Urban Issues

Report: Ontario, CA – A Geography for Unsettling Times

Praxis Strategy Group — Sun, 01 Feb 2009 00:05:30 -0500

These are unsettling times for almost all geographies. As the global recession deepens, there are signs of economic contraction that extend from the great financial centers of New York and London to the emerging market capitals of China, India and the Middle East. Within the United States as well, pain has been spreading from exurbs and suburbs to the heart of major cities, some of which just months ago saw themselves as immune to the economic contagion.

Without question, the damage to the economies of suburban regions such as the Inland Empire has been severe. Foreclosures in San Bernardino and Riverside Counties have been among the highest in the country, while drops in real-estate related employment have resulted in the first net job losses in four decades. This has led some critics to suggest that the entire area is itself doomed, destined to devolve along with other suburban regions to "the new slums”.

Yet our close examination of both short and longer-term trends suggests these perspectives are wildly off-base. For one, it is critical to separate different parts of the Inland region from one another. A place like Ontario retains many characteristics that make it far more able than other locales in the region to resist the negative trends. These advantages include a diversified economy, a powerful local job center, an excellent business climate and, most of all, a location perfectly positioned along the historic growth corridors of Southern California.

These assets have already allowed Ontario to weather the current storm far better than many other Inland Empire areas. Foreclosure rates, for example, although far too high, have remained considerably below the average for the region, and far below those in communities that lack the same strong diversified economic base and close access to employment.

More importantly, Ontario remains well-positioned to take advantage of both the eventual recovery of the Inland region and the greater expanse of Southern California. Housing prices – particularly the availability of single family homes – has been a driver of growth for the inland region for decades. As prices fall, the rates of affordability for the region – which had been dropping dangerously – will once again rise.

Despite the claims of some theorists, the preference of most Californians for single family housing seems likely to be unabated, particularly as immigrants seek a better quality of life and the first generation of millennials enters the home-buying market. These are populations that have been heading east to Ontario, the surrounding "Mt. Baldy region," and to the Inland Empire as a whole for decades, and there is no reason to suppose the flow will stop.

As the Inland Empire restarts its growth cycle, Ontario will remain uniquely suited to take advantage. Significantly, despite the current downturn in energy prices, worldwide supply shortages as well as growing political demands for regulation on carbon emissions will lead businesses to look increasingly at procuring goods and services nearby. As the Inland Empire’s premier business and transportation hub, Ontario will be well-positioned to emerge as the epicenter of the entire Inland Region.

At the same time, Ontario residents generally have short commutes, and the city sits astride the primary transportation routes of the region. Over time, well-planned developments such as the New Model Colony will offer a wide range of residents an opportunity to live, work and spend their spare time within a relatively compact, energy-efficient place.

Business friendliness is also a key asset. Ontario enjoys a close working relationship with expanding companies in business services, manufacturing, logistics, medical services, and other industries not directly dependent on the housing sector.

But more than anything, Ontario’s position rests on the city’s fundamental commitment to a balance of jobs and housing, and to a long-standing focus on economic growth. Unlike many communities in the region, Ontario has grown on a solid economic basis. As the fourth largest per capita beneficiary of retail sales in Southern California, the city has a considerable surplus to meet hard times .

Although the immediate prospects for virtually all communities will be difficult, few places in Southern California can hope to ride out the current tsunami better than Ontario. And even fewer seem as well-endowed to ride the next wave of growth that will sweep through the region – as has occurred throughout the last century – when the economy once again regains its footing and customary vitality.

See attached .pdf file for full report.

Primary Authors: Joel Kotkin, Delore Zimmerman
Research Team: Mark Schill, Ali Modarres, Steve PonTell, Andy Sywak
Editor: Zina Klapper

Photo courtesy of Valerita

Oregon’s Immigration Question: Addressing the Surge in the Face of Recession

Ilie Mitaru — Fri, 30 Jan 2009 00:19:21 -0500

The men huddle outside the trailer, eyeing the passing traffic. Handmade signs stapled to telephone posts speak for them: “Hire a Day Worker!” The site, a fenced-in lot at Northeast MLK and Everett Street, was launched in 2007, a testament both to Oregon’s recent immigration boom and lack of federal reform.

Since then, Obama’s historic campaign, several wars and a global recession have pushed the immigration question from the national headlines. But in Oregon – where the surging migrant population is on a crash course with a withering economy – the issue is bound to reignite.

Oregon’s economic boom, which started later than that in the rest of country, has ended. Unemployment has risen considerably. Oregon’s 9.0 percent unemployment rate was the nation’s 6th worst in December 2008 according to the Bureau of Labor Statistics.

At the eye of the storm have been losses in the construction industry, a major employer of immigrants. The hard times there will put new pressure on local legislators and law officials to “clean out immigrants”. Oregonians should not give in to such misguided temptations. Oregon’s immigrants have played a historic role in enriching the state’s economy and can continue to do so if given the opportunity.

Oregon’s immigration explosion is relatively new. The state’s foreign-born make up 9.5 percent of the population, with more than 60 percent of the immigrant population arriving after 1990, according to 2005 census data.

The influx of Latinos to the state is even more recent. Estimates place 75 percent of Latinos coming between 1995 and 2005. Unlike other immigrants who tend to concentrate to urban and suburban areas, Latinos are dispersing across Oregon. Between 1990 and 2000, the Latino population doubled in 21 of Oregon’s 36 mostly-rural counties. Agriculture employment, cheap housing, and existing Latino communities attract the rural migration.

Within the Portland metro area, the largest concentrations of foreign-born population live in Southeast Portland (Ukrainians, Russians, Romanians), Northeast Portland (Vietnamese, Africans), and Central Portland (Asians, Eastern Europeans), according to a study by the Urban Institute. Notably, more Russians and Ukrainians moved to Oregon’s suburbs between 2000 and 2005 than to any other region in the nation, according to a recent University of Oregon study.

Currently, immigrants total over 11 percent of the state’s labor force, up from 5.4 percent in 1990. Yet native unemployment did not increase during this time period.

One reason for this, argues MIT’s Tamar Jacoby in a recent Foreign Affairs article, is that the immigrant workforce should be viewed as complementary rather than competitive to the native workforce. For example, the business owner who can hire housekeepers and landscapers can devote more time to growing his business, and to leisurely expenditures that support other local businesses.

Oregon’s diverse agricultural industries – ranking third nationally for labor-intensive crops – offer a more concrete example of the complimentary nature of immigrants.

The state is home to a $325 million dairy and cattle milk production industry, a $778 million nursery and greenhouse industry, a $380 million fruit and nut industry, and a $200 million wine industry. All are primarily staffed by immigrants. In this case, immigrant labor allows Oregon’s agricultural sectors to thrive in the face of fierce import competition.

Immigrants have historically had a strong entrepreneurial spirit. Nationwide, 25.3 percent of technology and engineering companies had at least one foreign born key founder, based on a Duke University study. Often with few resources or formal education, immigrant entrepreneurship can foster new kinds of services. The abundance of landscaping businesses and nail salons is a testament to such ingenuity. In 2005, over 6,000 Latino and 400 Slavic entrepreneurs operated throughout the Portland metro area, according to one University of Oregon study.

Beyond providing jobs and fueling local economies, immigrant entrepreneurs bring the benefits of globalization to places like Oregon. They encourage trade and investment from their connections abroad.

Immigrants pay taxes, buy houses, food, cars, and clothes just like native residents. Even illegal immigrants – which many immigration-demagogues label as the real problem – have taxes withheld from their paychecks. They also otherwise bring money to the state through sales taxes on local purchases. A study by the Oregon Center for Public Policy found that undocumented immigrants contribute between $134 million and $187 million in taxes annually to Oregon’s economy. These numbers represent only those coming from undocumented workers and exclude the significant investments made through entrepreneurship, agricultural support and the continual purchase of goods and services.

Yet serious immigration reform is needed. A large portion of immigrants spends only stints working in the states, frequently sending money back home. The consequences of this go beyond the obvious fiscal drain. The stint worker will invest minimally in learning English, will often share rent in decrepit neighborhoods, and spend as little as possible in order to maximize savings for abroad.

The problem facing Oregonians is not immigration per se – or even illegal immigration, which constitutes only 10 percent of the migration to the state. The real problem is stint immigrants, who invest little in the long-term health of their new communities and the economy of the state.

The curious delusion about this point is that current federal legislation includes temporary-worker permits as key to reform. By giving only temporary permits to immigrants who might otherwise be coaxed into permanent stay, Washington is explicitly discouraging acculturation and encouraging capital drains.

In large part, the real solution to the downsides of immigration lies in the permanent integration of Oregon’s new residents. When these residents feel they may be here permanently – without constant threat of deportation – they will be more likely to invest in their new communities and futures.

Even the state’s recent job-shedding should not derail Oregonians’ historic acceptance of foreign residents. Oregon’s immigrants will stabilize agriculture and other service industries by providing cheap labor through hard times.

If the incoming administration manages the recession correctly, Oregon’s economy will soon recover. To rebound quickly, the state will need to employ thousands – natives and immigrants – in the infrastructure and Green packages coming from Washington. Oregon’s post-recession economy, like its pre-recession economy, will depend on immigrant labor.

A comprehensive understanding of Oregon’s immigration question must go beyond viewing the huddle of men on MLK and Everett every morning as mere numbers, bodies for pay.

A true understanding of the issue will surface only by looking beyond the numbers to recognize these men’s potential, resourcefulness and culture as indispensable components that once shaped our nation’s identity and will continue to mold its future.

Ilie Mitaru is the founder and director of WebRoots Campaigns, based in Portland, OR, the company offers web and New Media strategy solutions to non-profits, political campaigns and market-driven clients.

New Survey: Improving Housing Affordability – But Still a Way to Go

Wendell Cox — Wed, 28 Jan 2009 00:06:14 -0500

The 5th Annual Demographia International Housing Affordability Survey covers 265 metropolitan markets in six nations (US, UK, Canada, Australia, Ireland and New Zealand), up from 88 in 4 nations in the first edition (see note below). This year’s edition includes a preface by Dr. Shlomo Angel of Princeton University and New York University, one of the world’s leading urban planning experts. Needless to say, there have been significant developments in housing affordability and house prices over the past year. In some parts of the United States, the landscape has been radically changed by rapidly dropping house prices.

Our measure of housing affordability is the “Median Multiple,” which is the annual pre-tax median house price divided by the median household income. Over the decades since World War II, this measure has typically been 3.0 or below in all of the surveyed nations and virtually all of their metropolitan areas, until at least the mid-1990s. There were bubbles before that time in some markets, but during the “troughs” most markets returned to the 3.0 or below norm.

Unfortunately, the most recent bubble was and continues to be the most severe since records have been kept. The Demographia International Housing Affordability Survey rates housing affordability using five categories, indicated in the table below.

Demographia
Housing Affordability Ratings

Rating

Median Multiple

Severely Unaffordable

5.1 & Over

Seriously Unaffordable

4.1 to 5.0

Moderately Unaffordable

3.1 to 4.0

Affordable

3.0 or Less

Median Multiple: Median House Price divided by Median Household Income

At the height of the current bubble, some markets saw remarkable declines in housing affordability. In some Median Multiples exceeded three times the historic norm. Among major markets (metropolitan markets with more than 1,000,000 population), Los Angeles, San Francisco, San Jose and San Diego all reached or exceeded a Median Multiple of 10. Many other markets saw their Median Multiples rise to double the historic norm and beyond, such as New York, Miami, Boston, Seattle, Sacramento and Riverside-San Bernardino. Other major US markets – such as Portland, Orlando, Las Vegas, Providence and Washington, DC – rose to above 5, a figure rarely seen in any market before the currently deflating bubble.

America has hardly been an exception. Outside the United States, virtually all major markets in Australia were well over 6.0, as well as London and Auckland in New Zealand. Vancouver was the most unaffordable major market, with a Median Multiple of 8.4. Of particular note is barely growing Adelaide, which nonetheless has seen its Median Multiple rise to 7.1.
But, at least in the US, the unaffordability wave has crested. Generally, the house prices peaked in the United States in mid-2007. Since then the markets with the biggest bubbles took the lead in bursting. By the third quarter of 2008 (the Survey reports on the third quarter each year), the Median Multiple in San Francisco had dropped to 8.0, San Jose to 7.4, Los Angeles to 7.2 and San Diego to 5.9. Of course, even at these levels, housing affordability in these metropolitan areas remained worse than ever before. History would suggest that housing prices in these markets have a long way to go before they hit bottom.

Other markets have improved affordability more substantially. Inland California markets like Sacramento and Riverside-San Bernardino have gone from the “seriously” to only the “moderately unaffordable” category, with rates now in the mid-3.0s. Data for the fourth quarter is likely to indicate that Sacramento will be the first major housing market in California to return to a Median Multiple of 3.0, a rather large fall from its peak of 6.6 in 2005.

Outside California, other markets have experienced significant price declines. But some, like Miami still at 5.6, have a long way to go before they reach the historic norm of 3.0. Las Vegas and Phoenix (which nearly reached 5) may be closer, falling to the “moderately unaffordable ” category with Median Multiples of between 3.1 and 4.0. Seattle and Portland have fallen 10 percent or more as of the third quarter but remain severely overpriced, suggesting they, like Miami, have more price declines in the offing.

Much of the blame for the bubble has been placed at the feet of a mortgage finance industry that passed out money as if it was not its own. Not surprisingly, the ready availability of money had its effect on the market. Demand rose sharply and included many who couldn’t afford to pay.

But profligate lending practices represent only a relatively minor cause of the bubble. This was missed by all but a few economists, notably Dr. Angel’s Princeton colleague and Nobel Laureate Paul Krugmann. He could see that there was not one “national bubble” but a series of localized ones. The real villain, he noted, lay in land use regulations.

In reality the bubble missed much of the country – from Atlanta to El Paso to Omaha and Albany. There were house price increases, of course, but they were generally within the Median Multiple ceiling norm of 3.0. There were a few exceptions, but even they did not exceed 3.0 by much.

Rising demand was not the big problem. Housing affordability remained at virtually the same Median Multiple level in Atlanta, Dallas-Fort Worth and Houston, the three fastest growing metropolitan areas of more than 5,000,000 population in the developed world. Many other major markets across the South and Midwest experienced little price increase and maintained their affordability. Indianapolis, which has a Median Multiple of 2.2, continued to gain domestic migration from other areas and has a near Sun Belt growth rate. Kansas City, Louisville and Columbus remain affordable and are attracting people from elsewhere.

Although there are signs of a correction in parts of California, Nevada and Arizona, some bubbles in high-regulation markets are still in the early stage of deflating. New York, Boston, Portland and Seattle particularly may be in danger; the worst consequences of their bubbles lie ahead.

The longer-term question remains whether these and other still highly over-valued markets in California, the Pacific Northwest, Florida and the Northeast will return to affordability, at or near a Median Multiple of 3.0. The necessary price drops would be bad news for regional economies because of the losses homeowners and financial institutions would sustain.

At the same time maintenance of the currently elevated prices would also be bad news. In the past 7 years, 4.5 million people have moved from higher-cost markets to lower-cost markets in the United States. The formerly attractive markets of the California coast alone have seen more than two million people depart for other places since 2000. For these areas, a return to historic levels of housing affordability may be a prime pre-requisite to restoring economic health.

HOUSING AFFORDABILITY RATINGS UNITED STATES METROPOLITAN MARKETS OVER 1,000,000

Rank	Metropolitan Area	Median Multiple
AFFORDABLE
1	Indianapolis	2.2
2	Cleveland	2.3
2	Detroit	2.3
4	Rochester	2.4
5	Buffalo	2.5
5	Cincinnati	2.5
7	Atlanta	2.6
7	Pittsburgh	2.6
7	St. Louis	2.6
10	Columbus	2.7
10	Dallas-Fort Worth	2.7
10	Kansas City	2.7
10	Mem[hios	2.7
14	Oklahoma City	2.8
15	Houston	2.9
15	Louisville	2.9
15	Nashville	2.9
MODERATELY UNAFFORDABLE
18	Minneapolis-St. Paul	3.1
18	New Orleans	3.1
20	Birmingham	3.2
20	San Antonio	3.2
22	Austin	3.3
22	Jacksonville	3.3
24	Phoenix	3.4
25	Sacramento	3.5
26	Tampa-St. Petersburg	3.6
27	Denver	3.7
27	Hartford	3.7
27	Las Vegas	3.7
27	Raleigh	3.7
27	Richmond	3.7
32	Salt Lake City	3.8
33	Charlotte	3.9
33	Riverside-San Bernardino	3.9
33	Washington (DC)	3.9
36	Milwaukee	4.0
36	Philadelphia	4.0
SERIOUSLY UNAFFORDABLE
38	Chicago	4.1
38	Orlando	4.1
40	Baltimore	4.2
41	Virginia Beach-Norfolk	4.3
42	Providence	4.4
43	Portland (OR)	4.9
SEVERELY UNAFFORDABLE
44	Seattle	5.2
45	Boston	5.3
46	Miami-West Palm Beach	5.6
47	San Diego	5.9
48	New York	7.0
49	Los Angeles	7.2
50	San Jose	7.4
51	San Francisco	8.0

2008: 3rd Quarter
Median Multiple: Median House Price divided by Median Household Income
Source: http://www.demographia.com/dhi.pdf

Note: The Demographia International Housing Affordability Survey is a joint effort of Wendell Cox of Demographia (United States) and Hugh Pavletich of Performance Urban Planning (New Zealand).

Wendell Cox is a Visiting Professor, Conservatoire National des Arts et Metiers, Paris. He was born in Los Angeles and was appointed to three terms on the Los Angeles County Transportation Commission by Mayor Tom Bradley. He is the author of “War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life.”

Height of Power: The Washington Fiefdom Looms Larger Than Ever

Joel Kotkin — Sun, 25 Jan 2009 00:36:14 -0500

For more than two centuries, it has been a wannabe among the great world capitals. But now, Washington is finally ready for its close-up.

No longer a jumped-up Canberra or, worse, Sacramento, it seems about to emerge as Pyongyang on the Potomac, the undisputed center of national power and influence. As a new president takes over the White House, the United States' capacity for centralization has arguably never been greater. But it's neither Barack Obama's charm nor his intentions that are driving the centrifocal process that's concentrating authority in the capital city. It's the unprecedented collapse of rival centers of power.

This is most obvious in economic affairs, an area in which the nation's great regions have previously enjoyed significant autonomy. But already the dukes of Wall Street and Detroit have submitted their papers to Washington for vassalage. Soon many other industries, from high-tech to agriculture and energy, will become subject to a Kremlin full of special czars. Even the most haughty boyar may have to genuflect to official orthodoxy on everything from social equity to sanctioned science.

At the same time, the notion of decentralized political power – the linchpin of federalism – is unraveling. Today, once proudly independent – even defiant – states, counties and cities sit on the verge of insolvency. New York and California, two megastates, face record deficits. From California to the Carolinas, local potentates with no power to print their own money will be forced to kiss Washington's ring.

Americans may still possess what the 19th-century historian Frederick Jackson Turner described as "an antipathy to control," but lately, they seem willing to submit themselves to an unprecedented dose of it. A financial collapse driven by unrestrained private excess – falling, ironically, on the supposedly anti-Washington Republicans' watch – seems to have transformed federal government cooking into the new comfort food.

To foreigners, this concentration of power might seem the quintessence of normalcy. As the sociologist E. Digby Baltzell wrote in 1964, elites have dominated and shaped the world's great cosmopolitan centers – from Athens to Rome to Baghdad – throughout history. In modern times, capital cities such as London, Paris, Moscow, Berlin and Tokyo have not only ruled their countries but have also largely defined them. In all these countries (with the exception of Germany, which was divided during the Cold War), publishing, media, the arts and corporate and political power are all concentrated in the same place. Paris is the undisputed global face of France just as London is of Great Britain or Tokyo is of Japan.

Although each had their merchant classes, these cities were strongly hierarchical, governed by those closest by blood or affiliation to the ruling family and populated largely by their servants. In contrast, Baltzell observed, U.S. cities such as New York have been "heterogeneous from top to bottom." Their power came not from the government or the church but from trade, the production of goods and scientific innovations, as well as the peddling of ideas and culture.

But Washington has always occupied a unique and somewhat incongruous niche among U.S. cities. It came into being not because of the economic logic of its location, but because it was a convenient compromise between North and South. It never developed into a center of commerce or manufacturing. Nor was it meant to be a fortress. Instead, it was designed for one specific purpose: to house the business of governance.

Pierre Charles L'Enfant, the French-born classicist and civil engineer who developed the plan for the city, envisioned a majestic capital that would "leave to posterity a grand idea of the patriotic interest," as he wrote in 1791. Yet for most of its history, Washington failed to measure up to the standards of European or Asian capitals. In January 1815, a South Carolina congressman described the capital to his wife as a "city which so many are willing to come to and all so anxious to leave."

This lowly status stemmed, to some extent, from what the historian James Sterling Young has defined as the "anti-power" ethos of early Americans. The revolutionary generation and its successors loathed the confluence of power and wealth that defined 19th-century London or Paris. A muddy outpost in the woods seemed more appropriate to republican ideals.

Even as other American cities, such as New York and Baltimore, expanded rapidly, Washington grew slowly, at a rate well below the national average. Bold predictions that the city would boast a population of 160,000 by the 1830s fell far short. Instead, it had barely reached 45,000 people, including more than 6,000 slaves. It remained eerily bereft of all the things that make cities vital – thriving commerce, a busy port, decent eateries and distinguished shops. Visiting the city in 1842, Charles Dickens marveled at a city of "spacious avenues that begin in nothing and lead nowhere."

To some observers, such as Alexis de Tocqueville, Washington's relative decrepitude reflected one of the glories of the young republic. The fact that the country had "no metropolis" that dominated it from the center struck the young noble, on his visit to America in the early 1830s, as "one of the first causes of the maintenance of Republican institutions."

Washington's status improved only marginally in the next century, even as other brilliant centers of power, culture and commerce emerged on the Eastern Seaboard and then across the Midwest and West. The rapid rise of New York was challenged in quick succession by the even more sudden emergence of Chicago in the industrial Midwest and San Francisco on the Gold Rush coast of California. Washington was surely the nerve center of politics, but commerce, culture and the vast majority of the media chose to concentrate elsewhere.

It would take enormous misfortune – the Depression – to provide Washington with its first great growth spurt. As the business empires of New York, Chicago, Detroit and Cleveland buckled and the New Deal took control of the economy, power shifted decisively to the capital. This expansion of influence continued with the onset of World War II and then during the Cold War.

The ensuing rise of the military and domestic bureaucracies transformed Washington from a small provincial city into a major metropolitan area. The greater economic shift from a predominantly manufacturing to a high-tech, information-centered economy also played to Washington's strengths. In his groundbreaking 1973 book The Coming of Post-Industrial Society, the sociologist Daniel Bell predicted that the country's prevailing "business civilization" would inevitably become dominated by the government bureaucracy. Corporations would eventually look to Washington's lead for regulatory standards, to sponsor research and make critical science-related decisions.

In the past half-century, this confluence of technology and bureaucracy has transformed Washington and its surrounding suburbs into the most dynamic large metropolitan economy in the Northeast. Between 1950 and 1996, the region's population expanded by roughly 150 percent, three or more times faster than other cities along the Boston-Washington corridor.

By the mid-1970s, Washington and its environs had also emerged as the richest region in the country. Since then, it has remained at or near the top of metropolitan areas in terms of both per capita income and level of education. Despite deplorable concentrations of poverty, particularly in the city proper, the region's average household incomes remain the highest in the country – nearly 50 percent above the national average. The percentage of adults with a bachelor's degree or higher, nearly 42 percent, surpasses even such brainy-seeming places as greater Boston, Seattle and Minneapolis.

The contrast between Washington and most of the United States has gradually become more pronounced. In good times and in bad, lawyers, lobbyists and other government retainers have continued to enrich themselves even as the Midwest industrial-belt cities have cratered and most others struggled to survive. "The vision of generations of liberals," admitted the New Republic in the mid-1970s, "has created a prosperous and preposterous city whose population is completely isolated from the people they represent and immune from the problems they are supposed to solve."

In today's crisis, the Washington area remains somewhat aloof, with the second-lowest unemployment rate among major metropolitan areas of more than 1 million. (Only Oklahoma City, largely insulated from both the financial and housing bubbles, is doing better, although collapsing energy prices could threaten its prosperity.) The rate of job growth, although slower, is still among the highest in the country, and unemployment is below the national average.

This disparity will grow in the coming years, as rival regions reel from the recession. Many once-powerful places are already losing their independence and allure. Wall Street, formerly the seat of privatized power, has been reduced to supplicant status. The fate of New York Mayor Michael Bloomberg's "luxury city" will be determined not in deals with London, Dubai or Shanghai but by the U.S. Treasury. Similarly, the vast auto economy of the upper Midwest will take direction from congressional appropriations and whoever is named the new "car czar."

This loss of power in the provinces will broaden in scope during the coming months. Even proud Texas has lost its unique political influence. Its energy barons will now be forced to do the bidding of the lawmakers and regulators, instead of carrying them in their hip pockets.

Even industries that are well plugged in to the new Obama regime – such as venture capital and alternative energy – are facing financial ruin from the downturn in both markets and energy prices. To win new funding and subsidies for their next bubble, they'll increasingly rely not on their ballyhooed cleverness but on their pull with the White House, Congress and the new science apparat, under the green-oriented Energy Secretary Steven Chu and Obama's neo-Malthusian pick for White House science adviser, physicist John Holdren.

All this is bad news for much of America, but it should mean great business for many residents of greater Washington. Sudden interest in District pied-a-terres among investment bankers, venture capitalists, energy potentates and their hired help could do a lot to restore the battered condominium market. Office buildings in the District and surrounding environs can now expect a new rush of tenants, both from the private sector and the soon-to-be expanding federal bureaucracies.

The transfer of cultural power to Washington will also accelerate. After all, Washington is more than ever where the action is. Media outlets have already been shifting out of New York and other cities – the Atlantic Monthly moved from Boston to Washington in recent years, and USA Today, National Public Radio and XM Radio are headquartered in or near the capital. A city that, according to one 19th-century account, had a cuisine consisting largely of "hog and hominy grits" now boasts world-class restaurants, draws top-line chefs to its food scene and will continue to develop into a serious epicurean center. The area already ranks third in film and television production, largely because of a thriving news and documentary business, as embodied in National Geographic, the Public Broadcasting Service and the Discovery Channel.

Over time, those of us in the provinces may grow to resent all this, seeing in Washington's ascendancy something obtrusive, oppressive and contrary to the national ethos. But don't expect Washingtonians to care much. They'll be too busy running the country, when not chortling all the way to the bank.

This article originally appeared at the Washington Post.

Joel Kotkin is executive editor of NewGeography.com and is a presidential fellow in urban futures at Chapman University. He is author of The City: A Global History and is finishing a book on the American future.

Infrastructure and Aesthetics

Adam Mayer — Sun, 25 Jan 2009 00:09:49 -0500

In his 2005 book Infrastructure: A Field Guide to the Industrial Landscape, Brian Hayes surveys the built environment with an undaunted appreciation of the vast networks of infrastructure systems in America. Hayes, a writer for American Scientist, argues that common understanding of infrastructure is just as important as an understanding of nature itself. Without the ubiquitous power lines, the oft disparaged garbage dumps, or the controversial mining industry, the United States would not have been able to achieve status as the paragon of 20th Century modernization – a pattern now emulated by the likes of China and India.

Yet it seems that ‘infrastructure’ has lost its fabled status in America. Our parents – or grandparents, depending on your age – celebrated achievements such as the building of the Hoover Dam or the California Water Project. But starting with the 1970s, as the environmental movement began to gain steam, and more recently after Al Gore’s documentary An Inconvenient Truth, large scale infrastructure has increasingly become something to be reviled.

The only time we are reminded of our infrastructure is when tragedy strikes, be it a mining accident, a bridge falling down or a collapsed levee. It’s as if we wish to keep the very things that support our modern lifestyles ‘out of sight out of mind’. No one really wants to know where their trash ends up or what the intricate processes for treating sewage are, nor does anyone want to be a neighbor with a coal burning power plant.

At the same time what had once been centers for productive industry have also been redeveloped into hip and trendy neighborhoods marketed to those looking for an ‘edgy’ urban experience. To be sure, part of the allure of once industrial areas such as San Francisco’s South of Market and Brooklyn’s Williamsburg lies in the gritty aesthetic and adaptability of warehouse and manufacturing buildings for reuse.

Yet even though residential development may be halted for the foreseeable future, it is critical to not lose sight of the aesthetic value of the industrial landscape. This ‘diamond in the rough’ appeal applies not only to converted lofts and art galleries but to both our current functioning and yet-to-be built infrastructure as well.

The potential for infrastructure to please the eye and to uplift the soul is not lacking in historical precedent. Some of the greatest monuments to the genius of ancient architects remain those which served as essential infrastructure, the most notable example the aqueducts constructed by the Romans.

Yet today, aside from exceptions like the bridges of Spanish architect Santiago Calatrava, the world of high architectural design has largely ignored the possibility that infrastructure could be beautiful. Instead, design media is relentlessly focused on museums and other elitist structures with the more mundane and common buildings being "left to the engineers".

LeCorbusier, the late Swiss/French architect and one of the ‘godfathers’ of modern architecture would be rolling in his grave if he knew this was the case. In his seminal manifesto Towards a New Architecture, LeCorbusier speaks of his appreciation for the industrial aesthetic: “Thus we have the American grain elevators and factories, the magnificent first-fruits of the new age”.

LeCorbusier, or ‘Corb’ as he is called, went on to apply the industrial aesthetic to socialist housing schemes while proclaiming that the “house is a machine for living in”. Although the jury is still out on whether or not living in a machine has mass appeal, Corbusier’s celebration of the simple and repetitive massing of structures such as grain silos is a good reminder that beauty can be derived from infrastructure.

Early 20th Century American city builders also celebrated infrastructure. Willis Polk, a prominent San Francisco architect, was commissioned in 1910 to build a water temple in Sunol, California. Sunol, about 40 miles outside of San Francisco, was where converging water lines met before feeding into the city. Sensitive to the importance of getting fresh water to a growing population, some of San Francisco’s wealthiest citizens hired Polk to design the structure, which was inspired by the Temple of Vesta at Tivoli. Soon after, the area around the iconic structure became a popular spot for park goers.

Similarly, Los Angeles architect Gordon Kaufman was hired to add aesthetic merit to the Hoover Dam. Still generating power for parts of Southern California, Nevada and Arizona, the massive dam symbolizes one of the most ambitious pieces of infrastructure in American history. At the time, the dam was the world’s largest concrete structure, yet Kaufman softened the aesthetics by adding a simple and elegant Art Deco touch to the otherwise imposing structure.

The marriage of aesthetic beauty and infrastructure does not always have to take place at the grand scale of the Hoover Dam or the Golden Gate Bridge. In contrast, the barn, according to Brian Hayes, remains “the unmistakable icon of American agriculture and rural life.” The barn, a prevailing theme in American literature, represents function and flexibility of the highest order: one day it could be housing livestock while the next it could serve as a dance hall. Whatever the function, there is no questioning the charm of these structures dotting the rural landscape. With a renewed interest in family and organic farming in current popular culture, these buildings – including new barns – could assume a renewed meaning.

With the Obama stimulus plan comes not only an opportunity to create jobs but to advance a cultural appreciation for the structures and systems that have made the United States a model to be emulated. Wind turbines, for instance, are gaining traction as the symbols of clean energy. When driving past large scale wind farms like the San Gorgonio Pass near Palm Springs, the movement of the out-of-proportion blades coupled with the dizzying repetition of turbines results in something similar to a pleasant hallucination. The appreciation for wind turbines is a start in the right direction, yet if we are to ensure that the systems that run the country are suited to last for generations to come, the culture needs to once again celebrate, rather than demonize, our infrastructure.

Adam Nathaniel Mayer is a native of the San Francisco Bay Area. Raised in the town of Los Gatos, on the edge of Silicon Valley, Adam developed a keen interest in the importance of place within the framework of a highly globalized economy. He currently lives in San Francisco where he works in the architecture profession.

What Way for the Stimulus? Post-Industrial America vs. Neo-Industrial America

Michael Lind — Fri, 23 Jan 2009 02:06:43 -0500

As a result of the economic crisis, there is a broad consensus in favor of large-scale public investment in infrastructure in the U.S., both as part of a temporary stimulus program and to promote long-term modernization of America’s transportation, energy, telecom and water utility grids. But this momentary consensus masks the continuing disagreement on whether the U.S. government can legitimately promote American industries, and, if so, which industries. This is a problem for infrastructure policy, because different national infrastructures correspond to different national economic strategies.

Consider the antebellum U.S. in Henry Clay’s American System: federal infrastructure investment in canals and later railroads (“internal improvements”) was part of a package that included import-substitution tariffs to protect infant U.S. industries from British competition. For Clay and his Whig allies and followers, including future Republicans such as Abraham Lincoln, internal improvements and tariffs were not ends in themselves. They were instruments to be used in the pursuit of the Whig-Republican vision of a decentralized, mixed industrial and agricultural economy where business owners, mostly small, and free workers, mostly prosperous, could realize the utopia of Clay’s “self-made man.”

From Thomas Jefferson to Jefferson Davis, the Southern planters who opposed such ambitious schemes had no objection to infrastructure as such. They favored infrastructure tailored to suit the needs of their semi-colonial slave plantation economy, based on exports of cotton and other commodities to British and Western European factories. Local wharves and harbors that facilitated the shipment of crops to industrial Britain were acceptable to the planters. They opposed infrastructure that would encourage industrialization in the South or the U.S. as a whole, out of fear that urbanization and industrialization would threaten their local dominance over both black slaves and poor white yeoman farmers. They also feared they would be marginalized in national politics – as they indeed were – by industrialists, merchants and financiers.

Today, the rivalry is not between the champions of an industrial America and an agrarian America. Rather, it is a rivalry between the champions of a neo-industrial America, which includes world-class industrial agriculture, and a post-industrial America, in which most if not all manufacturing and even agriculture will be outsourced. In this formulation, post-industrial America emerges as a consumerist paradise populated by investors, executives of multinational companies, rentiers, realtors, government and nonprofit bureaucrats, and a supporting cast of service sector proletarians including nursing aides, nannies, gardeners, security guards and restaurant and hotel workers.

Just as there was one logical infrastructure for the industrializing North and one for the anti-industrial plantation South in the nineteenth century, so in the twenty-first century a different infrastructure would be appropriate, depending on whether the goal is a post-industrial America or a neo-industrial America.

A post-industrial infrastructure can be simple, local and substantially foreign.

The post-industrial infrastructure can be simple since it involves little more than the roads and harbors needed to bring in high-value-added imports from abroad and ship out low-value-added American commodities. Adequate harbors are necessary, as are adequate highways to help ship U.S. soybeans and timber to industrial Asia while bringing Chinese, Japanese and Korean goods to Wal-Marts for distribution.

The post-industrial infrastructure can also be local. Just as the Southern planters were indifferent or hostile to regional or national infrastructure projects, so the elites of the service sector are interested chiefly in the infrastructure needs of the half dozen or so coastal megalopolitan areas where they live. Many favor high-speed rail to connect nearby big cities on the coasts, while denouncing federal investment in non-metropolitan areas as boondoggles. The FIRE (Finance, Insurance, Real Estate) economy of post-industrial America could function reasonably well as long as a handful of colossal city-states – Boswash, Northern California, Greater LA, the Texas Triangle – had state-of-the-art local telecom and transportation and energy grids. So what if the rest of the continent decayed?

Finally, the post-industrial infrastructure can be largely foreign. Most of the urban service sector elite favors both outsourcing American industry and importing a new metropolitan immigrant proletariat willing to work for lower wages and fewer benefits than native Americans. To be sure, someone must build the components of the metro infrastructure and put them in place. But steel can be shipped in from Asia and assembled in New York, San Francisco, Atlanta, Chicago and Houston by immigrants, legal or illegal. Better yet, the metro-supportive infrastructure can be leased or permanently sold to foreign consortiums and even foreign sovereign wealth funds, in order to avoid the need to raise taxes to pay for upfront costs or repay bonds over the long term. The “leakage” of federal stimulus spending to benefit Chinese factories, law-breaking Latin American illegal immigrants and petrostate sovereign wealth funds will not bother elites who are not only post-industrial but to a large extent too sophisticated to worry about narrow patriotism.

If the infrastructure of a post-industrial America would be simple, local and largely foreign, the infrastructure of a neo-industrial America should be complex, national and predominantly American.

A neo-industrial infrastructure necessarily must be complex, because the purpose of a neo-industrial infrastructure would be onshoring – arresting and in some cases reversing the transfer of high-value-added manufacturing and services to other countries. This requires something more than freight rail bringing Chinese imports to Wal-Mart and airports helping to deliver Amazon.com boxes to urban apartments. It requires an infrastructure tailored to the needs of an entire complex ecosystem of factories, design offices, and their suppliers and contractors. And that infrastructure not only must be rebuilt in existing industrial areas like Detroit but also built from scratch in areas such as the Great Plains. It would aim to put many of tomorrow’s factories and research parks in today’s depopulating rural areas and derelict inner cities.

A neo-industrial infrastructure must be national and inclusive in scope. Its goal resonates with the aspiration of Henry Clay Whigs, Lincoln Republicans and William Jennings Bryan Populists – a decentralized, prosperous middle-class society of small and medium-sized towns as opposed to a country where half a billion people are crammed into a few plutocratic megacities and forced to live in dense apartment blocks.

Such decentralization – contrary to the claims of some urbanists and greens – need not mean excessive “sprawl.” This is still a very large country with lots of land, as anyone who spends time away from the coasts recognizes.

But more important, there can only be an independent middle-class majority in a United States with 400 or 500 million people in 2050 if most Americans live and work in relatively low-density areas where homes are affordable and small business rents are not crippling. That means building new towns and new industrial centers away from the existing ones, to spread out the population and accommodate tens of millions of new immigrants with desirable skills. The rich, who will remain concentrated in a few metro areas, where they can socialize, compete and conspire with one another, must be taxed by the federal government to subsidize the infrastructure of the entire continental U.S., not just their own cities, metro areas and states.

Last but not least, a neo-industrial infrastructure must be predominantly national with respect to its components and its workforce. It would be self-defeating to design an infrastructure friendly to American industries and workers and then hire foreign industries and foreign workers to build it. Most or all federal infrastructure spending should be reserved for corporations and suppliers whose high-value-added production takes place on American soil. And all jobs directly or indirectly related to infrastructure construction should be reserved for citizens or legal immigrants. Law-abiding American citizens should not be taxed to subsidize law-breaking illegal immigrant workers and the unpatriotic, criminal contractors who employ them. This is not “nativism.” The right kind of legal immigration would be an important part of any neo-industrial strategy, as would taking advantage of foreign direct investment by foreign companies and sovereign wealth funds in mutually beneficial ways.

The debate about infrastructure, then, is also a debate about the future industrial profile of America. Will America in the twenty-first century be neo-industrial or post-industrial? This debate, in turn, may well determine whether the U.S. will become a decentralized, continental middle-class society or a collection of plutocratic, hierarchical city-states. The stakes could not be higher.

Michael Lind is Whitehead Senior Fellow at the New America Foundation and Director of the American Infrastructure Initiative.

Obama’s Friends: Enemies of the American Dream?

Wendell Cox — Thu, 22 Jan 2009 01:27:14 -0500

President Barack Obama has rightly spoken positively about the American Dream, how it is becoming more expensive and how it needs to be reclaimed. But to do this, he may have to disregard many of those who have been among his strongest supporters and the dense urban centers which have been his strongest bastion of support.

Indeed, the American Dream has been achieved by countless millions of households, though many have been left out of this expansion that began following World War II. Home ownership has risen from little above 40 percent to nearly 70 percent. Automobile ownership has become nearly universal, making it possible for urban areas to grown to unprecedented size. The Brookings Institution, the Progressive Policy Institute and others have published studies showing that people in low income households are far more likely to find and hold employment if they have access to cars.

All of this has been associated with a democratization of prosperity that has never before occurred. Per capita income is now 3.5 times its 1950 level in the United States (see 1929-2007 inflation adjusted data).

Yet, the American Dream is under serious threat – and this predates today’s faltering economy. A key component lies in the machinations of an urban policy and planning elite contemptuous of the comfortable lifestyles achieved by so many Americans. Instead they propose creating an environment in which households would have to pay more for their houses and spend more of their lives traveling from one place to another.

Most of those who wish to create this situation come from the political left and consider themselves to be “friends of Obama.” They have achieved positions of power in some urban areas, such as throughout California, Portland, Seattle and a host of other areas. As early as 2007 some saw Obama as the dream candidate – what one called “a smart growth President”.

This elite group starts by demonizing the very foundations of America’s inclusive prosperity. Having declared “urban sprawl” a scourge, they seek to stop further development on the urban fringe and want virtually all development to be within already developed urban footprints. These and other overly stringent regulations have served to strangle urban land markets, forcing land prices and housing prices higher, in those region where they have been imposed.

Over fifteen years ago William Fischell at Dartmouth University demonstrated that California’s overly restrictive land use policies had made that state more expensive than elsewhere. Since 2000, with the wider availability of mortgage credit, the new demand drove prices to double or triple historic norms in areas with restrictive regulation. Price reductions have lowered prices, but they are still well above historic norms. This means that fewer households still are able to own their own homes in areas with restrictive land use regulations. Once normal prosperity is restored, the higher house prices of the restrictive land use areas can be expected to resume their increase relative to the rest of the nation.

This is a problem for some regions now. But many planners are enthusiastic about Obama in part because he is thought to be sympathetic to recreating these conditions throughout the entire country.

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The automobile plays the role of the Great Satan in this morality play. The goal of many ‘progressive’ urbanists is to force people into transit and stop road building. Transit, of course, has its place. There is no better way to get to your job south of 59th Street in Manhattan, to Chicago’s Loop or to a few other of the nation’s largest downtown areas. But the stark reality is that transit can not substitute for the automobile for the overwhelming majority of trips, except for these niche markets. Further, failing to expand highways to keep up with traffic growth increases traffic congestion (and air pollution) and reduces economic productivity (read: “increases poverty”).

Higher costs for home ownership and slower commutes to work – and they will be slower because transit commutes average twice as long as automobile – impose significant burdens on people. Fewer people will have houses and fewer will have jobs. Forcing a single parent to take longer to navigate from home to the day care center to the job, whether by transit or by car, makes life more difficult – and for no rational reason. It is the equivalent of forcing people to work harder for nothing.

Of course, this way of thinking has been around some parts of the country for decades. The new drive to reduce greenhouse gas (GHG) emissions has extended its reach. The typical formulation now is that in order to reduce GHG emissions, Americans need to be crowded into dense urban areas and give up our cars.

###

In reality, nothing of the kind is required. “Green” houses are being developed that can make it possible to substantially reduce GHG emissions while Americans continue their favored suburban life styles (the lifestyles, by the way, also favored by Europeans and Japanese). Hybrid and other advanced car and fuel technologies can make it possible for the personal transportation sector to achieve massive long term GHG reductions. The answer is regulating emissions, rather than people.

But the planning and urbanist lobbies may not fundamentally be driven by the perceived need to reduce GHGs. They would rather regulate people, just as was the case well before climate change was even on the political agenda.

Of course, the planners don’t see their strategies as nightmarish. They have worked them all out theoretically in their heads. The problem is that the theory is not and cannot be translated into reality. There is no more comfortable place to live in the world for people – particularly those past their youthful and single years – than the American suburb. There are no metropolitan areas of similar size in the world where people spend less time traveling to and from work than in America. Take Hong Kong, which is by far the world’s most dense large first-world urban area. No other metropolitan area of its size should have such theoretically short trips, because everything is so close together. Yet, average travel time to work is almost double that of Dallas-Fort Worth, with a similar population. Indeed, even in “gridlocked” Los Angeles, so often ridiculed for its automobile-oriented “sprawl,” work trip travel times average nearly 40 minutes less per day than in that ultimate of urbanization, Hong Kong. That adds up to about a week’s worth of extra commuting time each year.

Rather than trying to constrict the dream, President Obama should work on ways to expand it. This will not be easy. Today, less than 50 percent of African-American and Latino households own their own homes. At the same time, Anglo home ownership is about 75 percent. No program to extend the American Dream can be based on policies that unnecessarily increase the price of housing.

For the new President, there is a clear choice. He can cast his lot with those whose strategies would extinguish the aspirations of millions of Americans, or he could make it easier for more households in the nation to achieve the American Dream.

A Little Genius for the City’s So-Called ‘Art World’

Jerry Sullivan — Sat, 17 Jan 2009 01:23:35 -0500

There’s a little girl – maybe 10 or 12 years old – whose family owns a store just a couple of miles from Downtown Los Angeles. She spends a lot of time at the place after her nearby school lets out for the day, sort of helping out but mostly just hanging around where her older relatives can see her.

I call her “Little Genius” because she’s always reading a book or busy at a computer or making paper dolls or working on some other challenge.

Little Genius is Asian/American, the daughter of immigrants, and I think the flavor of academic prowess that comes with the nickname makes her happy in part because it makes her elders happy.

It’s not just a nickname, though. I don’t know if Little Genius will grow up to be a great scientist or legal scholar or fill some other lofty role in our society. I do know, however, that she has the soul of an artist. Her paper dolls are much more intricate than the typical cut-outs. She recently put some craft clay and left-over cardboard from around the store together to make a scaled-down village occupied by little pigs. “The Pig Empire” went on display at the store for a few days, and plenty of customers enjoyed the work. Count me among them – it interested me, drew me close. I wondered about her motive and the inspiration for her little village.

I thought about Little Genius when 13th District Los Angeles City Councilmember Eric Garcetti recently spoke of using $2.8 million in city funds to forge greater links between the Museum of Contemporary Art (MOCA) in the gleaming Bunker Hill district of Downtown and the many ethnic and immigrant and blue-collar folks who live in nearby areas.

Garcetti pulled off a different sort of art – for a politician, anyway. He plainly spoke some truths that seldom get much of a genuine airing in our city. His brush strokes were bold, but applied with enough finesse to avoid offending anyone but the unduly sensitive. He said he’d like to see MOCA draw more visitors “who have never interacted with art in the visceral, provocative way that contemporary art can serve.” He called MOCA an institution with the potential to “set in motion a civic dialogue that’s been lacking in Los Angeles,” adding that that he hopes to see a variety of efforts focused on linking the museum to local schools, senior citizen’s centers, and everyday working folks by offering programs that appeal to them, and which they can readily attend.

Perhaps this seems a mild triumph of rhetoric, but art in our city is in such a state of withdrawal that Garcetti’s comments amounted to some useful provocation of his own. Hundreds of thousands of persons live within a short distance of MOCA. Many of them labor hard – for some it’s a downright struggle – to maintain themselves in the city. Not many of them, or their children, are getting to MOCA.

Garcetti’s comments also gave a reminder that museums and galleries might serve as reflections or repositories of art, but they should not be the exclusive province of what many refer to as the “art world.” I will go a step further – making clear that these are my thoughts and not Garcetti’s – and say that the moment artists, their patrons, and institutions such as MOCA come to believe that there is a distinct “art world” they lose touch with art itself.

Art is a reflection of culture. Our culture is all of us, all mixed up. Great art engages all of us and helps us understand this culture of ours. How can anyone claim to be an artist while carving off a separate “art world” of limited membership?

They can’t.

That’s the best reason for all of us to take seriously Garcetti’s recent comments. It’s time to call on MOCA to make new and stronger efforts to reach Little Genius and the teeming mass of others who might not be members of the so-called “art world” but nevertheless serve as the heart and soul of our culture – also known as the real world.

Jerry Sullivan is the Editor & Publisher of the Los Angeles Garment & Citizen, a weekly community newspaper that covers Downtown Los Angeles and surrounding districts (www.garmentandcitizen.com)

A Bailout For Yuppies

Joel Kotkin — Tue, 13 Jan 2009 00:28:10 -0500

The recent call by the porn industry – a big employer where I live, in the San Fernando Valley – for a $5 billion bailout elicited outrage in other places. Around here, it sparked something more akin to nervous laughter. Yet lending a helping hand to Pornopolis is far from the most absurd approach being discussed to stimulate the economy.

Some influentials close to the administration may even find the porn industry a bit too tangible for their tastes. After all, the pornsters make a product that sells internationally, appeals to the masses and employs a lot of people whose skills are, well, more practical than ideational.

As such, they may not even qualify for what is best described as a yuppie bailout, poised to extend the welfare state to the highly educated professional set. After all, George Bush's bailout of Wall Street has already set a precedent, using public money to secure the bonuses and nest eggs of some of the nation's most elite professionals. Call it the Paulson principle: In bad times, steer help to those least in need.

A yuppie stimulus differs from the more traditional approach, which aims to get the front-line, blue-collar types back to work. Instead, it would channel public funds away from those grouchy construction workers – some 30% of whom may soon be out of work – to better heeled, and, in their minds, more deserving "creative" professionals. After all, what stake do the netroots have in making things better for Joe the Plumber?

In contrast, the yuppie bailout focuses on a sure-fire Democratic constituency, the well-educated urban professional. One advocate of such an approach, pundit Richard Florida, has urged President-elect Barack Obama to eschew crude investments in traditional production and a renewed housing market in favor of goodies directed to what he calls "the creative industry."

Florida sees any focus on restoring manufacturing and housing as a misguided rescue of the "old industrial economy," in which Americans actually made things and other Americans consumed them. Instead, he suggests, "the first step must be to reduce demand for the core products and lifestyle of the old order."

So let's stop worrying about what happens to Detroit, or the crisis in the housing market. In Florida's view, cars, of course, are demonized as woefully bad for environmental reasons and not particularly friendly to the preferred dense urbanity so attractive to advocates of "hip cool" cities.

Florida even recommends shifting away from the single-family home, which is also, all too often, in the 'burbs. Instead, we should develop what he calls "flexible rental housing," so people can move every time they get new jobs. I think that is what they used to do in Chairman Mao's China, too, albeit without the granite countertops and a Starbucks around the corner.

In a yuppie bailout, what spending takes priority? More jobs for academics and educators. Florida suggests we invest in "individually tailored learning." We assume this means neither home-schooling nor basic skills training but something more like painting and acting classes for tots and advanced "creative" navel-gazing for tweens and adolescents. And, of course, lots and lots of new jobs for well-paid, unionized teachers.

These ideas should not be dismissed out of hand as the impractical meanderings of a lone scholar. In fact, Florida's views are taken very seriously among influential Obama supporters at companies like Google as well as by politicos such as Michigan Gov. Jennifer Granholm, who is widely identified as a key Obama counselor on economic issues.

Nor is Florida alone in his views. Bigger feet among the purveyors of conventional wisdom, like The New York Times' Thomas Friedman, also think the stimulus should steer more resources into the public pedagogy. Friedman even recently suggested teachers be exempted from paying federal taxes.

And it's not just teachers who would benefit from a yuppie bailout. The economic stimulus, Friedman says, should also focus more on high-tech companies like Google, Apple, Intel and Microsoft, all of which enjoy extraordinary valuations. This reaffirms the Paulson principle with a politically correct spin.

Politically, a yuppie bailout would certainly appeal to powerful Democratic constituencies, not just the teachers' unions. Select high-tech companies and venture capitalists can count on new subsidies and tax breaks. Greens and "smart growth" advocates will celebrate if money is diverted from hard infrastructure – such as improved roads, bridges, ports and transmission lines – which they insist would create enough carbon to heat the planet like a toaster.

This "yuppie first" approach certainly would appeal to many mayors, some of whom are already adherents to the Floridian ideology. They may be further encouraged by a new report by the Philadelphia Federal Reserve called "City Beautiful," which suggests cities should not promote growth through traditional infrastructure but instead invest in frilly amenities. As a Boston Globe article on the report summarized cheerfully: "Make it fun."

Here's another hint of what might be coming in a yuppie bailout. Providence, R.I., located in the state with the nation's second-highest unemployment rate, wants to sink money into a polar bear exhibit at its zoo – perhaps so we can see them before they become extinct or go on Al Gore's payroll – as well as make improvements to a soccer field. Miami envisions spending on a giant water slide, new BMX and dirt bike trails at a local park and, of great national import, a new Miami Rowing Club building.

Even the once-booming but now-hurting ultimate "fun city," Las Vegas, wants in on the act. Mayor Oscar Goodman is asking the feds to kick in big time for its new Museum of Organized Crime and Law Enforcement. That's right, taxpayers can participate in building a monument to Bugsy Segal. And with Nevada's own Harry Reid running the Senate, the project seems well-positioned to get the "respect" it deserves.

If Goodman, who used to defend mobsters as a criminal defense lawyer, has his way, it could spark a feeding frenzy for every under-funded tourist trap from Cleveland to Cucamonga. Pork used to mean roads, bridges and ports that, at least in theory, made the economy more productive while providing well-paid work for blue-collar workers. Soon these dollars may instead go toward yacht clubs, art galleries, museums and "creativity" training for toddlers.

A yuppie bailout is likely to hold more money for Boston, San Francisco and other havens of the perennially hip – all of them Democratic bastions. There's also likely to be less funding for the grotty suburban towns, industrial backwaters and Appalachian hamlets, all of which don't usually appeal to the artistic set.

To an old-fashioned Democrat, this all seems to miss the point. Shouldn't we be stimulating the places already suffering the most from high unemployment, foreclosures and spreading impoverishment? Where do Toledo, Cleveland or Modesto fit in to the yuppie bailout? As Pittsburgh-based blogger Jim Russell says: "Most of the population will continue to live in 'Forgottenville.' Should we just forget about them?"

In spite of all this, the mounting pressure for a yuppie bailout sadly reveals how the supposed party of the people is being transformed into just a second party of privilege. We should desperately try to create new productive capacity and better-paying jobs, especially for the denizens of Forgottenville. It certainly makes more sense than pouring taxpayer funds into new clubhouses, water slides or even better-financed pornographic movies – however much the latter may help property values in my neighborhood.

This article originally appeared at Forbes.

Advancing Economies by the Power of Industry

Praxis Strategy Group — Mon, 12 Jan 2009 22:22:01 -0500

For the last quarter century there has been a growing tendency among policy makers and corporate executives to downplay, and even ignore, the primary importance of the ‘real,’ or tangible, economy. It is now widely believed that the primary engine of wealth creation is the manipulation of symbols and images — ‘the new economy’ of the ‘information/creative age’ — as opposed to the manufacture of tangible products and services.

This paper challenges these assumptions. Our research in Europe, Asia, Australia and North America suggests that rapid economic and income growth tends to occur most steadily in areas where tangible production has been readily encouraged. Although the successful strategy varies by region and country, the basic fundamentals to propel growth lie in policies that stress the construction of essential physical infrastructure, investments in basic and skill-oriented education, and favorable tax and regulatory policies.

Increasingly, this also includes the building of what we refer to as ‘infrasystems’, also called regional innovation systems. These are policies that encourage innovation and cross-firm transactions through the development of interlocking regional institutions, such as schools and governments that work closely with local industries. These infrasystems investments represent the cutting edge of progressive economic policies that encourage wealth creation and broad based opportunities for a wide variety of citizens.

We believe that this ‘back to basics’ approach is particularly applicable during the current global financial crisis. Attempts to ‘create’ wealth through financial manipulation and the hyping of cultural attributes have done very little except create short-lived economic bubbles on the local, national and, most ominously, global levels. The time for a reassessment, and a return to the basic principles of wealth creation, clearly has arrived.

See attached .pdf file for full report.

Primary Authors: Joel Kotkin, Delore Zimmerman
Research Team: Mark Schill, Matthew Leiphon, Andy Sywak
Editor: Zina Klapper

Demographia Housing Affordability Ratings
Rating	Median Multiple
Severely Unaffordable	5.1 & Over
Seriously Unaffordable	4.1 to 5.0
Moderately Unaffordable	3.1 to 4.0
Affordable	3.0 or Less
Median Multiple: Median House Price divided by Median Household Income