary Clinton learned last year, deindustrialized communities have long memories.

In places like Youngstown, many people still remember what life was like when employment was high, jobs paid well, workers were protected by strong unions, and industrial labor provided a source of pride – not only because it produced tangible goods but also because it was recognized as challenging, dangerous, and important. The memory of what it felt like to transform raw ore into steel pipes and to be part of the connected, prosperous community that work generated still haunts the children and grandchildren of those workers. They long for the sense of purpose that industrial labor brought, even as they stock shelves at Walmart, wait tables at Applebee’s, and try to persuade strangers to make donations from a cubicle at the local call center. They resent not only the instability of largely part-time jobs with uncertain schedules and below-the-poverty-line wages but also the politicians and experts who insist that they should either stop whining, go to college (which for most would involve taking on significant debt), or move away from their homes and families to someplace with more and better jobs. Even more, they resent the educated big city elites who view them as exotic or foolish holdouts from a bygone era. That resentment emerged as support for populism in the 2016 election, and for too many it fuels racist and anti-immigrant positions.

In our 2002 book Steeltown USA: Work and Memory in Youngstown, we wrote that Youngstown’s story was America’s story. That seems even more true today, as Americans struggle to adapt to the growing precarity of work and to a changed political landscape. As Youngstown marks the 40th anniversary of its first major mill closing, people here understand that deindustrialization did not end in 1977, or even in 1982, when Youngstown Sheet and Tube closed the last of its local mills. They know that deindustrialization has a half-life. Like toxic waste, its potency decreases slowly, and it continues to cause harm – to individuals, to communities, and, as Americans increasingly recognize, to the nation as a whole.

Yet it is also worth remembering this: the first response to Black Monday in 1977 was not despair or resentment. It was activism. Busloads of local residents went to Washington to demand assistance from the government. Churches, civic groups, banks, and unions worked together to devise a plan for the community to buy and manage the mills. That part of local memory has faded, but the populism it reflected has returned.

Like the economic changes since the late 1970s, the politics of resentment will not disappear any time soon. New technologies and artificial intelligence will likely displace even more Americans, and workers no longer buy old promises about creative destruction or the great potential of a knowledge economy. The memory of an era when working-class jobs were good jobs has not yet faded, but neither has the hope that new policies will bring back good jobs. In the half-life of deindustrialization, Bannon may be right that traditional party affiliations will give way to a political contest between right-wing and left-wing populist movements, each promising – as so many politicians have before – to create real change for working people.

A version of this commentary appeared in September on the American Prospect blog.

This piece originally appeared on Working-Class Perspectives.

Sherry Linkon, Co-directed the Center for Working-Class Studies at Youngstown State University for more than a decade. Her Working-Class Studies research focuses on issues of education, diversity, literature and the arts, and pop culture. A professor of English at Georgetown University, she is also an expert on teaching and learning in the humanities.

Associate editor, John Russo, is a Visiting Scholar at the Kalmanovitz Initiative for Labor and the Working Poor at Georgetown University. He also serves as a Visiting Research Fellow at the Metropolitan Institute of Virginia Tech University, in Arlington. Until December, 2012, he was Director of the Labor Studies Program and Co-Director of the Center for Working-Class Studies at Youngstown State University.


Blockchain - A Capitalist Revolution for the Internet

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Blockchain, i.e. digitized and decentralized public ledgers of cryptocurrency1 or digital asset transactions, might emerge as the tool to liberate the Internet from the domination of the tech oligarchy. In some senses, we can envision through historical analogy how Blockchain can change the very economic system of the Internet itself, much similar to the processes in the offline world that ended the Middle Ages and laid the foundations for the birth of Capitalism.

Viewed in isolation, the current economic system of the Internet can be described as being on a par, or at least structurally similar, with the economic system known as Feudalism. It struck me in 2013 while writing a thesis on the aspiration of states to claim sovereignty in cyberspace that the Internet is really similar to the Feudal system in terms of “land ownership”, or more accurately, the part of Feudalism known as Manorialism.

Manorialism was a system characterized by legal and economic power vested in a Lord of the Manor. These Lords owned the land of various manors and made a living out of obligatory contributions from legally subject peasants, who worked the open common lands. The peasants could pay their obligations in labor, in kind, or more rarely, in coin. This was a system based on interest rate rather than profit, therefore it was not capitalist.

Internet, since its early days, works on similar lines like Manorialism. Much like the medieval supreme powers controlling the access to nobility - the King and the Church - there is a supreme organization keeping record of Top Level Domains (TLDs), such as .com or .org. This organization is known as the Internet Corporation for Assigned Names and Numbers (ICANN). Their motto is “One World. One Internet.” The TLDs are owned by companies and various organizations authorized by the ICANN2. The famous TLD.com for instance is operated by Verisign, one of our digital Lords of the Manors. Obviously, this is not the entire ownership structure, but it is the basis of it.

The Internet as such is owned by no one and everyone, much like the offline world prior to Capitalism. However, as users, we are never in full ownership of our own value creation online. We can use it, but we cannot really own it. The value that can be derived from our activities are all acquired by the Lords of the Internet, who are generally paid in labor, kind, or more rarely, in coin. Take Google as an example, in exchange for free web searches and free webmail, Google is acquiring our data and sells it to companies across the web. There is no way for a user to get ownership of his or her own data. This idea was first outlined by the computer scientist Jaron Lanier.3

Much like peasants under Manorialism, we are free to work on the Internet Common as long as we pay back in kind. The system of Manorialism eventually disappeared when more and more land started to become enclosed and the open-field system gradually disappeared.4

This process recalls the so-called Enclosure Movement which rose up in the early 1700’s in Great Britain. It entailed a series of events where wealthy farmers would buy land from small farmers and start fencing it off from the common land. It was the birth of private property of land, and the beginning of the Capitalism. The effects on the economic system were dramatic, as written by the economic historian James Boyle:

“Before the enclosure movement, the feudal lord would not invest in drainage systems, sheep purchases, or crop rotation that might increase yields from the common – he knew all too well that the fruits of his labour could be appropriated by others.”5

As Mark Twain allegedly said, history does not repeat itself, but it does rhyme.6 To make yet another case for this analogy, China for instance has already built the Great Fire Wall of the Internet, to suppress dissent.7 As Blockchain emulates those same factors in the online world that the Enclosure Movement brought about in the offline world.

Blockchain was first described by Stuart Haber and W. Scott Stornetta in 1991. They envisaged a cryptographically secured chain of blocks in the peer-reviewed article How To Time-Stamp a Digital Document in the Journal of Cryptology. Their initial description of the problem which a Blockchain would be able to solve, was how to certify when a document was created or last changed. Their idea was that the solution must be in time-stamping the data, not the medium. This would make it infeasible for a user to tamper with documents by either back-date or forward-date the document.

Intellectual property is one area in which time-stamping is crucial. It can be absolutely pivotal to verify when an inventor of something first wrote down the patentable idea. Since this can be tampered with in conventional documents, there is always the risk of competing claims. One conventional solution to this problem is lab notebooks, allowing scientists to write daily notations of their work one after another, while no pages can be left blank.

Haber & Stornetta write that the claim noted in a lab notebook can be even further enhanced by having a notary public signing off on the validity of the notebook on a frequent basis. This provides a strong case for the origin of a particular idea if it becomes challenged in the future. Another method is to mail a letter to oneself and leave it unopened, as the postal service will time-stamp it.

As the two authors noted, these procedures are completely out of question for digital documents, which now can be changed without leaving any mark or sign. Hence the need for a solution which fulfils the properties of being able to time-stamp the data itself in disregard of the medium. In this system, it must be impossible to change the time or data. From this problem, Haber & Stornetta worked out a solution that was computationally practical as well as mathematically sound: the blockchain.

This idea was then implemented by the anonymous person (or group) known as Satoshi Nakamoto in 2008 and developed into the digital currency bitcoin, which in essence is a public ledger of transactions based on Blockchain technology. The revolutionizing feature of Blockchain creates the possibility of having immutable property rights written into the very code of online environments, given that they are “enclosed”.

Blockchain can therefore be envisioned like an Enclosure Movement of the Internet, where business-minded users will eventually close off areas of the online world on enclosed Blockchain systems, where private property is guaranteed by the very code. This technological disruption might potentially catapult the online world into a capitalist state which is hard to even imagine in our current paradigm. Users will be able to monetize everything from their cat videos to their very consumer data in ways that are impossible today. It will effectively reinstate the scarcity principle in the online world and make it impossible to infinitely copy various kinds of immaterial assets.

Many people will probably protest to this development, as it will perceived that their Internet Commons, are being illegitimately cut off by pay-walls and enclosed systems. However, in the long run, it is absolutely necessary in order for common users to profit from a digital economy increasingly dominated by a handful of players. The fiercest critics of this revolution will be a paradoxical duo much like the ones who protested the bourgeois revolution in the offline world. The aristocrats and the non-commercial peasant. This time, it will be the Internet Lords, such as Google, and the global Left, who seek public, government control of the net.
As in the case of the first capitalist revolution, the stakes are high, but well worth fighting over.

Dennis Avorin is a Malta-based business analyst passionate about the digital economy. He is a master of Interdisciplinary Research and publishes frequently for the Swedish think tank Timbro.

References

Boyle, James (2007). “The second enclosure movement”. In Renewal: A Journal of Labour Politics, 15:4, 17-24.

Haber, Stuart & Stornetta, W. Scott (1991). ”How to Time-Stamp a Digital Document”. In Journal of Cryptology, 3:2, 99-111.

Investopedia (2017). Blockchain. Retrieved 2017-11-08:https://www.investopedia.com/terms/b/blockchain.asp

Jones, Andrew (1972). “The Rise and Fall of the Manorial System: A Critical Comment”. In The Journal of Economic History, 32:4, 938-944.

Kolbert, Elizabeth (2017). Who owns the internet? The New Yorker, August 28 2017. Retrieved 2017-11-07: https://www.newyorker.com/magazine/2017/08/28/who-owns-the-internet

Kshetri, Nir (2017). “Will blockchain emerge as a tool to break the poverty chain in the Global South?” In Third World Quarterly, 38:8, 1710-1732.

Nye, Joseph (2016). Who owns the internet? And who should control it? World Economic Forum, August 11 2016. Retrieved 2017-11-07: https://www.weforum.org/agenda/2016/08/who-owns-the-internet-and-who-should-control-it

Scott, Laurence (2013). Who Owns the Future? by Jaron Lanier-review. The Guardian, February 27 2013. Retrieved 2017-11-08: https://www.theguardian.com/books/2013/feb/27/who-owns-future-lanier-review

Wikipedia (2017). ICANN. Retrieved 2017-11-07: https://en.wikipedia.org/wiki/ICANN

Wikipedia (2017). Manorialism. Retrieved 2017-11-07: https://en.wikipedia.org/wiki/Manorialism

1. Investopedia 2017.

2. Wikipedia 2017.

3. See Scott 2013.

4. Jones 1972.

5. Boyle 2007. Page 18-19.

6. Kolbert 2017.

7. Nye 2016.

Photo: deavmi (Own work) [CC BY-SA 4.0], via Wikimedia Commons

Journalism Disrupted Again as DNAInfo, Gothamist Shuttered

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Owner Joe Ricketts shuttered unprofitable local news sites DNAInfo and Gothamist yesterday. Observers link this closure to a vote last week by New York employees to unionize.

This is an example of the disruption of the local media ecosystem. Technology allowed sites like DNA and Gothamist to exist in the first place, but local news has proven resistant to sufficient monetization to create profitability in most cases.

The loss of local news coverage is a serious issue in communities across the country, and the closure of these sites show that even the largest markets like New York and Chicago are not immune.

The closure of these sites sent waves of anguish rolling across Twitter, vastly disproportionate to the size of the sites or their national importance. There’s something off about this, and Lyman Stone wrote in a tweetstorm:

Sidenote: how many tears will be shed for, according to NYT, <300 jobs [115 jobs]? How did you respond to the Carrier plant in Indiana? I’ll be sad to see these sites gone, and the archive wiping seems not just vindictive but weird from a profit standpoint. But if you think this is some sort of hammer blow to democracy or a Big Evil Conspiracy…

NOW YOU KNOW HOW THE RUST BELT FEELS

“Gosh they didn’t even keep on a housekeeping staff in case they want to reopen the plant down the road.”

“Man, so vindictive. We were fired without warning when we tried to unionize a company that was losing money for years.”

“We didn’t get any warning, we couldn’t prepare for the next step in our career, they cut more than was ‘strictly necessary.'”

All fair complaints. All quite possible true. But let’s all measure our reactions here. How would you respond to a 300 person factory [being closed]? “It’s just technological competition; this kind of smokestack industry isn’t sustainable anymore.” Hello, local journalism, my old friend.

NYT ran a piece on a small business closing within *minutes* of the announcement. I am urging twitter to perhaps take a step back and use this as a moment to do some introspection about how they treat other industries.

Stone is exactly right. The thing that struck me about Carrier was not just that there was so little concern about people losing their jobs, but that commentators gave an impression they didn’t want them to be saved, lest it generate any positive press for Trump.

Given that the media industry has been subjected to many of the same forces ripping apart so many others, one would think its practitioners would be looking to make common cause across-industries, but that’s not the case.

The other irony is that most cities never had a DNAinfo or an “-ist” site to begin with. They had their local paper, now owned by some national chain and largely gutted. And their local TV and radio stations, which the FCC is now promoting the gutting of, with no pushback from many of the people crying about DNA. The bigger cities are now getting brought down closer to the same level everyone else is already at, and they don’t like much at all. All of a sudden, the loss of local news is a crisis.

I think the loss of sites like DNA is a problem. I hope somebody is able to fill the void and that the archives are reinstated, as reports suggest they will be. But the gap in local coverage is far greater than just New York, Chicago, and a handful of other major markets where DNA operated.

There are some bright spots. Vox Media runs some verticals, Curbed and Eater, that seem to be doing well in major local markets. Or at least the company itself seems viable. This isn’t full spectrum local coverage, but it is covering some niches. Maybe this sort of thing could be expanded to other verticals. In the meantime, disruption of the media space continues.

This piece originally appeared on Urbanophile.

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

Trump in China and the Limits of Authoritarianism

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As President Trump visits China, the contrast between the president — at war with the national media, the corporate establishment, almost all of academia and even his own party — and the sure-handed Xi Jinping seems almost unbearable. Xi has consolidated power to an extent not seen since Mao’s time, while directing a global expansion of Chinese power, notably in central and south Asia as well as Africa.

Xi’s power is all the greater for how subtly it is applied. There are no great propaganda posters on the streets of Beijing. Last week at Peking University’s “Global Forum,” few scholars openly challenged the country’s authoritarian system although limited open debate and discussion was permitted. China may be authoritarian, but not crudely oppressive like the former Soviet Union, North Korea or Cuba.

What China craves, not surprisingly given its turbulent 20th century, is “order,” both at home and in its expanding roster of vassal states. Their soft authoritarianism, at least if you are not an open dissident, is now promoted as the new global “role model” in the Chinese media. No matter how much Trump tries to talk tough about no longer being a “chump,” it’s likely he will be portrayed here and abroad as ceding the center of the world stage to Xi.

The New Role Model?

China’s ascendency appeals to many in America’s intellectual classes, and not only them, who historically have a soft spot for “enlightened” autocrats and overweening bureaucracies. In the progressive era, the lodestone was imperial Germany, in the 1930s for many the “future” was to be seen in the Soviet Union and even fascist Italy. In the 1980s, Japan emerged as the role model, followed in the late 1990s by a united Europe that seemed to many more humane and successful than the U.S.

In all cases, these role models ultimately failed to stay competitive with the United States. The Soviet Union is long gone and Mussolini, at best, is regarded as an almost comically bombastic figure. Both Japan and Europe have lagged the United States in innovation and are fading demographically.

To be sure, China may pose a greater challenge than any other in our history. It is poised to surpass the U.S. in terms of aggregate economic output; it enjoys a rapidly growing educated population, bustling cities and a strong sense of national unity. It also has seen more people lifted more quickly out of poverty than any regime in history and some suggest it is about to be the leader in technology as well.

Read the entire piece at The Orange County Register.

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

Photo: Via BBC.

Robert Iger For President? To Many Democrats, The Mouse May Look Like A Louse

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Few global companies enjoy as much public good will as the Walt Disney Company. The entertainment giant regularly ranks highly on lists of the most admired or trusted companies, including ones from Forbes and Fortune.

CEO Robert Iger, who reportedly is being encouraged to run for president in 2020, would be able to use the company’s image to his advantage on the campaign trail, according to The New York Times. Of course, Disney representatives say he’s not running; if so, one has to wonder why Iger is hinting at it so often, as reported in such other mainstream publications as the Guardian and The Hollywood Reporter.

Iger’s progressive positions on gun control, immigration and the Paris Accords certainly are in harmony with the Democratic base. But Iger may have a more difficult time explaining away his company’s treatment of his theme park workforce on his watch, and some of the communities where they live.

Rights and lefts

Once upon a time the Walt Disney Company was seen as rather right wing: anti-union, staunchly Republican and sometimes ruthless in its business dealings. Walt Disney himself has been characterized as everything from a fascist to a Nazi, although this seems to be baseless. Yet without doubt, Walt Disney was a conservative, aligned with California’s then powerful right-wing political machine. And he was also a ruthless businessman who opposed unionization and drove hard bargains to assemble the real estate for his parks in Anaheim and Florida. In some circles he is still regarded, as critic John West put it, as “Hollywood’s most influential conservative film maker,” largely for the pro-family, anti-big government and patriotic memes common in his movies and television shows.

Today the right-wing label no longer for Disney, which controls ABC, ESPN and other large media properties. The company has allowed a same sex kiss in a children’s cartoon, to the horror of social conservatives. Slate applauds Disney’s “progressive inclusive” shift with the plethora of plucky female heroines its introduced over the past few decades (Moana, Belle, Mulan), as well as casting the male “hunk” in the hit Frozen as the ultimate villain. This probably would have Walt Disney spinning in his grave.

Increasingly Disney’s script seems more MSNBC than Walt, with the late-night ABC host Jimmy Kimmel now a darling of the anti-Trump resistance. Kimmel’s ratings are a far cry from those of the apolitical Johnny Carson, but they are still respectable.

The more things change…

Yet if Disney’s public persona has changed, its fundamental corporate culture seems to have not been so transformed. Workers at its theme parks in Orlando and Anaheim complain of low wages and exploitative management practices that belie the company’s squishy clean image and could pose a threat to any attempt by Iger to campaign as a progressive Democrat.

Out of the 36,000 unionized Disney workers in the Orlando area, 23,000 make less than $12 an hour and only 3,000 make over $15 an hour, according to labor union officials. To afford a one-bedroom apartment in the Orlando area, a worker would need to be paid $15.87 an hour, according to the National Low Income Housing Coalition. Workers complain that management is miserly with raises even for longtime employees.

Earlier this year Disney was forced by the U.S. Labor Department to pay $3.8 million in back wages to over 16,000 employees in Florida because it had deducted a uniform fee that had caused workers’ compensation to fall below the minimum wage, as well as failed to pay them for work performed before and after their shifts.

A Disney spokesman said the company agrees workers there deserve a raise – in contract negotiations, it’s offering an increase of “up to 5%” over the next two years.

In Anaheim, Calif., home to venerable old Disneyland, wages are also low, averaging near $11.07 an hour for the first four years, with a meager rise to $12.57 for those with five to nine years of experience. And the cost of living in Anaheim is more than 50% higher than in Orlando.

Few tourists realize that around the magic kingdom exists a city with an extraordinarily high concentration of poverty. A majority Hispanic city of 350,000, some 40% of the population of Anaheim is living in or near poverty, according to the United Way, compared to 29% for Orange County and 31% for California as a whole.

Disney’s low wages contribute to the poverty problem, as well as growing homelessness, says Mayor Tom Tait, a Republican elected with strong Hispanic support. Anaheim and its surrounding cities, Orange and Santa Ana, now host a homeless population estimated at over 4,700, some subsisting just a few miles from the park near the grounds of Anaheim Stadium, the home of the Angels.

The mayor says the city doesn’t have the resources to deal adequately with poverty, in part, as a recent Los Angeles Times series asserts, because its biggest corporate citizen has aggressively minimized its tax burden. The company has spent millions bankrolling politicians friendly to it. As a result, the Times reports, Disney pays very little directly into the city’s coffers and has won tax exemptions for hotels being built around the park. The city leases Disney’s new garage, which the city built for $108.2 million, for $1 year. “They have dominated the city,” Tait says. “They are not side players, they are the directors.”

Overall, reports the Times, the Mouse has gained tax breaks, subsidies, rebates and incentives worth north of $1 billion. Disney disputes the accuracy of the tally. A one-dollar fee per ticket -- each of which costs over $100 -- would help the city close its budget deficit, Tait says. Disney also tried to push a highly impractical $300 million streetcar deal that would have shuttled passengers from the underutilized ARTIC train station to the park. Only the opposition of Tait and his allies, who saw this a diversion from more critical transportation needs, stopped what would have been a project that largely would have only benefited Disney.

Disney, for its part, claims to be a good corporate citizen, paying some $125 million a year in taxes, bonds, levies and fees, making it the city’s largest taxpayer. Yet Tait and city officials suggest that most of these taxes go to the state and elsewhere.

Disney’s PR people say the Times series is unfair; the Times says the company has not refuted it. Disney so objected to it that the company banned Times critics from press screenings for their latest movies. The movie ban was rescinded last week after a huge outcry by other media outlets.

Perhaps more reasonably, supporters of Disney counter that, despite its relatively low wages, the company remains the county’s largest employer and is simply doing what corporations are supposed to do -- maximize profits. And to be sure, the company’s 30,000 jobs, roughly 19% of the city’s total, would be greatly missed if the Park shut down. And with an estimated $2 billion in new investments, Disney remains a critical linchpin of Orange County’s heavily tourist-dependent economy.

Don’t tell the Bernie Bros

The logic used to defend Disney may be persuasive to friendly political operatives, business groups and, no doubt, Iger’s own shareholders, to whom the company returned $2.3 billion in dividends last year. Iger, who took in $44 million in compensation last year, will have a tougher time explaining the labor issues to the Bernie Bros.

Last year during a presidential campaign rally in Anaheim, Sen. Sanders lashed out at Iger for pocketing such a massive paycheck while paying poverty wages to so many. He particularly attacked the company for laying off 250 of its Orlando tech employees, replacing them with foreign H-1B visa holders from an Indian outsourcing firm. Some of the cashiered workers were asked to train their replacements before hitting the streets.

Of course, progressives will no doubt find Iger more attractive than his fellow businessman Trump, at least culturally and stylistically. But Trump is an unabashed capitalist in a decidedly capitalist party. Iger, if he chooses to run, will have to face an increasingly leftist, redistributionist segment of the Democratic base.

Given the likely ugliness that a presidential run would engender, Iger may decide it’s not worth taking any political dreams beyond the walls of the Magic Kingdom.

This piece originally appeared on Forbes.com.

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

Photo: hyku [CC BY-SA 2.0], via Wikimedia Commons

SAN FRANCISCO BAY AREA HOUSING 3Q17: Affordability Limits Continue to be Tested; Average Prices Hit Record Levels

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• Annualized new home starts in 3Q17 are up 2.5% compared to 3Q16, while closings are up 1.7%. Quarterly new home starts were up 31% while closings are down 4% compared to 3Q16.

• The average base price for new Single Family detached homes is up 17% YoY to a Metrostudy record, $1.03M; the average price for Attached homes is $905K, an increase of 5%.

• The supply of homes priced under $500k is falling, as prices are increasing in the suburban locations. 28% of new home starts are priced above $1 million. At this point the Sacramento market is more attractive where 70% of the starts are under $500K vs. 12% in the Bay Area.

• The East Contra Costa, Solano, Sacramento and Stockton regions will likely benefit from the expanding Bay Area economy, as homebuyers seek more affordable homes outside of the core Bay area.

Metrostudy’s 3Q17 survey of the San Francisco Bay Area housing market shows that annualized new home starts in 3Q17 are up 2.5% compared to 3Q16, while closings are up 1.7%. Quarterly new home starts were up 31% while closings are down 4% compared to 3Q16. Annual starts have been outpacing closings since 1Q13. As a result, total inventory levels that were once below equilibrium remain at the highest level since 2009. By the end of 2013, the annual start pace had significantly outpaced the annual closing pace mostly due to Condominium starts. Over the past year, total new home inventory has increased 8%.

“The story in this market continues to be affordability, or the lack thereof,” said Greg Gross, Regional Director of Metrostudy’s Northern California market. “Our average “offer to build” base price for new Single Family detached homes is up 17% over a year ago to a Metrostudy record, $1.03M as builders have realized higher land and construction costs, plus strong demand. The average price for Attached homes is $905K, an increase of 5%. Start activity has increased in the price ranges above $800K as builders adjust pricing based on increased demand and higher lot costs. The supply of homes priced under $500k is falling, as prices are increasing in the suburban locations. 28% of new home starts are priced above $1 million. At this point the Sacramento market is more attractive where 70% of the starts are under $500K vs. 12% in the Bay Area.”

While demand remains strong, lot deliveries continue to shrink. Only 3,451 new lots were delivered over the past year, 33% fewer than at this time last year. Months of supply decreased now under 14 months. After a rainy first quarter, new lot development increased significantly this summer. Considering the barriers to development, the market continues to face a lot shortage. More importantly, a more affordable lot shortage.

The Bay Area economy has experienced an exceptional run. Job growth is slowing significantly. Housing demand is strong and the general economic condition in the region is strong. Demand is stabilizing, prices have increased rapidly, and affordability limits are being pushed in almost all sub-markets.

Metrostudy expects demand to remain steady through 2017. But can this demand afford a new home? The overall cost of home ownership is outpacing household income growth in most areas. With prices at or above peak pricing in most sub-markets, buyers may begin to rethink their home-buying decisions and decide to rent or move out of the area. Buyers will calculate the cost of commuting and will factor in those costs when they decide where, or if to purchase a new home.

Given the above, Metrostudy does not expect the housing market to necessarily weaken, but experience more of a stable, slightly lower period of supply and demand into 2018 as the economy continues to moderate and the market adjusts to the rapid increase in home prices. The East Contra Costa, Solano, Sacramento and Stockton regions will likely benefit from the expanding Bay Area economy, as homebuyers seek more affordable homes outside of the core Bay area.

The San Francisco Bay Area market has enjoyed robust economic conditions for nearly seven years, and 2017 will continue this trend. Job growth however slowed significantly from the highs experienced during the second half of 2015. The unemployment rate is also very low and now stands at 4.0 compared to the State level of 5.4%. Most markets are considered to be at Full Employment when the unemployment rate is at 5%. When the rate is below 4%, there is added pressure for companies to find qualified labor. The very low unemployment rate and exorbitant cost of living is undoubtedly having an impact on growth.

This piece originally appeared on Metrostudy.com.

Greg Gross is a Metrostudy Regional Director who played a pivotal role in the launch of Metrostudy’s offices in the Northern California market in 2005, and is responsible for all operations there including research, consulting and managing local client relationships.

Photo: Maciek Lulko, via Flickr, using CC License.

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