The Fall of Los Angeles

For much of the 20th century, Los Angeles symbolised the future. Over the course of the century, the population grew 40-fold to nearly four million people.

But now, for the first time in its history, the population of Los Angeles is in decline, falling by 204,000 between July 2020 and July 2021. LA was once a magnet for investors. But recently many of the area’s corporate linchpins – including aerospace giant Northrop Grumman, Occidental Petroleum and Hilton Hotels – have left, taking with them high-paying jobs and philanthropic resources.

Worse still, conditions in LA today are bordering on the medieval. Anyone visiting some of the most famous districts of urban Los Angeles – notably downtown, Hollywood and Venice Beach – sees clear signs of destitution, including sprawling homeless encampments, vast numbers of people living in vehicles and rampant crime. Last year, a UN official compared conditions on LA’s Skid Row, a poor downtown neighbourhood, to those of Syrian refugee camps. Smash-and-grab thefts at local 7-Elevens and the persistent theft of goods from railyards suggest this is a city that has lost control to the modern version of lawless highwaymen.

So-called progressives have long dreamed of transforming the famously sprawled Los Angeles into a dense, transit-oriented, sun-kissed version of New York. But despite massive corporate and government investment, attempts to do this have failed. Rather than a vibrant hipster paradise, LA’s urban core is dominated by the homeless, the poor, government workers and a few creative types – making for an odd juxtaposition of homeless camps and low-rent hotels alongside high-end restaurants and artists’ lofts. Meanwhile, newly built luxury apartments have suffered vacancy rates as high as 14 per cent – remarkable in a city so short of housing.

Unsurprisingly, some Angelenos have sought to reverse this disastrous course. Earlier this year, disgruntled residents united around property developer Rick Caruso in his insurgent campaign to become mayor of Los Angeles. Caruso spent over $24million of his own money on the first round of the election in June.

Caruso is the grandson of Italian immigrants, whose father founded the successful LA business, Dollar Rent a Car. And he has himself been a big player in California for years. His real-estate business, founded in 1987, is now worth more than $4 billion. Caruso has built shopping centres all over the metropolitan area, from the iconic Farmer’s Market and middle-class San Fernando Valley to the swanky Pacific Palisades. Yet Caruso’s mayoral bid appears to have stalled against the well-organised might of the city’s public-employee-driven political machine.

This is a powerful machine. Last month, a grassroots movement opposing progressive criminal-justice reform lost its attempt to recall district attorney George Gascón, who has been widely blamed for LA’s lax approach to crime. Recall proponents needed 566,857 signatures, but despite collecting 715,000, only about 520,000 turned out to be valid. Thanks to the machine’s backing, Gascón’s recall bid failed, even though the city last year experienced 397 murders – up 11.8 per cent from the 355 the previous year, and a 53.9 per cent increase from the 258 in the pre-pandemic year of 2019.

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 Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Basil D Soufi via Wikimedia under CC 3.0 License.

Electric Car Mandates Latest Frontier of Elites’ War on Middle Class

California is working overtime to prove something that is obvious to most middle-class Americans: electric vehicle mandates are something of a scam.

A week ago, California announced it would ban the sale of new gas-powered cars by 2035—only to beg residents this week to stop charging their electric cars for fear of breaking the power grid amid a massive heatwave.

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The Democrats’ Green Agenda is Hurting Californians

The once-great state of California is now in a dire condition. With a heatwave now in full force, Governor Gavin Newsom is preparing to cut energy use, which may result in blackouts, brownouts and water rationing.

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Gavin Newsom’s Presidential Prospects

Conservatives often see prospective presidential contender Gavin Newsom as a tool of the far Left—and, as such, politically doomed by the seemingly endless crises afflicting California. Yet the Golden State governor is a more formidable candidate than this portrayal suggests. Rather than being a progressive windup doll, the 54-year-old is in fact a skilled political opportunist, with far less dogmatically left-wing views than most of his party’s legislative delegation. He would have no qualms abandoning unpopular progressive stances to pursue the goal of succeeding a doddering President Joe Biden.

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Irvine: A National Role Model

Irvine provides a solution for transportation, energy and diversity issues bedeviling the country. The master-planned city represents the modern version of a 19th-century garden city – a largely self-contained and environmentally sustainable community.

Critically, Irvine is not an outlier, but a role model for other communities – from The Woodlands outside Houston to New Albany in central Ohio – that are creating a new and more sustainable reality for households and families. Indeed, in discussions with other developers and planners in my research, Irvine is repeatedly cited as an example of the kind of community they want to create.

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Google: Whatever Happened to ‘Don’t Be Evil’?

When Google went public in 2004, it epitomised technological and entrepreneurial genius. Two engineers had developed a remarkably powerful, easy-to-use search engine, opening the doors to vast amounts of knowledge.

The founders proclaimed their motto as ‘Don’t be evil’, which was typical of Silicon Valley’s decades-old techno-optimism. Stewart Brand, writing in Rolling Stone in 1972, claimed that once access to information became universal, it would turn us all into ‘computer bums, all more empowered as individuals and as cooperators’. It would be a new era, Brand continued, of enhanced ‘spontaneous creation and of human interaction’. The ‘early digital idealists’, noted computer scientist and writer Jaron Lanier in 2014, envisioned a ‘sharing’ web that functioned ‘free from the constraints of the commercial order’.

This idyll is no more. Google and the other Big Tech firms are no longer grassroots creators. They’re now oligarchs and monopolists, exerting undue influence on the market and on politics.

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Gavin Newsom Won’t Save the Democrats

Burdened with a decomposing President and a clearly overmatched Vice President, the Democrats are on the hunt for a saviour. For many in the party, Gavin Newsom, the 54-year-old perfectly coiffed Governor of California, seems like the perfect solution. No doubt, given his recent trolling of Florida’s Republican frontrunner Ron DeSantis, he feels the same.

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Who Will Be the Next Mayor of Los Angeles?

Central Avenue, the historic heart of South Los Angeles, has seen better days. Once the home to leading black institutions, like the famous Dunbar Hotel, where jazz and other musical greats stayed, it was also an industrial powerhouse that promised decent work for those fleeing the Jim Crow South. But today many, if not most, of its factories are closed; many icons of the old black business community have disappeared, too. The area, site of two of the most devastating riots in American history, is now poorer in relation to the rest of the city than before those upheavals.

Yet amid a malaise that afflicts much of the city, entrepreneurial energy remains evident. Central Avenue’s sidewalks crowd with the brightly colored booths of street vendors, selling a broad range of food, clothes, and other products—more like Mexico City or Mumbai than the South L.A. of the past. Some new apartments are rising to replace the decrepit ones, and the street-level liveliness seems more Washington Heights than car-centric Los Angeles. Despite its troubles, Central Avenue does not exhibit the deathly sense of abandonment of places like the South Side of Chicago or other inner-city communities, where the spirit of enterprise has all but disappeared.

“We still have potential,” insists 63-year-old Rick Caruso, a billionaire running what once seemed a quixotic campaign for mayor. On June 7, Caruso will be a candidate in the city’s open mayoral primary, facing off against, among others, the race’s early frontrunner, long-time congresswoman Karen Bass. (The top two finishers will meet in a run-off general election in November if no candidate wins a majority of the vote.) Without any press, but for me, Caruso spent a recent morning at the Beehive, a new Southside business incubator located amid the detritus of the city’s industrial past. The youthful activity of the startups seemed to energize him. “I want to get on the phone and get investors to come back here—but they won’t if they see instability, the homeless camps, and the crime. That has to change.”

Though he has discarded his designer suit, Caruso cannot help but appear natty with his coiffed hair and monogrammed white shirt. The grandson of Italian immigrants, and son of an entrepreneur who founded Dollar Rent a Car, he started his real estate business here in 1987 and made a fortune worth more than $4 billion by developing shopping complexes, most notably the Grove, adjacent to the iconic Farmer’s Market. A key Caruso theme is restoring the promise that made L.A. the premier urban growth center of the last century, during which the city’s population grew from barely 100,000 in 1900 to nearly 4 million. Now, Los Angeles’s population is in decline and its appeal has faded. The city peaked at a population of 3,983,000 in 2019, and fell 134,000 to 3,849,000 by 2021, with a 41,000 loss in the last year.

The Wall Street Journal has described Caruso as a “liberal,” but that’s a stretch. A longtime Republican now conveniently turned Democrat, Caruso is best seen as a pro-business moderate Republican trying to downplay his membership, for example, in the Ronald Reagan Foundation. Yet unlike most GOP candidates here, he also has lots of money. He has spent over $24 million of his own money to reach out to Angelenos. His campaign boasts of his skills in dealing with L.A.’s fractious communities, whether in his business ventures or as a member of the Water and Power board, president of the Police Commission, or chair of the USC trustees. His money and message are clearly making headway. Despite the now strongly progressive tilt of the L.A. electorate, Caruso has managed to rise from single digits in February to parity, and perhaps even a lead, over Bass.

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 Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Homepage photo: Karen Bass via Flickr in Public Domain and Rick Caruso via Flickr under CC 2.0 License.

California Needs a Recession

Nowhere is better suited for flights of fancy than California, a place of miraculous growth and remarkable innovation. A backwater barely a century ago, with just over 3 million residents compared to nearly 40 million today, the Golden State has established pre-eminence over everything from agriculture and film to space travel and the internet.

Yet in recent years, California’s lead has become increasingly concentrated in one sector: tech. This has left the state deeply exposed to the recent decline of the stock market, which is concentrated heavily in tech stocks, and the inhospitable short-term climate for start-ups, which once reliably filled the state’s coffers. Easy Street is about to get a lot less so.

Even as state offices and their media megaphones crow about its nearly $100 billion surplus, California’s Legislative Analyst’s Office predicts the likely reappearance of budget deficits in the near future. Instead of flush times, we are likely to see a repeat of the last recession, which ended in 2009. Back then, it took California five years to get revenue back up to pre-downturn levels, during which time the government was forced to cut state programmes by roughly $45 billion to compensate for the deficit.

In many ways, California is even more vulnerable today. Governor Newsom and his PR team may boast about the state’s economy “roaring back”, but California enters the recessionary environment with the nation’s fourth highest unemployment rate and one of the nation’s slowest job recoveries. Los Angeles and San Francisco, its two biggest cities, are near the bottom of all metros in terms of job recovery.

This decline has its roots in the pre-pandemic era. For years California has been severely underperforming its main rivals — Texas, Washington, Arizona and Utah — in construction, manufacturing and professional and business services. Over the past decade, roughly 80% of all jobs created in California paid below the median income, creating an ever-expanding working class in low-end service industries.

During the boom for the rich, the state decided not to re-diversify its grassroots economy but expand its welfare state. This may have won plaudits from progressive publications, but the state is not a bottomless pit. California still suffers the highest long-term debt of any state — $507 billion — and that will only increase with interest rates.

And yet there seems little appetite to change course. Flush from his recall triumph, Newsom, along with the legislature, is determined to double down on his attempt to fashion California as the model for the progressive future. Others, such as the University of California’s Laura Tyson and former Newsom adviser Lenny Mendonca, see the Golden State as creating “the way forward” for a more enlightened “market capitalism”. But this reality is hard to see on the ground.

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.

Homepage photo: Jay Galvin via Flickr from CC 2.0 License.

California’s Economy May Seem Healthy, But Just Wait for the Next Recession

The California economy may seem healthy on the surface, with home prices soaring, Silicon Valley booming and the state government posting big multi-year state budget surpluses thanks to a massive surge in capital gains tax revenues and income tax revenues from tech stocks.

But that good news masks a dangerous period ahead.

In fact, California’s heavy dependency on tax payments from the rich and on the continued strength of the tech economy makes the state highly vulnerable in the event of a significant slowdown — or, worse yet, a full-bore global recession. According to Jim Doti of the A. Gary Anderson Center for Economic Forecasting at Chapman University, the probability of a recession starting late this year or next is very high.

Property prices are already beginning to drop in parts of the Los Angeles area. Similarly the IPO market, a major source of capital gains, is retrenching. Financial setbacks for the wealthy are problematic for the state because the top 1% of income-earning Californians pay 46.2% of all personal income taxes.

We’ve been here before. After the last recession ended in 2009, it took the state five years to get revenue from income taxes back up to pre-downturn levels. During those five years the state received about $50 billion less in revenue than if the recession had not occurred, and government was forced to cut programs by about $45 billion to compensate, according to the California Franchise Tax board.

Today, the state is even more reliant on tax revenues from its wealthy elites: Capital gains collections have increased roughly fivefold since 2010. Income taxes, mostly from the very wealthy, which barely constituted one-third of state revenues in 1980, now make up two-thirds.

A new recession, or even simply a slowdown, would place California in a very difficult position, particularly given that it continues to engage in what CalMatters columnist Dan Walters calls “an expansionist binge” of ever greater social spending and housing subsidies. Despite strong annual budgets, California suffers the highest debt of any state — $507 billion. It is projected that the cost of servicing the state’s debt in 2022 and 2023 will be approximately $8 billion annually and could grow even higher as interest rates rise.

Read the rest of this piece at Los Angeles Times.


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.

Marshall Toplansky is a Clinical Assistant Professor of Management Science at the Argyros School of Business and Economics at Chapman University.

Homepage photo: D. Ramey Logan, used under CC 4.0 License