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Why Housing Will Come Back

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Appearing in:

Forbes.com

Few icons of the American way of life have suffered more in recent years than  homeownership. Since the bursting of the housing bubble, there has been a steady drumbeat from the factories of futurist punditry that the notion of owning a home will, and, more importantly, should become out of reach for most Americans.

Before jumping on this bandwagon, perhaps we would do well to understand the role that homeownership and the diffusion of property plays in a democracy. From Madison and Jefferson through Lincoln’s Homestead Act, the most enduring and radical notion of American political economy has been the diffusion of property.

Like small farmers in the 19th century, homeowners–and equally important, aspiring homeowners–now represent the core of our economy without which a strong recovery is likely impossible.  Houses remain as a financial bulwark for a large percentage of families, the anchor of communities, and, increasingly, home-based businesses.

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Urban Plight: Vanishing Upward Mobility

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Appearing in:

The American

Since the beginnings of civilization, cities have been crucibles of progress both for societies and individuals. A great city, wrote Rene Descartes in the seventeenth century, represented “an inventory of the possible,” a place where people could create their own futures and lift up their families.

What characterized great cities such as Amsterdam—and, later, places such as London, New York , Chicago, and Tokyo—was the size of their property-owning middle class. This was a class whose roots, for the most part, lay in the peasantry or artisan class, and later among industrial workers. Their ascension into the ranks of the bourgeoisie, petit or haute, epitomized the opportunities for social advancement created uniquely by cities.

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Where’s Next: November May Determine Regional Winners

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As the recovery begins, albeit fitfully, where can we expect growth in jobs, incomes and, most importantly, middle class opportunities? In the US there are two emerging “new” economies, one largely promoted by the Administration and the other more grounded in longer-term market and demographic forces.

The November election and its subsequent massive expansion of federal power may have determined which regions win the post-bust economy, but the stakes in November are particularly acute for some prime beneficiaries of what could be called the Obama economy: the education lobby, Silicon Valley venture firms, Wall Street, urban land interests and the public sector. All backers of his 2008 campaign, these groups have either reaped significant benefits from the stimulus or have used it to bolster themselves from the worst impact of the recession. Read more

America’s 21st-Century Business Model

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Appearing in:

Forbes.com

Current attitudes aren’t too kind to the old American way of doing business. In our globalized economy, the most enthusiastically touted approaches are those adopted by centralized, state-dominated economies such as China, Brazil and Russia as well as–somewhat less oppressively–those of the major E.U. states.

Yet the U.S. may well be constructing the best sustainable business model for the 21st Century. It is an approach built on the country’s greatest enduring strength–an innovative business culture driven increasingly by a diverse pool of immigrants.

This model, of course, lacks the kind of centralized control beloved by many pundits. Yet its virtues are also missing from statist-oriented European or East Asian capitalism. These other regions’ systems may be more disciplined in their thinking, but they do not draw as well on the diversity of human experience and connections that drive America’s post-racial economy.

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The China Syndrome

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Appearing in:

Forbes.com

China’s ascension to the world’s second-largest economy, surpassing Japan, has led to predictions that it will inevitably snatch the No. 1 spot from the United States. Nomura Securities envisions China surpassing the U.S.’ total GDP in little more than a decade. And economist Robert Fogel predicts that by 2050 China’s economy will account for 40% of the world’s GDP, with the U.S.’ share shrinking to a measly 14%.

Americans indeed should worry about the prospect of slipping status, but the idée fixe about China’s inevitable hegemony–like Japan’s two decades ago–could prove greatly exaggerated. Countries generally do not experience hyper-growth–the starting point for many predictions–for long. Eventually costs rise, internal pressures grow and natural limitations brake and can even throw the economy into reverse.

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The Golden State’s War on Itself

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Appearing in:

The City Journal

California has long been a destination for those seeking a better place to live. For most of its history, the state enacted sensible policies that created one of the wealthiest and most innovative economies in human history. California realized the American dream but better, fostering a huge middle class that, for the most part, owned their homes, sent their kids to public schools, and found meaningful work connected to the state’s amazingly diverse, innovative economy. Read more

Alaska: Caribou Commons Or America’s Lost Ace?

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Appearing in:

Forbes.com

The most serious collateral damage from the BP spill disaster could very likely be in the far north, along the Alaskan coast. The problem is not a current spill but the Obama administration’s ban on offshore drilling and what many fear may be a broader attempt to close the state from further resource-related development.

Such an approach could harm both the local and national economies for decades to come.

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A New War Between The States

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Forbes.com

Nearly a century and half since the United States last divided, a new “irrepressible conflict” is brewing between the states. It revolves around the expansion of federal power at the expense of state and local prerogatives. It also reflects a growing economic divide, arguably more important than the much discussed ideological one, between very different regional economies.

This conflict could grow in the coming years, particularly as the Obama administration seeks to impose a singular federal will against a generally more conservative set of state governments. The likely election of a more center-right Congress will exacerbate the problem. We may enter a golden age of critical court decisions over the true extent of federal or executive power.

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How Obama Lost Small Business

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The Daily Beast

Financial reform might irk Wall Street, but the president’s real problem is with small businesses—the engine of any serious recovery. Joel Kotkin on what he could have done differently.

The stock market, with some fits and starts, has surged since he’s taken office. Wall Street grandees and the big banks have enjoyed record profits. He’s pushed through a namby-pamby reform bill—which even it’s authors acknowledge is “not perfect”—that is more a threat to Main Street than the mega-banks. And yet why is Barack Obama losing the business community, even among those who bankrolled his campaign? Read more

The Democrats’ Middle-Class Problem

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Appearing in:

Politico

Class, the Industrial Revolution’s great political dividing line, is enjoying Information Age resurgence. It now threatens the political future of presidents, prime ministers and even Politburo chiefs.

As in the Industrial Age, new technology is displacing whole groups of people — blue- and white-collar workers — as it boosts productivity and creates opportunities for others. Inequality is on the rise — from the developing world to historically egalitarian Scandinavia and Britain.

Divisions are evident here in the United States. Throughout the 2008 presidential campaign, Barack Obama lagged in appealing to white middle- and working-class voters who supported Hillary — and former President Bill — Clinton. Read more