What COVID Hath Wrought

Glenn Ellmers’s analysis of COVID and Trump represents a classic, and effective, account of the situation from the perspective of declining liberty and adherence to traditional values. But though it is important and necessary to hold onto our highest ideals, I would like to emphasize what is actually taking place on the ground and its likely long-term implication.

Statistics show that COVID accelerated economic, demographic, and geographic trends which were already existent, but rarely acknowledged. These trends include large-scale migration to the south, the west, and the suburbs. COVID also, as Ellmers suggests, sharpened the conflict between many Americans and the ruling “expert” class, who, unlike most Americans, actually flourished under COVID.

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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

There’s One Simple Trick for Making America’s Post-Pandemic Cities Great Again

America’s great cities are coming back, albeit slowly, from the shock of the pandemic, and its divisive aftermath. But don’t expect them to fully recover their former status any time soon.

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How the Boomers Robbed the Young of All Hope

“Young people do not degenerate; this occurs only after grown men have already become corrupt.”Montesquieu, The Spirit of Laws, 1748.

The great test of a generation is whether it leaves better prospects for its descendants. Yet by virtually every indication, the baby boomers, and even the Gen Xers, are leaving a heritage of economic carnage – as well as a growing social and cultural dissipation that could shape our future and the fate of democratic self-rule, and not for the better. This legacy comes not from outside forces, but the investment bankers, tech oligarchs and their partners in the clerisy who have weakened their national economies and undermined the chances of upward mobility for most young people.

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The Independent Republics of Big Tech Are the Biggest Threat to Democracy

The Department of Homeland Security revealed last week that it was creating a Disinformation Governance Board to distribute “best practices” for countering disinformation. The new board joins a growing chorus—which includes President Biden and former President Barack Obama—that views disinformation disseminated on social media as one of the biggest threats facing our democracy.

But there’s a much bigger threat to democracy coming out of Silicon Valley and it’s this: America’s largest financial and tech companies increasingly act as independent countries, routinely exporting jobs, money and technology to our most significant global adversary. These companies, their assets, and increasingly their workers, exist wholly outside of America’s democratic borders and under the auspices of China’s anti-democratic ones. And they are bringing these undemocratic pressures back home with them, subverting our democracy from within.

Apple Computers, once the ultimate expression of American entrepreneurial innovation, epitomizes this new corporate mindset. With ever-increasing dependence on Beijing, the company is much more in line with Xi Jinping’s promised “China dream” of greater wealth and technological supremacy than it is with the American Dream. The company may be based in Cupertino, but it produces two-fifths of its products in China, four times more than the share made in the U.S., and despite rising concerns about China’s ascendancy, Apple is doubling down on its support for the emerging authoritarian world-state.

In 2016, Apple negotiated a $275 billion deal with China that guarantees the firm’s continued dependence on the Middle Kingdom, with additional promises to share vital technology with our most important global adversary. The company recently announced plans to source some of its chips in China, and Apple also contributes to and profits from China’s ever-expanding surveillance system.

But the growing divergence between Apple’s interests and America’s is not unique. As economic power consolidates here, some companies, notably Wall Street and the tech giants, have grown so large and powerful that they have become in essence their own nation states.

By 2020, the five largest tech companies had total revenue amounting to half of those of all state governments combined. In January this year, Apple’s market cap was larger than the GDPs of all but seven countries. But this is not exceptional. Microsoft’s market cap is larger than that of Canada, Brazil, Russia, Korea, or Mexico. Amazon does about the same.

But these companies don’t employ masses of Americans to make their money; production is generally shifted elsewhere. Those non-elite jobs which do exist are often dangerous, short-term and driven by relentless monitoring. And even when it comes to tech workers, Big Tech goes elsewhere for (cheap) talent: Some 75 percent of Silicon Valley’s workforce are not U.S. citizens. Many have H-IB visas, which make their holders essentially indentured servants, brought into the U.S. on short-term contracts to do work for tech companies that evade the burden of paying wages as high as they would to American workers.

Read the rest of this piece at Newsweek.


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.

Do We Need a Capitalist Civil War?

We Americans like to think of ourselves as a thoroughly modern people — living proof of what, with enough toil and grit, the rest of the free world can one day hope to be. And yet for all our progressivism and idealism, America’s political culture finds itself unable to escape the past. We may be living in a 21st century democracy, but that “democracy” increasingly resembles something that could have been plucked out of feudal Europe or, perhaps more accurately, feudal Japan.

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Serfing the Future?

Land ownership has shaped civilizations from their beginnings, with a constant interplay between great powers—the aristocracy, the state, the Church, the emperor—and those below them. History has oscillated between periods of greater dispersion of ownership, and those that favored greater concentration.

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The Kids Are Not Alright and the Center is No Longer Holding

Across the West, the young are losing faith in the future.

The recent French election provides a case study. In the first round vote, voters narrowly favored President Emmanuel Macron, the epitome of “enlightened” elite rule, over Marine Le Pen, the doyenne of French fascism. Read more

The Working Classes Are a Volcano Waiting to Erupt

Whatever the final outcome, the recent French elections have already revealed the comparative irrelevance of many elite concerns, from gender fluidity and racial injustice to the ever-present ‘climate catastrophe’. Instead, most voters in France and elsewhere are more concerned about soaring energy, food and housing costs. Many suspect that the cognitive elites, epitomised by President Emmanuel Macron, lack even the ambition to improve their living conditions.

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Red Dusk

David Goldman’s remarks on America’s challenges against China are, for the most part, spot-on. He is particularly on-target about two realities that may displease traditional conservatives: the failure of Trump’s China policy, and the need for some form of industrial policy.

Goldman may have voted twice for Trump (I did not), but he is no MAGA die-hard. He can read the numbers, which show growing dependence on China and an ever-widening trade deficit: imports from China rose over 30% more starting in January 2018, when Trump imposed tariffs. This 19th-century strategy simply did not work in the 21st.

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