NewGeography.com blogs

Even if Australia is a beautiful place to live, it is far from affordable. Results from the Demographia International Housing Affordability Survey show that some of the country’s major cities rank near the bottom of the list of areas with affordable housing. Out of the 325 cities analyzed, Perth ranks 291st, Melbourne ranks 321st, and Sydney ranks 324th. At 6.3, 9, and 9.6 respectively, each one has a median housing price to median household income ratio at least three to six points higher than the 3.0 price to income ratio demarcating affordable from unaffordable housing. Compared to these places in Australia, living in New York or London seems almost reasonable.

Residential property prices in Australia have risen 250% in the past ten years, mainly due to the Government’s concentration on incentives for investors and speculators. A first home buyer’s program and negative gearing incentives for home and property owners have taken a toll on the housing market, creating such “inexcusable” conditions according to Australian Greens housing spokesman Senator Scott Ludlam.

The 2008 Senate Select Committee on Housing Affordability’s investigation into this issue reveals that the Government spent about $50 billion annually on capital gains exemptions and negative gearing incentives, while only spending $512 million over the course of five years to improve the supply of affordable housing. Rental affordability is not much better, as indicated by the gap of 493,000 affordable and available rental properties in Australia.

Ludlam and others have started to call this a “crisis,” an adequate term given migration trends all over the world. Cities with unaffordable housing, such as New York, London, and San Francisco, are losing people moving to the less expensive suburban areas. If Australia continues to have housing bubbles and affordability issues, cities like Melbourne and Sydney may experience high out-migration rates in the coming years, which would not bode well for cities on the rise.

"Within 25 years, our goal is to give 80 percent of Americans access to high-speed rail." With this ringing statement in his State of the Union address, President Obama injected new hope into the flagging spirits of high speed rail advocates. Predictably, spokesmen for industry associations, progressive advocacy groups and other stakeholder interests praised the President’s goal as a symbol of his renewed commitment to support investment in infrastructure. But hardly any one we spoke to at the TRB meeting took the President’s ambitious goal seriously.

"After listening to President Obama’s remarks on high-speed rail, I am left with more questions than answers," observed Rep. Bill Shuster, Chairman of the Subcommittee on Railroads of the House Transportation and Infrastructure Committee, who addressed the TRB Committee on Intercity Passenger Rail. "These promises mean little and the White House knows it," observed a railroad industry consultant attending the meeting, "it’s not within Obama’s power to commit future Administrations and Congresses to this pipe dream." "The President is out of touch with reality; where does he think the money will come from?" was a succinct reaction of a former senior U.S. DOT official.

Lack of a Financial Plan

There is good reason for these expressions of skepticism. Although some likened President Obama’s expansive vision to President Eisenhower’s historic call for a 42,000-mile Interstate Highway network, there is a vast difference between the two initiatives. The Interstate Highway proposal was backed by a reliable and steady revenue stream in the form of a federal gas tax. The high speed rail goal lacks a financial plan. It is not supported by a dedicated source of revenue that could maintain the program on a self-sustaining basis over a period of years. Nor can the Administration count on borrowed money or annual appropriations out of general revenue in the current political environment in which deficit reduction rather than new spending is the top congressional priority. Calling expenditures on high-speed rail "investment" does not obscure the reality that we would be spending money that we do not have. As if to underscore this point, the Congressional Budget Office announced on January 25 that this year’s federal budget deficit of $1.5 trillion will be the biggest one in history and the largest as a share of the economy since World War II. "Obama’s proposal is likely to land with a dead thud on Capitol Hill," opined National Journal’s transportation editor Fawn Johnson.

States' Ambivalence

A second reason for skepticism is the ambivalent attitude of the states toward high speed rail. As Federal Railroad Administrator Joseph Szabo, speaking at the TRB meeting, correctly pointed out, the high-speed rail initiative is a state-driven program. Hence, support of governors and state legislatures will be essential if the Obama vision is to succeed. But, as we have seen, several fiscally-strapped states (Wisconsin, Ohio, Iowa) have declined to participate in the Administration’s HSR program while Florida’s Governor Scott still has to be heard from.

Other governors and state legislatures may well follow their example should they conclude that high-speed rail projects will burden their constituents with massive annual operating subsidies and possibly open-ended risk of construction overruns. The protracted and still inconclusive track-sharing negotiations with the Class 1 railroads suggest that more than one state is having second thoughts about the wisdom of proceeding with these projects (at least on terms demanded by the Administration). About one-half of the dedicated HSR funds still remain unobligated according to the latest Federal Railroad Administration report.

Fred W. Frailey, a respected writer and commentator on the railroad industry and author of Twilight of the Great Trains thinks that enthusiasm for high-speed trains has peaked and is on the wane. Writing in the current (March) issue of TRAINS, Frailey says the collapse of support is not merely a partisan event. Election results suggest that the public was never really won over. Nor will the Association of American Railroads or its member railroads fight for HSR. "So anyway you cut it, the high-speed show is over," Frailey concludes.

A Fresh Congressional Posture

This does not mean that fast trains will have no role to play in America’s future. There is a need to diversify travel alternatives in crowded travel corridors to accommodate future population increases. But, as a congressional hearing in New York City on January 27 made clear, federal efforts should be refocused on places where passenger rail investment is economically justified and where there exists a potential of sufficient ridership to attract private capital. As Congressmen Mica and Shuster correctly concluded, this means concentrating on the densely populated and heavily traveled Northeast Corridor with its serious air traffic congestion and well-developed urban transit distribution networks in major metropolitan areas.

A majority of the witnesses testifying at the hearing seemed to agree with the two congressmen. They included such influential advocacy groups as Building America’s Future (Gov. Ed Rendell and Mayor Michael Bloomberg), America 2050 (Petra Todorovich) and U.S. High Speed Rail Association (Thomas Hart).

Thus, the need to involve the private sector and to focus on the Northeast Corridor as a matter of first priority could well emerge as the core elements of a new congressional posture on high-speed rail. Instead of lavishing money on projects in numerous states in an unrealistic and fruitless attempt to make high-speed rail accessible to 80 percent of Americans, Congress would use targeted financial incentives to attract private investment and encourage private sector involvement in a few corridors where high-speed rail service makes economic and transportation sense. The inducements could include long-term operating concession agreements, loan guarantees, tax credits, availability payments and other creative financing arrangements. Whether additional federal funds to bolster such a policy will be forthcoming in the deficit-conscious 112th Congress, remains to be seen.

Ken Orski is Editor and Publisher of Innovation NewsBriefs, a Washington-based transportation newsletter in its 22nd year of publication.

Recently an article ran in The Telegraph about China ‘creating the largest mega-city in the world with 42 million people‘. The title of the piece is a bit misleading as the government is not planning a new city per se, but rather combining a group of nearby cities into one huge ‘mega-city’. The targeted group of cities makes up the Pearl River Delta region in China’s southern Guangdong Province.

Home to China’s famous first tier cities Guangzhou and Shenzhen, the Pearl River Delta is already one of the most populated places on earth. It is the manufacturing powerhouse of the country, thanks in large part to it being the first economically liberalized region after Reform and Opening Up. As a result of this, the Pearl River Delta has absorbed ambitious migrants from all over China for the better part of three decades.

In addition to Guangzhou and Shenzhen, the proposal calls for integrating smaller (albeit still in the millions population-wise) cities of Donggaun, Foshan, Huizhou, Zhaoqing, Jiangmen, Zhongshan and Zhuhai into one. Upon first reading, the proposal doesn’t make much sense as the Pearl River Delta region has done an excellent job already of linking transportation and infrastructure among its different cities- so why the need to amalgamate into one city?

Yet the intention of the integration becomes clear when Ma Xiangming, the chief planner at the Guangdong Rural and Urban Planning Institute, articulates that:

“The idea is that when the cities are integrated, the residents can travel around freely and use the health care and other facilities in the different areas.“

This is the key. The Chinese government still enforces the hukou household registration system for its citizens, making it difficult for people who move from one city to another to use the services offered by their new city. Restrictions for migrants to new cities are not only limited to healthcare and educational services, but to investment opportunities as well such as starting a business or purchasing a new home.

By amalgamating the cities of the Pearl River Delta into one ‘mega-city’, this gets rid of the bureaucratic restrictions of the hukou registration. Now, the migrants who have left their native homes and settled in the Pearl River Delta can move more freely around the region. This is much more than semantics, it is a huge step forward in the liberalization of movement and opportunity for its citizens. It is unbelievable that The Guardian piece makes no mention of the significance of this development.

UPDATE:

Now there are reports that the story of the Pearl River Delta mega-city is false. According to an AFP report, China denies plan to create world’s biggest city.

The error made by the original Telegraph article is most likely due to a misunderstanding by the reporters. As I mentioned above, the title was highly misleading, nothing more than a sensational headline designed to get reader attention. And the consultants quoted in the original article are city planners, professionals whose job it is to make recommendations on how to go about development, not the final decision makers who approve projects.

The fact that the Pearl River Delta is not going to become one ‘mega-city’ doesn’t necessarily take away from the interest in integrating the region, making it a place where services are shared and the ease of mobility between its cities is increased.

Listening to public radio, the host was interviewing a college professor as to why China has brought more innovation and progress in many areas of its growth, leaving other countries behind. In particular they mentioned high speed rail, low energy vehicles, and construction. The entire show was based solely upon how China’s universities educate differently than America, as if somehow a graduate student would suddenly posses the knowledge, experience, and drive to make major changes in transportation, science, design, and construction.

When I hire American college students either as interns or graduates, what they have learned has little practical application as to the tasks that my business needs. Thus, we need to educate them on design (land surveying, civil engineering, planning and architecture), presentation techniques and the latest technology. What students do posses is a strong desire to make a difference in the world. I’m sure it is similar in China.

China has made explosive progress by the process required of American companies who must comply with their restrictions to do business in their country. Let me explain:

About 4 years ago we looked into designing neighborhoods in China. What we discovered is that an American company cannot do business directly in China. Instead of working directly, we would be required to enter into a partnership with an existing consulting firm in China. There is a problem with that requirement. If I would pursue business in China, I’d have to partner with a firm that did not have our talent, methods, or technologies we possessed. To work with an unknown firm would require us to share information that would have been exclusive to our firm, essentially training them in the strengths we took so long to accumulate. I figured that this would be a quick (and cheap) way their government could force American businesses to train their companies in our methods, and in most cases our advancements.

Why would a company with a competitive edge want to provide privileged information to gain business? What is there to prevent that “partnering” business to break off relationships once they drain the knowledge base? Certainly they do not hire us because we have a larger workforce.

American progress has been fostered by questioning why. Why is something being done this way? How can we make it better? This leads to innovation. Innovation was a major reason our country progressed more aggressively compared to countries that teach their students to think in only one way. China could see us as a knowledge base to farm information from our corporations wanting China’s riches.

China seems to present an image of more progress. By forcing partnerships to do business in China we may have taught their corporations our best secrets. “We” being not just the United States, but every other country with their top designers, scientists, and technologies sharing knowledge.

Once they have this knowledge and know-how, why would they need us? That is the foundational problem, and one reason I have not pursued work in China.

The American way is innovation – something which I’ve seen little of in the development of our land and the building of our housing by the largest of American corporations. We should be going back to the drawing boards to accelerate American innovation and technology, and this time, not hand over this competitive edge so easily.

The Eurostar, the high speed rail service that links London with Paris and Brussels remains more than 60 percent below its ridership projections as of 2010, according to recently released ridership information. This is despite a double digit (12 percent increase in ridership between 2009 and 2010.

According to a Parliamentary inquiry, consultants projected that Eurostar ridership would reach nearly 25 million passengers by 2006. As of 2010, ridership still languishes below 10 million, at 9.5 million. Rosy ridership and revenue estimates have often occurred with major infrastructure projects, especially rail projects, as has been documented in research by Flyvbjerg et al.

In 2009, the government of the United Kingdom has assumed £5.2 billion in debts of the builder/operator of the high-speed rail Channel Tunnel link to St. Pancras Station. This is in addition to the £1.7 billion that had been granted by the government to the builder/operator to extend the line.

Could the next zone of opportunity exist in the middle of the country? Census unemployment figures seem to signify this notion, especially in the Great Plains.

State-wise, November 2010 unemployment rates were lowest in North Dakota at 3.6%; South Dakota at 4.6%; Nebraska at 4.9%; Kansas at 6.5%; and Iowa at 6.8%. Compare these numbers to the ever-growing Sunbelt states where unemployment is at its most dismal with Arizona at 9.6%, California at 12.4%, and Nevada at a depressing 14%.

The top ten cities with the lowest unemployment rates are all found in the Midwest and the Great Plains, with the exception of Burlington, VT and Portsmouth, NH. The strength of the growing, younger manufacturing industry that escaped the huge manufacturing employment declines in the 80s and 90s may be fueling the prosperity in the plains.

Upon closer inspection of the economies of these cities, a few common denominators are revealed. Health care is a prevailing industry recurrent across many of the cities. Unsurprisingly, agribusiness and manufacturing also dominate, along with insurance services, food processing, and, in some cases, higher education.

Metromonitor prepared this interesting piece using data from the Bureau of Labor Statistics allowing one to see unemployement rates throughout the Midwest and the Rust Belt that appear to be on the rebound. The bottom map is of particular interest: One year’s growth has shown a decrease in unemployment throughout much of the Rust Belt, while cities in California and Florida consistently flounder. As far as overall performance, many cities in the Midwest – and much of the Great Plains – remain strong out of the recession and are comparable to the sturdy Texan cities that possess surging economies.

Perhaps these urban centers across the Midwest, and especially the Great Plains, should be viewed as models for effective economic development. Large cities throughout the Great Plains offer integral services not found for miles and serve as regional havens for essential activities such as health care, education, business services, and food processing. Meanwhile, cities with declining industries, exploding real estate prices, and a surplus of workers suffer. Areas such as the Sun Belt, California, Florida, and some Northeastern cities bare the weight of this dilemma. Our focus should rest on the well-grounded economies of the often-ignored flyover states, instead of those on the crumbling coasts.

Remember cigar-smoking union leaders, those portly white guys who sat around the pool at AFL-CIO conventions in Miami Beach?

We called them the “old guard” and blamed them for allowing what looked at the time to be a very foreboding decline in union density, power and influence.

When I started in the Labor Movement in the 1980s, the struggle to replace that generation with smart, progressive and militant leadership was well underway.

Now many national unions and locals around the country are led and staffed by a new breed, schooled in strategic thinking and coalition-building, and committed to organizing members for action and recruiting workers into the ranks.

The result:

The plunge in the number and percentage of union members continues without a blip.

The latest stats show 14.7 million union members in America; that’s 11.9 percent of the “wage and salary” workforce, a drop of almost a half a percent in one year and more than eight percent since 1983, when the rate was already tumbling.

I’m not accusing my friends and colleagues of incompetence, lack of commitment or anything of the kind.  In fact, many have been – and are – involved in heroic struggles to reinvigorate and rebuild the movement.

But the labor relations framework in the U.S. – effectively manipulated by a sophisticated union avoidance industry – makes union growth almost impossible.

For true believers – you know who you are – a fleeting moment of euphoria ended two years ago when labor law reform was buried by a senate filibuster and a white house with other priorities (the president, by the way, made one oblique reference to unions in his speech to congress this week: the UAW’s support for his free trade pact with South Korea).

Another daunting challenge facing the labor movement is the growing gap between the number of public sector union members (7.6 million) and those union members working in the business economy (7.1 million).

How do we convince nonunion working class taxpayers to support government employees being scape-goated for their “budget-busting” pension payouts?

Finally, a couple of interesting numbers on union distribution by states:

Of the big ones, California has the most members (2.4 million), New York has the highest percentage (26 percent).  But two “outlier states” also share the spotlight:

Heavily democratic Hawaii (23.5 percent) is no surprise.

But, ironically, the republican state of Alaska finishes second in union density (24.8 percent).  It’s where big oil pays union wages, enabling our giant state’s ethic of  “up by your bootstraps” individualism.

This first appeared at laborlou.com

The city of Kalamazoo in southwestern Michigan may be a shining pinnacle in an otherwise economically withering state. The secret may lie within the city’s well-educated population and its incentives to support an enlightened oasis. For 25-year-olds and older in Kalamazoo, 84.2% have finished high school or higher; 32.7% have accomplished a bachelor’s degree or higher; and 14.4% can boast a graduate or professional degree.

Compare this to Detroit’s much more bleak statistics: 69.9% of 25-year-olds have graduated high school; 11% have attained a bachelor’s degree; and a petty 4.2% have acquired a graduate or professional degree. The percentage of unemployed in Detroit is 13.8%, while 12.5% are unemployed in Kalamazoo.

These numbers reflect a well-educated workforce that hasn’t had such an apparent impact from the declining industries in the area. It seems that the answer may be in Kalamazoo’s education services. The most common industries for men and women are educational services, where 13% of men and 17% of women are employed. The area also employs 4% of men and 4% of women in professional, scientific, and technical services, which may lend the city with a more developed economy. Universities such as Western Michigan University and Davenport University help diversify Kalamazoo’s employment base opposed to the historically more manufacturing dependent Michigan .

Unsurprisingly, Detroit’s leading industry for males is transportation equipment (includeing auto manufacturing) at 15% of the workforce. The share in educational services is much lower than Kalamazoo with only 4% of males and 10% of females employed in the area. Figures for professional, scientific, and technical services were not listed.

Kalamazoo also has incentive programs for students in the local school systems. The “Kalamazoo Promise” is a program funded by anonymous donors who provide scholarships for students who attend and finish high school in Kalamazoo. Scholarships can total up to 100% of the student’s college tuition. The program started in 2006 and has likely contributed to the area’s 3% growth in student enrollment. In 2008, Detroit began a similar program in hopes of replicating the small economic boom that the Kalamazoo Promise instigated.

If the city can leverage its higher education institutions and its surging base of high school students entering college, it could ultimately become a prime example of a community improving itself through education. Incentives and opportunities provide citizens with a solid and encouraging way out of a weakening economy inthe state while still providing a standard that the rest of Michigan can attempt to replicate.

For more Kalamazoo facts and figures, visit http://www.city-data.com/city/Kalamazoo-Michigan.html.

This should be the year that China's intercity expressway system exceeds the length of the US interstate highway system. China's expressways are fully grade separated, freeway standard roadways, but unlike most interstate highways, have tolls.

The China Ministry of Transport indicates that, as of the end of 2010, China had 46,000 miles (74,000 kilometers) of expressways. Currently, the expressways of China have a total length about 1,000 miles (1,600 kilometers) less than that of the US interstate highway system. In the last year, 5,500 miles (9,000 kilometers) of new expressways were completed. If that construction rate continues, China's expressway system would exceed the interstate system length late in the first quarter of 2011.

By 2020, China expects to have 53,000 miles (85,000 kilometers) of expressways. This compares to the US total of approximately 57,000 miles (92,000 kilometers), including non-interstate freeways. However, the China expressway mileage does not include the expressways administered by provincial level governments, such as in Beijing (with its five expressway ring roads), the extensive system of Shanghai and the expressways of Hong Kong. No data is readily available for the lengths of these roads.

Now it is possible to travel, uninterrupted (except for traffic jams in the vicinity of the largest urban areas), from north to south from near the Russian border, north of Harbin (in Heilongjiang or Manchuria) to near the resort island of Hainan, well south of Guangzhou, Hong Kong and the Pearl River Delta and not far from the border with Viet Nam. This is a total distance of 2,700 miles (4,400 kilometers).

East to west travel without signals is now possible from Shanghai to near the Myanmar (Burma) border, beyond Kunming, a distance of 1,800 miles (3,000 kilometers). In the longer run, it will be possible to travel from the Russian border in Manchuria to the border of Kazakhstan in Xinjiang, a distance of 3,500 miles (5,700 kilometers).

The expressway system is indicated in the map below. The blue the routes have been opened and the red routes are yet to be completed.

“In public Congress hugs them, in private they mug them!” So said the late Milt Stewart, one of the architects of the Small Business Innovation Research (SBIR) Program in the 1980s and a renowned advocate for America’s small businesses.

I first met Milt in 1992 and eagerly joined forces with him and others from business and government to generate more research opportunities for America’s small businesses – then and now, the most potent force for innovation and job creation on the planet.

Unfortunately, small business continues to get what Fred Patterson, echoing Milt Stewart, calls the "Huggem-Muggem": lots of lip service but very little productive legislative action that facilitates their creation of jobs.

Case in point is the current plight of the SBIR program, which has received considerable bi-partisan support in the Congress for more than 25 years. The Senate of the 111th Congress wanted to reauthorize the SBIR but their counterparts in the House leadership played the old "Huggem-Muggem" game.

The outgoing Chairman of the House Small Business Committee, Nydia Velazquez (D-NY), blocked all efforts to openly debate many Small Business Administration (SBA) initiatives, including the SBIR Program, before her committee. The incoming committee chair, Sam Graves (R-MO), has previously aligned with her to thwart SBIR reauthorization. Their opposition to reauthorization appears to center on the fact that companies which are majority-owned by venture capital firms are now ineligible to apply for SBIR funds.

The National Small Business Association puts the facts on the line. “Despite the remarkable achievements of SBIR, federal R&D funding is still skewed against small businesses. Today, small R&D companies employ 38 percent of all scientists and engineers in America. This is more than all U.S. universities and more than all large businesses. Furthermore, these small companies produce five times as many patents per dollar as large companies and 20 times as many as universities—and more small-business innovations are commercialized. Yet small companies receive only 4.3 percent of the federal government’s R&D dollars. The SBIR program provides more than half of this amount.”

If our country is serious about innovation, competitiveness and job creation it makes sense that we put our resources where they have the most impact. Instead, we are served up the same old tired "Huggem-Muggem" game by those who profess to be advocates for small business.

I've said it before, and will say it again- instead of weakening the SBIR program we should be doubling, if not tripling, our country’s investment in the program. At a minimum a $5 billion SBIR program should be put in place. It will give us much more job growth than the Treasury bailouts of domestic banks and, as we now know, foreign banks too. The SBIR program represents both what America wants and needs in these times of economic stress: job growth driven by small business innovation.

Delore Zimmerman is President of Praxis Strategy Group and publisher of newgeography.com