Tag Archive for: economic inequality

Restoring the California Dream

Join us for a webinar hosted by Joel Kotkin and Marshall Toplansky to learn how we can restore the California Dream for middle and working class Californians. Following the presentation of the report, there will be an all-star panel led by Jeff Ball, new CEO of the Orange County Business Council.

Panel participants include Raul Anaya, Joe Hensley, and Karla Del Rio.

Register for the free Zoom webinar Restoring the American Dream

Restoring California Dream

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Click here to view or download a copy of the full report (17MB PDF opens in new tab or window)

California is a Bastion of Innovation Marred by Deep Inequality. Is That America’s Future?

Everyone seems to be California dreaming these days. Much of America, particularly its red parts, see California as a hopeless dystopia best understood as everything the nation should avoid. Meanwhile, for the progressive Left and many around Joe Biden, California is the Mecca, a great role model being attacked by jealous reactionaries.

As in so many cases, both sides have a piece of the truth.

To be sure, despite the many well-documented problems, California still has an impressive economy that will shape the country’s and the world’s economic future—through the entertainment, space, critical software and social media industries and international trade. A spirit of experimentation and innovation persists across the state and fuels this industriousness.

Sadly, along with new technical and cultural innovations, the everyday reality outside the glamor zone presents a prospect as cautionary as it is aspirational, a harbinger of innovation marred by massive social inequality.

For the parade of startups and youthful billionaires coexists with the country’s highest cost-of-living adjusted poverty rate, the largest gap between the middle class and the rich, the most crowded housing and second lowest homeownership rate.

California once projected the essence of our common national dream. Today, its leaders increasingly see it as a kind of post-America, with its own racial, gender and environmental standards. It’s an approach welcome in Malibu or Palo Alto, but most Californians are left coping with the nation’s worst homeless crisis and rising crime. A ride on Highway 33 through the impoverished expanses of the Central Valley reveals a vast and bleak landscape of abandoned cars, dilapidated houses and threadbare shops.

The pandemic has accelerated California’s class divide, vastly enriching the tech elite and financial oligarchs but leaving California with the nation’s highest unemployment rate and making it the second hardest place to find a job.

Silicon Valley was once among the most egalitarian regions in the nation; today, as it has become more aggressively woke and taken to massively funding progressive Democrats, it has become one of the most segregated places in the country, what CityLab has described as “a region of segregated innovation.”

Times may be flush for venture capitalists and serial tech entrepreneurs, but they’re not so great for those who clean their own buildings and work in the food service industry. Nearly 30 percent of Silicon Valley’s residents rely on public or private financial assistance. African Americans and Latinos have seen declines in real incomes. The one percent pay roughly half of the state’s income tax and windfalls from IPOs fund the state’s ultra-generous pensions and an ever expanding welfare state—and yet, none of this creates good jobs.

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Class War is Just Beginning

With the seeming deconstruction of the Biden Administration proceeding at a rapid clip, many on the right hope for an end to the conscious stoking of class resentments that has characterized progressive politics. Yet despite the political meltdown, America’s class divides have become so wide, and so bitter, that Biden’s presidency may prove more a prelude than a denouement for the future of class warfare.

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Welcome to the End of Democracy

We bemoan autocracies in Latin America, the Middle East, Africa, Russia and China but largely ignore the more subtle authoritarian trend in the West. Don’t expect a crudely effective dictatorship out of Orwell’s Nineteen Eighty-Four: we may remain, as we are now, nominally democratic, but be ruled by a technocratic class empowered by greater powers of surveillance than those enjoyed by even the nosiest of dictatorships.

The new autocracy rises from a relentless economic concentration which has engendered a new and fabulously wealthy elite. Five years ago, around four hundred billionaires owned as much as half of the world’s assets. Today, only one hundred billionaires own that share, and Oxfam reduces that number to a mere twenty-six. In avowedly socialist China, the top one percent of the population holds about one-third of the country’s wealth, up from 20 percent two decades ago. Since 1978, China’s Gini coefficient, which measures inequality of wealth distribution, has tripled.

An OECD report issued before the Covid pandemic finds that almost everywhere, the non-rich share of national wealth has declined. These trends can be seen even in social democracies like Sweden and Germany. In the United States, as the conservative economist John Michaelson put it succinctly in 2018, the economic legacy of the last decade is “excessive corporate consolidation, a massive transfer of wealth to the top 1 percent from the middle class.”

This process has developed both in the tangible and digital economies. In Great Britain, where land prices have risen dramatically over the past decade, less than one percent of the population owns half of all the land. On the European continent overall, farmland has fallen increasingly into the hands of a small cadre of corporate owners and the mega-wealthy. In America, the largest farmland holder is Bill Gates, with over 200,000 acres, while Ted Turner and John Malone preside over lordly estates of over two million acres each — larger than several American states.

As property has concentrated, small-holders have come under increased pressure. Australia historically has enjoyed high rates of homeownership, but the rate among twenty-five to thirty-four year-olds dropped from more than 60 percent in 1981 to only 45 percent in 2016. The proportion of owner-occupied housing in once-egalitarian Australia has dropped by 10 percent in the last twenty-five years. Morgan Stanley predicts that the US will soon become primarily a “rentership society” where Wall Street firms seek to turn homes, furniture and other necessities into rental products.

The digital economy is similarly dominated by a small group of giant firms. These overlords together exercise control of up to 90 percent of critical markets such as basic computer operating systems, social media, online search advertising and book sales. No longer satisfied with controlling the pipelines, the tech oligarchy increasing buys up old news outlets and “curates” the news to its tastes. It increasingly dominates mainstream entertainment too: the pending sale of MGM to Amazon is just the most recent example of its conquest and consolidation of the means of communication.

Like the barbarian princes who shaped the Middle Ages, the new oligarchs have been able to seize their fiefdoms with little resistance from weak central governments. The pandemic accelerated this process; its lockdowns and restraints on mobility proved a bonanza for tech companies like Google, whose profits doubled during the period. In this highly regulated environment, the tech-rich have simply gotten richer: seven of the ten richest Americans come from the tech sector. Apple, by some calculations, is now worth more than the entire oil and gas industry. The already obscenely rich have become richer still. Jeff Bezos alone saw his net worth jump by an estimated $34.6 billion in the first two months of the pandemic, while his company has enjoyed continued revenue and profit growth.

As executive compensation reached the stratosphere in Big Tech and finance, small businesses face what the Harvard Business Review calls “an existential threat.” Experts now warn that one third of small businesses, which comprise the majority of US companies and employ nearly half of all workers, could ultimately shut down for good. Hundreds of thousands have already disappeared, including nearly half of all black-owned businesses. Particularly damaged have been the small merchants along Main Street and those working for them, such as restaurant and hospitality workers.

Read the rest of this piece at The Spectator World.


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: Chris Devers, via Flickr under CC 2.0 License.

Trouble in Paradise: The Crumbling California Model

Some horrified conservatives dismiss California as the progressive dystopia, bound for bankruptcy and, let’s hope, growing irrelevance. Progressives, for their part, hail the Golden State as the avatar of a better future, the role model for a new, more environmentally friendly and socially just economic order. They often dismiss critiques as conservative misinformation.

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Kotkin on Arquette Show: End of Progressive America?

By: Rod Arquette

On: The Daily Rundown (iheart radio)

Joel Kotkin, Professor of Urban Studies at Chapman University joins the program to discuss his recent piece for Unherd in which he questions if we have reached the end of progressive America.

“So, here’s the good news. On what sometimes seems the inexorable course towards progressive capture, we can see multiple fronts of resistance, and the early congealing of independent-minded forces, from the rational Right to the traditional liberal-left.”.

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Own Nothing and Love It

From the ancient world to modern times, the class of small property owners have constituted the sine qua non of democratic self-government. But today this class is under attack by what Aristotle described as an oligarchia, an unelected power elite that controls the political economy for its own purposes. In contrast, the rise of small holders were critical to the re-emergence and growth of democracy first in the Netherlands, followed by North America, Australia, and much of Europe.

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An Unholy Alliance Between Big Tech and Woke is Destroying the Middle Class

By: Steven Edginton

On: The Telegraph

“An unholy alliance between big tech and woke is destroying the middle class”.

With wealth inequality soaring and the power of the elites growing, is society returning to the feudal era? The demographer and geographer Joel Kotkin joins Steven Edginton to discuss his theory of “neo-feudalism”.

Listen to the interview on Spotify

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Serfing the Planet

Like its global predecessors, the COP26 Glasgow conference will usher in a new wave of apocalyptic warnings about climate change. It will also likely prove no more successful, in terms of actually addressing the issue, than its predecessors, particularly as China, India and other developing countries ramp up their emissions.

Nevertheless, none of this will force the climate activists to reconsider how the current strategies against global warming could break the backs of the already beleaguered working and middle class. (For British readers, I use the phrase ‘middle class’ here in the American – less bourgeois – sense.) The climate chorus of celebrities, oligarchs and royals may feel virtuous, but for most people the future could prove to be propertyless proletarianisation. Many of those in Glasgow at the moment pray at the altar of ‘de-growth’. They want to limit the consumption of the working and middle classes, undermine their jobs, raise their energy bills, and inhibit their ability to buy property or travel.

These policies are fine with ‘woke’ corporatists like BlackRock, who see enormous profits in the regulated shift in energy, even as they seek to expand their business with the world’s dominant polluter, China. What’s missing is any focus on how to cut emissions without causing high inflation, raising energy prices and destroying the middle class. So far, more palatable options, like increasing remote work, geothermal energy, natural gas, nuclear power and varied new technologies, have not managed to get on to the agenda.

With climate, as with many other issues, the upper classes are inflicting their own preferences on working- and middle-class people. As nonprofits, oligarchs and bureaucrats plot out the future, small business owners and the middle class, as one entrepreneur put it, are ‘not at the table – or even in the room’. This is the very class – what I refer to as the yeomanry – that has driven much of the West’s economic progress and nurtured self-government. Democracy was born when both Athens and later Rome included small property owners in governance. Democracy died when these small owners lost power to what Aristotle labelled the ‘oligarchia’.

After the autocratic Middle Ages, both human progress and self-rule came back as the middle classes began to rise – first in Italy but then more profoundly, and more pervasively, in the Netherlands and the British Isles, before spreading to North America and Oceania, where there was no true hereditary aristocracy. Students of classical experience, such as Thomas Jefferson, James Madison and John Adams, all considered the over-concentration of property in a few hands as a basic threat to republican institutions, an insight shared by such intellects as Edmund Burke, Alexis de Tocqueville and Adam Smith.

After the brutalities of the early Industrial Revolution, and two world wars, the middle class thrived not just in America, but also in Britain, Australia, Canada and increasingly in East Asia. But by the 1970s we began what has become an inexorable march towards an ever more feudalistic structure. The Organisation for Economic Cooperation and Development has noted that, across the 36 wealthier countries, the uber-wealthy have taken an ever greater share of national GDP in recent decades, while the middle class ‘looks increasingly like a boat in rocky waters’.

These patterns are clearly evident in the United States, where wealth gains have been especially concentrated among the top 0.1 per cent. The share of national wealth held by those below the top 10 per cent has fallen since the 1980s by 12 percentage points, the same proportion that the top 0.1 per cent have gained. Today, roughly half of all Americans earn less than $35,000 annually, living essentially pay cheque to pay cheque.

Even with their robust social-welfare provisions, over two thirds of European Union countries, including Sweden, have experienced declining social mobility. Germany is significantly less equal than its EU peers, with richer households controlling a bigger share of assets than in most other Western European states. The bottom 40 per cent of German adults hold almost no assets at all; barely 45 per cent of Germans own homes. Even in theoretically socialist China the top one per cent of the population hold about one third of the country’s wealth. Meanwhile, the prospects for the Chinese middle class are fading, particularly in light of the recent debt and housing crisis.

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 Executive Director for Urban Reform Institute. Learn more at joelkotkin.com and follow him on Twitter @joelkotkin.

Photo: Paul Farmer, via Geograph.org.uk, CC 2.0 License.