California Needs a New Economic Model

Already anointed by The New Yorker as the “head of the resistance,” Gavin Newsom could well think he’s also king of California politics. He can both sell himself as the model of progressive virtue and also lord of the world’s fifth-largest economy, home to three of the world’s most powerful and influential companies.

California, along with New York, epitomizes what the French Marxist economist Thomas Piketty has aptly called “the Brahmin left,” which trades in digits, images and financial transactions. The other side, “the merchant right,” trades in more tangible goods such as cars, steel, oil, gas and food.

Yet here’s the rub: The vast majority of Californians are not entitled Googlers from Stanford who can spend their time obsessing about the climate or the meaning of their sexuality. The Brahmin model has worked well for the top earners, and their offspring, but most Californians were left out of the boom.

The Other Guys are gaining on us

The rest of the nation thinks it has our number and is calling it. Data compiled by EMSI and Mark Schill over the last year reveal some key metropolitan regions, including New York, Los Angeles, Chicago and Boston, are falling behind in terms of job creation with competitors such as Nashville, Orlando, Phoenix, Dallas and Salt Lake City. The Bay Area economies, which ranked in the top five over the last decade, notched 15th and 16th last year. Even tech and business service growth, although strong down the peninsula in Silicon Valley, is now much more rapid in the sunbelt hotspots.

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The Golden State Won’t Glitter for Republicans

California’s Republican Party was once a force to be feared, not only in the state, but across the country. Nowadays, it’s at most a mild irritant and sometimes a convenient whipping boy for the Democratic progressives, who run the state almost entirely. Nothing is working much for the GOP this year. The Republican gubernatorial candidate, John Cox, has little charisma, no discernible local roots, and no compelling message. He sneaked into the runoff election because too many Democrats vied for the job. He’ll be thrashed by Lieutenant Governor Gavin Newsom, likely by a wide margin. As governor, Newsom will probably preside over a legislative super-majority that will marginalize the Republicans even further.

Read the entire piece at City Journal.

Joel Kotkin 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 is executive director of NewGeography.com and lives in Orange County, CA.

Homepage photo credit: Tommy Lee Kreger (John Cox-6), under CC-BY-SA-2.0 license, via Wikimedia Commons.

How About a Fusion Party in the Golden State?

Once upon a time, the California Republican Party was a fearsome political instrument, forging the ground for two presidents. But today the California GOP is fighting rearguard actions to save its last remaining seats in once solidly Republican strongholds as Orange, San Diego and even in inland California, potentially costing them upward of seven House seats.

The party is now so pathetic that a top party official crowed that GOP gubernatorial candidate John Cox might be “within 10 points” to the inevitable winner, Gavin Newsom. No doubt the architects of the earlier glory days like Stuart Spencer, Mike Deaver or Pete Hannaford would find this situation unbearable.

What California needs is not a new Republican Party — at least at the state level — but what the late Kevin Starr called “the Party of California.” This party would target the growing independent constituency, now larger than Republicans, as well as Democrats who might be disaffected by their party’s relentless move to the left.

Roots of a one-party state

The roots of the Republican collapse lie largely in demographics: the steady loss of middle-class, middle-aged families, and the massive immigration of the 1980s and 1990s, which shifted the state’s ethnic profile. In 2012, the California electorate was barely half non-Latino white, but by 2030 it will drop closer to 40 percent. Some Republicans, including strong Asian-American candidates in Orange County, have made some breakthrough but overall this is ever more the party of aging white males.

Economic changes have also played a role. California’s growth engine now rests almost entirely on tech oligarchs, large funders and, increasingly, media enforcers for the progressive agenda — at least as far as it does not threaten their vast wealth. The parts of the California economy that once backed the GOP, such as aerospace, oil and gas and suburban homebuilding, have fallen into a long-term secular decline.

Much of the media, and virtually all progressive activists, will consider the collapse of the GOP as a positive development. Yet for Californians as a whole, one-party rule — as is usually the case — has engendered a growing disconnect between the political elites and the aspirations of electorate.

Time for a Party of California

If we had a functioning two-party system, California’s insane climate jihad — which has served to weaken most blue-collar sectors and boosted energy and home prices — would be reevaluated based on economic impacts as opposed to increasingly stepped up. Gov. Jerry Brown’s high-speed choo-choo would likely be abandoned or scaled back out of sheer embarrassment.

But now California’s Democratic activists face few brakes on their power. They can, and often do, impose whatever controls on people’s lives and thoughts as possible, with little concern with push-back from the impacted masses.

To stop this neo-Stalinist momentum, we need an opposition that does not carry the GOP’s toxic legacy on issues relating to gays, minorities and immigrants. Running a wealthy, carpetbagging, visionless non-entity like John Cox, who speaks mostly to the aging Reagan constituencies, seems a poor way to change perceptions.

What would the Party of California stand for?

This new party should not become some “third way” front for the super-rich and their technocratic approach to politics. It could even take some pages from Trump’s book of economic nationalism and populism, but throw away the arguably xenophobic excesses associated with the chief executive, a very unpopular figure in the state. Instead it would focus heavily on those parts of the state — pretty much everywhere outside Silicon Valley and fashionable coastal communities in Southern California — that have seen little high-wage job growth, and growing poverty under the current regime.

What would a Party of California favor? It would stand for local control, which has support from about 70 percent of voters, according to a new USC Dornsife poll, and oppose the top-down policies favored by the state’s planning clerisy. The party might allow poorer areas, particularly in the interior, to increase their competitiveness by opting out of some of the fashionable progressive lunacy imposed by the Bay Area-dominated political class.

This new party would embrace California’s obligations on the environment, but at a level congruent with policies adopted by most foreign competitors. It would seek ways to employ the very technologies developed here to make our suburbs and rural areas more sustainable. The current policy of “pack and stack,” favored by the planners, means simply higher prices and fewer residences that appeal to families.

There are some promising signs. For all the inevitability of more progressive gains, two candidates, charter school advocate Marshall Tuck for superintendent of education, and tech executive Steve Poizner, running for insurance commissioner with “No Party Preference,” seem likely to either win or get in striking distance.

These candidates, particularly should they win, could pave the way for others to consider running outside the two established parties. The GOP, hopelessly addicted to its declining base, cannot accomplish this, but an emergent Party of California might do the trick.

This article first appeared in The Orange County Register.

Joel Kotkin 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 is executive director of NewGeography.com and lives in Orange County, CA.

Homepage photo credit: SCUMATT, under CC-BY-SA-3.0 license, via Wikimedia Commons

Autonomous Cars Are Our Real Future

Long a hotbed of new technologies, California insists on seeing its transit future in the rear mirror. Rather than use innovative approaches to getting people around and to work, our state insists on spending billions on early 20th century technology such as streetcars and light rail that have diminishing relevance to our actual lives.

California’s roads may be among the worst in the country, but the state seems more than anxious to spend billions on transit systems that are losing market share. Despite spending over $15 billion on trains since 1990, Los Angeles transit market share and ridership have dropped. As one member of the California Transportation Commission notes, the state’s planners largely ignore the role of technologies — including home-based work, ride hailing and autonomous vehicles — that offer the best hope for resolving our transportation woes.

Part of the problem lies in geography: the state refuses to address transportation needs within the reality of continued suburbanization of jobs and people. In major metropolitan areas since 2010, more than 90 percent of the population growth in the six largest metropolitan areas has been in the suburbs and exurbs, and less than 10 percent in the urban core favored by California’s policies. As growth heads to places such as south Orange County, the Inland Empire and northern L.A. County, the relevance of traditional transit — which works largely for downtown locations — continues to weaken.

Getting beyond the transit fantasy

Rather than hop on the rails, more residents are addressing traffic woes by simply staying home. By 2015, more Los Angeles-area residents were working at home than were taking transit, something also true across the country. Since 1990, the number of people working at home increased eight times as rapidly as the number of people using the transit system. The number of people driving increased even more rapidly compared to transit.

Promoting home-based work is one way California can develop a transit future that addresses the actual needs of of our people, who overwhelmingly live and work in suburban locations. The state really has one traditional functioning downtown — San Francisco — but most residents everywhere else favor personalized transportation because they commute to dispersed and diverse location. Already the convenience of driving keeps most of us in our cars and, for those who don’t want to drive, Uber and Lyft, both California companies, have become the carrier of choice.

We need a new vision

California government justifies its policies on environmental grounds, but increasingly the state’s priority is to reduce driving in order to produce its utopia of ever more crowded, densely packed cities. Yet these policies so far have not made the state a leader in GHG reduction but, as a new Chapman report reveals, actually behind the pack of most other states.

As the state emphasizes transportation that most people won’t use, it has favored a “road diet” to keep the freeways clogged. Against all market signals, it is determined to force people into “transit-oriented” areas, even as ridership falls. This approach ignores strategies that address mobility in ways both environmentally friendly way and also in touch with human realities. They largely ignore, for example, the potential of the ultimate, low-GHG technology, which is home-based work, a mode of work access that already is more widely used in the state, including the dense Los Angeles and San Jose areas, than transit.

But the biggest change, perhaps unfolding over the next two decades, will be the autonomous vehicle. MIT’s Alan Berger suggests this new technology will free up huge amounts of space in cities that now go for wide roads and garages, while finally liberating the overwhelmingly suburban majority from dependence on traditional cars. These new vehicles, Berger suggests, could be powered by solar power, stored in special garages, and be on call when needed. They will also likely drive a new dispersion to the outer suburbs as commutes become more tolerable, according to recent Bain study.

Streetcars, bullet trains and other waste needs to stop

Intoxicated with their transit obsession, our political leaders continue to fund ill-conceived projects such as Jerry Brown’s high-speed rail system with costs that have more than doubled since initial planning. Despite considerable scaling back, it is more than 10 years behind schedule. As many as two-thirds of Californians no longer want to fund it.

Possibly even more boneheaded are streetcar lines, which almost everywhere in the county are performing well below projections and losing riders. The construction of a 4.5-mile, $400 million trolley between Santa Ana and Garden Grove follows a route that promises few riders and seems doomed to a long money-losing career. Atlanta’s disastrously under-performing trolley has been nicknamed by some locals “a streetcar named undesirable.” Maybe we can do the same for the Santa Ana line — how does “a streetcar named stupidity” sound?

All this is all the more unconscionable at a time when more efficient, less costly technologies — electric cars, work at home and autonomous vehicles — all beckon with promise of better environmental results and greater mobility and efficiency. California may have developed many of these technologies, but our leaders have been maddeningly slow to even consider how to adopt them.

This article first appeared in The Orange County Register.

Photo: Ed and Eddie, via Flickr, using CC License.

California Must Stop Trying to Stomp Out Suburbia

We may be celebrating — if that’s the right word — the tenth year since the onset of the financial crisis and collapse of the real estate market. Yet before breaking out the champagne, we should recognize that the hangover is not yet over, and that a new housing crisis could be right around the corner.

This is particularly true in California, which took one of the biggest hits in 2008 as its sky-high prices collapsed, causing enormous problems in areas including the Inland Empire, where incomes are lower and the economy was largely built around new housing construction. The urbanist punditry helpfully came out in force to declare such areas as “the next slums.”

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A Generation Plans An Exodus From California

California is the great role model for America, particularly if you read the Eastern press. Yet few boosters have yet to confront the fact that the state is continuing to hemorrhage people at a higher rate, Read more

California Takes the Prize for Environmental Virtue Signaling — But Not Much Else

If there’s an award for environmental virtue signaling, California would win the prize. Yet for all the constant self-promotion, shameless grandstanding and endless moralizing, perhaps it’s time to reconsider the impact, and failures, of our current green obsessions.

Take the recent fires that Gov. Jerry Brown, predictably and with little evidence, blamed squarely on climate change. If he wanted to find the immediate culprit, he might be better off looking in a mirror. Earlier this year the Little Hoover Commission placed primary blame for increasing ferocity of fires on poor forest management practices, largely at the behest of the powerful green lobby. Saying that this echoes Donald Trump is true, and guaranteed a Pavlovian reaction from the progressive press, but even the blusterer in chief is occasionally right.

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‘Chinafornia’ and Global Trade in Age of Trump

One of the last regions settled en masse by Europeans, California’s trajectory long has been linked to its partners across the Pacific. Yet these ties could be deeply impacted by President Trump’s immigration and global trade policies, as well as resulting blowback by the authoritarian regime in Beijing.

In recent decades, California has become something of a China junkie. With China on the route to what some predict will be hegemonic power, there’s a set who eagerly wish to promote the idea of “Chinafornia.” The pattern of dependency can be seen in how our industries depend on China for their production. For some companies, like Apple, China provided the capacity to produce products cheaply without suffering heavy GHG impacts in state. China’s coal-based pollution allowed these congenitally “virtue signaling” firms to retain their “green” street cred.

Yet as a trade war looms, California could find itself without key markets, investment capital and sources of supply for its increasingly de-industrialized economy. Any reduction in immigration, and related investment flows, could dent real estate values, particularly in such speculator-driven markets as Irvine, downtown Los Angeles and Koreatown. There could be political ramifications as well given the close ties between China and California officials, including an alleged spy working as a driver for Sen. Dianne Feinstein.

California’s historic trade ties

Asia has always been a kind of ace in the hole for California. The state’s economic emergence in the early 1900s was tied directly to rising trade with Japan, China and the country’s new imperial outpost, the Philippines. These connections, wrote the Los Angeles-based journalist Harry Carr, changed our region from “a hick town” and turned it “into a city.”

Of course, some of our early entanglement with the Pacific was profoundly oppositional. Deep-seated fears of Asian immigrants engendered harsh racial restrictions, including bans on property ownership. The massive buildup against Japan during the Second World War sent tens of thousands of Japanese residents, including citizens, to concentration camps, but also initiated the region’s first great wave of industrialization.

Since the war California has benefited from its Asia ties in generally more positive ways. Asian importers, such as car companies, tended to use the Port of Los Angeles and set up their local headquarters here. Investors, particularly from Japan in the 1980s, buoyed the state property market. New immigrants from China, Korea, south Asia and Vietnam brought a tremendous work and entrepreneurial ethos to the state, helping to revitalize communities from the San Fernando and San Gabriel valleys to wide swaths of Orange County.

The challenge of Trump

Over the past half century, both parties have tended to be friendly both to globalization. Yet now the state’s establishment is being rocked by Trump’s assault on both generous immigration policies and China’s unfair trading practices. China’s mercantilism alone has been linked by labor-aligned groups with the loss of millions of jobs. There’s a stark class division here; the upper classes have largely benefited while many higher-wage job opportunities for middle- and working-class Californians have disappeared.

The current Trumpian policies could change this, forcing companies to rely more on citizen workers and local capital. Silicon Valley tech firms, now dependent for 40 percent of its workforce on largely Asian imports, will have to compete for domestic labor with regions and companies that operate in more reasonably priced markets. This could benefit local workers and sub-contracting firms.

To be sure, some California exporters — notably in the Central Valley, Hollywood and Silicon Valley — could find some markets shut off to them. Yet, in the longer run, China will likely suffer more in a trade war, given its almost four times larger volume of exports than come from the U.S., weaker domestic markets and massive indebtedness. Trump’s approach could force it to compromise on key trade issues in ways that benefit our exporters.

Can we benefit from the new reality?

Given the extraordinary anti-Trump mood in the state, it may seem discordant to see any good in Washington’s trade stance. California is home to nearly 40 percent of all Chinese home purchases in the U.S. These investors are one primary cause for the insane property-price inflation that has effectively chased young American families from the state. Would it be a tragic loss to lose the capital expended by non-resident foreigners who buy property largely as a kind of safe deposit box? Some two-fifths of these investors, according to a one real estate study, do not intend to live in their homes.

Policies discouraging shifts of work to China also could help reorient our business from just originating ideas to making products. This could prove a potential boon to the state’s suffering working class and for the environment, by shifting production to relatively clean California from coal-dependent China.

We are right to be offended by the xenophobia associated with the Trump policies. But if a crisis in Chinafornia spurs the state to think about decreasing our dependence on China, perhaps we can begin to promote development that helps not just speculators, investors and oligarchs, but ordinary Californians.

This article first appeared in The Orange County Register.

Joel Kotkin 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 is executive director of NewGeography.com and lives in Orange County, CA.

Photo: 禁书 网, via Flickr, using CC License 2.0.

Self-Styled Futurist Looks at California Governor’s Mansion

When he takes office this January, as seems inevitable, Gavin Newsom, a self-styled futurist, will inherit an economic legacy that could be turning sour. After a rapid expansion that seemed to make all things possible, Newsom may face challenges for which he may be poorly prepared. Read more

Jonathan Gold’s Los Angeles

The passing this week of Jonathan Gold, Los Angeles’s Pulitzer Prize-winning restaurant critic, reminded us of why we have lived in Southern California for more than four decades. When we arrived in L.A. in the 1970s—from New York and Montreal, respectively—the city was known largely for glitter and celebrities but little else. The food scene wasn’t much to write home about, though it was better than the awful cuisine in most of the country. A newcomer was likely to be introduced to Tommy’s Burgers, or perhaps a local taco joint with a menu that hadn’t changed in decades. Fine dining was largely of the stargazing variety—Perino’s, Chasen’s, Musso and Frank—which meant generally so-so food but a bettor’s chance to spot a celebrity.

Jonathan Gold helped to change all that. He was from L.A., and he embraced his inner Angeleno while driving through this vast region in his old truck. He was no aesthete in the model of the New York Times’s Craig Claiborne, who favored fancy restaurants serving small portions. Gold embraced L.A. in its vastness, and if there was too much food on the plate—as long as it was good, hell, why not?

Read the entire piece at City Journal.

Mandy Shamis, an amateur chef, worked as a journalist in London and is business manager of JK Associates in Orange, California. Joel Kotkin, a City Journal contributing editor, serves as Presidential Fellow in Urban Futures at Chapman University and executive director of the Center for Opportunity Urbanism (COU).

Homepage photo by PunkToad from oakland, us (Jonathan Gold) [CC BY 2.0 ], via Wikimedia Commons