Obama's America

Can the Working Class Trust the Democrats?

Marc Dann and Leo Jennings III — Mon, 19 Aug 2019 01:30:38 -0400

Two years ago, we compared the opioid epidemic to the mortgage crisis that nearly cratered the global economy, noting how both were caused by corporate greed. Recent reporting in the Washington Post and other media outlets reveals an important difference between the two: unlike the regulators who were blithely ignorant of what was happening in the financial markets, officials at the U.S. Drug Enforcement Administration (DEA) knew exactly how many opioid pills were being distributed in the U.S. and where they were going. They simply chose to do nothing about it even though DEA investigators and line attorneys were pushing to hold at least one major drug manufacturer responsible for fueling the deadly epidemic.

The Obama administration’s decision to let drug company CEOs and managers off the hook runs parallel with its refusal to prosecute the big bank and brokerage officials who ignited the mortgage crisis. This eagerness to place Wall Street above Main Street is the key to solving the mystery that has confounded pundits, pollsters, and prognosticators since November 8, 2016: why did so many blue-collar and working class voters abandon the Democratic Party and vote for Trump?

In our minds, it’s all about hypocrisy, broken promises, and dashed hopes.

Let’s be realistic. From opposing the Wagner Act, to imposing the Taft-Hartley Act, to proposing right-to-work laws, to firing striking air traffic controllers, to embracing free trade, to supporting anti-worker policies too numerous to mention in this space, Republicans have never hidden their disdain for working people and unions or their love for the rich and corporations. When a voter casts a ballot for a GOP candidate, they know what they’re going to get.

Conversely, since 1932, Democrats have positioned themselves as advocates for working men and women. For most of that time, they attempted to keep the promises they made. Roosevelt, Truman, Kennedy, and Johnson, all proposed and implemented policies that strengthened workers’ rights and created the opportunity for more and more Americans to grab a piece of the American Dream.

And then came the “Man from Hope,” Bill Clinton and Barack Obama, AKA President “Hope and Change.”

When we looked back at all the times these two dashed the hopes of everyday Americans, we weren’t surprised that blue collar and working-class voters abandoned the Democratic Party. What’s surprising is that it took them so long to head for the door. By 2016, they were tired of being screwed over by Democratic presidents who promised one thing but delivered only repeated blows to the working class’s collective solar plexus. Trump’s ability to recognize and exploit that fatigue along with his opponent’s refusal to acknowledge that Clinton and Obama had made mistakes carried him to victory.

A quick trip down memory lane validates our thesis. During his 1992 campaign, Clinton vowed to reform America’s health care system and outlaw the use of permanent replacement workers during labor disputes. Those promises energized a labor movement that had been demoralized when Ronald Reagan fired striking air traffic controllers and was being crushed at the negotiating table by rapidly rising health care costs. Union members turned out in droves and fueled Clinton’s victories in Ohio, Pennsylvania, Michigan, and Wisconsin.

How did he repay them? Not by reforming health care or banning the use of scabs. Instead, he passed and implemented NAFTA, put former Goldman Sachs co-chair Robert Rubin in charge of the economy, and fought tooth and nail to repeal the Glass-Steagall Act.

Anyone who doubts that these actions had any effect on the 2016 election should consider all the hundreds of thousands of blue-collar jobs that NAFTA erased across the Midwest. In the Mahoning Valley, it wiped out Delphi Packard, General Electric, RG Steel, and other firms. The people who worked for those companies and their families haven’t forgotten who fought for and signed the pact that erased thousands of good jobs–and they almost certainly took note of the fact that his spouse was the Democratic Party’s nominee in 2016.

NAFTA-based job cuts were still fresh wounds for many voters in 2016. According to the U.S. Department of Labor, thousands of workers in Pennsylvania, Ohio, Michigan, and Wisconsin lost their jobs due to foreign competition and thus qualified for Trade Adjustment Assistance programs between October 2015 and September 2016. They would have been particularly susceptible to Trump’s anti-NAFTA message in the run-up to the election.

The repeal of Glass-Steagall, which was enthusiastically supported by then-Treasury Secretary Robert Rubin, set the stage for the mortgage crisis that cost millions of Americans, many of them working-class, their homes. Rubin saw no danger in deregulating the financial markets, only opportunity–for himself. He resigned his post at Treasury to accept a top job at Citigroup just days after the Clinton administration placed its stamp of approval on the repeal.

As some candidates in the most recent Democratic presidential debate had the temerity to point out, Barack Obama’s betrayals of the working class were every bit as egregious as Clinton’s – maybe even worse.

Those betrayals began with the Troubled Asset Relief Program (TARP). Cobbled together by Treasury Secretary and Robert Rubin acolyte Tim Geithner in the wake of the financial crisis, TARP funneled billions of dollars to banks and financial institutions but directed very little to middle- and working-class homeowners who were left holding shreds of what had been their piece of the American Dream.

The Affordable Care Act (ACA) was another slap at working families. The drafting and negotiating process was dominated by private insurers and Big Pharma. Single-payer health care advocates weren’t just excluded from the deliberations, they were derided and chided. In the end, the ACA, which did feature some much-needed reforms, was a boon for health insurers and the pharmaceutical industry, which managed to stave off efforts to give the government the power to bargain drug prices. As a result, working-class families are still being squeezed by rising health care costs and skyrocketing prices for prescription drugs, including insulin.

The administration’s decision to support the Kline-Miller Multiemployer Pension Reform Act of 2014 (MPRA) enraged workers and retirees. The legislation gave the Treasury Department, the Pension Benefit Guarantee Corporation, and the Labor Department the power to approve unilateral cuts in pension benefits. Throughout 2015 and 2016 thousands of retirees covered by the Teamsters Central States Pension Fund feared that their benefits would be reduced by thousands of dollars a month. While the cuts were shelved temporarily, retirees continued to harbor resentment toward the Democratic president who signed the bill.

Two more episodes that demonstrate his disdain for the working class: Obama’s support for the Trans Pacific Partnership, another trade agreement opposed by organized labor and his failure to insist that GM commit to retaining jobs in the U.S. in exchange for the bailout that kept the company out of bankruptcy.

View all these incidents from the perspective of a workers whose jobs have been shipped overseas, families who lost their homes because of corporate greed, the thousands of people who live in communities ravaged by the opioid epidemic, or retirees whose pensions are in jeopardy, and it’s really not hard to understand why so many working-class people voted for Trump in 2016. To riff on the old adage, Fool me once, shame on you. Fool me twice, shame on me. Fool me a couple dozen times and I’m voting for Trump.

In order to prevent a repeat of 2016, the Democratic presidential candidates must admit that Obama and Clinton took the party in the wrong direction, a case Matt Stoler made convincingly in the Washington Post in January of 2017. Unless they are willing to repudiate the policies that drove a wedge between the working class and the party, they won’t be able to undermine Trump’s core message to this critical constituency: that Democrats have abandoned them.

A clear break with the past combined with a credible economic message that convinces working men and women that they can once again trust the Democratic Party to fight for their interests is the path to victory in 2020.

This piece originally appeared on Working-Class Perspectives.

Marc Dann served as Attorney General of the State of Ohio and now leads the Dann Law Firm, which specializes in protecting consumers from various forms of predatory financing. Leo Jennings III is a leading Northeast Ohio political consultant and media specialist.

Photo credit: Garfld986 [Public domain], via Wikimedia Commons

Ten Years After Lehman Collapsed, We’re Still Screwed

Joel Kotkin and Wendell Cox — Mon, 17 Sep 2018 01:33:38 -0400

The collapse of Lehman Brothers 10 years ago today began the financial crisis that crippled and even killed for some the American dream as we had known it. Donald Trump might be starting to change that, at least for Americans who aren’t determined to remain in our bluest and priciest cities.

Overall an estimated nine million jobs and nearly $20 trillion in household wealth were lost. Job levels finally recovered but most of those who suffered from the Great Recession—and particularly current and former middle-income homeowners—did not see their wealth restored when the economy turned around.

Perhaps worst of all, the recession undermined our traditional belief in a better day ahead. Just one in five Americans is confident that life for today’s children will turn out better than it did for their parents, according to a 2014 survey conducted by NBC News and the Wall Street Journal. Nearly three in five Americans expect today’s children to be worse off, according to a 2017 Pew survey.

Some of this pain was self-inflicted, to be sure, as buyers seeking to catch up and get ahead of the market—they thought prices would just keep rising—drove up the home-ownership rate with dodgy loans many could not afford to repay. After approaching 70 percent, the rate is now back in the 63-to-65-percent range of the quarter-century preceding the housing bubble.

But there are two key reasons that most Americans still haven’t recovered their wealth or position from a decade earlier, and that most young adults find themselves starting the race far behind: slow wage growth across the nation and increasingly unaffordable housing prices in the most expensive and often most desired markets.

Wages for working and middle class people, at least until this year, have stagnated. Overall, only upper-income households have recovered financially from the Great Recession, while the vast majority of middle-income and lower-income households have yet to recover their pre-recession wealth, according to Pew.

In the meantime, housings costs have kept climbing, driven by conscious but misguided policies, particularly in coastal states, that have restricting new building. National Association of Realtors second quarter data shows median house prices in many deep blue enclaves areas have shot past their 2008 bubble peaks. In Portland, Seattle and San Francisco, prices are up 30 percent over the decade. In Denver, prices are up more than 80 percent. They have risen 60 percent in San Jose, where the median price for houses is now a staggering $1.4 million.

Rents are also rising substantially in some coastal markets, leaving many Americans in markets including Los Angeles, New York and Miami doubling up, retreating to family homes or struggling to just make each month’s payment. The biggest losers have been millennials and African Americans. A recent St. Louis Fed survey titled A Lost Generation? (PDF) found that the lingering effects of the Great Recession has been greatest on people in their thirties, who have the highest indebtedness of any age cohort and who may never recover the financial ground they lost.

The double hit of high rents and college debt has put home ownership out of reach for too many Americans just entering their prime marriage and home-buying years. The problem is particularly pronounced in California, where barely 25 percent of people 25 to 34 own their own home, compared to 37 percent of their peers nationally.

The percentage of African-American homeowners nationally fell by more than 10 points between 2000 and 2016, by far the largest drop of any racial group. Far fewer African-Americans now own homes in Los Angeles, San Francisco or San Diego than in Dallas, Houston or Atlanta.

The Great Recession and Obama’s New America

It may have been a tragedy for most Americans, but the recession was a blessing for many in the planning, media and academic clerisy who saw the vast numbers of suburban foreclosures—they tended to ignore the equally bad numbers in inner cities—as a sign that the century-old American shift to the suburbs was over. Rather than home to dreams of upward mobility, new urbanists like the Atlantic’s Paul Leinberger now proclaimed that suburbs were destined instead to become ”the next slums.”

That, in turn, was supposed to usher in a new urban golden age. In his book The Great Inversion, Alan Ehrenhalt predicted that educated and skilled workers would finally wise up and leave supposed suburban dystopias and return to core cities. That hasn’t happened, at least to the extent predicted, but the narrative continues to enjoy strong support in the national media centered in New York City.

In this first phase of the Recessionary period—2009 to 2011—big cities also had a big friend in the White House in Barack Obama. His recovery policies were tilted, not unexpectedly, towards the urban interests that elected him. Obama bailed out the big banks, also linchpins of the core city economy, as well as governments; four dollars in new subsidies flowed to big banks for each dollar that flowed to Main Street. The first urban president since the nation became majority suburban, Obama’s vision, and increasingly that of his party, embraced urban containment and densification, while seeking (unsuccessfully) to convert drivers to transit users.

Although the president could reasonably claim he took the economy “out the ditch” the Republicans had sent it into, Obama’s recovery was arguably the most unequal in American history, with 95 percent of all gains through 2013 going to the top one percent. Silicon Valley, Hollywood and Wall Street prospered, and cheered on the president as ultra-low interest rates and a massive fiscal stimulus buoyed capital markets and inflated venture capital pools.

The big banks that caused the recession have increased their share of deposits by 50 percent since 2007. Not a single big banker went to jail for nearly collapsing the world economy.

Generally pleased with Obama, few progressives noted that while the elites loved these policies, much of the hoi polloi generally did not—even as voters deserted Democrats in droves in 2010 and 2014 and again in 2016, leaving Republican with decisive control on Washington as well as an unprecedented number of state offices.

The Tea Party-led 2010 revolt may have been associated with opposition to Obamacare, but its cultural and economic roots were far deeper. For large parts of the country—including Texas, the Great Plains and the Intermountain West—Obama’s “green” economic policies threatened key local industries like energy, manufacturing and home-building. As Democrats left their labor and working-class roots to become the party of the coastal elites, blue-collar workers had genuine reasons to fear Democratic dominance.

Equally important were new demographic trends that paralleled long-standing patterns progressives had insisted no longer applied. As millennials began to hit their 30s, the “back to the city” movement started to slow as early as 2011. Even with the improved performance of core cities, domestic migration continued to favor the suburbs as Americans left expensive coastal core cities for more affordable metro areas including Houston, Dallas-Fort Worth, Orlando, Nashville, Charlotte and Raleigh.

By 2017, New York’s population growth rate had dropped from its 2010 level. In that same span, a million net residents moved out of metropolitan Los Angeles. In San Francisco, nearly half of respondents now tell pollsters they want to leave.

Although some price increases might have been a natural occurrence given the boom, for example in San Francisco, local policies have made things worse. Strong opposition by the Brown administration to suburban development shifted construction, where allowed, towards small, usually expensive apartments that rarely appeal to older people, particularly those with children, and are generally not affordable for lower income households. The kind of natural outward movement that created the original Silicon Valley in the 1960s and 1970s and affordable suburbs around the world was stopped in its tracks.

The restrictive approach to development in California and some other states—including Washington, Colorado, Oregon, New York and Massachusetts—has greatly raised prices. Since 1970, California’s major metropolitan area housing prices, relative to incomes, have increased at three times the national average. An entire generation of young adults has been encouraged to leave for somewhere else or accept lifetime rent-serf status.

The Trump Era: Cause and Effect

Just as they did in 2010 and 2014, the urban and coastal dominated media are failing to register changing opinions elsewhere. Convinced that we are on our way to a “green” urban future, progressives still have not recognized that many industrial workers, suburban homeowners, small business people and others didn’t want to emulate the urban elites but to get away from them in suburbia.

Herein lies the true secret of Trumpism. Many Americans did not want to see the continued erosion of industries that offered decent wages to middle and working-class people. Trump promised to reverse this, and, to date, his policies have ignited broad-based domestic growth in an otherwise struggling global economy. Small business, for example, now enjoys the highest confidence level on record.

For now, at least, the economy of Middle America is making a major comeback, a sharp contrast to the period right after the housing bust. Industrial employment reversed declines that were hitting at the end of the Obama years, growing by 327,000 jobs over the past year, the best performance since 1995. The sector has reported the strongest output in August in fourteen years. Retailers, home-builders, business service firms are all hiring, and, for the first time, in over a decade, wages for the lower half of the labor force are actually rising and even the long-term unemployed are returning to the workforce.

Perhaps most important, Trump may have shifted the geography of economic growth. The share of growth now taking place in non-metropolitan area America has increased fourfold. The most recent data from the Bureau of Economic Analysis shows that state GDP growth is highest in Washington state, but most of the other leaders are in the Intermountain West (Utah, Colorado and Wyoming), states in the middle of the country (Iowa and South Dakota) and Texas. New York and California aren’t leaders in either category.

Much of this comes growth from a revived industrial and energy sector. Meanwhile the states of the Resistance, New York and California, are now experiencing increasing domestic out-migration. The rate of population growth in California is among the country’s lowest—less than half that of Texas.

A Better Tomorrow?

Despite the good news, we are a long way from correcting the displacement caused by the Great Recession. Housing production remains well below historic norms—a full one-third below the 1980 to 2000 rate, population adjusted, as state and local government policies continue o discourage suburban growth in favor of dense inner-city housing have helped limit supply and drive up prices.

To fix that problem, state and local governments are returning to policies like rent control and “inclusionary zoning”mandates sure to raise prices for everyone else while slowing the rate of construction. California’s mandate for “zero emissions” houses is expected to raise prices, already high, by at least $20,000 — and without doing much for the environment, warns environmentalist Mike Shellenberger.

While prices are rising nationally, it’s highly regulated markets like California are seeing home sales fall—down over 12 percent in the largest market, Los Angeles-Orange County.

This urban-centric focus could prove costly. Retail space in big cities, once hot, is now seeing a erosion of rents. Office and industrial space rents are also falling, according to CBRE.

Another potentially damaging trend for many cities, particularly on the coasts, may be the retreat of the foreign investors—most notably the Chinese who invested $40 billion in foreign real estate in 2017—that helped keep prices high, particularly in California, where they’ve sent a third of their money here, Washington State and New York. Chinese investors have placed millions in luxury apartments in New York and downtown L.A., some hardly marketed to locals but instead offered to buyers in China.

Other Chinese investors have also bought single-family homes, particularly in heavily Asian suburbs in the Bay Area, Orange and suburban LA. Now, for the first time in recent memory, there are more sellers than buyers as sales falter. Worried about financial problems looming over its own domestic real estate market, and battling a trade war, China’s government is working to send strong signals to both individual investors and companies to tamp down on new real-estate projects.

That money river may dry up even as the higher interest rates we’re finally seeing will mean rapid increases in mortgage costs for buyers. Higher interest rates tend to undermine the viability of high-priced markets in particular—such as New York, which hardly saw a little recession, let alone a great one, as artificially low interest rates kept the banks the city relies on humming and massive foreign investment propped up real-estate prices. As investment slows and interest rates rise, New York’s financial sector could suffer, dragging the city’s economy down.

Nationally, we could be setting the stage for a new kind of housing debacle, a reprise no one much wants to see. There are already disturbing signs, such as the rising percentage of buyers paying 45 percent of their income or more on mortgages, up four-fold from 2010. Then there’s the return of the home-equity loan market back to its pre-recession level.

As we begin to recover from the damage done a decade ago, a new housing crisis may be bubbling just under the surface.

This piece originally appeared on The Daily Beast.

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

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

Photo: Jorge Royan / http://www.royan.com.ar

The Triumph Of Trumpism Will Outlast Trump

Joel Kotkin — Mon, 27 Aug 2018 01:33:38 -0400

Given the endless scandals swarming around him, Donald Trump’s presidency may prove, to quote Thomas Hobbes, to be “nasty, brutish and short.” But even if Trump ends up out of office sooner than planned, we will continue to live in a world shaped by him for years to come.

He retains surprisingly high ratings for the economy and keeping the country safe. His perceived successes have allowed him, in a way matched only by Ronald Reagan, to alter American politics, and policy, in ways that could well persist well after he has returned to the gold-plated garishness of the Trump Tower.

The economic equation

Trump’s biggest triumph has been the economy. Despite repeated tales of how tariffs are destroying manufacturers, the turnaround in the industrial sector, going negative in the last year of President Obama’s term, is enjoying its best growth since the mid-1990s. Even retail, a big employer of blue-collar workers, has expanded. Critically, incomes finally are up for the lower deciles of the labor force, including youth.

There’s nothing that guarantees this recovery will continue, but Trump can boast that he has accomplished things that Obama failed to deliver in his eight years of office. Democrats might mutter that renewed growth has come from regulatory reforms and big corporate tax breaks, but that’s making The Donald’s point: A continuance of Obama-style economic and regulatory policy would have failed most Americans outside of his Wall Street and Silicon Valley bankrollers.

Trump has also benefited those geographies that supported him. Under Obama, economic progress focused largely on high-tech, increasingly post-industrial states like California, New York and Massachusetts. Now, with the industrial and energy sectors rebounding, some of the fastest income growth, notes the federal Bureau of Economic Analysis, is taking place in Texas, the southeast, parts of the Midwest and the mountain states. The very places that elected him.

Near the bottom of the totem pole? New York and California, bastions of the “resistance.”

The global perspective

Trump is hardly well-respected abroad, notably in Europe and Canada, but his foreign policy is leaving an important legacy. He has successfully exposed the fundamentally mercantilist approach of our European allies, notably Germany, not to mention the massive manipulations employed by China and its imitators to game trade relations.

It will be hard for Democrats to reverse Trump’s trade policy if they want to appeal to voters in the nation’s heartland, and among working-class voters. They are aware that “free trade,” as currently practiced, works well for the well-placed established establishment duopoly but not for millions of others. Progressive Democrats, if worthy of the name, could up the ante even further.

Trump’s nationalism will remain an important factor, at least until the Baby Boomers finally kick off. Whatever we might think of American “greatness,” the current relative rise of the U.S. — to the utter bafflement of almost the entire U.S. media — suggests our resource and talent-rich country remains in a fundamentally better situation than largely stagnant Europe, debt-ridden, corrupt China and an increasingly pathetic Russia, so broke that is allegedly considering giving of millions of acres of farmland to keep the Middle Kingdom fed.

Then there’s always Paris, where the accords are the holy writ of green propaganda but in reality are not even being remotely followed by such scolds as in Europe while China continues to boost greenhouse gases. The U.S. meanwhile seems the one big emitter actually cutting emissions.

Can the wreckage be repaired?

On the evening Trump was elected, I was sitting at dinner with my friend Henry Cisneros, the former mayor of San Antonio and HUD secretary. When he announced, to my surprise, that Trump had won, Henry admitted that the New York billionaire had seen things few politicians had recognized — most notably the resentment in Middle America against the sophisticated elites.

Sadly, Trump has fumbled the chance to build on this insight. Despite a strong economy, Trump continues to play his favorite tunes of divisiveness and petty jealousy. He has undermined his rising Hispanic and African-American support from an improving economy, in degrading personal spats with LeBron James and sometimes cruel immigration policies.

Yet once The Donald goes, or is hopelessly weakened, his imprint will remain. Following the lead of predecessor Barack Obama, Trump effectively killed both neoconservatism and liberal Democratic messianism. It will also be difficult for any president — of either party — to embrace sweeping trade agreements perceived to hurt middle Americans.

He may not be known as the great populist, as some, including author Conrad Black believe. His manifest character flaws have doomed his presidency, but the defenders of the widely unpopular bipartisan status quo may not get off so easy, either. The country may remain more divided than ever, but it will never again be quite the same.

This piece originally appeared in The Orange County Register.

Photo: Michael Vadon, via Flickr, using CC License.

Restoring Localism

Joel Kotkin — Fri, 24 Aug 2018 01:33:38 -0400

Americans are increasingly prisoners of ideology, and our society is paying the price. We are divided along partisan lines to an extent that some are calling it a “soft civil war.” In the end, this benefits only ideological warriors and their funders.

One key source of this deepening division is the relentless centralization that has overtaken both our economy and our politics. Leaders of both parties have sat by while the forces of capital and government have centralized power and authority in ever fewer hands. When the federal executive branch changes hands, it’s not a political shift in the constitutional order but something closer to the kind of regime change associated with unstable countries. Increasingly, progressives favor ever more government control over people’s lives while conservatives see no limits to the power of the market.

Fortunately, there is a way out of this dilemma: a shift to local control. In a country that is ever more diverse culturally, racially, and economically, the best option is, within limits, to allow localities to determine their own fate, congruent with their own values and aspirations.

The issue here is not the irrelevance or intrinsic evil of government itself, but rather how to best address society’s primary challenges. Does the concentration of power make government more effective in addressing problems, or less so? Former Defense Secretary Robert Gates notes that the country needs to return to “the system of government bequeathed to us by the Founders,” saying that the expansion of government should be restrained “when so much of what we have works so poorly.”

Central authority is useful in such things as waging war, but a more expansive government has not, for example, improved education or seen more poor students attending college. A half century after the Great Society legislation, poverty remains higher than it was before it began. Leviathan has grown immense, but it has also failed.

Listening to the Founders

When the Founders crafted the Constitution, they understood the need for a strong federal government, but were profoundly aware of the dangers posed by the concentration of power. They had studied the successful growth of the Roman Republic, with its intricate system of checks and balances, followed by its devolution into a centralized state under one ruler.

The American Republic itself emerged in large part against monarchical control and the political oppression dealt to the colonies by the central government in London.[1] In Federalist 47, James Madison wrote: “The accumulation of powers legislative, executive, and judiciary in the same hands . . . may justly be pronounced the very definition of tyranny.”[2] The Constitution divided power in two ways: between the executive, legislative, and judicial branches of the federal government, and between the powers of the federal government and those “reserved to the states.”

The federal Constitution was enacted to ensure stability and security, but with limited powers. Madison believed a successful republic would require “checks and balances” between society’s “factions” to prevent them from gaining too much power and subverting the republican system, as occurred in Rome.[3]

Since then, localism has been a critical source of America’s dynamism. Participation in politics at the neighborhood and community level was one of the “habits of the heart” of which Alexis de Tocqueville spoke—one of the essentials in forming the American character, and sustaining free institutions.

In the ensuing nearly two centuries, this local spirit has decreased, in part due to the linkage between local control, or state’s rights, with the pure evil of slavery. Later, the challenges of the Depression, the Second World War, and the ensuing battle against communism favored the concentration of power in Washington, and increasingly in the executive.

The Rise of Leviathan

The view of the federal role as preeminent has deep roots in progressive thought. Herbert Croly’s 1909 book, The Promise of American Life, helped define progressivism beyond the ideas of the old Jacksonians and populists. It would fundamentally reshape American life; and the reshaping would be guided, promised Croly, not by the “monarchism” of the Constitution but by the disinterested ministering of “poet-leaders,” experts and social scientists.[4]

This notion of leading from the center accompanied a massive expansion of the federal bureaucracy. There were about 3,000 federal bureaucrats at the end of the Federal Period (approximately 1789 to 1823), and 95,000 when Grover Cleveland took office in 1881.[5] Since 1929, the federal government’s share of total public spending has risen from 39 percent to 53 percent. The federal bureaucracy has grown from a mere 600,000[6] employees to 2.7 million (a 2014 estimate).[7]

This role has expanded, fairly consistently, under both parties. For his part, George W. Bush increased the regulatory apparatus by 90,000 workers. Bush also expanded the federal role in education and health, and generally did little to reverse the inexorable concentration of power in Washington that already reached beyond the traditional federal role in fielding and deploying the U.S. military.

Federal power is increasingly based on the power of the purse and regulation. While the number of federal employees has not grown rapidly in recent years, the share of government spending controlled by the federal government—but often distributed through states and localities—has risen from 3 percent of GDP in 1900 to almost 22 percent in 2016. Every decade has brought more regulations, more agencies and departments, and more expansions of federal authority.

But perhaps no leader did more to expand federal power in peacetime than President Barack Obama. Under his “pen and phone” regime, the federal government issued more and more regulations, vastly expanding the power of the executive branch. The Heritage Foundation estimated that, as of 2015, the Obama administration had passed at least 184 “major rules” (regulations with at least a $100 million economic impact) and thousands of smaller rules. During its first six years, the Obama administration promulgated more than twice as many major rules as the first six years of the predecessor Bush administration.[8]

President Obama’s directives—particularly those dealing with the environment, housing, labor, race and gender—were implemented without legislative approval or even consideration, a marked shift from earlier eras of legislative-executive cooperation.[9] All of this has threatened the federalist vision, note authors Richard A. Epstein and Mario Loyola, turning local governments into “mere field offices of the federal government.”[10]

Can We Mount a Decentralist Rebellion?

President Trump, woefully ignorant of constitutional issues, is not likely to lead us away from centralization, although he may, for his own reasons, curb some of Obama’s worst excesses. More important may be public attitudes. By a wide margin—64 percent to 26 percent, according to a 2015 poll—Americans say that they believe that “more progress” comes from the local level than the federal level. Majorities of all political affiliations and all demographic groups hold this same opinion. Local governments, according to another 2015 survey, are thought to be particularly better at economic development, and at improving neighborhoods and education.

The tilt toward localism also extends to attitudes toward state governments, many of which have grown more powerful and intrusive in recent years, notably in California. Some 72 percent of Americans, according to Gallup, trust their local more than their state governmental institutions. Even in California, far more people prefer local control than being ruled from Sacramento. Strong majorities (70 percent of adults) prefer local government over state government.

Millennials, largely liberal on issues such as immigration and gay marriage, also are strongly in favor of community-based, local solutions to key problems. They might be, as one commentator suggests, more “socially conscious,” but they do not necessarily favor the top-down structure embraced by earlier generations; they prefer small units to larger ones. “Millennials are on a completely different page than most politicians in Washington, D.C.,” notes pollster John Della Volpe. “This is a more cynical generation when it comes to political institutions.”

Toward an Ideological Consensus

President Trump may have little interest in decreasing power, now that he holds it, but his presidency has increased support for a decentralizing strategy among some progressives. This includes such figures as the Brookings Institution’s Bruce Katz and urbanist Richard Florida, left-leaning pundits who now embrace the idea of freeing cities and regions from the grip of federal control.

Democrats, as liberal thinker Ross K. Baker suggests, may “own the D.C. swamp” but they are beginning to change their tune in the age of Trump. Even dutiful cheerleaders for Barack Obama’s imperial presidency, such as the New Yorker, are now embracing states’ rights.

Perhaps the most coherent case for left-of-center decentralization comes from a recent book by three prominent Democrats: former Al Gore aide Morley Winograd, pollster Mike Hais, and longtime Michigan political leader Doug Ross. In Healing American Democracy: Going Local, they make the case for decentralizing decision-making as one way to reduce polarization and the growing disillusionment with representative government as practiced in the United States today.

Within basic constitutional limits, the authors suggest a system which prefers that decision-making be as close to the citizens as possible. “That is where consensus and effective solutions are most likely to emerge,” they suggest. There’s little point, short of preserving basic constitutional protections, in forcing a common ground between, say, citizens in Portland, Oregon and those in the conservative eastern part of that state, or in making California harmonize with Mississippi.

Of course, once back in power, many progressives will once again find federal power appealing. But as millennials become more important, and information technology disrupts the political norms of former generations, many progressives might embrace a decentralist solution, particularly if they recognize that the nation remains, for the most part, center-Right in orientation.

The Conservative Conundrum

Historically conservatives have favored local control—after all, they are supposed to favor small government. But when in power at the national level, they have shown an unfortunate tendency to act with the centralizing zeal of Soviet apparatchiks.

In states like Texas and North Carolina, right-wing legislators have actually expanded state powers in order to limit political heterodoxy on environmental issues and cultural issues. As analyst Aaron M. Renn points out, these assaults on local control are carried out by conservative legislators who want to contravene the progressive agenda of core cities while, in blue states, progressive-dominated state governments frequently seek to override more conservative local governments.

There is another, and perhaps even more pernicious, conservative trend: to refuse localities the right to protect themselves from the unwanted ramifications of untrammeled capital. Throughout much of the past quarter century, libertarianism—largely averse to government regulation and fervent about reliance on private initiative—has been the unofficial faith of the GOP. Yet this tendency also has a downside when it comes to the realities of how people want to live.

A classic case came up recently in California, with a bill, proposed by state senator Scott Wiener of San Francisco, to remove local government control of housing development in certain areas. This bill is part of a concerted progressive attempt to attack the suburban way of life embraced by most Americans. Some libertarian conservatives, supposed champions of “small government,” supported a measure that would leave local governments and communities out of decisions affecting their day-to-day lives.

Needed: A New Political Paradigm

If progressives and conservatives could come to an agreement on localism, it would constitute the electorate’s best protection against ideologically driven, unwanted intrusions by both capital and government. What is needed is not enforced unanimity but the nurturing of multiple alternatives. We need to allow states to serve as what the progressive Justice Louis Brandeis described as “laboratories of democracy.” These entities, he suggested, can “try novel social and economic experiments without risk to the rest of the country.” In other words, let Oregon legislate one way, and Texas and Oklahoma another. Voters could then judge what approach they prefer and try to prove what works best.

Under these localist principles, states also would decentralize authority. California’s coastal power structure, largely concentrated in the Bay Area, should not be so able to impose policies that mean real hardship in Fresno, Riverside, or Redding. Similarly, progressive redoubts in places like North Carolina should be able to legislate their preferences without being gagged by the more conservative rural areas.

The country’s Founding was based largely on the idea of giving communities control over their own money and their own fate. The decades-long rush to centralize power—whatever the political orientation—has undermined our union, and left the country on the road, inevitably, to a new kind of interminable conflict. It is time to reverse course.

[1] See John Adams’s recounting of the history of Rome in Defence of the Constitutions: “We may affirm the contrary; that a standing authority in an absolute monarch, or an hereditary aristocracy, is less friendly to the monster than a simple popular government; and that it is only in a mixed government, of three independent orders, of the one, the few, and the many, and three separate powers, the legislative, executive, and judicial, that all sorts of factions, those of the poor and the rich, those of the gentlemen and common people, those of the one, the few, and the many, can at all times be quelled. . . . The only remedy is to take away the power, by controlling the selfish avidity of the governor, by the senate and house; of the senate, by the governor and house; and of the house, by the governor and senate.”

[2] Madison’s full quote in Federalist 47: “The accumulation of all powers, legislative, executive, and judiciary, in the same hands, whether of one, a few, or many, and whether hereditary, self-appointed, or elective, may justly be pronounced the very definition of tyranny.”

[3] Charles and Mary Beard, The Rise of American Civilization (MacMillan and Company, 1930), pp. 334-35.

[4] Fred Siegel, Revolt Against the Masses: How Liberalism Has Undermined the Middle Class (Encounter, 2013), pp. 9-10.

[5] James Q. Wilson, “The Rise of the Bureaucratic State,” The Public Interest, Fall 1975.

[6] Irving Stern, “Government Employment Trends, 1929 to 1956,” Monthly Labor Review 80:7 (July 1957), 811-815, published by the Bureau of Labor Statistics, U.S. Department of Labor.

[7] “Total Government Employment Since 1962,” Historical Federal Workforce Tables, Office of Personnel Management, Washington, D.C. Available at: https://www.opm.gov/policy-data-oversight/data-analysis-documentation/federal-employment-reports/historical-tables/total-government-employment-since-1962/

[8] James Gattuso and Diane Katz, “Red Tape Rising: Six Years of Escalating Regulation Under Obama,” the Heritage Foundation, Washington, D.C., May 11, 2015.

[9] For example, the working relationship between President Bill Clinton and House Speaker Newt Gingrich.

[10] Richard A. Epstein and Mario Loyola, “The United State of America: Washington Is Expanding Its Power by Turning State Governments into Instruments of Federal Policy,” The Atlantic, July 31, 2014.

This piece originally appeared in Law and Liberty.

Photo by Ckelley [CC BY-SA 3.0 ], from Wikimedia Commons

California: The Republic of Climate

Joel Kotkin — Mon, 03 Apr 2017 01:33:38 -0400

To some progressives, California’s huge endorsement for the losing side for president reflects our state’s moral superiority. Some even embrace the notion that California should secede so that we don’t have to associate with the “deplorables” who tilted less enlightened places to President-elect Donald Trump. One can imagine our political leaders even inviting President Barack Obama, who reportedly now plans to move to our state, to serve as the California Republic’s first chief executive.

As a standalone country, California could accelerate its ongoing emergence as what could be called “the Republic of Climate.” This would be true in two ways. Dominated by climate concerns, California’s political leaders will produce policies that discourage blue-collar growth and keep energy and housing prices high. This is ideal for the state’s wealthier, mostly white, coastal ruling classes. Yet, at the same time, the California gentry can enjoy what, for the most part, remains a temperate climate. Due to our open borders policies, they can also enjoy an inexhaustible supply of cheap service workers.

Of course, most Californians, particularly in the interior, will not do so well. They will continue to experience a climate of declining social mobility due to rising costs, and businesses, particularly those employing blue-collar and middle-income workers, will continue to flee to more hospitable, if less idyllic, climes.

California in the Trump era

Barring a rush to independence, Californians now must adapt to a new regime in Washington that does not owe anything to the state, much less its policy agenda. Under the new regime, our high tax rates and ever-intensifying regulatory regime will become even more distinct from national norms.

President Obama saw California’s regulatory program, particularly its obsession with climate change, as a role model leading the rest of the nation — and even the world. Trump’s victory turns this amicable situation on its head. California now must compete with other states, which can only salivate at the growing gap in costs.

At the same time, foreign competitors, such as the Chinese, courted by Gov. Jerry Brown and others to follow its climate agenda, will be more than happy to take energy-dependent business off our hands. They will make gestures to impress what Vladimir Lenin labeled “useful idiots” in our ruling circles, but will continue to add coal-fired plants to power their job-sapping export industries.

Read the entire piece at The Orange County Register.

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

Photo: By User "Neon Tommy" (https://www.flickr.com/photos/neontommy/8117052872) [CC BY-SA 2.0], via Wikimedia Commons

Obama's not so glorious legacy

Joel Kotkin — Wed, 04 Jan 2017 00:33:38 -0500

Like a child star who reached his peak at age 15, Barack Obama could never fulfill the inflated expectations that accompanied his election. After all not only was he heralded as the “smartest” president in history within months of assuming the White House, but he also secured the Nobel Peace Prize during his first year in office. Usually, it takes actually settling a conflict or two — like Richard Nixon or Jimmy Carter — to win such plaudits.

The greatest accomplishment of the Obama presidency turned out to be his election as the first African American president. This should always be seen as a great step forward. Yet, the Obama presidency failed to accomplish the great things promised by his election: racial healing, a stronger economy, greater global influence and, perhaps most critically, the fundamental progressive “transformation” of American politics.

Racial healing

Rather than stress his biracial background, Obama, once elected, chose to place his whiteness in the closet and identified almost entirely with a particular notion of the American black experience.

Whenever race-related issues came up — notably in the area of law enforcement — Obama and his Justice Department have tended to embrace the narrative that America remains hopelessly racist. As a result, he seemed to embrace groups like Black Lives Matter and, wherever possible, blame law enforcement, even as crime was soaring in many cities, particularly those with beleaguered African American communities.

Eight years after his election, more Americans now consider race relations to be getting worse, and we are more ethnically divided than in any time in recent history. As has been the case for several decades, African Americans’ economic equality has continued to slip, and is lower now than it was when Obama came into office in 2009, according to a 2016 Urban League study.

The economic equation

On the economy, Obama partisans can claim some successes. He clearly inherited a massive mess from the George W. Bush administration, and the fact that the economy eventually turned around, albeit modestly, has to be counted in his favor.

Yet, if there was indeed a recovery, it was a modest one, marked by falling productivity and low levels of labor participation. We continue to see the decline of the middle class, and declining life expectancy, while the vast majority of gains have gone to the most affluent, largely due to the rising stock market and the recovery of property prices, particularly in elite markets.

At the same time, Obama leaves his successor a massive debt run-up, doubling during his watch, and the prospect of steadily rising interest rates. Faith in the current economic system has plummeted in recent years, particularly among the young, a majority of whom, according to a May 2016 Gallup Poll, now have a favorable view of socialism. Economic anxiety helped spark not only the emergence of Bernie Sanders, but later the election of Donald Trump.

Read the entire piece at the Orange County Register.

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

Photo: The Official White House Photostream (originally posted to Flickr as P012109PS-0059) [CC BY 2.0 or Public domain], via Wikimedia Commons

Carrier and the Commonwealth

Aaron M. Renn — Wed, 28 Dec 2016 00:33:38 -0500

I was asked by Fortune to contribute a piece about Trump’s Carrier deal. They had gotten a lot of people criticizing it and were looking for someone who would give a different perspective. I think many of the criticisms are valid in a sense, but miss the larger context. So I wrote the piece which is now online. Here’s an excerpt:

Alexis de Tocqueville pointed out that one of the keys to America’s unique success was its sense of enlightened self-interest. Americans worked and competed hard for themselves, their families, and their businesses, but they understood that a purely selfish mindset was self-destructive in the long term. Tocqueville observed inDemocracy in America, “Each American knows when to sacrifice some of his private interests to save the rest; we [the French] want to save everything, and often we lose it all.

Businessmen once understood this link between national, local, and personal success. The men of the Commercial Club of Chicago who commissioned Daniel Burnham to create his famed 1909 plan for that city had personal fortunes deeply tied to Chicago. They needed the city as a whole to succeed for them to succeed. Likewise, General Motors CEO Charles Erwin Wilson once famously said, “For years I thought what was good for our country was good for General Motors, and vice versa.” He understood that his company’s fortune and America’s were intertwined: GM couldn’t make any money if no one could afford to buy its cars.

…

As these restrictions were lifted, these businesses left enlightened self-interest behind in favor of quarterly profits. They forgot their community in favor of global capital. Their business models evolved to delink profits and executive compensation from broad-based American prosperity. They could take a portfolio view of local communities and even countries. It was all very economically efficient. These firms and their managers could thrive even while much of America fell into ruin. Or so they thought.

Click through to read the whole thing.

Some people were a bit critical, saying, “Why not say this when Obama bailed out the auto industry?” or “Why is it only good when Trump does it?” In fact, I’ve actually written on this theme before.

Back in November 2008, shortly after Obama’s election, I posted a piece in which I criticized the auto companies’ management and came out in favor of a federally backed restructuring of the auto industry. While I am critical of some aspects of how Obama handled this, the idea of bailing out the car companies was something I was on record as supporting before it happened. Here are some excerpts from that:

Even if you assume a lot of this [auto company management behavior] is exaggerated for effect or outright BS, I’ve heard so many similar type things from people who’ve been associated with the auto industry that there must be a kernel of truth in it somewhere. I lead with this because it is so common to blame the UAW and its $73/hour or some such wage packages for the problems facing the Big Three. And indeed in the modern era that is not sustainable. But there has been particularly little focus on the management excesses of the auto industry, and the corporate cultures of those companies, and by analogy that of Detroit.

…

I’ve seen estimates that 2-3 million jobs could be lost and that chaos would ensue if the auto makers went bankrupt. That’s probably true if GM, Ford, and Chrysler just waltz down to the court house and file. But it is not the case if they have a government sponsored, pre-packaged bankruptcy.

…

Even so, we can’t lose track of the fact that there are real human beings, labor and management, with real trauma in their lives. Even if they are at least partially to blame for the mess they are in, that doesn’t mean they deserve what they are getting. It’s like a Greek tragedy: the suffering is disproportionate to the crime. And there but for the grace of God go you and I. I also work in a restructuring industry, and may yet join the auto workers in their pain.

The stories you hear in the Detroit papers are heartbreaking. One that really stuck with me was about people losing their life’s possessions when they couldn’t pay the rental fees on storage lockers. People who had already lost their homes to foreclosure put their possessions in storage, only to lose them too as the storage companies auctioned them to pay the bills. I’m not an emotional guy, but this makes me sick to my stomach. I don’t know about you, but I don’t think this should be happening in a country like America. People who made decisions in good faith, who showed up to work every day, who did the right things to care for their families, shouldn’t be left to lose everything because of the action of economic forces they can’t understand or control. Not in America. That’s why we absolutely need a federal safety net program here. Michigan alone can’t fund this.

I probably anticipated more of a bite the bullet approach than actually happened (which is one reason restructuring is still ongoing), and my views have probably changed somewhat in eight years, but clearly the same general themes are present.

Where I would take issue with Trump, is in the idea of “bringing the jobs back” as the theme. This sort of nostalgia for a bygone idyllic era that never really was is powerful in the Midwest. It’s very backwards looking and based on a language of resentment. I can understand why the appeal to this works rhetorically, but as an actual policy goal it’s not realistic. The ship has already sailed too far to return to the harbor. That doesn’t mean we should double down on the status quo, but we’ll have to chart a different path forward to the future, not roll back the clock. (Fortunately, Trump’s working class supporters seem realistic on this point and don’t expect him to literally do every single thing he said).

This perhaps explains why I’m more positive on intervention to save existing jobs than to try to lure new ones. That and the difference in the price tags. It’s one thing to try to preserve actually existing businesses already woven into the fabric of the community, but it’s another to try to speculatively create something new. I’m not under any illusion that we’ll get rid of economic incentives, but it does seem excessive to me to spend, say, $750 million (corruptly, as it appears to have turned out) to lure a solar panel factory to Buffalo. I’m ok with the idea of spending a billion dollars of state money in Buffalo, but there have to be better ways to do it. (Mayor Stephanie Miner of Syracuse said if she had a billion, she’d spend three fourths of it to fix her city’s water pipes – a prescient pledge made prior to the Flint debacle).

It’s also the case that we need to be willing to face the unpleasant reality that many communities are poorly positioned for the future economy. That doesn’t mean abandoning them, but we do have to level with them. And those communities, not just the federal government, also need to be willing to make some changes.

But all that doesn’t mean that simply pushing forward with more of what we’ve already been doing is a viable option. Trump understood that, and beyond the politics of it, the Carrier deal was a symbol that he intends to pursue a new direction.

Update: In line with these themes, a commenter pointed me at this recent blog post by South Bend mayor Pete Buttigieg.

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: By Carrier Corporation (http://www.teamworkmarinesxm.com/) [Public domain], via Wikimedia Commons

How Silicon Valley’s Oligarchs Are Learning to Stop Worrying and Love Trump

Joel Kotkin — Sat, 17 Dec 2016 00:38:33 -0500

The oligarchs’ ball at Trump Tower revealed one not-so-well-kept secret about the tech moguls: They are more like the new president than they are like you or me.

In what devolved into something of a love fest, Trump embraced the tech elite for their “incredible innovation” and pledged to help them achieve their goals—one of which, of course, is to become even richer. And for all their proud talk about “disruption,” they also know that they will have to accommodate, to some extent, our newly elected disrupter in chief for at least the next four years.

Few tech executives—Peter Thiel being the main exception—backed Trump’s White House bid. But now many who were adamantly against the real-estate mogul, such as Clinton fundraiser Elon Musk, who has built his company on subsidies from progressive politicians, have joined the president-elect’s Strategic and Policy Forum. Joining Musk will be Uber’s Travis Kalanick, who half-jokingly threatened to “move to China” if Trump was elected.

These are companies, of course, with experience making huge promises, and then changing those promises to match new circumstances. Uber, for instance, touted itself as a better deal than a cab for both riders and drivers before it prepared to tout a better deal for riders by replacing its own soon-to-be obsolete drivers with self-driving cars.

Silicon Valley and its leading mini-me, the Seattle area, did very well under Barack Obama, and expected the good times to continue under Hillary Clinton. Tech leaders were able to emerge as progressive icons even as they built vast fortunes, largely by adopting predictably politically correct issues such as gay rights and climate change, which doubled as a perfect opportunity to cash in on Obama’s renewable-energy subsidies. Increasingly tied to the ephemeral economy of software and media, they felt little impact from policies that might boost energy costs or force long environmental reviews for new projects.

No wonder Silicon Valley gave heavily to Obama and then Clinton. In 2016, Google was the No. 1 private-sector source of donations to Clinton, while Stanford was fifth. Overall the electronics and communications sector gave Democrats more than $100 million in 2016, twice what they offered the GOP. In terms of the presidential race, they handed $23 million to Hillary, compared to barely $1 million to Trump.

Yet, there is one issue on which the Valley has not been “left,” and that is, predictably, wealth. It may have liked Obama’s creased pants and intellectually poised manner, but it did not want to see the Democrats become, God forbid, a real populist party. That is one reason why virtually all the oligarchs favored Clinton over Sanders, who had little use for their precious “gig economy,” the H-1B high-tech indentured-servants program, or their vast and little-taxed wealth.

Jeff Bezos, the Amazon founder with a net worth close to $70 billion, used his outlet, The Washington Post, to help bring down Bernie, before being unable, despite all efforts, to stop Trump. So now Bezos sits by Trump’s side, hoping perhaps that the president-elect’s threats to unleash antitrust actions against Amazon will be conveniently forgotten as an artful “deal” is struck.

For these and other reasons, there’s little doubt that the tech elite would have been better off under Clinton, who likely would have, like Obama, disdained antitrust actions and let them keep hiding untaxed fortunes offshore. Now, they will have to share the head table with the energy executives they’d hoped to replace with their own climate-change-oriented activities.

The tech oligarchs have long had a problem with what many would consider social justice. Although the tech economy itself has expanded in the current period, its overall impact on the economy has been less than stellar. For all of its revolutionary hype, it’s done little to create a wide range of employment gains or boost worker productivity.

To be sure, there have been large surges of employment in the Bay Area, Seattle, and a handful of other places. California alone has more billionaires than any country in the world except China, and nearly half of America’s richest counties.

But for much of the country, notably those areas that embraced Trump, the tech “disruption” has been anything but welcome news. This includes heavily Latino interior sections, home to many of America’s highest employment rates. Overall, the “booming” high-wage California economy celebrated by progressive ideologues like Robert Reich does not extend much beyond the Valley. In most of California, job gains have been concentrated in low-wage professions.

Despite its vast wealth, California has the highest cost-adjusted poverty rate in the country, with a huge percentage of the state’s Latinos and African Americans barely able to make ends meet. California metropolitan areas, including the largest, Los Angeles, account for six of the 15 metro areas with the worst living standards, according to a recent report from demographer Wendell Cox. Meanwhile, the middle and working class, particularly young families, continue to leave, with more people exiting the state for other ones than arriving to it from the, in 22 of the past 25 years.

Even in Silicon Valley itself the boom has done little for working-class people, or for Latinos and African Americans—who continue to be badly underrepresented at the top tech firms as many of those same firms aggressively promote diversity. A study out of the California Budget and Policy Center (PDF) concluded that with housing costs factored in, the poverty rate in Santa Clara County soars to 18 percent, covering nearly one in every five residents, and almost one-and-a half times the national poverty rate. Since 2007, amidst an enormous boon, adjusted incomes for Latinos and African Americans in the area actually dropped (PDF).

Much of this has to do with change in the Valley’s industrial structure, which has shifted from manufacturing to software and media. The result has been a kind of tech alt-dystopia, with massive levels of homelessness, and housing costs that are prohibitive to all but a small sliver of the local population.

With a president whose base is outside the Bay Area, and dependent on support in areas where jobs are the biggest issue, the tech moguls will need to find ways to fit into the new agenda. The old order of relentless globalization, offshoring, and keeping profits abroad may prove unsustainable under a Trump regime that has promised to reverse these trends. In some senses the Trump constituency is made up of people who are the target of Silicon Valley’s “war on stupid people.” Inside the Valley, such people are seen as an obstacle to progress, who should be shut up with income supports and subsidies.

So can Silicon Valley make peace with Donald Trump, the self-appointed tribune of the “poorly educated”? There are two key areas where there could be a meeting of minds. One is around regulation. One of the great ironies of the tech revolution is that the very places that are home to many techies—notably blue cities such as San Francisco, Austin, and New York—also tend to be the very places most concerned with the economic impacts of the industry.

Opposition to disruptive market makers in the so-called sharing economy like Uber, Lyft, and Airbnb is greatest in these dense, heavily Democratic cities. What’s left of the private-sector union movement and much of the progressive intelligentsia is ambivalent if not downright hostile to the “gig” economy. Ultimately, resistance to regulations relating to this tsunami of part-time employment could be something that Trump’s big business advisers might share in common with the techies.

More important will be the issue of jobs. It may not work anymore for firms to lower tech wages by offshoring jobs or importing lots of foreign workers under the H-1B visa program, since Trump has denounced it. IBM’s Ginni Rometty, who had been busily replacing U.S. workers with ones in India, Brazil, and Costa Rica, has now agreed to create 25,000 domestic jobs. Other tech companies—including Apple—have also been making noises shifting employment to the United States from other countries. Trump may well feel what “worked” with Carrier can now be expanded to the most dynamic part of the U.S. economy.

If the tech industry adjusts to the new reality, they may find the Trump regime, however crude, to be more to their liking than they might expect. Companies like Google may never again have the influence they had under Obama, but many techies may be able to adjust. As long as the new president “deals” them in, the techies may be able to stop worrying about Trump and begin to embrace, if not love, him.

This article first appeared on The Daily Beast.

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

Photo by Gage Skidmore from Peoria, AZ, United States of America (Donald Trump) [CC BY-SA 2.0], via Wikimedia Commons

Photo: MCR World

The Future of Racial Politics

Joel Kotkin and Wendell Cox — Sat, 10 Dec 2016 00:38:33 -0500

From its inception, the American experiment has been dogged by racial issues. Sadly, this was even truer this year. Eight years after electing the first African-American president, not only are race relations getting worse, according to surveys, but the electorate remains as ethnically divided as in any time of recent history.

Donald Trump has emerged in most media accounts as the candidate of Anglo voters, with a margin of 21 percentage points over Hillary Clinton among that segment of the electorate. Clinton’s embrace of “identity” politics may have played a role in turning off many of these white non-Hispanic voters, who might otherwise had voted Democratic.

Many Democrats maintain still, with some justification, that as demographics evolve over the next decade, the increasingly diverse electorate will reward their identification with racial minorities. The country, and the electorate, seem destined to become ever less white in the coming decades. Between 2000 and 2015, the nation’s population makeup became increasingly minority, from 31 percent to 38 percent. This trend will continue, with the country conceivably becoming 45 percent non-white by 2030 and 53 percent by 2050.

White Men Can’t Jump, But They Can Still Vote

It may well be that Democrats this year jumped the demographic gun. Even as the white population diminishes, it retains a dominant influence in elections. One reason: Whites tend to vote more. Most critical, the African-American share of the electorate, which reached record highs with Barack Obama atop the ticket, actually dropped by a percentage point in 2016. Latino turnout, widely seen as a surge that would elect Clinton, represented about the same percentage --11 percent -- in 2016 as in 2012.

Thesedynamics keyed the Trump victory, particularly in heavily white working-class precincts in the Midwest, Pennsylvania and Florida, where he secured his electoral victory. Many of the pivotal states’ electorates remain very white indeed. In Wisconsin, for example, more than 80 percent of voters are white, and most of them are not residents of liberal college towns like Madison. This is also the case for Pennsylvania, where more than 75 percent of voters are Caucasian. Even Florida – itself a very diverse state -- still has a heavily white electorate, accounting for more than 55 percent of voters.

These patterns will remain critical past what might be seen as their sell-by date for two critical reasons. One has to do with the concentration of minority voters. Nearly 60 percent of African-Americans live in Southern states where Trump won by dominating a very conservative white electorate. Other minority voters are clustered in big cities in the Northeast, which are not remotely contestable for Republicans.

Latino voters, and also Asians, are likewise heavily concentrated, particularly in California, now essentially a non-GOP zone, as well as the similarly politically homogeneous Northeastern cities and Chicago. To be sure, Latinos are also critical in Texas, and Asians too (increasingly so), but for now the Texas white population still outvotes them by a considerable margin.

Another problem for the much-ballyhooed “emerging Democratic majority” lies in one stubborn fact: The elderly, most of whom are white, are not dying out quickly enough for Democrats to win. Although the extension of life spans may have slowed, or even slightly reversed in some demographic segments, seniors are clearly living longer than before.

The Limits of Identity Politics

Ignoring the reality of economic decline in the states that swung to Trump, some observers maintain that the increased conservatism among white working-class voters reflects deep-seated racial antagonisms. But this does not explain the considerable movement of these voters, particularly in the Rust Belt, from support for Obama to support for Trump, as seen in such places as Youngstown, Ohio, Wheeling, W.Va., Macomb County, Mich., and Erie, Pa.

The Democratic Party made things easier for Trump by adopting identity politics as its mantra. This is particularly maddening when charges of racism are leveled by affluent professionals, academics and bureaucrats, many from elite universities, who are themselves privileged.

To their credit, some progressives suggest shifting away -- at least in the short run -- from identity politics. But racial determinism may now be too central to their ideological core. Bernie Sanders’ campaign spokesperson Symone Sanders, for example, said that when it comes to picking a new leader for the Democratic National Committee, whites need not apply.

Matthew Yglesias, always an excellent window on progressive dogma, insists that “there’s no other kind of politics” but identity politics; Democrats, he asserts, simply need “to do it better.” Progressives seem about as ready to ditch racialist politics as Southern segregationists were willing to abandon Jim Crow in 1948.

The Coming GOP Crisis

For Republicans, identity politics is the gift that keeps giving, but the question is for how long. If you want a nightmare racial scenario for the GOP, just look at California. Since 1994, when the state passed Proposition 187, a measure widely perceived as anti-Hispanic, the Anglo population has dropped by more than 2 million as the state has added 9 million people, including more than 7 million Hispanics. Minorities now account for 62 percent of the population, compared to 43 percent in 1990. The shift in the electorate has been slower but still significant. In 1994, 49 percent of the electorate was Democratic and 37 percent Republican. Due in large part to ethnic change, by 2016 the Democratic margin was 45 percent-26 percent.

In California this surge in minority voters has accompanied a gradual erosion of the white population, a large portion of which has left for other states. The Golden State also has gone out of its way to encourage immigration of undocumented aliens by offering them driver’s licenses, subsidized health care and financial aid for college; 74 percent of all California children under 15 are now minorities, compared to 66 percent in 2000, and 25 percent of them live below the poverty line. This is 2.5 times the white non-Hispanic rate in California.

Despite largely positive results outside the blue coastal states, potentially the biggest long-term problem facing Republicans is in a dominant aspect of geography: suburbia. Trump lost some largely affluent suburban areas like Orange County, where 55 percent the population is Latino or Asian, up from 45 percent in 2000. Perhaps most emblematic of potential GOP problems was Trump’s -- and the GOP’s -- loss of Irvine, a prosperous Orange County municipality that is roughly 40 percent Asian.

Republicans should be even more worried about trends in Texas, where Latinos are already close to a plurality and the Asian population is surging. There are still enough conservative whites to win elections in Texas -- Trump won by 10 percentage points -- but the margins will continue to shrink. This trend can already be seen in Houston’s sprawling, increasingly multiracial suburbs. Trump, for example, lost solidly middle-class Fort Bend County, by some estimates among the most diverse in the country, which voted Republican in every presidential elections since 1968.

If this pattern continues, the die may indeed be cast for the GOP. As most minorities now live in the suburbs -- a trend that continues to increase -- a loss of suburban voters, given the total Democratic lock on inner city electors, would be too much for rural and small-town whites to overcome. Simply put, by 2030, losses in the multicultural suburbs could make dreams of progressive long-term dominance all but inevitable.

How Republicans Can Withstand the Racial Shift

Republicans must reverse these trends if they don’t want to go the way of the dinosaur. They can take some limited satisfaction in knowing that Trump did somewhat better than Mitt Romney or John McCain among Hispanics and blacks as well as improving slightly among Asians.

To expand on these modest gains, Republicans need to focus not on race but economics. Our recent study for the Center for Opportunity Urbanism demonstrates clearly that minorities generally do far better in red states than in blue ones, based on such factors as income, homeownership, entrepreneurship and migration. Minorities all continue to move in ever larger numbers to red states because their economic climate and regulatory regime work better for them.

Conservatives can make a case that Barack Obama’s progressive agenda actually favored the highly affluent, who tend to be disproportionately white. According to a 2016 Urban League study, African-American levels of economic equality are lower now than in 2009, surely a disappointment for a black middle class so understandably proud of Obama’s elevation.

The best role model for the GOP could be in Texas. Latinos in the Lone Star State generally do better than their counterparts in California -- as measured by homeownership, marriage rates, incomes -- and also tend to vote more conservatively. In 2014, for example, Republican Gov. Greg Abbott won 44 percent of Texas Latinos. In contrast, that same year Democratic Gov. Jerry Brown won 73 percent of the Latino vote in California.

Other factors, notably upward mobility among Latinos, African-Americans and Asians, could play a transformative role. As they continue to move to the suburbs, buy houses and start businesses, they may become less likely to support a high-regulation, high-tax and redistributionist agenda. Since 2000, more than 95 percent of the minority growth (black, Asian and Hispanic) in the 52 largest metropolitan areas has been in suburban and exurban areas. Trump did much better among college-educated black males, for example, than those with no college education -- 16 percent vs. 11 percent.

If more minorities enter the middle class, particularly under Trump, this could provide an opening for Republicans, just as occurred after the World War II when Italian, Irish, Polish and other eastern European voters moved to the suburbs and assimilated, even intermarried, after years of living apart. A message that targets the middle class aspirations of minorities could be more effective in the long run than appealing merely to xenophobic sentiments shared by an inexorably diminishing population.

Critically, in the coming decades, the vast majority of Latinos and Asians will be native-born. They will have spread out increasingly not only within regions but to more conservative parts of the country, notably Texas and the Southeast. At the same time, the population of undocumented workers, the least assimilated and generally the poorest demographic, is already declining, down by 300,000 since 2008. If it continues to decline, which may be likely under Trump, immigration may soon fade away as a primary issue for Latinos.

Perhaps even more critical, however, may be the growing trend toward intermarriage among minorities. Among second-generation Latinos and Asians, interracial marriage is creating what could become an increasingly fluid racial identity. Intermarriage involving African-Americans is also on the upswing. The new generation of ethnic hybrids, most with one Anglo parent, will no longer be easily pigeon-holed ethnically. Overall, 15 percent of marriages were between partners of different ethnic groups in 2012.

These are all opportunities to succeed, but the GOP can only prolong itself if it finds a way to reach minority voters based on an appeal of economic mobility. Whether they take this tack, or simply play for time until white voters lose their primacy, may determine whether it is the stupid party that some suggest, and one that, even at its great moment of opportunity, is destined to remain permanently so.

Ultimately, Republicans could build on Trump’s economic message by demonstrating its efficacy for minority voters. This may be the party’s only hope in the future, given the demographic trends. The competition could also encourage Democrats to focus more on “bread and butter” issues. If future presidential campaigns are waged over key economic issues, rather than pitting ethnicities against one another, the nation will be both unified and stronger.

This article first appeared on Real Clear Politics.

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

Photo: Steve White, Creative Commons

Five Ideas to Make America Greater

Joel Kotkin — Tue, 22 Nov 2016 00:38:22 -0500

Donald Trump’s presidential campaign was based on the notion that he could “Make America Great Again.” But beyond the rhetoric — sometimes lurching into demagoguery — the newly elected president comes to office, as one commentator suggests, “the least policy-savvy president in history.”

To succeed, Trump must adopt innovative policies that transcend traditional right-left divides. He needs to find ways to help his heavily white, working-class base while expanding his appeal to minorities, millennials and educated people who are now largely horrified by his ascendency.

In the short run, his biggest problem may lie with his own Republican Party establishment, which, rather than “drain the swamp,” would simply like to create one of its own. The looming presence of corporate lobbyists, swarming around the administration like hungry flies, is not encouraging at all, nor are GOP congressional plans to re-establish “earmarks.”

The key lies not in empowering a different set of K Street parasites, but rather in reversing income stagnation. If he cannot, his triumph may prove to be no more consequential than an absurdist, Latin American-style telenovela.

A flatter, fairer tax

The basic instinct among many Republicans tends toward reducing taxes on their richest donors and making life easier for the ultrarich, including some on Trump’s economic team. Trump’s imperative should, instead, be to make the tax system fairer for the middle and working classes. One way would be to make a graduated flat tax that would mean that the rich, who make most of their money from investments, pay the same rate for capital gains as the rest of us do for income.

Democrats will, no doubt, still charge Trump with being “unfair,” but, as Ronald Reagan proved 20 years ago, Americans support incentives for work if they don’t unfairly tilt conditions to the ultrarich. Main Street business owners, the most hostile constituency to the Obama administration’s policies, pay taxes based on their income and can’t manipulate the system like Apple, Google, Wall Streeters or, for that matter, real estate developers like Trump himself.

A middle ground for immigration

Opposition to illegal immigration helped drive the Trump campaign early on, but, outside of the GOP base, there is little support for a mass roundup of the undocumented. The vast majority of Americans, over 70 percent, also oppose “open borders.” After all, even President Obama evicted 2 million people during his two terms in office.

Trump also can begin reordering our immigration policies toward skilled workers who are interested in becoming citizens. At the same time, Trump could score points by undermining the H1-B visa program, which allows Silicon Valley firms, along with corporations like Disney and Southern California Edison, to lay off American workers and replace them with temporary indentured servants.

Read the entire piece at The Orange County Register.

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

Photo: Gage Skidmore from Peoria, AZ, United States of America (Make America Great Again hat) [CC BY-SA 2.0], via Wikimedia Commons