The Delusion of Eric Garcetti for President

Photo courtesy of Eric Garcetti, Flickr.

Someone may be putting something in the Los Angeles water supply. In the past months, two unlikely L.A.-based presidential contenders — Mayor Eric Garcetti and Disney Chief Robert Iger — have been floated in the media, including in the New York Times.

But before we start worrying about how an L.A.-based president might affect traffic (after all this is the big issue in Southern California), we might want to confront political reality. In both cases, the case for our local heroes’ candidacies is weak at best, and delusional at worst.

The Disney fantasies

The Iger case is, if anything easier to dismiss. Iger can sell himself, like Trump, as a business success story, and with probably far-fewer questionable business transactions. Yet Iger, trying to run as a progressive in an increasingly left-wing Democratic Party, will face numerous challenges that dwarfs those faced by Trump.

Iger, for example, will have to run against the sad record of his company’s self-serving interference in Anaheim. Disney is generally a low-wage employer, and, in Orange County, this can be seen as contributing to the enormous disparity between cost of living and low salaries. I don’t suggest that companies should be primarily social justice warriors, but when a corporate executive runs, he’s going to be subject to their scrutiny.

Other problems also abound. For example, in 2016 the firm laid off 250 of its Orlando tech employees, replacing them with H-1B visas holders from an Indian outsourcing firm, and then, insisted that some train their replacements before being laid off. Let’s just say that won’t play well if Iger had to run against populists like Bernie Sanders, Elizabeth Warren, or even Joe Biden.

Should mayors run the world?

If Iger suffers from Mouse made illusions, Garcetti gets his from urbanist circles, who increasingly maintain that mayors should run the world. This may seem strange given that core cities account for barely a quarter of our major metropolitan population. In the Los Angeles metropolitan area, most of regional growth takes place well outside the urban core. The slow growing city, which was first claimed to have reached four million people in 2008, has still not achieved that number according to the U.S. Census Bureau.

Unfortunately for Garcetti, L.A. makes a hard sell as an exemplar for the economic future. Some cities like New York and San Francisco, have enjoyed robust expansions of employment in the past decade, but not Los Angeles. Overall, notes a recent survey in Wallet Hub of 150 cities in the country in terms of job prospects, ranked Los Angeles 115th well below less hyped places as Irvine, Rancho Cucamonga, Ontario and even Fontana.

Garcetti’s has tried to sell L.A.’s “silicon beach” as a hot tech location but, despite the success around the now faltering Snapchat, overall STEM growth over the past decade has been slightly negative. Remarkably for a one-time tech behemoth, the county now has less STEM employment per capita than the national average. At the same time, rankings of inequality and poverty, as measured by urban theorist Richard Florida, place the L.A. area, which includes the surrounding communities, dead last among the 20 largest metros. Overall the poverty rate in both the city proper and in the riot zone is higher now than before the 1992 riots.

Has Garcetti’s density agenda paid off elsewhere? One in four Angelinos, according to a recent UCLA study, spend half their income on rent, the highest again of any major metro.

Garcetti’s backers praise pro-density policies and hail him as a crusader against sprawl. But ordinary citizens are less enthused about his policies for narrowing streets, which has not only slowed traffic but also seen an increase in accidents; congested traffic also tends to generate more greenhouse gas. Garcetti gets kudos for his transit fixation but last year Los Angeles accounted for almost one-quarter of the strong national decline in transit ridership; in the period spanning his first term, Los Angeles lost 113 million annual rides, 16.6 percent of its 2014 ridership.

Deep blue visions on the national stage.

Of course, Mayor Garcetti is not to blame for all L.A.’s troubles, which have been festering for decades. His culpability lies with doubling down on failed policies. If someone is running for the highest office in the land, it’s nice to have something to brag about other than speculative high rises in the inner core and the arrival of two football teams, both scheduled to play in Inglewood.

The good news may be neither of these people are going anywhere. Both Garcetti and Iger seem unlikely to outdo California’s favorite daughter, Sen. Kamala Harris, in the early primaries. She may have little to show for her time in office — except for a genius for grandstanding — but her multi-cultural allure, to coin a phrase, trumps that of white male heterosexuals in today’s identity crazed Democratic Party.

Basically, my old New Yorker’s advice to both these guys is: “fuggedaboutit.” America may be nutty enough to nominate a Californian, but it won’t be either of you.

Originally published in the Orange County Register.

Cross-posted at New Geography.

The California Economy’s Surface Strength Hides Looming Weakness

If you listen to California’s many boosters, things have never been so good. And, to be sure, since 2011, the state appears to have gained its economic footing, and outperformed many of its rivals.

Some, such as Los Angeles Magazine and Bloomberg, claim that it is California — not the bumbling Trump regime — that is “making America great again.” California, with 2 percent job growth in 2016, gained jobs more rapidly than most states. The growth rate was about equal to Texas and Colorado, but behind such growth centers as Florida, Nevada, Oregon, Washington, Utah and the District of Columbia.

Bay Area: Still the tower of power

sanfrancisco3Over the past few years, the Bay Area has grown faster in terms of jobs than anywhere in the nation. But this year, according to the annual survey of the nation’s 70 largest job markets that I do with Pepperdine University public policy professor Michael Shires for Forbes, there is a discernible slowing in the region. For the first time this decade, San Francisco lost its No. 1 slot to Dallas, which, like most other fastest-growing metros, boasts lower costs and taxes, and has created more middle-class jobs than its California rivals.

The San Francisco area, which includes suburban San Mateo, remains vibrant. More troubling may be the weakening of the adjacent San Jose/Silicon Valley economy, which dropped six places to eighth — respectable, but not the kind of superstar performance we have seen over the past several years.

This partly reflects an inevitable slowdown in information job growth. As the startup economy has stalled, and the big players have consolidated their dominance, sector growth has dropped from near double digits to well under half that. Perhaps more telling has been a shift in domestic migration, which was positive in San Francisco earlier in the decade, but has now turned sharply negative. These are clear signs of a boom that is cooling off.

Southern California: Stuck in second gear

Southern California continues to lag. San Diego managed only a mediocre 29th-place finish. That’s better than Orange County, which managed an even less impressive 37th, and Los Angeles, by far the state’s largest job market, which reached only 40th place.

In Southern California, many seem to mistake high housing prices for economic vigor. High prices do create a wealth effect for those who own property, and this creates ancillary jobs in home repair and real estate. The area has also benefited from something of a boom in hospitality, medical and educational jobs.

But this does not make up for less-than-stellar creation of high-wage jobs. Los Angeles has expanded information jobs, much of them tied to Hollywood and the media-oriented “Tech Coast” corridor along coastal Southern California, but it continues to lose blue-collar manufacturing jobs. Professional business growth has been weakening since 2013. Lower-wage jobs in the health and hospitality industries, meanwhile, have enjoyed more robust expansions. Poverty in Los Angeles, particularly in South L.A., is arguably worse than during the riots a quarter-century ago.

Orange County suffers less from poverty but also sees rapid growth in low-end sectors like hospitality, which has grown almost 20 percent since 2011. Unlike Los Angeles, professional and business service employment — the largest of the high-wage sectors — has seen steady growth, up 20 percent since 2011, but information growth has been weak and manufacturing continues to decline.

Perhaps the biggest surprise may be the 14th-ranked Inland Empire, which has benefited from, among other things, the soaring home prices along the coast. Outside of information jobs, which have declined, the region has seen steady growth in manufacturing, wholesale trade and professional and business services. As much as the middle-class economy still exists in Southern California, it is now solidly ensconced in this region.

Future prospects

In the coming years, California’s claim of being the economic exemplar of the country may be further undermined by legislative overreach. The statewide rise in the minimum wage will hit the lower-wage sector, particularly outside the coastal enclaves. Various plans to boost the welfare state, such as a single-payer health care system that includes the undocumented, and a host of union-driven initiatives, seem certain to drive up costs and impose an ever-heavier tax burden on the state’s struggling middle class.

Perhaps most threatening, over time, may be a host of new environmental laws which will impose enormous burdens on affordable housing, energy prices and industrial growth. The slowdown in tech growth, coupled with a looming decline in the markets as the Trump agenda unravels, could weaken the capital gains juggernaut that has sustained the state through the past decade. Gov. Jerry Brown, under whose watch spending has risen 45 percent, is already predicting a large deficit for next year.

So far this decade, California has defied economic logic, largely due to the explosive growth of Silicon Valley, as well as the effects of rapid real estate appreciation. Yet, these gains have failed to reverse, and in some ways have even exacerbated, the state’s highest-in-the-nation poverty rate, growing inequality and a mounting outmigration of middle-class families. These facts suggest that it’s time to end the celebration and start focusing on how create a more expansive, less feudal California.

Originally published in the Orange County Register.

Cross-posted at New Geography.

ditor of NewGeography.com and Presidential fellow in urban futures at Chapman University.

Pothole Coast Highway: California Faces an Infrastructure Crisis

Pot hole in residential road surface

The Pacific Coast Highway stretch between Dana Point in Orange County, Calif., at the southern end, and Fort Bragg in Mendocino on the northern end, “is a bucket-list trip,” the New York Daily News enthused two years ago. “Stretching 650 curve-hugging, jaw-dropping miles along the ruggedly beautiful central coast of California, Highway 1 is one of the most scenic roads in the country.”

What the newspaper didn’t mention is that anyone winding along California roads might think that the Big One has already hit. Streets and highways across the state are in awful shape: a cracked, crumbling mess pock-marked with potholes, which tend to grow larger due to time, weather, and government negligence.

Some potholes grew so monstrous after recent heavy winter rains that California Highway Patrol officers in Oakland actually named one — “Steve.” They should have called it “Jerry,” after Governor Brown, who has done little about the state’s failing infrastructure except talk about it, while continuing to seek funding for a costly and unnecessary high-speed rail system. A bit of help for the weary motorist who’s thinking about making a justifiable claim against Caltrans for the damage it’s done to his car? Not in Brown’s California. Chapman University professor and City Journal contributing editor Joel Kotkin wrote last year in the Orange County Register that Brown’s goal “is to make congestion so terrible that people will be forced out of their cars and onto transit.”

Not all of California’s infrastructure problems can be blamed on the winter weather. In 2015, in the midst of a withering drought, the Mercury News reported that a family’s car hit a “killer pothole” near Sacramento with such force that its airbags inflated. Repairs would have cost nearly $15,000, so the insurance company wrote if off as a total loss. Though that might sound like a one-off event, California roads are indeed wrecking cars. “Deficient roads” in the Los Angeles area cost motorists an average $2,800 in annual repair costs. The state implicitly admits that its roads are a mess through a law that enables car owners who feel they’ve “lost money or property as a result of any action or inaction by Caltrans” to make five-figure claims against the agency.

The Reason Foundation, which for decades has rated road conditions across the country, ranked California roads 42nd in the nation in its 22nd Annual Highway Report. The state is 45th in rural-interstate pavement condition, 48th in urban-interstate pavement condition, and 48th in congestion in urbanized areas, the study says. “Half of the nation’s rural interstate mileage in poor condition is located in just five states,” says Reason’s Adrian Moore, and California is one of them. Media reports say that nearly 60 percent of the roads need repair. Will Kempton, a former Caltrans director, told the Los Angeles Times in February that road conditions were the worst he’d ever seen.

Roads aren’t the only infrastructure breaking down in California; its dams are no longer trustworthy. The Oroville Dam in the Sierra Nevada foothills almost failed this winter when its main spillway fell apart. It didn’t, but its near-collapse was a warning, as the New York Times reported, that the state’s “network of dams and waterways is suffering from age and stress.” The San Francisco Chronicle said a year ago that “there are 200 dams in California that are at least partially filled with mud and are approaching the end of their working lives.”

This isn’t a surprise to policymakers, who’ve been on notice for some time. According to the Association of Dam Safety Officials, California had 334 “high-hazard potential” dams in 2005; by 2015, 678 earned that designation. Officials were told in 2005 that the emergency spillway at the Oroville Dam posed a serious risk.

Also vulnerable are the state’s levees, especially those in the Sacramento-San Joaquin River Delta network. Problems in this patchwork of largely muddy banks, built by farmers rather than civil engineers, put much of the state’s water supply at grave risk.

Rather than fix the state’s vital artery system and shore up its dams and levees, Brown and other policymakers prefer to focus on the shiny bauble of high-speed rail and a fanciful mixture of mass transit and bike lanes in an effort to move Californians out of their cars and into forms of transportation favored by Sacramento’s political bosses. Those who resist the agenda because they want to maintain the freedom facilitated by cars are likely to be hit with a new fuel-tax hike (in a state that already has some of the highest fuel taxes in the country).

More taxes, tolls, or user fees might be tolerable if the additional dollars improved the roads. But California has a history of taxing motorists to pay for pet projects that have zero connection with improved street and highway conditions. The Golden State’s existing patterns of density and sprawl have made reliance on car travel a necessity for most residents. Mass-transit advocates can wish for magical people-moving networks that will make cars obsolete, but the state’s planners need to focus on repairing the infrastructure we already have before they start implementing their dreams of a shining California future.

Why California’s Finances Could Derail Their Energy Plans

Energy power linesAccording to State Senator John Moorlach, R-Costa Mesa, California has real financial problems that need to be immediately addressed. A self-described Truman Democrat, Joel Kotkin, in a recent syndicated article echoes the same sentiments. Some of the problems are California has the highest taxes overall in the nation, worst roads, underperforming schools, and the recent budget has at least a $1.6 billion shortfall.

Moreover, depending on how the numbers are analyzed California has either a $1.3 or a $2.8 trillion outstanding debt. This is before counting the maintenance work needed for infrastructure, particularly roads, bridges and water systems. Yet tax increases aren’t covering these obligations, and even the bullet train project, which held so much promise when it was passed are now billions over budget.

However, the financial strain also has California’s net financial position running a $169 billion deficit according to the Comprehensive Annual Financial Report, which puts California ranked last in the nation. Deferred maintenance on our state roads and highways is roughly $59 billion. Estimates of California’s unfunded pension liabilities – assuming a rate of return – above 5% has CalPERS at $114.5 billion, CalSTRS at $76.2 billion and UC Pension at $12.1 billion.

California in addition has the highest unfunded retiree medical liability in the nation, second highest gas taxes when cap and trade is added, highest corporate and individual income taxes, and lastly has the worst business competitive environment in the U.S. as well.

Our biggest issue of all could be that our nation’s unfunded pension liabilities have reached upwards of $5.6 trillion with California’s share at $956 billion. These above-mentioned sobering assessments of our state’s financial and societal health are reasons to question why California has become an outlier of progressive policies – particularly when it comes to energy – with renewable energy being at the forefront of our overall energy portfolio.

At one time California was the leader in sensible environmental, education, manufacturing and cultural polices, but those days have seemingly passed. As the country moved to the right during the recent election, California has entrenched itself as the stronghold of the left-leaning, progressive movement. Nowhere has this played itself out than in California’s embrace of global warming with AB 32 and SB 32. Both energy policies are known to restrict economic growth, and make all forms of energy more expensive. Whether you believe or not in global warming and climate change, California’s embrace of the fundamental tool for economic growth – affordable, scalable energy – has now become harder than ever to achieve with the voters, California legislature and Governor’s full embrace of these policies.

At this time California isn’t creating middle or upper middle class jobs, except in the northern California region. With San Francisco leading the way. Apple just announced they are creating 2,000 jobs in Arizona with firms such as Toyota, Tesla and Carl’s Jr., having followed suit the last few years. Recent labor announcements about California creating 21,600 private sector jobs in December turned out to be a false narrative.

According to payroll processing company Automatic Data Processing Inc. working with Moody’s Analytics Inc., put the figure at only 2,400 “goods producing types of jobs.” Meaning that nine out of ten jobs created were service sector, minimum wage paying levels jobs.

With this type of employment opportunities being created how are Californians expected to pay for an energy portfolio that strongly relies on renewable energy? This could be turned around with great paying careers that the oil and gas industry provides. As an example, according to Russell Gold’s book “The Boom,” page 62, the average oil-field worker made $91,400.

Renewable energy at this time doesn’t work on the type of basis that could power neighborhoods, cities, counties, or this state. Additionally, renewable’s technology hasn’t solved a number of key issues for energy security, reliability and scaling at a cost effective measure to reach all California markets.

These main problems are: 1) storage of excess energy, 2) intermittent weather issues when using wind and solar, 3) generous tax credits needed for profits (Tesla as an example), and 4) modernizing the grid needs to take place, because renewable energy causes surges that California’s grid isn’t able to handle from over 38 million Californians.

As California relishes its role fighting the new President, it is hard to imagine his administration doing anything to assist California lowering its energy costs. It’s not hard to imagine that if you live in Los Angeles, San Francisco or other expensive coastal enclaves that a $200,000 a year salary isn’t enough once taxes are paid. Therefore, why is California nudging the new President towards confrontation?

Gun control, immigration, and even snubbing him at his inauguration, members of the California Congressional delegation are playing a dangerous game. Joel Kotkin has many times called California’s energy policy an amalgamation of “green clergy, or a clerisy.” Trump also has control over federal dollars. California is expected to receive $105 billion this year, with $78 billion going to health and human services programs. Likewise Trump has nominated pro-fossil fuel advocates to the Departments of State, Energy, Interior and the EPA. It doesn’t seem wise for California to not want to work with the Trump administration on opening up parts of California to energy exploration to assist with politically disagreeable problems now in the mix.

California has billions of gallons of oil and trillions of cubic feet of natural gas sitting off our coastlines and in the Monterrey shale. Jobs aren’t being created that can sustain working families, infrastructure is lagging and our energy portfolio isn’t functioning correctly to contain costs.  Our high-energy costs are one of the biggest factors why companies and CEOs are leaving California.

Many astute energy observers believe California will need to cut 100,000 jobs and increase energy prices to meet our ambitious climate goals. These goals could be met with moving towards natural gas and nuclear-powered plants.

A desirable goal for the new year would be for voters to begin considering voting for moderate, business-friendly Democrats, and sensible environmental Republicans who believe in an all-of-the-above approach when it comes to energy policy.

This perfect amalgamation of animosity rapidly approaching California could be mitigated with sensible, low-cost energy policies that benefit all of California.

Todd Royal is a geopolitical risk and energy consultant based in Los Angeles.

Californians Approve $5 Billion per Year in New Taxes

For the last few years, using data provided by the watchdog organization CalTax, we have summarized the results of local bond and tax proposals appearing on the California ballot. Nearly all of them are approved by voters, and this past November was no exception.

With only a couple of measures still too close to call, as can be seen, 94 percent of the 193 proposed local bonds passed, and 71 percent of the proposed local taxes passed. Two years ago, 81 percent of the local bond proposals passed, and 68 percent of the local tax proposals passed. No encouraging trend there.

Outcome of Local Bond and Tax Proposals – November 2016

outcome-of-local-bond-and-tax-proposals-november-2016

A simple extrapolation will provide the following estimate: Californians just increased their local tax burden by roughly $4 billion, in the form of $1.9 billion more in annual interest payments on new bond debt, and $2.1 billion more in annual interest on new local taxes. But that’s not even half the story.

California’s voters also supported state ballot initiatives to issue new bond debt and impose new taxes. Prop. 51 was approved, authorizing the issuance of $9 billion in new bonds for school construction. Prop. 55 extended until 2030 the “temporary” tax increase on personal incomes over $250,000 per year, and Prop. 56 increased the cigarette tax by $2 per pack. The cost to taxpayers to service the annual payments on $9 billion in new bond debt? Another $585 million per year. Even leaving “rich people” and smokers out of the equation, California voters saddled themselves with nearly $5 billion in new annual taxes.

But as they say on the late-night infomercials, there’s more, much more, because California’s state legislators don’t have to ask us anymore if they want to raise taxes. November 2016 will be remembered as the election when a precarious 1/3 minority held by GOP lawmakers was broken. California’s democratic lawmakers, nearly all of them controlled by public sector unions, now hold a two-thirds majority in both the state Assembly and the state Senate. This means they can raise taxes without asking for consent from the voters. If necessary, they can even override a gubernatorial veto.

And they will. Here’s why:

There are three unsustainable policies that are considered sacrosanct by California’s state lawmakers and the government unions who benefit from them. (1) They are proud to have California serve as a magnet for undocumented immigrants and welfare recipients. (2) They are determined to continue to overcompensate state and local government workers, especially with pensions that pay several times what private workers can expect from Social Security. (3) They have adopted an uncritical and extreme approach to resolving environmental challenges that has created artificial scarcity of land, energy and water, an asset bubble, and a neglected infrastructure that lacks the resiliency to withstand large scale natural disasters or civil emergencies.

All three of these policies are extremely expensive. “Urban geographer” Joel Kotkin, writing in the Orange County Register shortly after the Nov. 8 election, had this to say about these financially unsustainable policies:

“This social structure can only work as long as stock and asset prices continue to stay high, allowing the ultra-rich to remain beneficent. Once the inevitable corrections take place, the whole game will be exposed for what it is: a gigantic, phony system that benefits primarily the ruling oligarchs, along with their union and green allies. Only when this becomes clear to the voters, particularly the emerging Latino electorate, can things change. Only a dose of realism can restore competition, both between the parties and within them.”

Despite the increase in consumer confidence since the surprising victory of Donald Trump in the U.S. presidential election, the stock and asset bubble that has been engineered through thirty years of expanding credit and lowering rates of interest is going to pop. The following graphic, using data from Bloomberg, explains just how differently our economy is structured today compared to 1980 when this credit expansion began.

1980-vs-2016

As can be easily seen from their price/earnings ratios today, publicly traded stocks are grossly overvalued. Equally obvious is that interest rates have fallen as low as they can go. For more discussion on how this is going to affect the economy, refer to recent California Policy Center studies “How a Major Market Correction Will Affect Pension Systems, and How to Cope,” and “The Coming Public Pension Apocalypse, and What to Do About It.” Despite healthy new national optimism since Nov. 8th, the economic fundamentals have not changed.

California’s democratic supermajority legislators, and the government unions who control them, are going to have a lot of explaining to do when the bubble bursts. For decades they have successfully fed their unsustainable world view to the media and academia and the entertainment industry. For over a generation they have brainwashed California’s K-12 and college students into militantly endorsing their unsustainable world view. This year they conned California’s taxpayers into approving another $5 billion in new annual taxes. But the entire edifice exists on borrowed time.

Ed Ring is the vice president of research policy at the California Policy Center.

What Do American Workers Have To Lose By Trying Donald Trump?

Donald TrumpIn a recent column, Joel Kotkin again makes a great case why American workers should vote against the Ruling Class and their poster child candidate, Hillary Clinton including:

“Middle-class revulsion with the political mainstream has been driven by slow economic growth, stagnant wages, a dysfunctional education system, and, for smaller businesses, a tightening regulatory regime. Homeownership is now at a nearly half-century low. New business start ups, for the first time in three decades, are not keeping up with the number of deaths. Both stats reveal a real decline in aspiration. Most Americans, in a stunning reversal of past trends, see a worse future for their offspring than themselves. Who can blame them? Middle-class breadwinners and working-class wage-earners now suffer from deteriorating health and shorter lifespans.”

However, Kotkin makes a remarkably week case why American workers should support Hillary Clinton over Donald Trump and continue America on the same track, albeit much more crooked.

Joel Kotkin does not criticize any of Donald Trump’s policies. Kotkin likes Trump’s “themes, notably economic nationalism and control of immigration.”

Kotkin’s stated reasons for American workers supporting Hillary Clinton are:

  • “A Trump administration would be unlikely to reflect blue-collar interests, but rather those of his inner circle, which includes some of the most ravenous Wall Street operators. The same is true of his general election opponent.”  [BTW, “ravenous Wall Street operators” overwhelmingly support Hillary Clinton.]
  • “His clear incompetence, narcissism and mean-spiritedness.”

One never knows whether candidates will attempt to fulfill their promises and whether they will be successful. On Wednesday, Donald Trump reaffirmed his immigration promises. Trump has been consistent in putting America and American first. Trump has not “moved to the middle” after winning the nomination like most politicians. While you can find isolated statements in Donald Trump’s many extemporaneous speeches and interviews, Trump has been remarkably consistent in his policy positions throughout the campaign.

Assuming is it uncertain whether Donald Trump will attempt to keep his promises and be successful in doing so, American workers have a choice between a known bad result in Hillary Clinton and possibly good, possibly bad result in Donald Trump, and if Trump is even partially successful in keeping his promises, he will be better than Clinton. Given that choice, wouldn’t every rational American worker choose the possible good result of Donald Trump vs. the known bad result of Hillary Clinton?

“Narcissism and mean-spiritedness” are subjective. Given the harm to American workers from Hillary Clinton continuing ruling class policies, why shouldn’t American workers support Trump whose policies will serve their economic interests? General Patton might be described as “narcissistic and mean-spirited,” but he was a great leader, who loved America, and led his men to victory.

I totally do not get “clear incompetence.” While not every business venture was successful, Donald Trump was very successful in business. He successful built many large projects in complicated, difficult political environments. He built a multibillion dollar company. Trump dispatched 16 other candidates in the primaries. Trump is gaining on Clinton despite the unified and unprecedented MSM bias and opposition and Hillary Clinton’s massive money advantage from Ruling Class donors.

Donald Trump would be hard pressed to do worse than the corrupt, incompetent, “do as we say not as we do” Ruling Class that is making America less free, less prosperous and less secure.

As Trump asks African Americans, what do American workers have to lose by trying Donald Trump?

This piece was originally published by Fox and Hounds Daily.

Middle Class Fleeing CA at Record Rates

http://www.dreamstime.com/-image14115451New data has brought a new urgency to the souring fortunes of California’s middle class.

“Not only are Californians leaving the state in large numbers, but the people heading for the exits are disproportionately middle class working families — the demographic backbone of American society,” the American Interest recently noted.

Looking at labor force categories provides more evidence that California is losing working young professional families,” argued Hoover Institution research fellow Carson Bruno; “while there is a narrative that the rich are fleeing California, the real flight is among the middle-class.”

“Knowing that net out-migrants are more likely to be middle-class working young professional families provides some hints as to why people are leaving California for greener pastures. For one, California is an extraordinarily high cost-of-living state. Whether it is the state’s housing affordability crisis — California’s median home value per square foot is, on average, 2.1 times higher than Arizona, Texas, Nevada, Oregon and Washington’s — California’s very expensive energy costs — the state’s residential electric price is about 1.5 times higher than the competing states — or the Golden State’s oppressive tax burden — California ranks 6th, nationally, in state-local tax burdens — those living in California are hit with a variety of higher bills, which cuts into their bottom line.”

Real estate indicators

“In 2006, 38 percent of middle-class households in California used more than 30 percent of their income to cover rent. Today, that figure is over 53 percent,” according to Christopher Thornberg, director of the UC Riverside School of Business Administration Center for Economics Forecasting and Development. “The national figure, as a point of comparison, is 31 percent. It is even worse for those who have borrowed to buy a home — over two-thirds of middle-class households with a mortgage are cost-burdened in California — compared to 40 percent in the nation overall.”

Recent studies illustrated a continuing plunge in homeowning among traditional buyers in-state. “California’s middle class is being hammered,” wrote Joel Kotkin at the Orange County Register. “The state now ranks third from the bottom, ahead of only New York and the District of Columbia, for the lowest homeownership rate, some 54 percent, a number that since 2009 has declined 5 percent more than the national average.”

Low on houses

Some analysts looking to explain the trend have pointed to a so-called housing shortage statewide. “With supply falling far below demand, California needs to build at least 1 million more homes for low- and middle-income Californians in the next 10 years,” CAFWD suggested, adding that, although Gov. Jerry Brown “did not mention housing in the State of the State address,” he has “not explicitly ruled out addressing the issue in the next three years.”

Giving ammunition to the housing shortage thesis, meanwhile, was “a new report from the California Legislative Analyst’s Office that found that poorer neighborhoods that have added more market-rate housing in the Bay Area since 2000 have been less likely to experience displacement,” the Washington Post noted. But experts have differed significantly on how to read the tea leaves of the data, and analysts disagree on whether increasing density — or what kind of density — is the right answer.

A cloudy picture

The Golden State has been haunted in recent times by sharply mixed economic indicators. “While California has added 2.1 million jobs since 2010, employment in six industries is still below 2007 levels, before the Great Recession, according to the center’s analysis. Those sectors — including construction, finance and manufacturing — generally pay more than the service-type jobs that we’re adding in droves,” the Sacramento Bee noted late last year.

Economic growth concentrated in Silicon Valley has also not done much to relieve the income or jobs picture for middle-classers. “In a recent survey of states where ‘the middle class is dying,’ based on earning trajectories for middle-income cohorts, Business Insider ranked California first, with shrinking middle-class earnings and the third-highest proportion of wealth concentrated in the top 20 percent of residents,” Kotkin observed.

Originally published by CalWatchdog.com

The Schwarzenegger-Brown Climate Alliance

schwarzMonday’s L.A. Times gushed over the “bipartisan” gubernatorial legitimacy Governors Arnold Schwarzenegger and Jerry Brown have given efforts to fight climate change in Paris this weekend. The two former governors “sat for a joint interview to put a bipartisan spin on fighting climate change,” showing the world that green-minded Democrats and Republicans can avoid petty bickering and find a middle ground in combating this great issue of our times.

Here are the juiciest quotes the Times recounts:

“It’s important for people to know that Republicans can work with Democrats and vice versa,” Brown said.

Schwarzenegger added, “That is a very important message for the international community, that they should not look at [climate change] in a political way.”

Bipartisanship for broader goals is all well and good. Of course, the Times doesn’t recount the fact that Schwarzenegger is not, to put it mildly, a typical Republican, and that his participation in “bipartisanship” doesn’t mean much. In fact, on the climate change issue in particular, he arguably toes the liberal line with crossed t’s and dotted i’s. It’s perhaps a little bit ironic that a self-described Rockefeller Republican like myself should accuse a fellow Republican of being a “Republican In Name Only,” but on climate change, because of his joining hands with the green-and-blue liberal policy elite on cap-and-trade, renewables, and other fashionable green boondoggles, it’s hard to categorize Schwarzenegger as anything other than a post-partisan Donkey in Elephants’ clothing.

In an excellent article for the excellent journal National Affairs (read the whole thing) Troy Senik nicely outlines the self-imposed fate of the once-maverick Governor:

“[H]e began marshaling his political capital in the service of nationally fashionable issues like greenhouse-gas reductions. … [I]t began to feel suspiciously like Schwarzenegger was concerned more with buttering up the national media and the Beverly Hills cocktail circuit than actually forging an agenda to pull California back from the abyss.”

So the notion that the Schwarzenegger-Brown stand is anything like meaningful bipartisanship is, by all significant measures, bunk. Most Republicans, moderate or conservative, will rightfully oppose the anti-growth measures that modern environmentalism requires in the crusade against climate change.

Rather than joining hands with fashionable elites in pursuing self-defeating policies that aren’t likely to put much of a dent in carbon emissions, Republicans should live up to their tradition of conservation and environmental stewardship by living up to another one of their great traditions — innovation. Instead of fighting climate change by arbitrarily restricting carbon emissions and pumping money into zero-emissions, zero-results “renewable” sources, Republicans should pursue a climate strategy with what has worked empirically- high-energy, low-emission fuels like natural gas as substitutes for high-emission fuels like crude oil and coal. Peter Wehner and Jim Manzi argued for such a strategy in another article at National Affairs, and their middle ground makes for much more practical policy than either ultra-conservative denials of climate science or mainline liberal worship of cap-and-trade and solar energy.

As Joel Kotkin argues, the Paris climate talks aren’t likely to result in much more than self-righteous gabbing by the elite classes of developed nations, to the detriment of the lower classes of said nations. Developing countries like China and India, by far the largest carbon emitters, are unlikely to shackle their growth to the whims of Western experts and activists. So in the end, Schwarzenegger and Brown’s united stand against climate change will do much for their consciences and little for the climate or the struggling. It remains for another generation of pragmatic politicos to tend to this truly pressing problem. Let’s hope the glittering promise of accolades for “bipartisanship” doesn’t take precedence over reality for them.

esearch associate for the Center for Opportunity Urbanism and Senior Correspondent at Glimpse From the Globe.

Originally published by Fox and Hounds Daily

Political Battle of the Ages: Boomers vs. Millennials

Photo courtesy of www.ondeck.com

Photo courtesy of www.ondeck.com

NEW GEOGRAPHY–The old issues of class, race and geography may still dominate coverage of our changing political landscape, but perhaps a more compelling divide relates to generations. American politics are being shaped by two gigantic generations – the baby boomers and their offspring, the millennials – as well as smaller cohorts of Generation X, who preceded the millennials, and what has been known as the Silent Generation, who preceded the boomers.

Both the boomers and the Silents gradually have moved to the right as they have aged. Other factors underpin this trend, such as the fact that boomers are overwhelmingly white – well over 70 percent compared with roughly 58 percent for millennials. People in their 50s and 60s have seen their incomes and net worth rise while millennials have done far worse, at this stage of their lives, than previous generations.

Although millennials are more numerous than boomers, the elderly are a growing portion of the population, and they tend to vote in bigger numbers. Voters over age 65 turn out at a rate above 70 percent, while barely 40 percent of those under 25 cast ballots. That may be one factor in why this presidential campaign is dominated not by youth, but by aging figures like Donald Trump (69), Hillary Clinton (67) and Bernie Sanders (74).

The Silent Generation

Leading generational analysts – Neil Howe, Morley Winograd, Mike Hais – have suggested that the experiences people have growing up shape political beliefs throughout their lives. This does not mean that people do not change as they age, but where they started remains a key factor in determining how far these changes spread within a generation.

The now-passing Greatest Generation – the group that survived the Depression and the Second World War – were largely shaped by the experiences of the New Deal and the boom of the postwar era. This has made them consistently less conservative than successor generations, and they have retained their Democratic affiliations.

In contrast, the Silents – many of whom grew up under President Dwight Eisenhower and during the Cold War – have gradually moved toward the Republican column. After generally supporting the Democrats in 2006, they have backed GOP candidates but remain surprisingly balanced in their affiliations; Pew estimates Silents who at least lean Republican constitute 47 percent, versus 44 percent Democratic.

Surprisingly, Silent Generation Democrats are not much more socially conservative on issues – such as gay marriage, abortion and climate change – than the younger generation. But Silent Generation Republicans are far more socially conservative than their younger counterparts, particularly on immigration. This may be one factor that keeps the Donald Trump energizer bunny animated.

Boomers Move Right

Although now outnumbered by millennials, 83 million to 75 million, boomers, those born from 1946-64, remain the largest voting bloc, accounting for some 35 percent of the electorate. Despite being closely identified with the 1960s hippie movement and the counterculture, this group has been heading right for at least 30 years. This may be traced to their experience with the inept and depressing Jimmy Carter presidency and their support for the more self-assured optimism of Ronald Reagan.

Since the second term of the first boomer president, Bill Clinton, that generation has favored the GOP in virtually every election. And they are getting more conservative over time. Since the 1970s, the percentage identifying themselves as liberal has dropped consistently while those holding conservative views have steadily climbed. In 2011, 42 percent of boomers identified as conservative, more the twice the number who considered themselves liberal.

Focus on Generation X

Generation X, smaller than the boomer and millennial demographic behemoths, with roughly 65 million, occupies a particularly critical, if unappreciated, niche in our evolving political structure. Born from the mid-1960s to early ’80s, this generation will produce our next generation of leaders.

The politics of the X’ers are complex. On social issues, they are notably more liberal than boomers but considerably more conservative than millennials. Younger X’ers, many of whom grew up under the generally successful era of Bill Clinton, are notably more liberal than their older counterparts, but a strong majority do not approve of President Obama.

Overall, the X’ers represent something of a swing vote and could be a source of some moderation on social and environmental issues. As a group, they are widely seen as more pragmatic than boomers, who tend to embrace ideological politics. Although likely to support the GOP nominee in 2016, the margin may not be great and, if the Republicans remain committed to embracing clownish candidates, the X’ers could even end up in the Democratic column.

Millennials: Game changers?

With the exception of the Greatest Generation, the millennials are the only age cohort that can be said to be solidly Democratic. Given their huge numbers and relative youth, they will ultimately dominate our political system. By 2030, there will be 78 million millennials and 56 million boomers. But, as in other generations, their political affiliations could shift, at least somewhat, depending on how the parties shape their message over the next decade or two.

Millennials’ social views strongly benefit Democrats. The Republicans have turned off a large portion of a generation that embraces gay marriage by a huge margin and is heavily pro-immigration. The shift to the Democrats could be supercharged if Trump, disliked by four-fifths of Latinos in some surveys, gets the GOP nomination.

Millennials also could push the Democrats even further to the left. They have become a major base of support for socialist candidate Bernie Sanders. The Vermont septuagenarian has played well to this generation’s latent anti-capitalism (about as many of them favor socialism as the free market system; his call for free college no doubt appeals to those worried about college debts). More than three times as many millennials like Sanders’ Facebook page as Hillary Clinton’s, and he is polling about even among them with the former secretary of state, well ahead of his national rankings.

Although smaller in numbers, Republican millennials have gained some ground in recent elections, with most white millennials now in favor of a GOP takeover of the White House in 2016. Their expanding presence could have a potentially moderating impact on a party that appears committed to engaging in ideological and demographic suicide. Young Republicans tend to be more socially liberal – 64 percent, for example, embrace broad acceptance for homosexuality, compared with 45 percent of GOP boomers – and more often define their conservatism in economic terms, a potentially strong issue after seven years of generally anemic, and highly concentrated, income and job growth.

Who wins?

Generational politics pose both risks and rewards for each party. A Trump candidacy may excite older voters and many younger white voters, but the cost among a pro-immigrant, heavily minority millennial voting bloc could prove damaging over the longer run.

Democrats, too, face risks, particularly if they continue on the path of radical wealth redistribution and draconian climate change regulation. Although still strong, support for Obama has been steadily weakening since 2008. Millennials are the only age group to still approve of President Obama’s record, but by only 49 percent, not exactly a ringing endorsement.

The future may be determined by the extent that millennials feel that Democratic policies inhibit their ability to move up economically. Younger millennials, having grown up during a weak economy under a progressive president, are notably more conservative than older ones, notes a recent Harvard study.

They increasingly share some attitudes with conservatives, having become notably more deeply distrustful of many of the nation’s political institutions. Nearly half describe themselves as independents, far more than any other age group.

To be sure, mllennials will likely stay more liberal than boomers (about as many are conservative as liberal), but they could shift further to the right once they enter their 30s and start earning a living. Once they are accumulating such things as a house and starting families, they may not easily embrace policies that would see much of their income taken away – radical redistribution is more appealing when you have little and know even less.

To take advantage of these trends, Republicans first need to adjust their views on social issues, notably on immigration and gay rights, and come up with policies to address rampant income inequality. If they fail to do so, generation dynamics will likely allow the Democrats to dominate electorally for the next decade or more.

(Joel Kotkin is executive editor of NewGeography.com, the Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. His most recent book is “The New Class Conflict” –Telos Publishing: 2014. Joel Kotkin lives in Orange County. This piece first appeared at The Daily Beast.) 

SoCal’s Housing Crisis: Middle Class, Minorities May Not Survive

urban-housing-sprawl-366c0What kind of urban future is in the offing for Southern California? Well, if you look at both what planners want and current market trends, here’s the best forecast: congested, with higher prices and an ever more degraded quality of life. As the acerbic author of the “Dr. Housing Bubble” blog puts it, we are looking at becoming “los sardines” with a future marked by both relentless cramming and out-of-sight prices.

This can be seen in the recent surge of housing prices, particularly in the areas of the region dominated by single-family homes. You can get a house in San Francisco – a shack, really – for what it costs to buy a mansion outside Houston, or even a nice home in Irvine or Villa Park. Choice single-family locations like Irvine, Manhattan Beach and Santa Monica have also experienced soaring prices.

Market forces – overseas investment, a strong buyer preference for single-family homes and a limited number of well-performing school districts – are part of, but hardly all, the story. More important may be the increasingly heavy hand of California’s planning regime, which favors ever-denser development at the expense of single-family housing in the state’s interior.

In both the Bay Area and Southern California, plans are now being set to force the building of massive new towers in a few selected “transit-oriented” zones. In a bow to political realities, the planners say they won’t bring superdensity to the single-family neighborhoods beloved by Californians; the wealthy – including those who bought early and those with access to inherited money – will still be able to enjoy backyard play sets, barbecues and swimming pools. 

Home prices skyrocket

The rest of you had better get used to cramming. House prices over the past two years in Orange and Los Angeles counties have risen at a rate more than 10 times the relatively paltry increases in weekly paychecks, among the nation’s worst ratios of home prices to income. Now, you can’t buy a house in much of Orange County or West L.A. without a triple-digit income; in Manhattan Beach, buying a median-price house requires an income of more than $300,000 a year.

With development on the periphery basically shut down for lack of sufficient transit usage, the bright folks at SCAG, MTC, ABAG, SANDAG (the regional planning agencies in Los Angeles, the San Francisco Bay Area and San Diego, respectively) foresee a future of ever-increasing density, with apartment towers interspersed throughout the cities.

To be sure, city life and density might seem great, and could even work to some extent in smaller, scenic areas like Laguna Beach or Santa Monica, with their accessible walking districts. But such locales are only a small part of Southern California.

To live in a high-rise in Ontario or Garden Grove might please planners, but density without much amenity – and nothing that will ever be close to a New York-style transit system or even a system as good as that serving downtown Los Angeles – seems more a ticket to a neo-tenement purgatory than paradise.

For areas that lack ocean breezes or scenic views, we are looking at something more like the congested chaos of Mexico City or Tehran than the tourist’s Paris on the Pacific (more than 80 percent of Paris, France, is outside the compact core).

The biggest losers, as usual, will be those people – working and middle-class families as well as minorities – who have looked to the periphery for housing opportunities and a chance for a better life. Los Angeles County is already a majority-renting community, and attempts to force densification in other counties could bring this reality to Orange, San Bernardino, Riverside and Ventura counties as well. 

Where minorities can thrive

Until recently, the periphery has offered housing salvation for younger middle-income homeowners, particularly families. Homeownership rates are more than 25 percent higher in the Riverside-San Bernardino area than in the Los Angeles-Orange County area. Minorities also do much better. The homeownership rate inland is a quarter higher among African American and Asian households. The rate for Hispanics is nealy half again higher than in Los Angeles-Orange.

But as housing prices have soared, and opportunities to move outward have shrunk, Southern California has developed some of the worst crowding in the nation. Three of the most crowded areas – based on people per room – are in Los Angeles County: South Los Angeles, the Pico Union area near downtown LA and Huntington Park. Southern California trails only Miami, Fla., for the highest percentage of residents who spend 40 percent or more of their incomes on rent or a mortgage.

The impact of high prices extends well beyond the poor and minorities. As a recent report from the state’s Legislative Analyst’s Office suggests, the lack of affordable housing is one reason why California companies have trouble attracting employees, particularly those with families. To keep the digital hearths going in places like Silicon Valley, companies rely on either young people (often with family money) or, increasingly, low-wage workers, called “technocoolies” by some, imported from Asia.

The LAO is spot on about the disadvantages of California housing, which now costs two and half times the national average, and rents that are 50 percent higher than in the country as a whole. Homeownership rates now stand at 48th among the states. Unfortunately, the proposed solutions follow the same script adopted by our planning elites that seeks to further densify large swaths of central Los Angeles and the San Francisco Bay Area, which, since 2000, have accounted for roughly 10 percent of all growth in the state. 

Affluent exempt

This planning fiat is sure to spark fierce resistance. Don’t expect to see high-rises sprout amid the expanses of single-family housing in Malibu or Beverly Hills, due to the organized power of their overwhelmingly “progressive” residents. Higher-density development likely will be jammed, instead, into already denser, less-affluent and less politically powerful areas, such as the east San Fernando Valley, North Orange County and some inland communities.

There’s nothing wrong with appealing to a market for apartments, but limiting the expansion of single-family construction will only exacerbate our looming demographic dilemmas. Southern California’s family population is decreasing more than any of the nation’s other large metro areas. Homes are increasingly owned by an aging population lucky enough to have bought before the new planning regime helped drive prices into the stratosphere. Young workers may be amused by dense, high-cost rental space, at least until they desire to start families and own homes. But the crucial middle-class households headed by thirty- and fortysomethings may find themselves forced out of the region if they are unwilling to accept a lower quality of life.

Some of the logic behind densification was based on the perception that the suburban dream is dead. Yet, despite persistent claims by planners and pundits, this turned out to be less a matter of altered market preferences than of temporary effects of the Great Recession. Roughly 80 percent of Americans still prefer single-family homes. So do Californians: In the past decade, single-family units represented the vast majority of all new homes built in the state.

Now that the economy is coming back to life, suburban communities, particularly the much-disdained exurbs, appear to be on the demographic rise again around the nation. By rejecting this option for the next generation, we are essentially putting the California Dream on ice, all but pushing upwardly mobile, but not rich, families to pursue their futures in notably lower-cost, less-regulated places, like Texas.

All this is for a dubious philosophy that has long derided suburban communities and their single-family homes as an environmentally wasteful, anti-social extravagance. Yet, today, many new suburban developments are eco-friendly, including such features as high-efficiency construction and renewable solar power, and employment patterns increasingly allow for work from home or in nearby firms. Business growth near homes in Irvine, often pilloried as the epitome of sprawl, notes former California State University, Los Angeles demographer Ali Modarres, has resulted in some of the nation’s shortest commutes and highest rates of people working at home.

Add to the equation more fuel-efficient cars and the environmental justification for forced sardinization becomes even less compelling. Densification might well increase over time as some people prefer more urban lifestyles. But the opportunity to own a single-family home should not be limited to the very rich, or to aging baby boomers, by Sacramento bureaucrats and unelected regional planning agencies. Yet, precisely this is the inevitable result of the massive attempt at social engineering now advancing throughout the region and state.

This piece is cross-posted at Citywatchla.com

Joel Kotkin is executive editor of NewGeography.com… where this piece was most recently posted …  and Roger Hobbs Distinguished Fellow in Urban Studies at Chapman University, and a member of the editorial board of the Orange County Register. He is also executive director of the Houston-based Center for Opportunity Urbanism is now available at Amazon and Telos Press. He lives in Los Angeles, CA