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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Why Millennials Are Dropping Out

With inflation soaring, trust in governments plummeting, and the global economy teetering on the brink of collapse, one might expect to see the masses out in the streets, calling for the heads of their rulers. But instead of rage and rebellion, we mostly see apathy. Rather than getting radicalised, people are dropping out.

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Heartland Manufacturing Renaissance

Out in the rolling country just east of Columbus, Ohio, a new—and potentially brighter—American future is emerging. New factories are springing up, and, amid a severe labor shortage, companies are recruiting in the inner city and among communities of new immigrants and high schoolers to keep their plants running. Read more

Class is Back

The growing likelihood of recession, at best sharply lower growth and maybe 1970s-style stagflation, seems likely to further accentuate the class and political divisions already rubbed raw by the pandemic and a global supply crisis. A majority of Americans feel we may be headed for a depression, while Britain is already experiencing negative growth.

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Forget College. Skilled Trades are the Future of the U.S. Economy

America is suffering from a worker shortage, but a more persistent and perhaps even urgent problem is the profound lack of skills among younger Americans. American elite universities may still be still regarded as the world’s best, but for most young people, the educational system—from grade school to graduate school—is something of a failure, a critical engine of persistent inequality and diminished competition on the international stage.

This crisis in competence predates the pandemic. So does the very related labor shortage. The percentage of firms reporting shortages of labor more than doubled between 2015 and 2020, to 70 percent. Low birthrates among millennials has created what the forecasting firm EMSI describes as a “demographic drought,” as U.S. population growth between 16 and 64 has dropped from 20 percent in the eighties to less than 5 percent last decade. By 2028, Korn Ferry projects there will be a deficit of at least six million workers.

But the bigger problem is not just numbers; consider that our competitors, notably China, face even more challenging demographics. The big issue is the lack of skills throughout the workforce. From grade to graduate schools, our education is deteriorating.

Our education system, with its hyper-focus on four-year colleges, has failed its students. This about one staggering statistic: Over the past 20 years, we have created twice as many bachelor’s degrees as jobs to employ those who have earned them. Over 40 percent of recent graduates are underemployed, meaning that they’re working in jobs that don’t require their degree. Many graduate programs produce fancy degrees that never return the investment for an estimated 40 percent of master’s students, particularly those earning degrees outside the sciences, business, medicine and education

Students are getting the message: A survey taken in 2020 found that only a third of undergraduates see their educations as advancing their career goals, and barely one in five think the BA is worth the cost. The basic reality is this: The upfront investment is high (tuition fees for four-year public colleges have increased by an average of 213 percent in real terms between 1988 and 2017) but the return on investment seems to be failing.

It is likely universities may have reached their apogee and are trending down from their high point. A survey from in 2020 found that only a third of undergraduates saw their education as advancing their career goals, and barely one in five think that a bachelor’s degree is worth the cost. The vast majority of young people prioritize such things as finding a good paying job over the social uplift and hefty tuitions associated with four-year colleges. Not surprisingly, overall college enrollment is not simply dropping; it’s fallen a full 11 percent in the past decade.

Increasingly employers recognize the education industry’s failures. Companies like Google and Apple no longer require a college degree and entrepreneurs like Elon Musk treat universities with a skepticism that borders on disdain, calling it “not for learning” and favoring dropouts who “did something.”

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.

Homepage photo: Washington State DoT via Flickr under CC 2.0 License.

Green Rope-a-Dope: China Watches as America Greens

The color green has long been associated with envy, but increasingly it’s becoming a pigment of mass delusion. Amid near-hysterical reporting about the climate, the U.S., and much of the West, is embracing willy-nilly policies likely to weaken our economy and boost China’s ascendancy at the expense of democracy and market economies.

In essence, China is adopting a version of the great Muhammad Ali’s “rope-a-dope” boxing strategy, which had the opponent wear himself out by launching harmless punches as Ali lounged on the ropes. Then, as the rival began to weaken, Ali would seize the moment and pummel him.

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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.

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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