You are here: / / The Economy

Why Europe and America Need Each Other

/in ,

European elites are greeting the incoming Trump administration with something less than enthusiasm. The UK has sent an ambassador to Washington with a well-expressed disdain for the returning US president. Le Monde, a French publication not known for its pro-American sympathies, called Trump’s election ‘the nail in [the] coffin’ for the US as a ‘democratic model’ for the world. The Guardian, predictably, has called for Europeans to fight to preserve the continent’s welfare and climate regime.

Some seem to think that Trump’s return is the spur Europe needs to finally stand on its own two feet. But they need to recognise, as was the case during the Second World War and the Cold War, that only a strong alliance between Europe and the US offers any hope of resisting the rise of an authoritarian bloc, this time grouped around China.

There are hopeful signs. Since the start of the Ukraine conflict, ties between Europe, Canada and the US have been strengthened. There is some promise in an incipient alliance between North America and India, Japan and Australia. But Europe cannot expect the US to bear the strategic burden itself.

Trump’s insistence that Europe rearm makes sense at a time when the continent is facing immediate threats, most immediately in the Red Sea and Ukraine. Today, almost all European countries outside the UK, Greece and the Baltic states do not spend more than two per cent of their GDP on defence, while the US spends roughly 3.5 per cent.

Although there is an isolationist tendency among MAGA activists, most US voters are in favour of expanding America’s ‘global presence’. In a reinvigorated alliance, Europe has much to offer in terms of production and expertise, particularly given the sad state of the US military industry, as evidenced by shortages of materials to send to allies like Ukraine, Taiwan or Israel.

A similar imperative exists in the economic sphere. Europeans have long prided themselves on producing a stronger, more equitable economy than the military-oriented Americans. Two decades ago, one could legitimately see Europe as a determinative third force in the world economy. This is no longer the case. It’s basically a choice between China and the US.

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 and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Whitehouse Archives, Official White House Photo by Shealah Craighead, via Flickr, Government work, Public Domain.

Europe Faces Green Energy Immiseration. Trump is About to Offer It a Lifeline.

/in

Teddy Roosevelt believed in speaking softly and carrying a big stick. Donald Trump will never speak softly, or even politely, but he will soon pack the power inherent in presiding over the world’s number one producer of oil and gas.

Read more

Why Both Sides Are Right in the H-1B Visas Row

/in ,

The current clashes over high-skilled immigration between Donald Trump’s right-wing base and his ‘first buddy’, Elon Musk, reveal a fundamental divide within the US president’s odd coalition. On one side are the populists concerned with jobs being prioritised for American workers. On the other, libertarians fret about how businesses can compete on a global scale.

The row was sparked last week by a tweet by Vivek Ramaswamy, co-chair of Trump’s Department of Government Efficiency, in which he blamed American culture for celebrating ‘mediocrity over excellence’, causing firms to seek skilled workers from abroad rather than hire home-grown talent. Musk has since chimed in to tell opponents of high-skilled immigration to ‘take a big step back and fuck yourself in the face’. ‘I will go to war on this issue the likes of which you cannot possibly comprehend’, he wrote on X.

Never one to sweat the details, Trump’s views on this issue are often ill-defined and seem ideal for sparking just such an internal conflict between his base and his Silicon Valley backers.

As the populists point out, H-1B visas – temporary work permits for skilled workers, first introduced in 1990 – have a record of abuse. Most notably, in 2014, Disney was accused of exploiting the H-1B programme to replace American programmers en masse with cheaper Indian ones. In an era of depressed growth in tech jobs, in part due to AI, the oligarchs’ claim that we face a profound shortage of such workers may be increasingly strained.

The populists also have it right in that H-1B visas have accelerated class divides, particularly in places like Silicon Valley. Valley types used to hire from local schools, like San José State University, rather than from places like the Indian Institutes of Technology. Today, roughly three-quarters of the Valley’s jobs go to non-citizens. Tech oligarchs may like this arrangement, but taking jobs from people who vote can have severe political ramifications, something those galaxy-brained techies seem not to comprehend.

What’s more, the widening social divides in the Bay Area have already created a progressive monoculture, while the GOP has all but ceased to exist there. Back in the 1970s, when the Valley was a place of upward mobility, its politics were decidedly centrist.

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 and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: TED Conference via Flickr, under CC 2.0 License.

The Lone Star State is Soaring: America’s Future Will Be Made in Texas

/in

The United States is a misnomer. Despite its title, our republic has rarely been united, instead hosting an endless gladiatorial contest between different states and regions. In the early 19th century, New York and New England struggled for supremacy against the Virginians and their empire of cotton. Gotham then took the field against the Chicago stockyards, before losing out to those upstarts in California. And now, the West Coasters are themselves under attack: from the Lone Star State.

Texas today is irrepressible. If the numbers are right, it could soon pass California and become America’s most populous state. Texas is also the nation’s second youngest state, even as it enjoys higher net migration than any of its peers. Tellingly, many new arrivals are exiles from the Golden State. This buoyancy isn’t hard to understand. Shaking off its reactionary heritage, Texans now wallow in progress, building more and making more than anyone else, with some boozing and dancing as they go. At its best, in fact, this blend of high-tech growth and gentle multiculturalism could yet rebuild America — if, that is, its worst conservative instincts can be repressed.

In a sense, Texan success within the United States is ironic. After declaring independence from Mexico, in 1836, it enjoyed a reputation as a place to “flee” the tyranny of Washington. By the time it joined the union, nine years later, the 28th state was dominated by planters and ranchers, groups that eagerly embraced both slavery and the Confederacy. After losing the Civil War, Texans were left bitter and impoverished, their natural bounty in hock to far-off Northern bankers. To quote Wilbert “Pappy” O’Daniel, governor and then senator in the Forties, Texas had become “New York’s most valuable foreign possession”.

For all its bloody-minded independence — Steinbeck was surely right when he called Texas “a nation in every sense of the word” — it would ultimately be the federal government that dragged the state’s marshes and prairies into the 20th century. The New Deal brought electricity to remote rural areas, and massively expanded the all-important Houston Ship Channel. The boom in a quintessentially Texan product surely helped too. “Oil is money,” the historian Robert Bryce has written. “Money is power.”

Dovetailed with a degree of racial pragmatism, with Houston desegregating far more easily than Atlanta, Texas also began to move beyond its dependence on oil and gas. Prodded along by LBJ and other native sons, for instance, Houston emerged as the centre of a gigantic new space centre. And if that banished memories of the city’s parochial past — as recently as 1946, the writer John Gunther grumbled about hotels filled with cockroaches — other towns rose too. Houston, Dallas-Fort Worth, San Antonio and Austin, together known as the Texas Triangle, are now home to two-thirds of the state’s population and 70% of its GDP.

Not, of course, that this is simply a historical tale. For if 20th-century Texas flourished on a mix of social peace, low taxes and light-touch regulation, their successors are sipping much the same brew. The numbers here are clear. Texas’s overall tax burden, according to one recent study, ranked 37th out of 50: hardly the best, but much better than California (5th) or New York (1st).

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 and directs the Center for Demographics and Policy there. He is Senior Research Fellow at the Civitas Institute at the University of Texas in Austin. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Circa 1938 postcard, via Flickr under CC 2.0 License.

Western Nations Cripple Their Economies With Green Initiatives While China and Others Laugh

/in ,

North America, with its vast resources, may be in a position to save the economies of the west. But governments on both sides of the border seem more concerned with green virtue signaling than actually finding a workable approach to carbon emissions that does not undermine our economies and ability to defend ourselves.

Read more

The Triumph of Red States

/in ,

Forget the presidential election. The real contest about the future direction of the country has already taken place, and it’s the red states that are clearly winning. Read more

The Road to Neo-Feudalism

/in ,

For middle- and working-class people across the developed world, home ownership has served as a primary driver of upward mobility. But in a growing number of places, this aspiration is being systematically undermined with grave implications for liberal democracy, the economy, and even fertility.

Read more

Why Johnny Can’t Build

/in ,

We were once a nation of builders—from the toll roads and canals of the early nineteenth century and the railroads of the second half of that busy century, to the construction of power, energy, and water systems that were the envy of the world. Read more

The Economy, Not Palestine, Will Undo Joe Biden

/in ,

This week’s surge in workers seeking unemployment benefits should be a sign that America’s already weakening economy, and much slower job growth, could prove the key to this year’s election. Indeed, one in four Americans fear losing their job in the next year.

Read more

Biden’s Grid Wars are a Direct Assault on the Western Middle Class

/in ,

As in the Medieval past, scarcity will likely define our present, facilitated by our “net zero” economy. This brave new world will support fewer people, juggling between them expensive resources, less food, and uncertain energy production. Perhaps the biggest struggle will be over electricity, the preferred energy solution of our ruling green hierarchy.

Read more