The First Shots in the Climate Wars

In launching their now successful protests against President Emmanuel Macron’s gas hike, the French gilets jaunes (yellow jackets) have revived their country’s reputation for rebelling against monarchial rule. It may well foreshadow a bitter, albeit largely avoidable, battle over how to address the issue of climate change.

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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.

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Ten years After Lehman Collapsed, We’re Still Screwed

This article first appeared at The Daily Beast.

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. Read more

The Battle for Houston

This article first appeared at City Journal.

America’s most opportunity-rich city faces a long-term challenge from “smart-growth” advocates pushing for more regulation.

Over the last half-century, Houston has developed an alternative model of urbanism. As the New Urbanist punditry mounts an assault on both suburban growth and single-family homes, Houston has embraced a light regulatory approach that reflects market forces more than ideology. But last year’s Hurricane Harvey floods severely tested the Houston model. An unprecedented four feet of rain in four days —a year’s worth, the greatest rainfall event in recorded U.S. history—overflowed the banks of every channel in Harris County, flooded nearly 100,000 homes (7 percent of the housing stock), and created an estimated $81.5 billion in damage, the nation’s second-largest natural disaster after Hurricane Katrina. Coupled with a downturn in the energy industry, which saw the loss of some 86,000 jobs last year, Harvey’s aftermath suggested that the region’s growth period had come to an end, with stagnant job growth and domestic migration.

A year later, the city’s economy and its energy industry are rebounding, and job growth has gone positive again. Houston is once again among the nation’s leaders in population and housing growth. The recent recovery, however, is unlikely to quash the growing pressure to revise the region’s growth model. Challenges to Houston’s approach can be found everywhere from writers for the Houston Chronicle to the urbanists at Rice University—both representing an increasingly powerful clerisy capable of challenging the long-running dominance of the local commercial and real estate interests that have always promoted growth and expansion as signs of virtue. Houston’s business community tends to ignore or dismiss the critics, but experience elsewhere should encourage caution. In California, once dominated by growth-happy free marketers, business interests have been largely neutered by environmental zealots, government unions, and social-justice militants. And a shift in national priorities, with a Democratic takeover of Congress and the White House, would greatly enhance the power of the “smart-growth” lobby to impose its vision, even in Houston.

Houston is famous for its lack of zoning, which has allowed for speedy transition of the housing stock, including a surge of high-density housing close to the city’s historic core. But as a new paper from the local Center for Opportunity Urbanism suggests, most of the region’s growth occurs on the periphery. In 1960, the City of Houston dominated the region; today, Houston is home to barely one out of three of the area’s roughly 6.8 million residents, with almost all growth on the pro-development edges.

Houston has long had in place deed restrictions to maintain the integrity of residential neighborhoods as well as significant development guidelines for commercial projects. Yet the generally light regulatory hand has resulted in a remarkable level of affordability, even with strong job and population growth. Among the 15 largest metropolitan areas, Houston ranks first in housing affordability (tied with Detroit), while cities like San Francisco, Los Angeles, and New York are among the costliest, adjusted for incomes. Houston is also fifth in rental affordability (median gross rent divided by median household income) among major U.S. regions, at 19.6 percent, below the national average of 20.4 percent.

Since 2010, the Houston area has trailed only Dallas–Fort Worth among major regions in rate of net migration, while New York, Los Angeles, and Chicago have all suffered massive net out-migration. Houston has won by giving people what they want, including an affordable single-family home; low costs are critical to understanding the city’s appeal. Admittedly, people don’t move to Houston for topography, climate, or historical charm. As author Erika Grieder notes, no one moves to Houston “for fun,” but for opportunity. “Everyone who is there,” she writes, “is there for a practical reason.”

Perhaps most impressively, Houston excels at accommodating minority aspirations. The region is now widely acknowledged as the country’s most diverse. Houston offers the most affordable U.S. rents for African-Americans, with rent absorbing 25.4 percent of income, considerably less than in highly regulated markets like San Francisco (45.3 percent), Miami (37.2 percent), and Los Angeles (37 percent). Among Hispanics, Houston’s rental affordability ranks fifth among the top 15 metropolitan areas.

Like other immigrant hubs, Houston suffers from high income inequality, but Houston’s minority middle class has been expanding at a rate unmatched by blue-state metropolises. Among the largest metro regions, Houston ranks first in housing ownership—a critical signal of upward social mobility—for African-Americans, and second for Asians; it’s tied for the lead for Latinos with Atlanta and Dallas–Fort Worth. Houston’s level of overall minority homeownership is ten percent higher than in such bastions of progressivity as Los Angeles, San Francisco, New York, or Boston.

This low-cost structure—largely the result of policy—has been key to sparking job growth. Businesses generally find recruiting easier in Houston, given the range of housing options, and residents have enjoyed one of the country’s highest cost-adjusted standards of living, ranking well ahead of rivals such as San Francisco, New York, Los Angeles, Seattle, and Chicago. These gains have been bolstered by an increasingly varied economy that produces a high percentage of mid-wage jobs in fields such as energy, trade, and medical services. In the past decade, Houston has not only consolidated its domination of the energy industry but also become the nation’s leading exporter and home to the world’s largest medical center.

Houston is largely an engineered city. Its success does not owe to a perfect location, a salubrious climate, or spectacular scenery. Situated far from a natural harbor, this bayou city was forged, in large part, by the 1914 decision to build a ship channel that connects it with the Gulf of Mexico, 50 miles away. Its location makes Houston susceptible to natural disasters. Long before Harvey, Houston was devastated by hurricanes, including the one that destroyed the once-thriving port city of Galveston in 1900. A 1935 flood caused more severe damage, proportionally, than Harvey did, on a then much-smaller Houston.

Historically, Houston has met these challenges by seeking to tame nature. A relevant model can be found in the Netherlands, where, for hundreds of years, planners managed to push back against the sea, in the process creating one of the world’s great metropolises (Amsterdam). Historian Jonathan Israel traces the rise of the Netherlands, particularly following a massive flood in the sixteenth century, to its period of extensive infrastructure-building. Like Houston’s suburban expansion, infrastructure development in Holland opened new land and opportunities for residents. It also initiated liberal laws about tenancy and allowed for the expansion of ownership and enterprise, much as Houston’s expansion accomplished over the past half-century. The new lands constituted “the geographic roots of republican liberty,” notes historian Simon Schama.

Like the Netherlands, Houston built an elaborate, if now inadequate, system of flood-control channels and dams. The city’s business community still follows this infrastructure-led model, as evidenced by Harris County Judge Ed Emmett’s 15-point resiliency plan and the business-backed “Houston Stronger” plan for $58 billion in infrastructure projects for water conveyance, storage, and surge defense. To help pay for it all, Harris County will hold a $2.5 billion bond election on August 25. Though it will increase property taxes by up to 1.4 percent, the taxpayer value is substantial, since the funds can be leveraged 4-to-1 or more as the local match for federal funds.

In the past, such an investment would go unchallenged, but public skepticism about new infrastructure is growing, along with demands for stricter regulation, particularly toward development on the fringes. The Harvey disaster gave momentum to both these trends. Days after the storm hit, Ana Campoy and David Yanofsky of digital news outlet Quartz opined: “Houston’s flooding shows what happens when you ignore science and let developers run rampant.” Further afield, Guardian climate columnist George Monbiot portrayed the event as a kind of karmic comeuppance for Houston’s being the world capital of the planet-destroying energy industry. New York Times architecture critic Michael Kimmelman essentially suggested that Houston should emulate dense and transit-dominated Manhattan.

Houston’s small but influential urban intelligentsia has embraced these views. Mike Snyder of the Houston Chronicle, for example, blamed municipal-utility districts and suburban developers for the severity of the flooding. Similarly, the Rice Design Alliance called for the creation of a “thick” (meaning denser) city, with an enhanced role for traditional transit. This suggestion is at odds with recent experience, however: despite opening 22 miles of light rail since 2004, for example, Harris County transit ridership has dropped, while the county’s population has grown by nearly 1 million.

A big win for the “smart-growth” crowd has been a new regulation adopted within the City of Houston, which mandates raising houses off the ground—but these new rules, suggests economist Luis Bernardo Torres, a real estate expert from Texas A&M, will disproportionately hurt poorer, older, heavily minority areas. “I think we are passing the buck,” says Greg Travis, Houston District G City Council representative. “The city has been underfunding drainage improvements for decades, and now we want to make everyone elevate. City Hall needs to take responsibility for flooding instead of pushing it onto homeowners.” A 2018 Metrostudy report estimates that the new regulation could add an additional $65,000 to the costs of building or reconstructing a house in the city, compared with building in the surrounding or less regulated areas.

The battle within Houston boils down to emphasizing regulatory restraints, rather than infrastructure, as the best means to meet floods and hurricanes, which some expect to worsen with climate change.

The smart-growth lobby generally sees raising elevations for houses and reigning in “sprawl” as the best solution to the city’s environmental challenges. Concern over suburbanization runs high: the Houston Chronicle opined that steps such as building a proposed third reservoir might be inadvisable, since it could enable new peripheral development. These views reflect the conviction that the severity of flooding was largely due to the paving over of the Katy prairie west of the city. Yet an analysis of the run-off by Meyers Research showed that the area’s natural soils, with their poor suitability for retention, would have absorbed only 4 billion gallons out of the 1.6 trillion gallons that fell on Harris County, a savings of a mere .25 percent. “Anyone suggesting that more wetlands or more pervious surfaces would have done anything to mitigate what has just happened is lacking a proper sense of scale,” says Charles Marohn of the media organization Strong Towns.

Houston’s newer suburban areas actually withstood the flood far better than older communities inside the city. According to Harris County’s engineering staff, of the 75,000 homes built after the 2009 regulations, only 467 flooded; a remarkable 99.4 percent did not. Less than 3 percent of the houses identified as flooded after Harvey were built after 2009. These newer homes complied with the drainage and detention regulations adopted after Hurricane Allison.

Looking forward, suburbs could be important players in addressing intense storms. Alan Berger, co-director of MIT’s Norman B. Leventhal Center for Advanced Urbanism, suggests that lower-density areas, as opposed to highly built-up cities, are ideal for detaining water. Celina Balderas Guzmán, a wetlands researcher and Ph.D. student at the University of California-Berkeley, argues that suburban areas could provide “a new paradigm for managing storm water” and that the best solutions “will be those that shift away from mono-functional, centralized infrastructure.”

Some of this can already be seen in the improved performance of detention ponds in Houston’s lower-density areas during Harvey. These initiatives can be expanded into “constructed wetlands” that mimic natural wetlands, using the same physical, biological, and chemical processes to treat water. Besides treating storm water pollution and detaining floodwaters, constructed wetlands can boost biodiversity and provide urban amenities such as recreation.

Houston already has many communities, such as the Woodlands, designed to absorb storm water through natural means. These developments suffered limited damage during Harvey—only about 0.2 percent of the population in the Woodlands needed to be evacuated. Better-planned suburbs could well be the “secret sauce” for addressing Houston’s challenges without destroying its growth-and-opportunity model.

Without question, Houston will need to update some regulations and boost its infrastructure if it wants to meet the challenge of future storms. The real question is whether flood control opens the gates for a smart-growth agenda that could seriously weaken Houston’s affordability and growth trajectory. This will depend largely on political factors. Though the region overall continues to follow a free-enterprise model, with Democrats and Republicans both embracing a low-regulation agenda, the City of Houston has become more smart-growth-oriented in recent decades. Business and political leaders shouldn’t underestimate the power of academic institutions, legacy media, and allied nonprofits to advance that cause. The battle has just begun, and the future of the Houston model hangs in the balance.

Homepage photo credit: narawon

Cities Are for Rich People Now and Wooing Amazon Only Makes It Worse

This article first appeared on Vice

Local officials across America are trying to attract the mega-corporation’s new headquarters. That is not going to help your rent.

If there are two facts of life in the modern American city, they are that rent will be too damn high, and that attracting investment from a mega corporation will seem to some local power players like the best way to stave off economic disaster. The rent part is an old, old story. Under-construction of affordable and publicly-funded housing units targeted at the working- and middle-classes is a trend that started around the 1970s. Combine that with spiraling income inequality, the erosion of tenants’ rights, and stagnant real wages, and it makes paying for a roof over your head almost impossible in many metropolises. At the same time, the decline of manufacturing and the federal government’s general unwillingness to invest in major job-creation programs (like infrastructure) means civic leaders have long been tripping over each other to woo companies who might act as job creators for the populace and, not incidentally, help those politicians keep their own jobs.

Enter Amazon, the corporation to rule them all.

CEO Jeff Bezos is the richest man ever, and his empire has been dangling construction of “HQ2,” its new headquarters outside the company’s original home base of Seattle, for nearly a year now. Dozens of cities have made bids, Olympics-style, to win the company’s favor, and 20 cities are still in the running as finalists. Their thirst makes some sense: After all, tens of thousands of high-paying tech jobs could be in the offing, not to mention all the money those new arrivals (or maybe even newly-employed locals) might be spending at local businesses.

The company, for it all its questionable labor practices and pernicious effects on everything from book publishing to retail clothing, does seem to be able to offer the prospect of a real economic boon. That’s what unprecedented corporate consolidation means—one company really does have the power to boss around an entire city because its sway over jobs (and its attendant political influence) are that enormous. The leaders of places as varied as Toronto to Newark (two finalists for the HQ2 bid) are not crazy to be offering massive (and possibly secret) tax breaks in hopes of winning Amazon’s favor—it really could improve their short-term finances or at least attract a lot of tourism and the wealth that comes with it.

But shipping in a bunch of tech workers and their ilk could also mean even higher rent and worse gentrification. And since cities don’t seem to have any idea how to actually drive down rent for the poor, it’s fair to wonder if they might be better off without that Amazon money entirely—even if it means losing out on jobs and development in the interim.

As the New York Times reports, Seattle Mayor Jenny Durkan took pains to issue what amounts to a warning to her colleagues nationwide in June: go ahead and chase tech money, but watch out for higher housing costs. Specifically, she noted, the city has an average home cost of over $800,000 and has seen rent explode 57 percent in the last five years. And homelessness is a huge problem in the city, not that Amazon—which recently teamed up with other big local companies like Starbucks to kill a tax that would have helped pay for more housing—seems to be sweating it.

“When you’re bringing a lot of people into any given housing market, that’s a shock to demand [and] it’s going to boost prices in the near term,” Aaron Terrazas, senior economist at Zillow, told me. He added that in theory, at least, the housing supply could catch up with demand over time—and that, depending on where a company like Amazon lands, some cities (like Indianapolis or Columbus, two other finalists) might be better prepared than others (like Los Angeles) where housing is already strained.

But even leaving aside the initial question of what you might be paying now and how a tech company’s swooping in could affect it, there’s the more nebulous boogeyman of gentrification. No, Amazon’s arrival wouldn’t instantly remake, say, New York (another finalist) in San Francisco or Seattle’s image—for one thing, NYC would have at least a bit of time to plan for the influx of new tech workers. But it would likely having lasting effects on the character of the city.

“You’re talking about one-bedroom [and] studio apartments as opposed to single-family apartments or three-bedroom apartments, so you change the nature of the kind of housing,” Joel Kotkin, an expert on cities who worked on Kansas City’s (failed) bid for Amazon, said of the impact tech companies like it have on housing. “It also changes the nature of the area. In other words, a lot of the rootedness of a particular region is sort of undermined.

Meanwhile, as the Washington Post reports, rent is still rising for many people in major American cities—efforts to rein in increases have, in some cases, actually just gone to benefit the wealthy. “For-profit developers have predominantly built for the luxury and higher end of the market, leaving a glut of overpriced apartments in some cities,” Diane Yentel, president and chief executive of the National Low Income Housing Coalition, an advocacy group, told the paper. “Some decision-makers believed this would ‘filter down’ to the lowest income people, but it clearly will not meet their needs.”

Some middle-class people have seen their rent go down, but the broader superstructure of housing in this country is overwhelmingly tilted towards the needs of the mega-rich. Even when local officials want to help people of modest income find something they can afford, the limits of municipal budgets and the broader trends in the housing market can make actually increasing the supply of affordable housing a titanic feat.

So most city officials across America, if asked to choose, would take a splurge of Amazon money over some kind of principled stand against big tech or gentrification. As much as anti-monopoly and anti-Silicon Valley sentiment are in the air, local chambers of commerce and other “pro-business” institutions are still immensely powerful. It may look more and more like the safest way to keep housing in the vicinity of affordable for non-rich people is to tax the hell out of them, locally. But the fact that Seattle—a progressive lodestar where actual Socialists can win elected office—failed catastrophically suggests things are going to get a lot worse before they get any better.

So is Amazon really worth it for your city?

“It’s worth it for tech workers, it’s worth it for property owners, [but] it’s not worth it for most other folks—especially with the caveat that this is going to come out at a significant direct public expense, through tax breaks and other kinds of incentives,” said Daniel William Immergluck, a professor in the Urban Studies Institute at Georgia State University who’s written about how Amazon might affect the city’s housing market.

He went on to bemoan how cities increasingly seem to be convinced—by hype, if nothing else—that they need a massive influx of tech investment, even if their population and housing markets are just fine.

“Whether it’s Amazon or Google or these other huge trophies, that’s going to continue to cause huge problems,” he told me.

This article first appeared on Vice

Homepage photo credit: Simone via Flickr under CC 2.0 License

Can Lebron James Make Los Angeles Great Again?

Excerpted from an article that first appeared at The Orange County Register.

With his decision to move to Los Angeles, LeBron James has given our metropolis another reason to feel good about itself. When it comes to sports, and celebrity, Los Angeles’ lead is only growing, as evidenced by the recent movement of two football teams to the area, the proposed construction of a new basketball facility for the Clippers and the winning of the 2028 Olympics games.

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Europe Has Lost Its Way in Culture and Economics

This article first appeared at The Orange County Register

In recent years, many of America’s leading lights have embraced Europe as the model for America. Books like “The European Dream” and “The United States of Europe: The New Super-power and the End of American Supremacy”, both published in 2005, as well the 2010 “The European Promise: Why the European Way is the Best Hope in an Insecure Age” reflected a broadly progressive view that Europe represented the essence of an enlightened future. Many Western journalists, horrified by Donald Trump, have designed Germany’s Chancellor Merkel or France Emmanuel Macron as “new leaders of the Western world.” Read more

Blue-collar Blues in the Southern California Job Market

This piece first appeared in The Orange County Register.

Every year over the past decade, in the Forbes’ annual “Best Places for Jobs” survey, we have been fortunate to assess Southern California’s job market and compare it to other large metropolitan areas. The results point to some strong points but also many long-term problems that regional leaders need to address.

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Finance Flies West, and South

This article first appeared at City Journal.

The recently announced departure of New York City-based Alliance Bernstein for Nashville, taking more than 1,000 jobs with it, suggests a potential loosening of New York’s iron grip on the financial-services industry. Yet the move reflects a longer evolution that has seen financial firms leave not only New York but also other traditional centers—what one historian calls the “Yankee Empire”—that for two centuries dominated banking, insurance, and investment capital.

This process is driven, in large part, by cost considerations. The cost of living in Nashville is just 58 percent that of New York, an important differential for younger workers looking to buy houses and start families, and one likely to widen with the new federal limits on state and local tax deductions. In addition, pension-driven fiscal realities may force states like New York, Illinois, and California to keep raising revenues.

Other forces are at work, too, notably demographic shifts to Sunbelt states and the growing influence of technology companies on finance. Jobs in industries like information technology and business and professional services are fleeing the old centers outside of New York, which is holding its own better than the rest. But the stagnation, and even decline, of financial-services jobs, at a time of high profits, represents a serious threat to regions losing out on job creation in these other sectors as well.

Alliance-Bernstein notwithstanding, New York is not close to losing its hegemony over finance. With 472,000 employees in that industry, the city dwarfs all its competitors, including runner-up Chicago, where finance employs 264,000. Finance jobs in New York, according to Pepperdine University’s Michael Shires, have grown at a respectable 11 percent since 2009, though the pace has slowed more recently, last year increasing by only 1.6 percent. New York might be losing ground and market share, but the industry as a whole is not shrinking, at least for now. And New York’s traditional rivals in this sector—Chicago, Boston, and Los Angeles—have been struggling. Since 2009, Chicago’s financial job growth has been barely 5 percent, less than half of New York’s. Los Angeles, home to the fourth-largest agglomeration of finance workers, also did poorly, while Boston did even worse, actually losing finance jobs last year.

The big winners—as Alliance-Bernstein’s move demonstrated—have been overwhelmingly in the low-cost, low-density Sunbelt. With reasonable taxes, more affordable home prices, and expanding residential populations, these areas are becoming financial-industry giants, even if they lack large, locally based companies. Among the global financial firms relocating operations to these less costly locales are UBS, Deutsche Bank, Morgan Stanley, and Goldman Sachs.

The next potential financial superstar is the Dallas area, now boasting the country’s third-largest concentration of financial workers and likely to supplant Chicago from second place in the near future. Last year, the Dallas Morning News suggested that “Y’all Street” may soon replace Wall Street as the U.S. financial capital. That’s a bit of a stretch, but between 2009 and 2017, Dallas did expand financial employment by 30 percent—three times New York’s rate and more than six times that of Chicago or Los Angeles. With rapid population growth, low taxes, moderate housing prices, and a premier strategic location between the coasts, Dallas has much going for it. Last year, Texas overtook New York for the most banking and insurance jobs among the states; in 2005, New York had led by almost 100,000 jobs.

Dallas is not alone. Since 2009, Nashville, San Antonio, and Phoenix—winner of new jobs from employers like USAA, State Farm, and Charles Schwab—have experienced financial-services growth rates greater than 30 percent. Charleston, Charlotte, Durham-Chapel Hill, Raleigh, and Greenville have all seen their financial workforces expand by more than 20 percent. Florida, which shares a time zone and many cultural ties with New York, is a financial-services hotbed, with Jacksonville, Miami, Tampa, and Orlando all experiencing growth rates two times that of Gotham.

The other region clearly capitalizing on the outbound trend is the Intermountain West. The epicenter here is Utah, notably St. George, Provo, and especially Salt Lake City. All enjoyed 25 percent growth since 2009, with Salt Lake City emerging as a growing center for international banking, in large part due to the area’s language capabilities, an outgrowth of Mormon missionary activity. Salt Lake City has become Goldman Sachs’s fourth-largest global hub; the firm now employs more people there than in any U.S. location outside New York. All indications are that the financial-services presence in Utah will continue growing.

With the Internet reducing the need for close communication for many transactions, and powerful migration trends among millennials to Sunbelt and Intermountain West locales, the expensive, heavily regulated, high-tax financial bastions in New York and elsewhere can expect mounting competititon. Nor is this just a matter of low-paying back-office jobs; investment banks like Alliance-Bernstein, Morgan Stanley, and Goldman Sachs are moving well-paid professional personnel into their new outposts. In places like Charlotte, veterans of large concerns like Bank of America are setting up boutique investment banks of their own. We can expect more of this kind of activity in places like Dallas, Nashville, and Salt Lake City as well.

Another challenge for the old-line financial centers, and just as daunting, emanates from Silicon Valley. Finance appears to be yet another industry ready for “disruption”—and the primary beneficiary will not be New York but San Francisco, another financial heavy-hitter. Long a major banking hub, the city, increasingly an annex of Silicon Valley, enjoyed the fastest growth, almost 19 percent since 2009, of any of the traditional financial centers. San Jose followed closely behind, with a 16.8 percent increase.

Increasingly a business service and media hub, Silicon Valley/San Francisco is no longer just geek central. As long ago as 2015, JP Morgan Chase CEO Jamie Dimon warned that “Silicon Valley is coming” after New York’s core business. Home to many rising “fintech” companies, the Bay Area already counts established firms like Apple, Square, and Paypal that are ideally suited to the new phone-based payment system. Talent that might have headed to Wall Street or LaSalle or State Streets is instead going to San Francisco’s Montgomery Street or the dominant venture-capital region around Palo Alto and Menlo Park. Financial employment is rising in other tech centers, too, notably in Austin, where financial-sector growth topped 39 percent. California-based PIMCO, the nation’s largest bond fund, recently announced plans to site its expanding data and analytics operation in the Texas capital—not in Orange County, long a center for tech and data analysis.

The changing nature of the financial and tech industries, along with the appeal of lower-cost regions for these industries, poses a threat to long-established finance centers like Boston, Chicago, and New York. In these traditional hubs, banking and finance have long been producers of both high-paying jobs and generous revenues for overspending urban regimes. Legislators in old-guard cities should take a long look at the policies that are driving these jobs away presently—and perhaps permanently.

Joel Kotkin is the presidential fellow in urban futures at Chapman University and executive director of the Center for Opportunity Urbanism. His latest book is The Human City: Urbanism for the Rest of Us.

Homepage photo credit: Nashville Skyline by Peter Miller

The Best Cities For Jobs 2018: Dallas And Austin Lead The Surging South

This article first appeared on Forbes.

Among America’s largest metropolitan areas, the economic leaders come in two flavors: Southern-fried and West Coast organic. The first group flourishes across a broad range of industries, fed by strong domestic in-migration and a friendly business climate. The other is driven largely by technology and high-end business services clustered around expensive but highly desirable urban areas.

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