Letter from Los Angeles: The Death of Small Business is a Tragedy for Jewish Community and Democracy

“Small-scale commercial production is, every moment of every day, giving birth spontaneously to capitalism and the bourgeoisie…wherever there is small business and freedom of trade, capitalism appears.”— V.I. Lenin

A great connoisseur as well as sworn enemy of the free market, Vladimir Lenin might smile a bit if he witnessed what is now happening to small businesses in the current Covid-19 pandemic. Even before, America was experiencing falling rates of business formation as well as declining homeownership, particularly among the young. The share of GDP represented by small firms had dropped from 50 to 45% since the 1990s.

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Triumph of the Woke Oligarchs

Like the rest of the country, although far less than New York, California is suffering through the Covid-19 crisis. But in California, the pandemic seems likely to give the state’s political and corporate elites a new license to increase their dominion while continuing to keep the middle and working classes down.

Perhaps nothing spells the triumph of California’s progressive oligarchy more than Governor Gavin Newsom’s decision to off-load the state’s recovery strategy to a task force co-chaired by hedge-fund billionaire Tom Steyer. A recently failed presidential candidate, Steyer stands as a progressive funder. He is as zealous as he is rich. Steyer sometimes even found the policies adopted by climate-obsessed former governor Jerry Brown not extreme enough for his tastes.

Some conservatives wistfully hope that the pandemic will push the climate crusaders to the side. In California, at least, the corporate aristocrats, the governmental apparat, and the progressive nonprofits have  the momentum to impose their ultra-green vision on the state’s residents. Steyer may have made much of his fortune on fossil fuels, including coal, but now, approvingly described as “a reverent Christian,” the Bay Area mogul seems to be eager to repent, both through his political largesse and as operator of a fulsomely organic ranch down the coast from his San Francisco manse.

What Kind of Recovery Will the Oligarchy Allow?

Steyer’s failed, self-funded presidential run was full of extreme notions, such as imposing a “state of emergency” to address climate issues, essentially shutting down fossil fuels; and, as a kind of bonus for those who still can find work, promoting a $22 an hour minimum wage while offering alms for the soon-to-be-eliminated legions of miners and energy workers.

If this is what he wants for the recovery, Steyer will simply accelerate the state’s already poor performance in creating higher-wage middle- and working-class jobs outside those created or subsidized by government. Over the past decade, according to Chapman University’s Marshall Toplansky, the vast majority of jobs being produced in California pay under the median wage, and 40% pay under $40,000 a year. Since 2008, the state has created five times as many low-wage jobs as high-wage jobs.

California’s climate regulatory regime, notes relocation expert Joe Vranich, has been particularly hard on manufacturing. Over the past decade, according to BLS data, California has fallen into the bottom half of states in manufacturing-sector employment growth, ranking 44th last year; its industrial new job creation has been negative, compared with gains from competitors such as Nevada, Kentucky, Michigan, and Florida. Even without adjusting for costs, no California metro ranks in the US top ten in terms of well-paying blue-collar jobs; but four metro areas—Ventura, Los Angeles, San Jose, and San Diego—sit among the bottom ten.

Perhaps nowhere will the pain be worse than in Bakersfield, capital of California’s once-vibrant oil industry. That industry is now slated for extinction by policymakers, even as the state has emerged as the largest US importer of energy and oil, much of it from Saudi Arabia. This ultimate effort at “virtue signaling” will cost California as many as 300,000 generally high-paying jobs, roughly half held by minorities, and will particularly devastate the San Joaquin Valley, where 40,000 jobs depend on the industry. “Imagine that the state dictated that the entertainment industry be eliminated from Los Angeles, or the tech industry be eliminated from Silicon Valley. That is what removing the oil and agriculture industries from Bakersfield is like. “It is an existential threat to the entire area,” says Rob Ball of the Kern County Council of Governments.

Read the rest of this piece at RealClearEnergy.org.

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute — formerly the Center for Opportunity Urbanism. His last book was The Human City: Urbanism for the Rest of Us (Agate, 2017). His next book, The Coming of Neo-Feudalism: A Warning to the Global Middle Class, is now available to preorder. You can follow him on Twitter @joelkotkin

Photo credit: Gage Skidmore via Flickr under CC 2.0 License.

California’s Post-Corona Challenges

California has, at least to date, escaped the worst effects of Covid-19. Despite predictions by Governor Gavin Newsom that upward of 25 million Californians would become infected, after six weeks of lockdown the state, despite having twice as many residents as New York, has suffered only one-eighth the number of cases and considerably less than one-tenth the fatalities. The numbers could worsen, but if the rate of growth of infection slows, as is now occurring even in New York, the Golden State may well avoid the worst-case scenario. Read more

Viral Politics

Long after the pandemic has receded, its long-term impact on our society and political life will continue. Just as plagues past have reshaped the trajectory of cities and civilizations, sometimes with fearsome morbidity, COVID-19 is already having a profoundly disruptive impact on our political future.

Rather than uniting humanity against a common foe, the pandemic seems to be widening the internal political chasm between nations and within them. The “battle,” “war,” or “crusade” against the novel coronavirus has not to date reprised the London Blitz, Pearl Harbor, or the World Trade Center attack in 2001, during which people closed ranks, even if they thought little of their country’s leaders.

Democrats like party strategist James Carville and Speaker Nancy Pelosi insist that Trump has “blood on his hands” and one of Pelosi’s more excitable colleagues has suggested that Trump be tried in The Hague for his handling of the pandemic. On the Right, meanwhile, the pandemic has engendered, in the US and elsewhere, a predictably anti-China and nativist tone, which have sometimes drifted into overt racism, particularly in Italy. Some journalists toss around terms like “Manchurian media,” a regrettable throwback to McCarthyism.

This is no way to handle a global pandemic. Most Americans, according to a recent survey, would prefer a more collaborative approach. They have so far been disappointed. At a time when we need a rational discussion of policy alternatives and a thoughtful debate among experts, including not just epidemiologists, but also economists, psychologists, and social scientists, we are seeing an escalation of finger-pointing, blame-shifting, and character assassination from both sides.

The globalized politics of the pandemic

Throughout history, pandemics have periodically devastated great cities like Rome, Constantinople, and Cairo. Repeated exposure to sickness slowed the recovery of European cities throughout the Middle Ages and ravaged the great cities of the Renaissance. Diseases imported from the West devastated the once proud cities of Meso-America and Peru, making them more easily overcome by the Hispanic conquistadors.1 Later on, the disease-ridden slums of the industrial age helped to spark socialist insurrections almost everywhere, and in Russia, at least, to grievous political effect.

Today’s global pandemic is far less lethal, but it is rearranging global politics nonetheless, most obviously through the growing conflict between the world’s two dominant powers, China and the United States. The conservative press, President Trump, and Boris Johnson have blamed China for the pandemic. In response, Beijing claims their approach has been more successful, and demonstrates that authoritarians are able to deal with crises more efficiently than less ordered and obedient Western democracies.

Read the rest of this piece at Quillette.

Joel Kotkin is the Presidential Fellow in Urban Futures at Chapman University and Executive Director for Urban Reform Institute — formerly the Center for Opportunity Urbanism. His last book was The Human City: Urbanism for the Rest of Us (Agate, 2017). His next book, The Coming of Neo-Feudalism: A Warning to the Global Middle Class, is now available to preorder. You can follow him on Twitter @joelkotkin

Reference:

1 William McNeil, Plagues and Peoples, (Garden City, NY, 1976). pp.2, 13, 207, 208

Photo credit: The White House via Flickr.

Who Will Prosper After the Plague?

The COVID-19 pandemic is likely to widen even further the growing class divides now found in virtually every major country. By disrupting smaller grassroots businesses while expanding the power of technologies used in the enforcement of government edicts, the virus could further empower both the tech oligarchs and the “expert” class leading the national response to the crisis. Read more

The Coronavirus is Changing the Future of Home, Work, and Life

The COVID-19 pandemic will be shaping how we live, work and learn about the world long after the last lockdown ends and toilet paper hoarding is done, accelerating shifts that were already underway including the dispersion of population out of the nation’s densest urban areas and the long-standing trend away from mass transit and office concentration towards flatter and often home-based employment. 

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Millennials Find New Hope in the Heartland

In “Millennials Find New Hope In The Heartland,” Heartland Forward Senior Fellow Joel Kotkin and his contributors address a fundamental topic for future economic success in the Heartland: Will Millennials return and remain at higher rates? The answer to this question is critical as Millennials are the largest generation, eclipsing the Baby Boom generation, and they represent the largest portion of the American workforce. The economic ramifications have made this cohort a highly prized demographic target. If Millennials do not find the Heartland more attractive, even the most well-conceived and articulated economic development strategies will be rendered mute. Growth of the Millennial population in the Heartland is, perhaps, the single most important indicator for its economic vibrancy.

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California Democrats Exit Planet Earth

This past week, in most states, America’s liberal party voted for a doddering, but non-threatening old man, rejecting a strident socialist from Vermont. But second thoughts about socialism appear not to be on the agenda for California’s Democrats, who almost single-handedly kept Bernie Sanders’ anti-capitalist crusade from an untimely implosion.

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The Two Middle Classes

Politicians across the Western world like to speak fondly of the “middle class” as if it is one large constituency with common interests and aspirations. But, as Karl Marx observed, the middle class has always been divided by sources of wealth and worldview. Today, it is split into two distinct, and often opposing, middle classes. Read more

The West Turns Red?

Adam Smith, the philosophical father of modern capitalism, may have been Scottish, but his ideas have long found their muse in America. Smith’s “voice has been ringing in the world’s ears for sixty years”, wrote one observer in 1838, “but it is only in the United States that he is listened to, reverenced, and followed.”

Yet today the US is shifting, perhaps inexorably, in the precise opposite direction towards an embrace of socialism. Read more