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Foreign Threats Demand a Muscular Domestic Response

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With our natural resources, our productive capacity, and the genius of our people for mass production we will…outstrip the Axis powers in munitions of war.
Franklin Roosevelt, Message to Congress, Jun 10, 1941

War, or the threat of war, should awaken nations from their dogmatic quarrels. So too should concentrated economic threats and assaults on our political system from unfriendly powers. It is not so much a matter of good global intentions but the embrace of hard-headed national interests, not only in the realm of energy and manufacturing, that will be key in responding to the autocratic challenge.

In the end, it’s only the nation state—in alliance with other similarly minded states—that can stand up to the threats now coming from our primary adversaries, China, and Russia. NATO does not build planes and failed to counter Russian threats; the UN has not exactly stamped out aggressive wars. Meanwhile the global economic hegemons have backed policies on energy and manufacturing that have made our autocratic enemies, and their allies like Iran, stronger.

Fortunately, America has revived itself before, albeit often later than would have been ideal. We freed ourselves from Britain through Hamilton’s embrace of industrial development; Lincoln’s development of credit systems, the Homestead Act, and the development of industries proved critical to defeating the slave economy of the south. Massive American production was critical in defeating Nazism and, over the ensuing four decades, under both parties, the United States managed to innovate and out produce the Soviet industrial state.

To be effective at countering that vast effort, a new American nationalism must transcend Donald Trump’s often hyperbolic “America First” rhetoric. We are fighting a primarily economic war, not against ideological opponents like the USSR or Mao’s China, but against leaders strategically motivated by imperial revanchism. In countering these autocratic moves, we cannot count on the United Nations, the European Union, or the globalist grandees of Davos. The current challenge can only be met by a national response on every level—from our increasingly weakened military, to our industrial and agricultural establishment—as well as an embrace of America’s uniqueness and historic mission.

Successful nationalism lies in tapping the power of our productive economy—real products, not just digital ones—as occurred under Franklin Roosevelt and successive presidents. America’s rise to global predominance in the last century, and its creation of a vibrant middle class, had its roots, notes economic historian Robert Gordon, in great investment in physical infrastructure and production. In contrast, our current focus on digital technology and social media has resulted in a slow and diminished productivity and growing social inequality. This has been made worse as by what one analyst describes as “the transformation of disruptive tech companies into rent seeking monopolies.”

Read the rest of this piece at American Mind.

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 credit: Nikolas Zane, via Flickr, under CC 2.0 License.

How America’s Division Empowers Putin

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For more than a decade, Vladimir Putin has sought to sow division and undermine American democracy. Now that he’s distracted by the conflict unfolding in Ukraine, his successor has stepped into the spotlight: America’s political class.

Once wars united people, but not in modern America. Here, the vast majority of citizens share remarkably similar opinions about Russia’s invasion of Ukraine: that it should be condemned outright. Our politicians, however, seem blissfully unaware of this.

In Congress last week, despite strong pro-Kyiv sentiment among the vast majority of Republicans, pro-Trump acolytes constituted the largest faction of those who voted against supplying aid to Ukraine. Yet on this issue, there is little to distinguish them from the Democratic Socialists of America, who have called for America’s exit from the “imperialist” Nato. There are even some on the far-Left who believe the West’s sympathy for Ukrainians reflects our unredeemable racism.

And yet the past fortnight has revealed something more optimistic than the intellectual adolescence of America’s politicians. The key to repelling Putin’s campaign of division in the West has also become apparent: unifying around basic economic interests.

Much attention has been paid in recent years to Russian online interference in our elections. But it is tangible realities — such as oil, food, and the ability to build things — that will determine our ability to resist external autocratic forces. And it is here that energy policy becomes crucial.

Before Biden became President, America was well on its way to energy independence, and emerged as the world’s leading gas exporter. Far more than words or military threats, the US energy revival was a blow to Russia, Iran and Saudi Arabia. American production was a critical factor in weakening the price of the one commodity that keeps their economies alive.

Yet this weapon is being systematically dismantled. Since taking the White House, Biden has turned the Federal Reserve and other executive departments into enforcers of “net zero” policies. From the very beginning, Biden and his green allies have busily cancelled gas pipelines, ended new leases for offshore oil, and introduced new regulations that make it harder to build new fossil fuel plants. All of this was manna for Moscow.

Biden’s energy policies, so poorly timed amid the prospect of a looming Russian invasion, has also widened a deeper, more long-lasting schism that will reverberate for years to come. Perhaps more than anything else, it seems certain to expand both class and geographic divisions.

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 credit: Werner Slocum / NREL, via Flickr, under CC 2.0 License.

Tarnishing the Golden State

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No state advertises its egalitarian bona fides more than California. Governor Gavin Newsom brags that his state is “the envy of the world,” a place that is “not going to abandon our poor people.” In his inauguration speech, he claimed that “unlike the Washington plutocracy, California isn’t satisfied serving a powerful few on one side of the velvet rope. The California Dream is for all.” Yet even as Newsom and his progressive allies have backed Black Lives Matter and enacted a racialized “ethnic studies” curriculum in public schools, reality tells a less positive story. The Golden State’s racial minorities are far from thriving. Increasingly, they’re seeking fortunes elsewhere—often to redder, less “enlightened” states.

The minorities leaving California are not running away from beautiful weather or scenery but toward an opportunity horizon that no longer seems achievable in the Golden State. In a new report for Chapman University, my coauthors and I found that African-American and Latino Californians’ real earnings ranked between 48th and 50th among the states. Blacks in California earn roughly the same, or slightly less, than do their counterparts in Mississippi. The state has the nation’s worst cost-adjusted poverty rate and the third-highest Gini Inequality index (behind New York and Louisiana). According to the United Way of California, over 30 percent of California residents lack sufficient income to cover basic living costs even after accounting for public-assistance programs; this includes half of Latino and 40 percent of black residents.

It was different once. Ever since the nineteenth-century Gold Rush, people from around the world rushed to California to seek their fortunes, giving the state a diverse population of whites, Asians, Latinos, and blacks. Deeply afraid of an “Asian invasion” into what newcomers called Gold Mountain, incumbent Californians limited the rights of Chinese, Japanese, and other migrants from the East and backed racially oriented bans originating from Washington, D.C. that lifted only in the early 1950s. The Asian population has risen since. Until 1990, Asians were not systematically enumerated in the decennial census but were instead combined with Pacific Islanders; this larger grouping increased from 2.0 percent to 9.6 percent of the state’s population, according to Census Bureau research. The state’s Asian population increased from 10.9 percent in 2000 to 15.1 percent in 2020.

Immigrants also entered from Mexico, at first to escape the chaos of that country’s brutal 1910–1920 revolution. Controls on Mexican migration tended to follow economic conditions, but a liberalization of immigration laws in 1965, and a mass amnesty in 1986, assured that Latinos would be the Golden State’s largest group. Census Bureau research indicates that California’s Hispanic population rose from 6.0 percent in 1940 to 13.7 percent in 1970 and 32.4 percent in 2000. A figure of 37.6 percent was reached in 2010, rising to 39.4 percent in 2020.

Finally, African-Americans started coming to the state in the 1920s and 1930s, with their numbers increasing during World War II. Lured by good jobs in the state’s burgeoning aircraft, automobile, and construction economies, blacks may have faced some discrimination, but far less than they did elsewhere. In L.A., wrote Ralph Bunche, blacks were “eating high up” off the hog. As late as 1940, less than 2 percent of the population was black—a number that more than doubled by 1950 and reached a peak of 7.7 percent in 1980. Since 2000, however, California’s black population has dropped from 6.7 percent to 5.4 percent.

Today, the California opportunity structure is no longer so promising. Once seen as a mecca of sorts for blacks, L.A. now ranks toward the bottom of the Urban Reform Institute’s Upward Mobility Index, which measures such factors as income, housing affordability, unemployment, educational attainment, and homeownership. San Francisco does poorly by the same metrics. The best American cities for upward mobility today are not Los Angeles or San Francisco but Atlanta; Phoenix; Virginia Beach and Richmond, Virginia; and Lancaster, Pennsylvania.

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.

Photo: City Journal.

The Great New Game

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Russia’s invasion of the Ukraine will be remembered as one of the great crimes of the 21st century. The ensuing humanitarian crisis has already caused more than two million refugees to flee their homeland. Read more

You Can’t Fix Housing with New Houses. We Need New Cities

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Housing is rapidly becoming the key economic issue facing America’s beleaguered middle class. Even as interest rates rise, rents are on a wild binge, up near 20 percent in the past year or more in some cities. Meanwhile, home prices have hit a high and appear to be climbing further still. Higher prices are emerging even in what have long been relative bargain communities in the southeast, as refugees from the high-priced Northeast pour in with their greater resources.

The property gold rush has been made more problematic by the growing role of professional, well-funded investors and speculators, to whom the housing market is more attractive than a sometimes unsteady stock market. Read more

The New Eurasian Century

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The current crises in eastern Europe reflect more than just Kremlin mischief-making—they reflect the first fruits of an emerging world order that spans the vastness from Beijing to Berlin. Unlike the longstanding liberal status quo, with its roots in classical civilization and the Enlightenment, this emerging alternative draws upon a mélange of German geopolitics, the legacy of Chinese emperors, the Mongols, and Orthodox Russian autocracy. For now, the new Eurasian ascendency encompasses Russia and its expanding list of recovered satellites, as well as China, the world’s premier dictatorship and workshop. Read more

Green Hypocrisy Hurts the Poorest

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Roughly a half century ago, rising energy prices devastated Western economies, helping make the autocrats of the Middle East insanely rich while propping up the slowly disintegrating Soviet empire. Today the world is again reeling from soaring energy prices; but this time the wound is self-inflicted — a product of misguided policies meant to accelerate the transition to green energy.

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A New Dawn for the Working Class?

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The labouring masses are restless, as evidenced by the Canadian trucker strike, union drives in Amazon warehouses in the US and in demonstrations throughout the developing world. More revealing still may be the turmoil in the labour markets, where workers are changing jobs, creating their own and, overall, refusing to return to the structures of the pre-pandemic order.

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How Biden Can Defeat China

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In 1930, John Dos Passos wrote that America is many things: it is a “slice of a continent”, “the world’s greatest river valley”, and “a set of bigmouthed officials with too many bank accounts”. “But mostly,” he wrote in The 42nd Parallel, America “is the speech of the people”.

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Welcome to the End of Democracy

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We bemoan autocracies in Latin America, the Middle East, Africa, Russia and China but largely ignore the more subtle authoritarian trend in the West. Don’t expect a crudely effective dictatorship out of Orwell’s Nineteen Eighty-Four: we may remain, as we are now, nominally democratic, but be ruled by a technocratic class empowered by greater powers of surveillance than those enjoyed by even the nosiest of dictatorships.

The new autocracy rises from a relentless economic concentration which has engendered a new and fabulously wealthy elite. Five years ago, around four hundred billionaires owned as much as half of the world’s assets. Today, only one hundred billionaires own that share, and Oxfam reduces that number to a mere twenty-six. In avowedly socialist China, the top one percent of the population holds about one-third of the country’s wealth, up from 20 percent two decades ago. Since 1978, China’s Gini coefficient, which measures inequality of wealth distribution, has tripled.

An OECD report issued before the Covid pandemic finds that almost everywhere, the non-rich share of national wealth has declined. These trends can be seen even in social democracies like Sweden and Germany. In the United States, as the conservative economist John Michaelson put it succinctly in 2018, the economic legacy of the last decade is “excessive corporate consolidation, a massive transfer of wealth to the top 1 percent from the middle class.”

This process has developed both in the tangible and digital economies. In Great Britain, where land prices have risen dramatically over the past decade, less than one percent of the population owns half of all the land. On the European continent overall, farmland has fallen increasingly into the hands of a small cadre of corporate owners and the mega-wealthy. In America, the largest farmland holder is Bill Gates, with over 200,000 acres, while Ted Turner and John Malone preside over lordly estates of over two million acres each — larger than several American states.

As property has concentrated, small-holders have come under increased pressure. Australia historically has enjoyed high rates of homeownership, but the rate among twenty-five to thirty-four year-olds dropped from more than 60 percent in 1981 to only 45 percent in 2016. The proportion of owner-occupied housing in once-egalitarian Australia has dropped by 10 percent in the last twenty-five years. Morgan Stanley predicts that the US will soon become primarily a “rentership society” where Wall Street firms seek to turn homes, furniture and other necessities into rental products.

The digital economy is similarly dominated by a small group of giant firms. These overlords together exercise control of up to 90 percent of critical markets such as basic computer operating systems, social media, online search advertising and book sales. No longer satisfied with controlling the pipelines, the tech oligarchy increasing buys up old news outlets and “curates” the news to its tastes. It increasingly dominates mainstream entertainment too: the pending sale of MGM to Amazon is just the most recent example of its conquest and consolidation of the means of communication.

Like the barbarian princes who shaped the Middle Ages, the new oligarchs have been able to seize their fiefdoms with little resistance from weak central governments. The pandemic accelerated this process; its lockdowns and restraints on mobility proved a bonanza for tech companies like Google, whose profits doubled during the period. In this highly regulated environment, the tech-rich have simply gotten richer: seven of the ten richest Americans come from the tech sector. Apple, by some calculations, is now worth more than the entire oil and gas industry. The already obscenely rich have become richer still. Jeff Bezos alone saw his net worth jump by an estimated $34.6 billion in the first two months of the pandemic, while his company has enjoyed continued revenue and profit growth.

As executive compensation reached the stratosphere in Big Tech and finance, small businesses face what the Harvard Business Review calls “an existential threat.” Experts now warn that one third of small businesses, which comprise the majority of US companies and employ nearly half of all workers, could ultimately shut down for good. Hundreds of thousands have already disappeared, including nearly half of all black-owned businesses. Particularly damaged have been the small merchants along Main Street and those working for them, such as restaurant and hospitality workers.

Read the rest of this piece at The Spectator World.

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: Chris Devers, via Flickr under CC 2.0 License.