San Francisco

Gavin Newsom’s California Has Become a Neo-feudal Nightmare

Joel Kotkin — Fri, 02 May 2025 20:28:38 -0400

Never one to miss a reason to crow, Gavin Newsom, the governor of California, was out in front of the media at the weekend, bragging about how his state now boasts the world’s fourth largest GDP, surpassing Japan. This is a natural posture for a potential presidential candidate, a chance to show how under his leadership California has thrived.

Unfortunately, few are likely to believe him. Newsom must realise that the notion that California is a model for the rest of the United States – the rationale for the Newsom-led “resistance” against Donald Trump – is no longer widely accepted. In a national 2024 survey, only 15 per cent of respondents felt that California is a model other states should copy; 39 per cent said the state should not be emulated. Barely one in three state residents – and only one in four younger voters – now thinks of California as a good place to achieve the American dream.

Even the GDP news has to be taken with a grain of salt. For one thing, Japan’s downgrade is likely to be partly a result of the decline of that country’s currency, which has been weakening against the dollar for several years.

But beyond GDP, the illusion of Californian success is also a product of high asset values, like real estate, exacerbated by regulatory policies, with house prices typically more than twice as high as the national norm. Add to this the huge capital gains accruing to a handful of tech firms, who over the past decade have doubled their share of the S&P, and you have a large part of the explanation for California’s asset boom.

Rather than the exemplar of a new “progressive capitalism”, or a model for social justice, as Newsom and his cadre assume, the beneficiaries of the state’s growth have been very much concentrated on the upper crust. It may be springtime for Apple, Google, Nvidia and Meta (formerly Facebook), but the prospects for most Californians are anything but sunny. In reality, modern California increasingly resembles a feudal country – like Qatar, Brunei or the United Arab Emirates – where fantastic wealth is largely owned by a small elite.

Once an example for upward mobility, today California manages to be both home to the highest number of billionaires and the highest cost-adjusted poverty rate. The state’s poverty rate continues to worsen. Seven in ten Californians say economic inequality is getting worse, according to a recent survey. The Public Policy Institute of California (PPIC) estimates nearly a third live in poverty or near-poverty – roughly 13 million people in total.

Even the geography of growth since 2017 has been highly concentrated in three Bay Area counties, bolstered by four of the world’s seven companies with trillion dollar valuations. By some counts, real GDP in these counties rose at four times the rate of the US average while the rest of the state, home to the vast majority of the population, has grown well below. The same can be said about race; California may talk boldly about “equity” but in reality, its economy is remarkably unequal, with majority black or Hispanic counties growing well under the national average.

Overall, California today is one of the worst states in the nation when it comes to creating jobs that pay above average, while it is at the top of the heap in creating below average and low-paying jobs. Between 2008 and 2020, the state created five times as many low wage jobs as high wage jobs. In the past three years, the situation worsened, with 78.1 per cent of all jobs added in California from lower-than-average paying industries versus 61 per cent for the nation as a whole.

As tech stocks and housing in Montecito (home of Meghan and Harry) soar in value, Californians suffer the nation’s second highest rate of unemployment, lagging in job creation in comparison to its chief rivals, like Texas and Nevada. In the past year, its GDP growth has also been among the lowest in the country.

This will be in no small part because California has the highest energy prices in the continental US, double the national average, which has also exacerbated “energy poverty,” particularly among the poor and those in the less temperate interior.

Much of this reflects the impact of climate policy, a favourite hobby horse of the state’s dominant elite. But these same policies increase poor and working family costs, and shift billions of dollars to the wealthy, in the relentless pursuit of unilaterally modelled emission targets that even advocates admit cannot possibly “fix” the global climate.

It’s working class jobs – construction, logistics, manufacturing, energy – that have been most severely hit. Even without adjusting for costs, no California metro area ranks in the US top ten in terms of well-paying, blue-collar jobs. But four – Ventura, Los Angeles, San Jose, and San Diego – sit among the bottom ten. They are also far more negative about the future of the economy than those nationally, and particularly compared to people in competitor states such as Texas.

Rather than the land of entrepreneurial opportunity, California increasingly presents a picture of medieval inequality. Huge wealth is concentrated within in few hands while around a quarter of the nation’s homeless population lives in the Golden State, many concentrated in disease and crime-ridden tent cities in Los Angeles or San Francisco.

If this is the model of Newsomian capitalism, it’s unlikely to have many buyers in 2028.

This piece first appeared at: Telegraph.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: GetArchive in Public Domain.

The Democratic Bourgeoisie is Fighting to Take the Party Back from the Left

Joel Kotkin — Tue, 11 Feb 2025 20:28:38 -0500

For generations, the ultra-rich in big American cities have been willing to go along with progressives and their policies. But now, as urban areas across the country depopulate and lose jobs, some of those oligarchs – from San Francisco and Los Angeles to Boston – appear to be increasingly willing to take on the Left. And in some places, they have already had considerable and surprising success.

These efforts contradict the prevailing Democratic trend, as evidenced by the recent choices for the leadership of the party. The Democratic National Committee’s obsessions with race and gender seemed to one party veteran “like outtakes from a humanities seminar at a small liberal arts college”. While moderates still represent a larger group, a growing proportion of Democrats identify as being on the Left, as the party shrinks.

Progressive stances taken within the party, and parroted by clueless Biden operatives, have much to do with Democrats’ high disapproval ratings. But the party’s heart still belongs to the favourites of the Left – Bernie Sanders, Alexandria Ocasio-Cortez, and Elizabeth Warren.

Yet when it comes to running cities, it’s clear to many in the commanding heights of the party – particularly donors – that the passions of the heart have led to a less effective brain. Once strong backers of progressives, taking the knee during the George Floyd era, the Democratic bourgeoisie – aghast at urban decay – have decided to try to save their cities.

Nowhere is this clearer than in San Francisco, the epicentre of progressive insanity. There, tech entrepreneurs worked to get rid of Left-wing prosecutor Chesa Boudin, and last year helped to elect as mayor Daniel Lurie, scion of the Levi Strauss fortune, as well as some more moderate members of the Board of Supervisors. Lurie’s candidacy reflected growing concern even among the city’s famously progressive business elites with the almost Dickensian lunacy on the streets.

Lurie, of course, faces major challenges in his efforts to restore San Francisco’s lustre and risks being labelled by progressives as promoting interests that are fundamentally selfish. But one has to be blind, or perhaps a member of the Democratic Socialists of America, to not see the ruination of a great city that, in recent years, has lost branches of national businesses like Safeway, Old Navy, Anthropologie, Whole Foods, Nordstrom and H&M. San Francisco’s office vacancy rate has reached record highs – and this in a city that not long ago seemed to be among the best positioned for the digital age.

Critically, Lurie, who spent almost $9 million of his own funds on his campaign, will run an administration less connected to progressive non-profits and the powerful public employee unions. In a place like San Francisco, it greatly helps to fund your own campaigns.

Yet “Baghdad-by-the-Bay” is not the only city suffering from progressive-generated decline and its consequences, such as wealthy individuals bailing to low-cost places such as Florida. Traditional big blue cities like New York, Los Angeles and Chicago are also those whose workers are most likely to have embraced hybrid or totally remote working, while more jobs of all kinds are headed to much faster growing suburbs and exurbs. Over the past five years, finance, business services, business management and even tech have shifted from New York, LA, Chicago, Boston and San Francisco to places such as Austin, Dallas, Salt Lake and Raleigh-Durham.

Read the rest of this piece at Telegraph.

Lead photo: Thomas Hawk, via Flickr, under CC 2.0 License.

SF Muni Tries Washington Monument Strategy

Randal OToole — Tue, 26 Nov 2024 20:28:38 -0500

Like many transit agencies, San Francisco Municipal Transportation Agency (Muni) is facing a big budget deficit, and its response is to employ the Washington Monument Strategy. For those who don’t know, back in 1969 President Nixon tried to reduce the National Park Service’s budget and the Park Service responded by shutting down the Washington Monument. Tourists who wanted to ride the elevator to the top of the monument were directed to the senate and house office buildings and told to ask their elected representatives to restore the agency’s budget. Congress restored the funding, but Nixon fired the Park Service director who thought up the strategy a few years later.

We may need to rename this the Cable Car Strategy, as Muni is proposing to reduce its deficit by suspending service on the cable car routes as well as some streetcar routes that are mainly used by tourists. While it’s true that cable car ridership has been slow to recover from the pandemic — as of September, it was less than 69 percent of 2019 numbers — it’s also true that cable cars are the symbol of the city and an important tourist attraction. Considering all the bad publicity San Francisco has received lately, its commercial interests don’t want to do anything to depress tourism still further.

Muni knows this, of course, which is why it is floating cutting the cable cars as a trial balloon. It obviously hopes that local taxpayers will eagerly support tax increases to keep the cable cars climbing halfway to the starts. Unfortunately, taxpayers are pretty defenseless against this strategy, so it will probably work and many other transit agencies are probably using a similar strategy to restore their budgets despite low ridership.

This piece first appeared at The Antiplanner.

Randal O'Toole, the Antiplanner, is a policy analyst with nearly 50 years of experience reviewing transportation and land-use plans and the author of The Best-Laid Plans: How Government Planning Harms Your Quality of Life, Your Pocketbook, and Your Future.

Photo: Pi.1415926535 via via Wikimedia, under CC BY-SA 4.0.

Kamalafornia Über Alles

Joel Kotkin — Thu, 03 Oct 2024 20:28:08 -0400

For the last century, no state more epitomized the ideals of upward mobility and technological and cultural innovation than California. Once on the distant fringe of America, the Golden State has emerged as an economic powerhouse, with a gross domestic product larger than those of all but four nation states. As its economic influence swelled, California became a central locus of US political power. Its political clout arose first in the Nixon-Reagan era and later in the form of the progressive California elite—the likes of Nancy Pelosi, Adam Schiff, George Clooney, and the tech oligarchs—who have now expelled “Scranton Joe” in favor of one of their own, Vice President Kamala Harris, at the summit of Democratic power.

Yet given the partisan fixations of most mainstream media, few look at the Kamalafornian reality. Since 2000, this state of unmatched attractions has managed to lose a net 3.5 million domestic residents. Critically, it ranks toward the bottom among US states in drawing newcomers, who have always been the critical fuel for its economy. Many of those leaving, according to an analysis of IRS data, are middle-income families in their childbearing years; many are college graduates. Forget Harris’s youthful “vibe”: The state, according to data from the Census Bureau’s American Community Survey, is aging 50 percent more rapidly than the nation—gradually ditching the surfboard for the walker.

When Biden was elected in 2020, an overjoyed Los Angeles Times gushed that his goal was to turn America into California. This reflected the reality that the progressive power center lies not in New York, now only the fourth most populous state, or even in the wider Northeast, but in California. With all its problems, the Golden State has a far bigger economy and wields far greater technological influence.

California’s wealth nurtured the careers of both Gov. Gavin Newsom and Harris, who pulled key support from elite Golden State lawyers, tech oligarchs, progressive inheritors, Hollywood, and public-employee unions. Harris, as Dan Walters has noted, was anointed by the same San Francisco-based cabal forged by the onetime assemblyman and redistricting guru John Burton. It’s a tight-knit bunch that includes Pelosi, Newsom, and Willie Brown, among others. Many of these people are linked by personal ties, funding, and political alliance; Harris’s emergence also came courtesy of an affair with a key cabal figure, the much older, highly gifted Brown, a former California Assembly speaker and San Francisco mayor.

The cabal operates in large part with funds derived from Silicon Valley and Hollywood. Newsom, lavishly sponsored by the Getty Oil heirs, was largely seen as the cabal’s most likely political standard-bearer. But history, in the form of South Carolina’s James Clyburn and the acquiescent Biden, broke in Harris’s favor. In the current race, Harris, not surprisingly, is crushing Trump on the fundraising front.

Of course, Harris’s pitch includes a self-portrait as a middle-class kid with a blended ethnic heritage, Jamaican and Indian. But despite having a Marxian economist for a father, she is no class warrior or socialist, as the delusional right continues to insist. Instead, she reflects the worldview of California’s ultra-rich elites: executives at the Apples and the Googles and the big studio directors. It shouldn’t come as a surprise that Harris’s successful debate performance last month was coached by a top Google attorney, who is litigating antitrust business in front of her own administration.

Read the rest of this piece at Compact Mag.

Photo: via Gavin Newsom on X.

A Golden State Realignment?

Joel Kotkin — Wed, 17 Jul 2024 20:28:58 -0400

Elon Musk has just announced that he will move the headquarters of both SpaceX and X from California to Texas, citing Governor Gavin Newsom’s signing of a new law banning parental notification by school districts of children’s gender identification changes. “The governor of California just signed a bill causing massive destruction of parental rights and putting children at risk for permanent damage,” Musk wrote on X. “If you’re a normal family living in California, get out before it’s too late,” wrote one commenter. Many state residents seem to be coming to a similar conclusion.

Californians are concerned for many reasons beyond their governor’s latest concession to the far Left. The state faces a deep budget deficit, tepid job growth, and massive net outmigration. Far from being the egalitarian paradise celebrated by Governor Newsom, it has the nation’s highest unemployment and poverty rates while being home to the most billionaires. It recently ranked last among the 50 states in terms of taxpayers’ return on investment.

Residents have lost confidence. Only 40 percent approve of the activities of state legislators. Some 62 percent told pollsters the state was headed in the wrong direction, up from 37 percent in 2020. Four in ten are considering an exit.

Governor Newsom finds himself increasingly unpopular with state voters. But are Californians ready for radical change? Are they even ready for reform?

So far, what should have been a political firestorm has been more like a series of isolated campfires. True, Republicans have rallied modestly from their 2018 nadir, picking up five House seats in the last two rounds of federal elections. But the GOP’s 12-representative total is a paltry fraction of the available 52. The next governor and future legislatures are likely to remain progressive, as three-fifths of Californians plan to vote for Democrats for Congress, and a hefty majority back President Biden’s reelection. As former GOP State Senate leader Jim Brulte once told me, “things have to get a lot worse before they can get better.”

Right now, “there’s some movement politically but not much,” says Shawn Steel, GOP national committeeman for California and husband of Representative Michelle Steel (R-CA). “People are stuck on an ideology and it’s hard to move them.”

One critical factor in California’s progressive dominance, notes Steel, has been changes in migration patterns. In the past, those who flocked to the Golden State brought diverse political views. This led the state to oscillate between progressive and conservative governance. In recent decades, however, population movement has created ideal conditions for one-party rule. Between 2000 and 2023, per census data, California has lost about 3.8 million residents in net domestic migration—a loss roughly the population of Los Angeles. Many of those leaving, according to an analysis of IRS data that I coauthored, are middle-income people in their childbearing years, a Republican-leaning cohort. And as another study showed, conservatives are three times more likely to consider leaving the state than are liberals. “Texas is taking away my voters,” laments the GOP’s Steele.

Read the rest of this piece at City Journal.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

How California Became a Warning to the World

Joel Kotkin — Thu, 13 Jun 2024 20:28:38 -0400

For generations, California has led the world in creating cutting-edge ideas and opportunities for newcomers. As actor-turned-governor of California Arnold Schwarzenegger once said:

‘We are the modern equivalent of the ancient city-states of Athens and Sparta… Not only can we lead California into the future… we can show the nation and the world how to get there.’

Today, the Golden State once again foreshadows the future, but this time it should be read as a warning.

Many still see California as the home of a ‘new progressive era’. It is often viewed as an exemplar of social equity, one that reflects, as a New York Times column put it, ‘the shared values of our increasingly tolerant and pluralistic society’. In truth, far from embodying an egalitarian ethos, it is pioneering a new kind of almost feudal society. A relative handful of oligarchs and a vast bureaucratic ‘clerisy’ lord it over a massive class of what are essentially serfs.

California is not only home to by far the highest number of billionaires in the US. But it also suffers the highest proportion of Americans living in poverty and the widest gap between middle- and upper-middle-income earners of any state. It endures among the US’ highest rates of unemployment, as well as massive net outmigration, an exodus that has increased sharply since 2019. It also has 30 per cent of the nation’s homeless population, with some now living in ‘furnished’ caves.

The key to understanding California’s neo-feudal reality lies in its changing economy. A decade ago, its largest firms included a host of aerospace, finance, energy and service firms. Today, the energy firms have largely disappeared – Chevron remains, though it has been moving more operations to Houston, Texas. Only one top aerospace firm, SpaceX, is still headquartered there, and it has also moved many operations to Texas. As Jerry Brown, who was governor of California for 16 years in two different periods, once warned, the state has a precarious ‘Johnny one-note’ economy. It is based almost entirely on returns to real estate, tech IPOs and the value of privately held ‘unicorn’ startups.

Even as fortunes are made by a handful of tech investors and entrepreneurs, most industries are stagnating or on their way out. Joseph Vranich and Lee Ohanian, in a Hoover Institution report released last year, observed that in 2020, Texas had seven times the number of company-initiated capital projects as California. Additionally, from 2018 to 2021, 352 companies headquartered in California moved their headquarters elsewhere.

The damage has been particularly severe in blue-collar sectors. This has proven a disaster for working-class Californians. Even without adjusting for costs, no Californian metro area ranks in the US top 10 in terms of well-paying, blue-collar jobs. But four – Ventura, Los Angeles, San Jose and San Diego – sit among the bottom 10.

For the majority of Californians today, most jobs are of a distinctly peasant quality. Since 2008, the state has created five times as many low-wage jobs as high-wage jobs. Even in Silicon Valley, once a byword for ambition and innovation, most new jobs earn less than $50,000 annually. That is far below what is needed to live a decent life in this ultra high-cost area. According to the Brookings Institution, San Francisco, arguably America’s premier high-tech city, has experienced the most rapid growth in inequality from 2007 to 2012.

Read the rest of this piece at Spiked.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Downtown Los Angeles, by Russ Allison Loar via Flickr CC 2.0 License.

Latinos and the California Housing Crisis

Jennifer Hernandez — Fri, 10 May 2024 20:28:58 -0400

My extended family spans from third to seventh generation Mexican immigrants. Most of us expect to work hard, provide for our families, and hope our children do better than we did. However, in a total Blue State betrayal of the political, environmental, and civil rights progress that began in the 1960s, younger and middle-income Latino families can no longer afford to buy a home in California.

Much of the Democratic party’s traditional middle-income constituency include small business owners, first responders, and the army of the “essential workers” who were directed to work during the prolonged COVID-19 lockdowns. These groups earn too much to qualify for housing assistance, but too little to live in the state’s most expensive population centers.

Economist John Husing showed that even the highest-paid construction workers cannot afford to buy a median priced home in any Southern California county that touches the ocean, or any Bay Area county that touches San Francisco Bay

Homeownership is by far the most effective multi-generational wealth accumulation investment for working families. According to Habitat for Humanity, homeowners have four times the net wealth of non-homeowners. They are also physically and mentally healthier, vote more often, and their children achieve higher levels of education. Owning a home in the working-class Bay Area town of Pittsburg, in Contra Costa County, was a far superior economic and quality of life choice for my parents and grandparents rather than paying landlords rent in San Francisco.

Today, however, middle-income home ownership is thwarted by urbanists who solely desire denser cities as well as environmentalists who condemn any development, even of fallow pastures next to urban freeways as unsustainable “sprawl”. Vast areas of the state where affordable, desirable housing could be built are exclusive, high-income, and largely white “green’ enclaves.

For example, Marin County, which is located a scant two miles from San Francisco has proudly banned homes on over 83% of its land. Marin has the region’s lowest Latino population (about 17% of all households) and has one of the region’s highest median incomes and home prices. It is essentially still a “sundown town,” a segregated area during the Jim Crow era where people of color were encouraged or forced to vacate each night. Over 60% of the county’s workforce commutes from other counties where housing is more affordable.

Scores of studies have bemoaned California’s housing crisis. Yet, the state continues to favor policy reforms that focus on high-priced infill housing. Truly affordable home building outside of these areas is seen as harmful to the environment and anti-climate. At the same time, the state’s profligate spending and record deficits are draining revenues from local governments which forces cities and counties to boost development fees for local service funding. The state is utterly failing to provide “missing middle” affordable housing, or indeed any housing for hard-working families and households.

Background: Progress Report on California Housing Law Reforms

Starting in 2017, an all-Democrat slate of statewide leaders enacted the first few dozen laws — which have now grown into more than 100 — aimed at solving California’s acute housing crisis. Total housing production continued to hover between 110,000 — 1118,000 new housing units per year but these figures conceal the fact that single family, condominium and apartment construction stagnated or fell. Instead, accessory dwelling units (ADUs) — granny cottages and garage apartments built in someone else’s home — rose from nearly nothing to 19% of all new housing permits in 2022.

ADUs are most popular in Los Angeles County, where 49% of the population is Latino. They provide homeowners with rental income opportunities and nearby living units for family or friends who would otherwise be forced to move to more remote, but affordable locations, including other states. But ADUs do not provide the same generational wealth-building benefits as owner-occupied housing and are not well-suited for households with children.

Despite the new laws, affordable single and multifamily housing production - particularly compared to competitors like Florida and Texas — continues to be blunted by California’s increasingly stringent “CalGreen” building code costs, fees and exactions that can exceed $150,000 per unit, as well as high cost cleanup or utility improvements required to reuse urban infill sites. Infill housing costs have skyrocketed to the point that infill proponents concede that even staggering expensive rental housing development is not feasible in major California urban areas. A multi-family project charging over $4,000 per month for a small two-bedroom unit touted as an infill housing solution in 2019 simply did not “pencil” almost anywhere in 2023.

California’s inability to produce affordable for-sale and rental housing particularly harms the aspirations of Latino households. According to the Public Policy Institute of California, Latinos are far more likely to have children. In 2022, the median annual income of a U.S. born Latino household was estimated to be $70,000, and $55,000 for a foreign born household, compared with $90,000 for white and $100,000 for Asian households.

These incomes are far too small to rent a $4,000 per month apartment, which requires annual earnings of at least $160,000 to avoid paying more than 30% of total income on housing, the standard threshold for excessive housing costs. California Latino households have much lower homeownership rates compared to white and Asian households. Only 45.4% of California’s Latinos were homeowners in 2021, compared to 63.6% of California’s non-Latino white population. California Asian households had a homeownership rate of 60 percent. African Americans rates were also far lower than in other states.

Read the full report (PDF; this section starts on page 27)

Jennifer L. Hernandez has practiced land use and environmental law for 40 years, and leads Holland & Knight’s West Coast Land Use and Environmental Group. Ms. Hernandez is the longest-serving minority board member (23 years) of the California League of Conservation voters, was appointed by President Clinton to serve as a trustee for the Presidio National Park in San Francisco, serves on the board of directors for Sustainable Conservation, and teaches environmental justice at the Univeristy of Southern California Law School. Ms. Hernandez graduated with honors from Harvard University and Stanford Law School. She and her husband live in Berkeley and Los Angeles.

Photo: Lucas Valley, Marin County. Source: Mark, via Flickr, under CC 2.0 License

Why London is Beating American Cities

Joel Kotkin — Wed, 01 May 2024 20:28:58 -0400

As America’s cities continue to decline, as even ardent boosters warn of “an urban doom loop”, how does London remain a global powerhouse? The straightforward answer is that it retains an old advantage: its origins as a former imperial capital.

Unlike the high-rise “transactional” cities of New York, Chicago and San Francisco, all groaning under record levels of vacancy and massive investor losses, London never had an official “downtown”, with all major business clustered in dense formations. Rather, as one observer noted in 1843, London’s development occurred organically, surrounding “itself suburb by suburb like onions 50 to rope”. Of course, parts of central London have suffered significant losses — see Canary Wharf and Spitalfields — but the capital’s archipelago of villages have mostly survived. Far more than its great American rivals, London is actually increasing its population.

This, let’s not forget, comes in the wake of Brexit, which many feared would turn the City into a tertiary player. Yet even here, despite the loss of listings from some prominent firms such as ARM, London is thriving: it has since welcomed the financial powerhouses of Bloomberg, Citadel and Alantra into its embrace.

Crucial to London’s success is its prospering technology and media industries, which, notes Tony Travers, a visiting professor at LSE, increasingly drive the capital’s economy. Its creative sector, for instance, now accounts for almost 15% of jobs in London, up from 11% in 2010. In the realm of tech, one recent study suggested that London beats New York and San Francisco. Indeed, Microsoft plans to open an AI hub in the city, part of a $2.5-billion investment strategy, following other firms such as OpenAI. According to the Harvard Business Review, this makes London both first in the world for talent attraction and the top destination for foreign investment in financial and professional services.

None of this is to say that London’s streets are paved with gold. Flick through the capital’s Evening Standard and you’ll find report after report about surges in crime. Even so, notes Munira Mirza, who served as policy director for former prime minister and London mayor Boris Johnson: “London is doing better in many ways than a lot of US cities… But for Londoners, the perception is that crime, street cleanliness, housing costs, road congestion, etc, have been getting worse because public services and infrastructure have not expanded to match the growing population.”

“London is doing better in many ways than a lot of US cities.”

And yet, she observes, overall crime rates have fallen under London’s last three mayors and, in terms of crime and anti-social behaviour, levels are well below the national average. Travers partly credits this to the fact that the UK has not experienced an American-style “opioid crisis” or “defund-the-police moment”. As a result, London saw 104 homicides last year, equivalent to 12 per million people, compared to 45.4 per million in New York, one of America’s safer cities.

A similar story is playing out in London’s classrooms, particularly when it comes to ethnic-minority performance. In one diverse district in Chicago, not one student can do grade-level math. According to data from the Illinois State Board of Education, 30 schools last year, 22 of which are in the Chicago area, failed to lift even one student to grade-level reading.

In London, by contrast, state schools are consistently improving, particularly in recently developed free schools. Moreover, immigrants are actually lifting the performance of London’s state schools above their counterparts in the rest of the country. “London’s schools are better now because of the immigrants,” suggests Mirza. The proximity of world-class universities — in London, Cambridge and Oxford — not only helps jumpstart elite industries such as tech and media, but has also attracted generations of ambitious foreigners who then choose to stay in London.

It is difficult to imagine how any rival city-states — including Singapore — could operate so successfully without the interference of a powerful central bureaucracy. In Dubai, there is no real recourse from the wrath of Sheikh Mohammed. In India, corruption, pollution and lower life expectancy make Mumbai or Delhi less than likely locales for rich investors and skilled professionals. Beirut was once promising, but is now largely a sectarian ruin. As for Latin America, even business-friendly Sao Paolo is now in poor repute.

Read the rest of this piece at UnHerd.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and and directs the Center for Demographics and Policy there. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Sadiq Khan, Mayor of London - by U.S. Embassy London via Flickr under CC 2.0 License.

Downtown San Francisco is Beyond Redemption

Joel Kotkin — Mon, 19 Feb 2024 20:28:58 -0500

The recent announcement that Ian Jacobs, a scion of the famous Toronto-based Reichmann real estate clan, was coming to buy upwards of $900 million of San Francisco real estate, has offered the beleaguered California city a rare moment of hope. Some suggest that we could see a repeat of New York’s recovery from its nadir in the 1970s, during which the Reichmanns made a fortune gobbling up depressed buildings shortly before the city’s resurgence.

Yet any effort to restore San Francisco’s appeal will need more than an infusion of vulture capital. The city’s problems are essentially demographic and political, and have transformed San Francisco from an icon to a disaster zone, particularly as workers opt for remote work. The city’s office vacancy rate continues to rise, now surpassing 35%, the highest in its history.

To be sure, San Francisco has been losing its middle class for decades, replaced initially by young single people, many of whom are tied to the tech industry. But as early as 2015, the city began losing net domestic migrants as growth shifted to the further exurbs.

Since the pandemic, the city’s population has dropped and its social problems, long festering, have become a running sore. That’s likely why up to 10% of San Francisco’s residents have left the city — far more than in New York. “A lot of people have had it,” Heather Gonzalez, a longtime Democratic activist and mother of two, told me. “We have had neighbours and an elderly grandfather beat up on a bus and my kids have to watch people poop in public on Market Street. This is what we have to go through.”

Yet there is some hope, Gonzalez suggests. She points to the recent recall of ultra progressives including the District Attorney and three school board members. There’s also been a concerted effort by moderate Democrats to root the radical Left’s hold on the party as well as an effort to replace several far-Left members of the Board of Supervisors.

Amid a severe budget deficit, these efforts are critical. The city’s understaffed police department is almost certain to lose the battle for resources with the city’s dominant and fervently Leftist public employee unions. That the city now suffers the second highest violent crime rate in California illustrates just how important this battle is.

These reform efforts finally have some backing now from the tech oligarchs, who in recent years have been indifferent or even supportive of the progressive agenda. This has roiled the Left-wing activists who see any movement backed by the billionaire class as a hostile takeover.

Yet even if the city somehow regains its ballast, Reichman may be looking at the wrong places to invest. Although the office market may recover, the movement of business out of the state continues in a way far more profound than in New York back in the 1970s.

Read the rest of this piece at UnHerd.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Ken Lund, via Flickr under CC 2.5 License.

Transportation Policy and the Ukrainians

John Sanphillippo — Fri, 12 Jan 2024 20:28:58 -0500

The dominant philosophy that guides North American land use and transportation policy is advocacy of car ownership. The logic is simple. If you have a car you have automatic access to a wide variety of geographic employment options at any time of the day or night regardless of weather. If you have a car you can live anywhere you want. If you have a car you can shop wherever you want. If you have a car you can associate with anyone you want. Auto-mobility makes everything about your life better.

Conversely, if you rely on what’s available on foot, by bike, or public transportation you’re options are sharply curtailed in space and time and you suffer the whims of heat and cold, rain and snow along with lower wages, higher prices, and worse living conditions. Looking around at the suburban landscape it’s hard to argue. That philosophy isn’t wrong. But it’s more complicated than that… I’m going to use a real life example of how different people find different solutions to the transportation / land use puzzle.

We live in San Francisco, but have a cottage with a large garden in the countryside north of the city. We offer a cottage to Ukrainians for settlement. There are two bedrooms. It's close to town with shops, schools and a post office, so it's an easy walk or bike ride for most daily needs. Suitable for children and the elderly.

I sponsored a series of Ukrainian war refugees this year. I created a posting on Host4Ukraine stating “Дача в Каліфорнії” or “country cottage in California.” Ukrainians understand the concept of a dacha. This is a modest part time granny house outside the city where people grow a big garden and enjoy a bit of nature during the warmer months. The house itself is nothing special and I’ve furnished it entirely with a jumble of second hand items and things brought back from various trips. It really is as close to an authentic dacha as you can find in the States. While it isn’t going to win any awards for style, it’s clean and orderly and in a great location in Sonoma north of San Francisco. It also has the virtue of no missile attacks.

At present count I’ve sponsored ten Ukrainians. (I’m going to describe the first six here for the moment. Perhaps I’ll write about the others at a later date.) They arrive, get oriented, secure proper documents, and slowly integrate into their new lives. I describe myself as the bridge, not the destination. I meet them at the airport, provide free accommodations, food, cover the gas and electric bills, drive them to their appointments, and generally make them feel welcome. Along the way I show them the highlights of the area for fun.

So far all the Ukrainians have been from Kherson which is seeing some of the worst ongoing destruction. The most recent bombings killed enough civilians to prompt the official mass evacuation of all children from the territory. Older people are reluctant to leave their homes and become refugees abroad. But the young have too much to gain by leaving.

Before anyone arrived I received a continuous live feed of information. Everyone has a television studio in their pocket these days. As is so often the case, if you ask ten people what’s happening you’ll get fifteen answers. I don’t spend any of my time searching for The Truth. Instead, I explore how different people respond given external reality.

Read the rest of this piece at Granola Shotgun.

Johnny Sanphillippo is an amateur architecture buff with a passionate interest in where and how we all live and occupy the landscape, from small rural towns to skyscrapers and everything in between. He travels often, conducts interviews with people of interest, and gathers photos and video of places worth talking about (which he often shares on Strong Towns). Johnny writes for Strong Towns, and his blog, Granola Shotgun.

Photos: by the author.