Confronting the Supply Chain Crisis

For a generation, the Long Beach and Los Angeles harbors in California handled more than 40 percent of all container cargo headed into the US and epitomized the power of a globalizing economy. Today, the ships—mostly from Asia—still dock, but they must wait in a seemingly endless conga line of as many as 60 vessels, sometimes for as long as three weeks. These are the worst delays in modern history, and the price per container has risen to as much as 10 times its cost before the pandemic. The shipping crisis is now projected to last through 2023.

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Joe Biden’s Class War

Joe Biden may present himself as a ‘working-class hero’, a claim reiterated recently in the leftist American Prospect, but increasingly America’s workers are showing signs not of common cause but disquiet. Hollywood workers just announced a large-scale strike, some of whom blame their hard times on the ‘disruption’ to their industry wrought by tech firms, which are distinctly hostile to unions. There’s also increased tensions at Disneyland, as well as numerous organising efforts targeting Biden’s oligarch allies like Amazon and Starbucks.

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Feudal Future Podcast – Is There Hope? The Future of California Politics

On this episode of Feudal Future, hosts Joel Kotkin and Marshall Toplansky are joined by Tom Campbell and Shawn Steel to discuss the future of California politics.

Can the South Escape its Demons?

Out on the dusty prairie west of Houston, the construction crews have been busy. Gone are the rice fields, cattle ranches and pine forests that once dominated this part of the South. In their place sit new homes and communities. But they are not an eyesore; the homes are affordable and close to attractive town centres, large parks and lakes. These are communities rooted in the individual, the family and a belief in self-governance.

The new American Dream has its heart in the states of the old Confederacy. But its allure does not merely lie in a conservative embrace of lower taxes, less regulation and greater self-reliance, although these surely matter. More important are the opportunities that come from building businesses and owning new homes, not for the privileged few but for an increasingly diverse, and growing, populace.

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Never Going Back

For months, corporate hegemons, real estate brokers and their media acolytes have been insisting that a return to “normalcy,” that is, to the office, was imminent. Some companies threatened to reduce the incomes of remote workers, and others warned darkly that those most reluctant to return to the five-day-a-week grind would find their own ambitions ground down to the dust. Workers have been reported to be “pining” to return to office routines.

Fears of returning to the office due to the Delta variant have delayed a mass return to gateway cities. Office vacancies grew in August. Since the pandemic began, tenants gave back around 200 million square feet, according to Marcus & Millichap data, and the current office vacancy rate stands at 16.2 percent, matching the peak of the financial crisis. Overall, it is widely expected that office rents will not recover for at least five years.

Things could get ugly as some $2 trillion in commercial real estate debt becomes due by 2025, particularly in large, transit dependent central business districts, reflecting in part reluctance among commuters to ride public conveyances. This is a world-wide phenomenon—occurring in New York, Hong Kong, Paris, London, and other financial centers—and accompanied by a marked decline in business travel, with conventions and meetings particularly devastated.

A New Economic Geography

So where is the work getting done? Increasingly, in the suburbs and exurbs of the big metros, smaller metros, cities and even some rural areas, all of which offer lower urban densities, which usually means less overcrowding. In the first year of the pandemic, big cities, according to the firm American Communities and based on federal data, suffered the biggest job losses, nearly 10 percent, followed by their suburbs, while rural areas suffered 6 percent and exurbs less than 5 percent. The highest unemployment rates today are in coastal blue states, while the lowest tend to be in central and southern states.

The shift towards dispersed and remote work suggests the beginnings of a new geographical and corporate paradigm. Suburbs and exurbs accounted for more than 90 percent of all new job creation in the last decade, but with the rise of remote work, proximity to the physical workplace has lost more  of its advantages. University of Pennsylvania Professor Susan Wachter notes that telework eliminates the choice between long commutes and inordinate housing costs. The areas where remote work is growing most are generally small cities, as well as Sunbelt locales in Florida and South Carolina.

The dispersion of work is not a matter of low-wage workers heading to cheap places to do low-status jobs. In metros over one million such as Raleigh-Cary, Austin, Orlando, Salt Lake City, Nashville, Phoenix, Dallas-Fort Worth, and Charlotte, professional and business-services jobs are growing much faster than they are in San Francisco, Chicago, New York, or Los Angeles. The number of employees using the office started to drop as early as 2017 in San Francisco, the biggest winner in the tech economy.

The pandemic supercharged these trends. The disturbing rate of fatalities and hospitalizations in the Northeast, notably New York City, including Manhattan but particularly the poorest sections of the outer boroughs, chased many urbanites to the suburbs, exurbs, and beyond. Even as infections spread to other regions, it remained easier to endure the pandemic in a more spacious house, particularly if mass transit is not necessary.

Demographer Wendell Cox shows that, despite the considerable spread to less crowded areas over the past year, areas with the highest urban densities, in spite of their lockdowns, have experienced two times or more overall adjusted Covid fatalities, after more than one year of draconian social distancing regulations that eliminated much of downtown employment and cut mass transit use by up to 90 percent. Car-dominated places, where people can more easily afford space, have lower infection and fatality rates; if other pandemics follow, as many suspect, memories of the recent hegira will remain.

The longer the pandemic lasts and new variants appear, the greater will be what new research from Jose Maria Barrero, Nicholas Bloom, and Steven J. Davis refers to as  “residual fear of proximity.” The team suggests that when the pandemic fades, roughly 20 percent or more of all work will be done from home, almost four times the already growing rate before the pandemic. A study from the University of Chicago suggests this could grow to as much as one-third of the workforce and as high as 50 percent in Silicon Valley. Roughly 40 percent of all California jobs, including 70 percent of higher paying work, could be done at home, according to research by the Center of Jobs and the Economy.

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: Carol M. Highsmith, via Library of Congress under CC 1.0 License.

Feudal Future Podcast – The Psychological Impact of the Pandemic

On this episode of Feudal Future, hosts Joel Kotkin and Marshall Toplansky are joined by Ross Elliott and Aaron Kheriaty to discuss the psychological impact of the pandemic.

Gavin Newsom Won His Recall. What’s Next for California?

What started as a lark, then became an impossible dream—a conservative resurgence, starting in California—ended, like many past efforts, in electoral defeat. With his overwhelming victory in the recall election, California governor Gavin Newsom and his backers have consolidated their hold on the state for the foreseeable future.

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The Fading Family

For millennia the family has stood as the central institution of society—often changing, but always essential. But across the world, from China to North America, and particularly in Europe, family ties are weakening, with the potential to undermine one of the last few precious bits of privacy and intimacy.

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Progressives Have Ruined California

The very idea of a recall vote seemed absurd at first in California, this bluest of US states. Yet Californians’ surprisingly strong support for the removal of Democratic governor Gavin Newsom has resulted in precisely that, with the vote scheduled for 14 September. This reflects a stunning rejection of modern progressivism in a state thought to epitomise its promise.

Some, like the University of California’s Laura Tyson and former Newsom adviser Lenny Mendonca, may see California as creating ‘the way forward’ for a more enlightened ‘market capitalism’, but that reality is hard to see on the ground. Even before the pandemic, California already had the highest poverty rate and the widest gap between middle and upper-middle income earners of any state in the US. It now suffers from the second-highest unemployment rate in the US after Nevada.

Today, class drives Californian politics, and Newsom is peculiarly ill-suited to deal with it. He is financed by what the Los Angeles Times describes as ‘a coterie of San Francisco’s wealthiest families’. Newsom’s backers have aided his business ventures and helped him live in luxury – first in his native Marin, where he just sold his estate for over $6million, and now in Sacramento.

California’s well-connected rich are predictably rallying to Newsom’s side. At least 19 billionaires, mainly from the tech sector, have contributed to his extraordinarily well-funded recall campaign, which is outspending the opposition by roughly nine to one.

There is little hiding the elitism that Newsom epitomises. In the midst of a severe lockdown, he was caught violating his own pandemic orders at the ultra-expensive, ultra-chic French Laundry restaurant in Napa.

Newsom insists California is ‘doing pretty damn well’, citing record profits in Silicon Valley from both the major tech firms and a host of IPOs. He seems to be unaware that California’s middle- and working-class incomes have been heading downwards for a decade, while only the top five per cent of taxpayers have done well. As one progressive Democratic activist put it in Salon, the recall reflects a rebellion against ‘corporate-friendly elitism and tone-deaf egotism at the top of the California Democratic Party’.

Much of this can be traced back to regulatory policies tied to climate change (along with high taxes). These policies have driven out major companies – in energy, home construction, manufacturing and civil engineering – that traditionally employed middle-skilled workers. Instead, job growth has been concentrated in generally low-pay sectors, like hospitality. Over the past decade, 80 per cent of Californian jobs, notes one academic, have paid under the median wage. Half of these paid less than $40,000.

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 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.

Powering Down the Developing World

The Covid-19 pandemic has been particularly cruel to the developing world, with Africa, Latin America, and South Asia all epicenters of high fatalities. But something worse may be on the way – this time not from viruses but good intentions, bolstered by often-unrealistic climate projections, which threaten to keep these countries in poverty for the foreseeable future.

Economically strong countries – China, above all – account for most of the world’s greenhouse-gas emissions. But increasingly, western powers, along with the World Bank, investment banks, development funds, and the huge nonprofit sector, are moving to block fossil-fuel projects that could lift large parts of the world out of energy poverty. Emissions and economic progress remain closely linked; in the last two decades, CO2 ­concentrations have been falling in all wealthy nations, though these reductions were offset by the outsourcing of manufacturing jobs to a resurgent China.

The still-developing countries’ misfortune has been to get to the economic table when the climate change movement has gained unprecedented power in the West, placing new roadblocks in their following the East Asian path of manufacturing-led growth. At the same time, concerns over loss of industrial and other fossil-fuel-related jobs have led to growing calls from the likes of Senate Majority Leader Charles Schumer and the European Commission to tax the carbon content of imports, threatening the anti-poverty strategies of India and other poorer countries  while also dimming the prospects of struggling middleweights like Russia, Turkey, and Ukraine.

These countries are not likely to agree with U.S. climate representative John Kerry’s notion that “no one is being asked for a sacrifice.” It’s all about which populations get hit hardest under green-ification. We can see previews already in places like California and in Germany, where green energy shortfalls produce higher prices, rising energy poverty, blackouts – and a growing dependency on less-green places, like the Intermountain West or Russia, for energy.

Of course, such comparatively rich places are far better equipped to absorb soaring energy bills. If decarbonizing means the end of growth in the West, including restrictions on air travel, what will it mean for countries that are already poor, energy short, and possessing little in the way of savings? The Rockefeller Foundation estimates that more than half of Sub-Saharan Africa still lives in energy poverty, with deforestation making up the majority of its energy-related needs. The practice of indoor cooking on open fire and stoves alone contributes to almost half of all childhood-pneumonia related deaths worldwide.

Africa needs energy: the continent is set to make up almost 40% of the world’s population by the end of this century, and it is urbanizing at a rapid rate. In some senses, Africa’s problem is not its carbon footprint, but lack of one; the continent accounts for only 3% of the world’s carbon emissions. In Africa’s two largest economies, South Africa and Nigeria, the youth unemployment rate pre-Covid-19 approached 50%, five times that of the U.S. and three times that of the EU.

These social ills can be traced in part to lack of reliable energy and water for developmental needs. South Africa has since 2008 experienced an energy shortfall and simultaneously a water crisis. In 2021, Nigeria experienced a total grid collapse, and blackouts in the country are routine. Comparable situations exist in Iran, Pakistan, and Bangladesh.

There are also massive political risks. Africa’s young population is frustrated and unemployed, and riots over a rise in energy prices have occurred in South Africa, Nigeria, and Senegal. Comparable events occurred in 2019 in Iran, when protestors demonstrated against increasing fuel prices, as well as in Lebanon and Ecuador in 2021 The pandemic has made these places even more unstable, but long-term energy deficits could make such disorder commonplace.

Read the rest of this piece at Real Clear Energy.


Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the 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.

Hügo Krüger is a Structural Engineer with working experience in the Nuclear, Concrete and Oil and Gas Industry. He was born in Pretoria South Africa and moved to France in 2015. He holds a Bachelors Degree in Civil Engineering from the University of Pretoria and a Masters degree in Nuclear Structures from the École spéciale des travaux publics, du bâtiment et de l’industrie (ESTP Paris). He frequently contributes to the South African English blog Rational Standard and the Afrikaans Newspaper Rapport. He fluently speaks French, Germany, English and Afrikaans. His interests include politics, economics, public policy, history, languages, Krav Maga and Structural Engineering.

Photo credit: Kate Holt via Flickr under CC 2.0 License.