San Francisco

Trouble in Paradise: The Crumbling California Model

Joel Kotkin — Tue, 04 Jan 2022 20:28:58 -0500

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.

Yet California is not doomed, at least in the near term, nor is it anything like a model of social democracy. As long as its tech oligarchs produce enormous profits and generate wealth, California remains fiscally flush for the near term, and the evolving economy, long on digitization and constant entertainment, works to the state’s historic strengths. Key industries such as space and biomedical research also offer promise.

The big problem with the California model is that it does not work for most Californians, who suffer from the highest poverty rate (cost of living adjusted) in the country. Despite being home to three of the nation’s four most expensive housing markets, California has among the lowest cost-adjusted median income of any state, as demographer Wendell Cox notes. Although not particularly hard hit by pandemic fatalities, California continues to recover more slowly than the rest of the states and now suffers the highest unemployment rate in the country — including nine of the 16 metros with the greatest joblessness. Even as the tech oligarchy has reaped record profits and expanded its wealth to unprecedented levels, California ranks as the second-worst place to find a job of all the states. Thank God for Hawaii!

A New Economic Model?

Flush from his recall triumph, Governor Gavin Newsom, along with the legislature, seems determined to double down on his attempt to shape California as the model for the progressive future. He claims that our state is “the envy of the world” and the model of social justice. “Unlike the Washington plutocracy,” he boasts, “California isn’t satisfied serving a powerful few on one side of the velvet rope.”

We can see, in aggregate numbers, some justification for crowing. A writer at Bloomberg claims that the state has “the best economy” in the world, pointing to the bloated stock prices of the major tech firms, soaring home values, and the enormous wealth creation accruing to a relative handful. Other writers insist that California will continue to dominate most of its key industries, owing to its innovation and capital resources.

Yet it’s time now to see what California’s “success” is all about. It reflects a new kind of economy — dominated by a few large companies, with an elite workforce, a large service class, and a population increasingly dependent on wealth redistribution. This emerging oligarchic regime, however progressive it likes to label itself, is more feudal than egalitarian, more hierarchical than competitive, financed largely by the same tech giants who help fund Newsom’s successful defeat of the recall.

For most, the reality on the ground is increasingly challenging. The state is now the second-most unaffordable state for home-buyers, a particular challenge for Millennials, and it suffers the highest rate of “doubling up” — only our friend Hawaii does worse. California has the largest gap between middle and upper wage quartiles in the nation, and it has a level of inequality greater than that of Mexico and closer to that of Central American countries such as Guatemala and Honduras than to such “progressive” developed counties as Canada and Norway. According to the state Legislative Analyst’s Office, 20 percent of state wealth is held within 30 zip codes that account for just 2 percent of the population. Less than 33 percent of state wealth is held within 1,350 zip codes that house 75 percent of Californians.

Read the rest of this piece at National Review.

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: On the street in Pomona, California by Russ Allison Loar via Flickr under CC 2.0 License.

Here's Why California is Losing Population for the First Time

Joel Kotkin and Marshall Toplansky — Sun, 02 Jan 2022 20:28:58 -0500

California is suffering a major demographic reversal, one that threatens both the state’s economic future and the durability of its progressive model.

The numbers speak for themselves: The Golden State’s population has started declining for the first time, with new data from the state Department of Finance showing a population loss of 173,000 for the year ended July 1, 2021—a number that includes more than 56,500 pandemic related deaths, mostly of older Californians.

Net domestic migration hit a decade-long low, ballooning from a loss of 34,000 in 2012 to 277,000 in 2021. Over the last 10 years, California lost more than 1.625 million net domestic migrants—more than the population of Philadelphia. Altogether, 2.7 million more people—a population larger than the cities of San Francisco, San Diego and Anaheim combined—have moved to other states from California than the other way around over the last 20 years, and immigration is no longer making up the difference.

Many in the state’s media and political establishment insist that the demographic decline is a “myth” concocted by red-state haters. It’s not. The state that attracted America’s domestic migrants through the 20th century is losing millions of them in the 21st century.

This isn’t the Rust Belt of the 1970s, but the exodus out of the state and especially its metropolitan areas seems to be accelerating. From 2000 to 2020, Census Bureau estimates indicate that metro Los Angeles has lost 2.2 million net domestic migrants, metro San Francisco 400,000, metro San Diego 200,000 and metro San Jose 400,000—even as the rest of the state saw a net gain of 600,000.

Some California boosters comfort themselves by insisting the people leaving are mostly poor or old. But an analysis of IRS data from 2012 to 2019 indicates that 85 percent of those leaving are in their prime earning years of 25 to 64. In 2019, the largest share of net domestic migrants, 27 percent, was in the 35-44 age category, while 21 percent were aged 55-64. At the same time, the state is seeing a decline in the young, restless new arrivals who have traditionally driven California’s innovative and entrepreneurial economy.

In fact, Los Angeles between 2013 and 2017 ranked only behind New York City for the largest net loss of millennials, notes Brookings Many younger people now choose Dallas-Fort Worth, Austin, Houston, and Denver metros, as well as Riverside-San Bernardino, Sacramento and smaller interior metros in California. The days when California could depend on accruing brain power appear to be at an end. During the 2010s, California’s rate of college educated (BA and above) residents 25 and over rated 34th among the states, lagging the increase in the national rate and well behind such key competitors as Florida and Texas.

Critically, this is not an exodus primarily of the poor. Only 14 percent of the increased net domestic migration from 2012 to 2019 has been among those making less than $25,000, according to IRS data, while those making more than $100,000 accounted for 38 percent of the exodus (and the rate of departure was even higher for those making far more).

Read the rest of this piece at Daily Beast.

Wendell Cox is principal of Demographia, an international public policy firm located in the St. Louis metropolitan area. He is a founding senior fellow at the Urban Reform Institute, Houston, a Senior Fellow with the Frontier Centre for Public Policy in Winnipeg and a member of the Advisory Board of the Center for Demographics and Policy at Chapman University in Orange, California. He has served as a visiting professor at the Conservatoire National des Arts et Metiers in Paris. His principal interests are economics, poverty alleviation, demographics, urban policy and transport. He is co-author of the annual Demographia International Housing Affordability Survey and author of Demographia World Urban Areas.

Photo: Pixabay under CC 0.0 License.

California's Keenest Competitors for Tech Jobs are Blue Western States

Joel Kotkin and Marshall Toplansky — Mon, 27 Dec 2021 20:28:58 -0500

For a generation, California has seen more of its residents and companies head elsewhere, but has found a way to respond, at least in terms of wealth creation, by constant innovation. But today, the Golden State’s hold on the elite reaches of the economy is slipping in ways that could threaten the state’s long-term prosperity.

Innovation is California’s best driver of high wages and upward mobility. Bureau of Labor Statistics data show that in the innovation industry — software, computer and semiconductor manufacturing, technology services and nine other sectors — the median wage was $208,000 in California last year. That’s almost three times the $76,000 median wage for all jobs in California.

But now, prime competition for innovation-based jobs comes not only from low-tax, low-cost states like Texas but also from bluish states such as Colorado and Washington. We found that Washington and Utah have actually created more innovation sector jobs per capita than California over the past decade, while Arizona, Colorado and Idaho have had higher per capita growth rates for such jobs.

Many of these states, noted Christopher Lloyd, chair of the Site Selection Guild, which follows investment flows, are duplicating “many of the great things about California.” This includes building elite university systems in places like Washington, Texas, Colorado and Utah. “The development model has turned on its head,” Lloyd suggests. “These states have learned from California. There seems to be a failure there to recognize things have changed and tech people are much more mobile.”

Keeping tech in California is all the more critical with the state suffering the nation’s highest unemployment rate and Los Angeles the highest of any large metro area. We have already experienced a troubling shift in business and professional service jobs such as accountants, lawyers and management consultants, the largest source of higher-wage jobs. Over the last three decades, Texas saw more than double the level of California’s growth in that sector, but Washington, Oregon and Colorado also outperformed California by a wide margin.

Now tech seems also under assault. Some tech linchpins have already moved their headquarters to Texas, including Hewlett Packard Enterprise, Oracle and, perhaps most crucial, Tesla. Many other firms, like Apple, Airbnb, Amgen, Uber and SpaceX, are expanding largely outside of this state.These trends are accelerating, notes a recent Hoover Institution study.

Of course, big companies often move production and jobs to cheaper locales. But growth in the number of innovation businesses is also slowing. Since 2005, the number of these businesses grew far faster on a per capita basis in Arizona, Utah, Colorado, Florida, Georgia and Oregon. This is not only a reflection of high taxes and regulation; many of our keenest competitors, such as Washington, Oregon and Colorado, are hardly governed by conservative, anti-regulatory politicians.

Read the rest of this piece at Los Angeles Times.

Marshall Toplansky is a clinical assistant professor of management science at the Argyros School of Business and Economics at Chapman University.

Photo: Alek Leckszas, via Wikimedia, CC 4.0 License.

Muffy Van Moof's Maiden Voyage

John Sanphillippo — Fri, 24 Dec 2021 20:28:58 -0500

I went to the dentist and when I returned to the bicycle rack I discovered my broken lock laying on the pavement. No bike. I looked at the security guard standing by the door, pointed, and gave him a look. He said, “Oh. That was your bike?” I gazed up at the security camera bolted to the wall above my head and realized they’re largely a form of public safety theater. Then I remembered I’d had this bike for over fifteen years and it was a miracle that it lasted so long. I actually won it at a raffle when I volunteered for the San Francisco Bicycle Coalition so, all in all, I had a good long run with it. It was a sunny day so I walked home from downtown.

I’m a big believer in multiple redundancy so I had a reserve bike to fall back on. It’s a 1980s vintage woman’s bike that I inherited from a friend. It feels like it’s made of cast iron and isn’t my preferred configuration, but it does the job. I’m a pudgy middle aged guy so I’m not racing the Tour de France any time soon. I just need to get around town.

As I wandered back home through the city from the dentist I indulged in a long anticipated purchase of an electric assist bicycle. At first I was scornful of e-bikes. They seemed like yet another application of too much technology for no apparent reason a la “the toaster with a brain” or the WiFi enabled toothbrush. The beauty of a bicycle is its simplicity. Why mess with a perfectly good arrangement?

But San Francisco has lots of hills and the difference between a fast easy bike ride vs. an arduous uphill journey is rendered moot with just a teeny tiny bit of extra oomph. In my daily trips I have a variety of options. I could walk or pedal up those hills, I could take a bus or streetcar, I could use a ride hailing service, or I could drive. The electric bike makes almost all my trips viable without a vehicle unless the weather is particularly bad or I’m carrying big heavy things. Not having to deal with traffic congestion or parking is a tremendous upgrade. And the distances I’m willing to go on a bike expanded greatly with the electric boost.

The other factor in my decision to splurge on an electric bike is the way they’re now a ubiquitous part of the landscape. They’ve exploded in popularity over the last couple of years. It’s hard to find a spot in the city where people aren’t riding around on them. Families with little kids, weekend adventurers, ordinary commuters, tourists, older folks, and even young guys who might otherwise be on motorcycles… That reassures me that over time there will be people who can service the equipment and suppliers who will be available to replace and upgrade the various components.

There’s a Van Moof store a few blocks from my home and the clerks were happy to give me a test drive and show me all the features. But when it came to the actual sale I was directed to their website. These days physical shops are about brand presence in strategic locations, not sales. Van Moof is based in the Netherlands, the bikes are manufactured in Taiwan, and thier storefronts are in Paris, Amsterdam, Berlin, Tokyo, San Francisco, New York.... The bike was ordered, shipped, and eventually arrived at my door in a big box. It was specifically designed to be self assembled by the consumer at home with a little allen wrench and some YouTube instructions with minimum fuss. I’m the least mechanical person I know and even I could put this bike together. I tend to name the inanimate objects in my life and I instantly dubbed her Muffy.

For her maiden voyage I took Muffy Van Moof out to Tiburon to the north of the city to test the battery range. My route went through my neighborhood near Dolores Park, along the Wiggle to Golden Gate Park, then across the Richmond District to the Golden Gate Bridge to Marin County. From there it was a mostly straight shot from Sausalito to Tiburon along the designated bike trail that hugs the waterfront.

Read the rest of this piece at Granola Shotgun.

Johnny Sanphillippo is an amateur architecture buff with a passionate interest in where and how we all live and occupy the landscape, from small rural towns to skyscrapers and everything in between. He travels often, conducts interviews with people of interest, and gathers photos and video of places worth talking about (which he often shares on Strong Towns). Johnny writes for Strong Towns, and his blog, Granola Shotgun.

Only Interior Counties, San Benito, Riverside and Monterey Grow in 2021

Wendell Cox — Mon, 20 Dec 2021 20:28:58 -0500

Preliminary county population estimates just released by the state Department of Finance show that California’s population decline is persisting and accelerating. The state lost 173,000 residents over the year ending July 1, 2021. The Department of Finance reports that there were 56,500 Covid related deaths over the same period, which would account for about one-third of the population loss. Net domestic migration dropped to the lowest rate in a decade, down 277,000 --- more than the population of Marin County. Net domestic migration losses were sustained in all years from 2011 to 2021, but rapidly expanded by more than eight times from the lowest point of minus 34,000 by 2021. (Figure 1).

Population

Only 20 of California’s counties added population in the year ended July 1, 2021. The other 38 counties lost population. County population change is shown in Figure 2 and in Table 1, below.

San Benito, Monterey and Riverside counties gained, along with counties in the Central Valley (San Joaquin and Sacramento Valleys). San Benito County, the southern extension of Santa Clara County (San Jose and much of Silicon Valley) grew the fastest (1.27%). Adjacent Monterey County also grew. Salinas is the Monterey County seat and largest city between San Jose and Oxnard along the Route 101 corridor. Riverside County, just beyond the Los Angeles metropolitan area also gained and added the most population, at just over 10,000.

Colusa County in the Sacramento Valley had the second strongest population gain, followed by Placer in metro Sacramento, Merced (recently added to the San Francisco Bay Area combined statistical area by the Office of Management and Budget) and San Joaquin, the latter two in the San Joaquin Valley.

Other Sacramento Valley counties gaining population included Glenn, Shasta, Sutter, Tehama, Yolo, Yuba as well as Sacramento metro counties El Dorado, Yolo and Sacramento.

Other San Joaquin Valley counties gaining population were Fresno, Kern, Kings, Madera, Tulare.

Other Population Growth Highlights

Los Angeles County is estimated to have fallen under 10 million, which a loss of 68,000. However its loss rate, of minus 0.67% was only 37th worst. Adjacent Los Angeles metro county Orange lost 22,000, with a net domestic migration rate of minus 0.72% (ranked 39th).

San Francisco lost 15,400 residents, for net domestic migration rate of minus 1.77% and a ranking of 55th.

Butte (county seat Chico) lost 10,100 and had the largest population loss rate (minus 4.76%). Butte County has been particularly unlucky in having serious wildfires, which led to a drop in the city of Paradise population from 26,200 in the 2010 census to 4,800 in the 2020 census (a loss of 82%). Butte County’s 2021 population of 201,000 is down from 235,000 in 2018, a loss of 14%. Butte also continues to shed domestic migrants at the greatest rate in the state Table 1, below.

Net Domestic Migration

There were 24 counties gaining net domestic migrants, with 34 losing. All but two of the counties gaining net domestic migrants were in the interior. Placer County, in the Sacramento metropolitan area led the state, adding 0.95% of its 2020 population through net domestic migration. San Benito County added 0.76% through domestic migration followed by Tehama, El Dorado and Colusa. There was also positive net domestic migration in Sierra Nevada counties, such as Plumas, Nevada, Sierra and Amador.

As in population growth, Riverside County also led in the number of net domestic migrants, at 6,000. This is 0.25% of its 2020 population, which ranks it at 13th.

The massive net domestic migration losses continue in Butte County (9,500) at a rate of minus 4.51%, which had the highest loss (duplicating its population loss ranking). If Butte County were to sustain this same number of net domestic out migrants annually, the last resident would leave less than 25 years from now, though that probability is nil.

Other Net Domestic Migration Highlights

Los Angeles County lost the largest number of net domestic migrants, at 83,500. However, its minus 0.83 % ranks 43rd, ahead of 15 other counties.

One such county was San Francisco, with a net domestic migration rate of minus 2.01% or 17,500. San Francisco rated 57th, ahead of only Butte County (above). The San Francisco loss rate is more than double the rate of Los Angeles County.

San Diego County lost 28,000 net domestic migrants, for a rate of minus 0.84% and a ranking of 44th.

As in its population trend, Orange County’s net domestic migration trend trailed that of Los Angeles, at minus 0.95%, for a ranking of 46th (a loss of 30,200).

Rays of Hope

As California’s demographic decline intensifies, there remain rays of hope in parts of the state where the cost of living can be afforded by some incoming middle-income households. These are principally in the interior, on the east side of the Coast Range, north of the Transverse Ranges to about Cajon Pass and the Inland Empire (Riverside-San Bernardino metro). Interestingly, some of the strongest domestic migration (in terms of percentage rate) is in the Sacramento Valley, even north of the Sacramento area. Moreover, the positive trends in some Sierra counties may be an indication of remote workers moving to some of the most attractive environments in the nation.

Table 1 (back to top reference)

CALIFORNIA POPULATION 2020-2021
By County
	Population
County	2020	2021	Change	Rank	Net Domestic Migration	Rank
Alameda	1,682	1,672	-0.59%	35	-1.02%	48
Alpine	1	1	-1.50%	53	0.17%	15
Amador	41	40	-0.47%	32	0.09%	21
Butte	211	201	-4.76%	58	-4.51%	58
Calaveras	45	45	-0.37%	29	0.12%	16
Colusa	22	22	1.07%	2	0.53%	5
Contra Costa	1,167	1,164	-0.25%	27	-0.58%	36
Del Norte	28	28	-0.78%	42	-0.36%	30
El Dorado	191	192	0.37%	11	0.55%	4
Fresno	1,009	1,014	0.48%	9	0.01%	24
Glenn	29	29	0.64%	8	0.40%	9
Humboldt	137	135	-0.77%	41	-0.61%	39
Imperial	179	177	-0.83%	44	-1.28%	49
Inyo	19	19	-0.24%	26	0.10%	19
Kern	907	908	0.14%	17	-0.36%	28
Kings	153	154	0.35%	12	-0.37%	31
Lake	68	68	-0.02%	21	0.23%	14
Lassen	32	31	-2.02%	57	-1.94%	56
Los Angeles	10,012	9,945	-0.67%	37	-0.83%	43
Madera	157	157	0.09%	19	-0.36%	29
Marin	262	260	-0.76%	40	-0.76%	42
Mariposa	17	17	-0.46%	30	0.11%	17
Mendocino	92	91	-0.87%	46	-0.69%	41
Merced	281	283	0.83%	4	0.29%	12
Modoc	9	9	-1.28%	52	-0.65%	40
Mono	13	13	-0.85%	45	-1.37%	51
Monterey	439	440	0.16%	16	-0.42%	33
Napa	138	138	-0.60%	36	-0.59%	38
Nevada	102	102	-0.35%	28	0.07%	22
Orange	3,185	3,162	-0.72%	39	-0.95%	46
Placer	405	409	0.92%	3	0.95%	1
Plumas	20	20	-0.04%	23	0.45%	7
Riverside	2,421	2,432	0.42%	10	0.25%	13
Sacramento	1,586	1,586	0.02%	20	-0.38%	32
San Benito	64	65	1.27%	1	0.76%	2
San Bernardino	2,182	2,181	-0.03%	22	-0.32%	27
San Diego	3,304	3,288	-0.46%	30	-0.84%	44
San Francisco	871	856	-1.77%	55	-2.01%	57
San Joaquin	781	787	0.77%	5	0.41%	8
San Luis Obispo	283	279	-1.55%	54	-1.47%	52
San Mateo	763	757	-0.90%	47	-1.34%	50
Santa Barbara	449	443	-1.23%	50	-1.58%	54
Santa Clara	1,934	1,913	-1.06%	49	-1.56%	53
Santa Cruz	272	268	-1.77%	55	-1.82%	55
Shasta	182	182	0.11%	18	0.51%	6
Sierra	3	3	-0.49%	33	0.09%	20
Siskiyou	44	44	-0.68%	38	0.01%	23
Solano	453	453	-0.19%	25	-0.48%	35
Sonoma	490	485	-0.97%	48	-0.96%	47
Stanislaus	554	553	-0.15%	24	-0.46%	34
Sutter	101	101	0.72%	7	0.30%	10
Tehama	66	66	0.35%	12	0.56%	3
Trinity	16	16	-0.55%	34	-0.07%	25
Tulare	473	475	0.32%	14	-0.26%	26
Tuolumne	56	55	-1.24%	51	-0.59%	37
Ventura	845	838	-0.79%	43	-0.95%	45
Yolo	217	217	0.27%	15	0.10%	18
Yuba	81	82	0.76%	6	0.29%	11
CALIFORNIA	39,542	39,369	-0.70%	-277	-0.44%

Mayor Tom Bradley appointed him to three terms on the Los Angeles County Transportation Commission (1977-1985) and Speaker of the House Newt Gingrich appointed him to the Amtrak Reform Council, to complete the unexpired term of New Jersey Governor Christine Todd Whitman (1999-2002). He is author of War on the Dream: How Anti-Sprawl Policy Threatens the Quality of Life and Toward More Prosperous Cities: A Framing Essay on Urban Areas, Transport, Planning and the Dimensions of Sustainability.

Photo: San Gabriel Mountains in the Transverse Ranges looking toward the Mojave Desert, via Wikimedia under CC 2.0 License.

California Dreamin'

Joel Kotkin — Fri, 12 Nov 2021 20:28:58 -0500

“I just took [my son] to our local Walgreens to buy him a toy. While there, a man shoved past me so firmly that he sent me into the shelving. Then he proceeded to fill a brown paper bag with Halloween candy and waltzed out of the store. This is one of five Walgreens stores in SF that will be closing in the next two months, in part because of rampant theft. And our city leaders all keep insisting crime is down.”

San Fransicko: Why Progressives Ruin Cities, by Michael Shellenberger

I didn’t need to read Michael Shellenberger’s new book, San Fransicko: Why Progressives Ruin Cities, to know what has happened to the city on the Bay. The above quotation is taken from an email from a former student, herself a San Francisco native. Earlier she reported that a homeless man had defecated in front of her townhouse.

San Francisco’s mainstream media and political elite have tried to downplay such stories. But the trends are impossible to ignore. California is one of just a handful of states to see dramatic increases in its homeless population. Between 2015 and 2020, San Francisco’s homeless population grew by 32%, despite the city tripling its funds to address homelessness. Public health and safety have been jeopardized. The entire state has witnessed a spike in shoplifting, particularly in San Francisco. Meanwhile, homeless encampments have become breeding grounds for all sorts of diseases, some of them distinctly medieval.

Some say it’s the mild weather that drives this growth. But other warm-weather places like Houston, Phoenix, and Miami have all reduced their homeless populations, and their percentages of unhoused people are just a fraction of San Francisco’s. As Shellenberger shows, the blame lies not with climate, but with policies and politics.

San Fransicko lays out in precise detail the growth of homelessness and disorder in San Francisco and other West Coast cities, and how the efforts by progressive governments—from liberal drug policies to a deliberate reduction in punishments for minor property offenses—have simply made things worse.

Shellenberger suggests that many of the homeless in San Francisco are not people down on their luck, but those who, quite rationally, move to places where they are free to camp, avoid prosecution for property crimes, receive the occasional hotel room, and even access to free drugs and alcohol. Progressive politicians and policymakers, Shellenberger notes, live in a kind of dreamworld, where the public can build housing for anyone who wants to come to the Bay, a fiscal impossibility in the country’s most expensive city.

But San Fransicko is no right-wing screed about Democratic failure. Shellenberger, a long-time environmental activist, was a socialist in his youth and worked with radicals to protest “economic globalization.” He is part of a dissident movement from within liberal ranks that includes Bill Maher, Glenn Greenwald, Andrew Sullivan, Batya Ungar-Sargon, and many others.

Perhaps it’s his familiarity with the Left that explains Shellenberger’s keenest insights: how postmodernist ideology undermines the basic order necessary for urban life.

Read the rest of this piece at American Compass.

Photo: Benjamin Disinger on Unsplash.

Meet me in St. Louis: When One Golden Gate Closes, Another May Open

John Mirisch — Mon, 08 Nov 2021 20:28:58 -0500

Sacramento politicians and the urban growth lobby they so diligently serve have created a narrative that there is something very wrong with living in (or wanting to live in) a single-family neighborhood. Single-family neighborhoods are -- so the narrative goes -- “racist,” “immoral,” and “evil.”

Three sub-narratives disseminated by density fetishists dominate discussions aimed at demonizing what for a vast majority of Americans, represents a lifestyle preference.

Single-family neighborhoods are racist (OK, ignore the role of banks and the real-estate industry in suppressing Black homeownership, and reward them by effectively putting them in charge of urban planning).

Single-family neighborhoods preclude housing affordability because urban density is required for affordability (well, not exactly, according to demographer Wendell Cox).

Single-family neighborhoods accelerate climate change (except it isn’t the lack of density that causes climate change, but increased consumption).

The reasons Sacramento politicians cling to these narratives when carrying the water for the density lobby is fairly self-evident: money and power. For them, the commodification of housing serves numerous constituencies --- developers, Big Tech, the construction unions, and Sacramento politicians. These are aided and abetted by a vocal Twitter mob of WIMBY (Wall St.in my back-yard) true-believers.

Of course, these policies are at odds with what most Californians and Americans prefer. The move to force ever more urban density down the throats of Californians has left many of the state’s residents feeling helpless and frustrated. In effect, their preferences (are being derided by efforts to discourage homeownership and turn us into a state of renters ( a nifty and reliable source of recurring revenue for corporate landlords and private equity investors.

Now that Sacramento politicians have taken measures to eradicate single-family neighborhoods, reduce homeownership, and to force density upon communities, other states should take notice and react accordingly. The same vested interests have power in many communities and would like to impose this approach on them.

But those states throughout the nation that are willing to accept a diversity of lifestyle choices and to embrace housing pluralism, should promote this as a virtue and use it to their advantage. . States that are willing to embrace tolerance, including when it comes to people’s housing preferences should let people in states with fewer housing options know that they exist and would welcome new community members.

California’s historical tolerance of people of all stripes has been a strength and a way for the state to attract new residents. But as the “progressive” (well, really corporatist) clerisy tightens its grip here, there is an opportunity for other states to attract people of all stripes. This could turn the tables on California --- usually brashly seeing itself as harbinger of the future --- for a change. Other states have the opportunity to turn California’s lack of tolerance into a strength, into an asset, into a way to make people feel accepted, welcome, and at home within their states and within the communities in their states.

The notion that California is simply somehow “better” than other places is increasingly outdated --- except of course for our weather.

If Sacramento politicians take the state’s residents for granted and are comfortable telling them that they are not allowed to look for and live in the housing they prefer, then other states can offer a that opportunity to attract the talented and dynamic current residents of the Golden State, many of whom like living in a home with a garden in a neighborhood of homes with gardens.

We can already see an advertising campaign in California touting the virtues of Ohio as a place to relocate to. Why not consider Ohio as a place to lay down roots? And while Ohioans might not give a damn for the whole state of Michigan, why not Michigan, for that matter? Californians have headed to Texas, Arizona and Nevada, states not more attractive in physical terms those in the Midwest.

Last month I was in St. Louis for a few days. It’s a city I had never spent an appreciable amount of time in.

If we’re going to “build back better,” then there aren’t many better places than St. Louis to do so.

The population of St. Louis is currently just above 300,000 residents. This is less than in 1870. It’s a mere 35% of the St. Louis population in 1950. In the 50 years from 1970, St. Louis has lost more than half its population, even as its suburban population rose dramatically.

Like any city, St. Louis may have its share of problems. But it is quite simply a great city. Wholesome Midwestern values (on a human, person-to-person level; I am not making any political commentary here). Extensive infrastructure. Good food. Nice people. Great beer. For all the talk of Austin, Boise, Bozeman, and Nashville, St. Louis seems like a great place to live, laugh, love, and work. And it definitely deserves to be a success.

St. Louis has a beautiful, historic downtown. It has world-class universities, major museums, impressive cultural institutions, huge, well-maintained parks, and great professional sports teams. It has one of the most incredible man-made landmarks anywhere in the world.

Maybe it’s time we started to focus more on encouraging people to move back to the Midwest. There we can create greater geographic equity and regional equality, and allow people to pursue their dreams of homeownership and independence.

Maybe it’s time for us to really look to build back better, rather than just building back bigger.

St. Louis, Ohio, Michigan, and other parts of what has become known as “flyover country,” are all prime candidates for building back better, especially in the wake of the Great Resignation and with all the potential of remote work to offer Americans of all stripes more choices.

While urban supremacists who shun urban humanism in favor of concentrating more people (and opportunity) into “superstar” cities,” most Americans have no desire to live in the kind of dorm-like apartments that are the dream of these new urbanists.

Cities like St. Louis and states like Ohio should focus on promoting the quality of life they can offer Americans who, in the wake of the ongoing Great Resignation and the success of remote work now have choices they didn’t have before.

You like living in an historic, dense downtown? We have that. Do you prefer living in a medium-dense triplex or fourplex with easy access to the urban center? We have that, too. Do you want somewhat more spacious accommodations, maybe even a home with a garden in a neighborhood of homes with gardens? We have that, too.

And they’re all affordable compared to coastal “superstar” cities.

As a native Californian, I love my state and my community. But I also understand that California is not Jerusalem. Everywhere is Jerusalem. Jerusalem is wherever we choose to make it.

When California ceases to be a place of opportunity for all, and when it constrains choice and tries to force a housing Gleichschaltung upon its residents, then the Golden State has lost some of its luster as increasingly the state’s gold is reserved for the corporate oligarchs rather than the residents.

I recognize that those who have profited from the overconcentration of opportunity might vigorously resist decentralization and a deconcentration of opportunity. But when something is overconcentrated, the proper remedy is, of course, to deconcentrate it. We all suffer when a few places attempt to monopolize opportunity.

Remote work opens up new horizons. For regions. For states. For cities. And, perhaps most importantly, for people. We should embrace its potential, not try to stifle it like the Luddite Californian urban supremacists.

We now have an opportunity to restore the kind of balance restored to the country through policies that embrace urban humanism rather than the dehumanizing scale prescribed by the density fetishists and urban supremacists.

I’m rooting hard for places like St. Louis and Ohio and Michigan. And I understand that if they can offer tolerance for people’s preferences and can welcome a diversity of housing and lifestyle choices (and, yes, some of these places undoubtedly have room for improvement here), they may, in the long run, force California to become more hospitable to its own residents, whom the state’s powerbrokers and Sacramento politicians all-too-often seem to take for granted.

California has effectively told its residents who live in – or want to live in -- single-family neighborhoods: you are not welcome. Not opening that golden gate for you if you’re dreaming of your Blue Heaven.

But golden gates don’t only exist in the Golden state. They can be anywhere we want. They should be anywhere tolerance, choices, and respect for people from all walks of life can co-exist.

Californians now being told they aren’t welcome in their own state because they prefer living in a home with a garden -- or perhaps simply want a bit more space -- may be receptive to other places. A message along the lines of the following would likely resonate among many Californians:

“Your home is your castle. Your home is your home, and it’s for you to have a garden. It’s OK for you to live in a neighborhood of homes with gardens. Or in a denser urban center. Whatever you prefer. Welcome home. Welcome to St. Louis (or Dayton or Des Moines or Detroit or Toledo or Kansas City or…).”

John Mirisch was elected in 2009 to the Beverly Hills City Council, where he has served three terms as mayor. He is currently a garden-variety council member.

Photo: Sam Valadi via Flickr under CC 2.0 License.

The Anecdotal "Buyback" Effect

John Sanphillippo — Fri, 22 Oct 2021 20:28:58 -0400

I spend entirely too much time listening to experts in business, government, and academia explain the economy in general and the property market in particular. Looking back, very few people who are purported to know how the economy works, based on empirical evidence, have successfully predicted the wild spikes and crashes over the years. Worse still, every attempt to provide housing to the broad middle at a price ordinary people can support keeps failing in more and more places. This isn’t just a local or even national problem. It’s happening all over the planet. So, I tend to rely on what I personally observe on the ground in what officialdom dismisses as anecdotal references.

I enjoy chatting with strangers as I walk around the city. People self-select in or out of these conversations, but the ones who chat back teach me quite a lot I’d probably never know any other way. This lady described how she and her husband built this home themselves back in 1953. He had just returned from the Korean War, rolled up his sleeves, bought lumber, and built the place with the help of his working-class tradesmen family members with minimal debt.

Land was affordable, building materials were readily available, and regulations hadn’t yet twisted themselves into the Gordian knot of the present moment. Construction permits were a simple over-the-counter transaction for a nominal fee. I’ve talked to many people of that generation all around the country, including a few of my own relatives, and it was common for people to build their own homes seventy years ago, even in big cities.

Here’s another little tidbit about this house. According to the algorithms, this place is currently worth $1,400,000. Rent for a property like this is assumed to be $4,500, although that number is substantially too low in my experience. Public records show property taxes on this house are $766 per year. That’s a consequence of Proposition 13, a 1978 tax revolt that caps property tax at the value of the house on the day it was purchased, plus a 2% annual increase, rather than present value.

That one law is probably what’s keeping a lot of older folks in their homes as prices reached for the stars over the decades, which is exactly what the law was designed to do. But it had unintended consequences. In order to make up for the lost revenue, the city has found all sorts of alternative income streams, not least of which is to massively jack up the cost of new building permits. This same couple couldn’t duplicate the construction of their own home today largely because the culture and economy that existed in 1953 is entirely gone.

Half a block away I’ve watched as this house was transformed over the last few years. Built in 1906, this was a corner shop with additional living accommodations, most likely for the family that ran the shop. That was the year of the great San Francisco earthquake, although this neighborhood is built on pure rock and was largely spared the worse direct effects of the disaster. A century ago, these small shop houses were the ultimate in financially self-supporting homes. The income from the business paid for the living space. Some decades ago, as supermarkets made small neighborhood shops redundant, the retail space was repurposed into a second apartment and the building became a duplex.

In 2017 it was sold as a fixer upper for $2,000,000 and was given a radical renovation. These total transformations are common and often organized by professional high stakes flippers. When it was sold it was occupied by two rent-controlled tenants who had the legal right to remain no matter what. Protracted legal battles are expensive and unpleasant so renters are generally bought out as part of the transaction. The going rate is $100,000 per unit. That’s a lot of money, but given the overall cost of the property and ensuing renovations, it’s an acceptable cost of doing business that’s rolled over into the final price tag of the project. I know several people who gave up their rent-controlled apartments at that price point, some more willingly than others. It’s almost always a one-way ticket out of the city.

San Francisco has laws that forbid the physical removal of housing units from the market, so this place will remain a duplex on paper. The people who own it will probably never rent either apartment. Rent control, implemented in 1979 as a counterweight to Prop 13, is too onerous and whoever can afford to buy this place doesn't need the extra income. So, it's either just a big house that happens to have two front doors, or it’s two luxury condominiums. This is all part of the stairstep transition from small-scale, mixed-use, moderately priced property toward homes at a shockingly high price. The city says it wants affordable housing, but the market presses in and the tax revenue and job creation from these flashy renovations is intoxicating.

It’s tempting to blame convoluted rules and regulations that restrict free markets for the current housing situation, and that’s definitely a factor. No question. Each little rule, restriction and fee crept in over time like an alluvial delta with powerful constituencies. But there are other forces at work driving prices this high that have nothing to do with construction or housing policy.

Some of you may be aware that large corporations borrow money to buy back their own shares from the stock market. Interest rates are low, companies have access to unlimited amounts of easy debt, and buying their own shares drives the stock price up. That’s the metric by which executives are judged and paid. Why bother earning money through actual productive activity when it’s possible to conjure funds out of thin air with a little hypothecation? That takes us back to my anecdotal observations.

Read the rest of this piece at Strong Towns.

Exposure Density, Overcrowding and COVID Death Rates: Update

Wendell Cox — Wed, 22 Sep 2021 20:28:58 -0400

In their new book, Harvard economists Edward Glaeser and David Cutler characterize COVID and related issues as an “existential threat to the urban world, because the human proximity that enables contagion is the defining characteristic of the city” (see our review, Survival of the City: The Need to Reopen the Metropolitan Frontier (Review).

Exposure Density

The problem for cities was stressed in an open letter from 239 scientists to the World Health Organization, “Studies by the signatories and other scientists have demonstrated beyond any reasonable doubt that viruses are released during exhalation, talking, and coughing in microdroplets small enough to remain aloft in air and pose a risk of exposure at distances beyond 1 to 2 m from an infected individual.” They added: This problem is especially acute in indoor or enclosed environments, particularly those that are crowded and have inadequate ventilation relative to the number of occupants and extended exposure periods.

In the past , we have suggested the use of “exposure density” --- a radiological term used to assess the proximity and duration of exposure --- as appropriate of COVID analysis in an April 2020 article (see “Exposure density and the pandemic”).

Research published earlier this year estimates how the reduction in neighborhood level exposure densities in New York City reduced COVID infection and fatality rates. Comparing rates before and after the stay-at-home order that was effective March 22, 2020, Boyeong Hong, Bartosz J. Bonczak , Arpit Gupta, Lorna E. Thorpe , and Constantine E. Kontokosta of the Marron Institute of Urban Management, New York University associated a 1.00 percent reduction in exposure density with a 1.33 reduction in case rate and a larger 1.59 percent reduction in fatality rates in New York City (See: Exposure density and neighborhood disparities in COVID-19 infection risk)

Update on COVID Fatalities

Fatality rates data continue to show an association between higher county urban densities and their fatality rates. Urban density is used as a surrogate for the overcrowding that increases exposure density. The issue is not density per se, however, but consistent with crowding which is often found in dense urban areas.

The latest fatality rates as of August 31, 2021 from COVID-19 are shown in Figure 1. This is derived from data reported by usafacts.org. The data includes all the pandemic period, that began in the first quarter of 2020.

The counties with lower urban densities of 1,000 to 5,000 per square mile or below --- continue to do better in terms of death rates, at or below the national death rate in (Figure 2). These counties account for 81% of the nation’s population (267 million out of a total population of 328 million).

All categories of counties with urban densities exceeding 5,000 per square mile have more than their population proportionate share of COVID-19 deaths. Areas with urban densities below 1,000 per square mile (including rural areas) have higher than average death rates. The fully rural counties (without urban areas), death rate remains 16% above the national average, slightly above the end of 2020. Urban density categories above 10,000 per square mile have death rates more approximately one-half or more above the national average.

The death rates in counties with higher urban densities have improved materially since our first report (July 9, 2020), when they were a minimum of 350% higher than the national average --- seven times the current average. The earlier rates were far more influenced by the pre-lockdown fatality data, with improvements as the lockdown period has extended at least a year. But they remain considerably higher than less dense areas and rural ones at all.

Figure 3 illustrates the current fatality rates by urban population density category.

The Toll on the Largest Central Business Districts

As important as the measures have been in reducing exposure densities,much of this has come from the mass abandonment of the most crowded enclosed city environments have been substantial, especially on the hyper-dense central business districts (downtowns), which have been characterized as “ghost towns.” It is worth noting that employment densities in Manhattan (the largest US central business district) reach about four times the highest neighborhood (residential) densities (See here and here).

The largest downtowns are far more dependent on enclosures such as elevators and transit commuting than elsewhere in metropolitan areas, as social distancing requirements have decimated the extent of use by workers. Nearly half or more of workers to the largest downtowns (New York, Chicago, San Francisco, Boston, Philadelphia and Washington) had commuted by transit before the pandemic.

In August, only 23% of Manhattan workers were physically at work, with 44% of employers delaying returns because of the recent rise in COVID-19 cases due to the Delta variant.

In May, downtown San Francisco was reported to have only 15% of its workers at their jobs. The BART regional metro had ridership in August had ridership 78% below the same month in pre-pandemic 2019.

In July, Metra, the Chicago area’s principal commuter rail agency, reported ridership down 75% from pre-pandemic levels and has set a goal of ridership down 70% by the end of the year.

Overcrowded Housing

While the policy responses to COVID have reduced exposure densities in crowded employment and transit environments, such policies are not as easily applied in the overcrowded housing that includes so many in poverty. A Furman University study on New York City found: “Neighborhoods with higher rates of confirmed COVID-19 cases have lower median incomes, higher shares of residents who are Black or Hispanic, and higher shares of residents under the age of 18 relative to less affected neighborhoods. Residents of these neighborhoods are less likely to be able to work from home, disproportionately rely on public transit during the crisis, and are less likely to have internet access.”

An Uncertain Future

Polling cited in research by Jose Maria Barrero (Instituto Tecnologico Autonomo de Mexico) Nicholas Bloom (Stanford University) and Steven J. Davis (University of Chicago) indicated that “once most of the population had been vaccinated ”nearly three quarters of the working age population would not completely return to pre-COVID work activities”.

Moreover, the continued emergence of COVID variants, combined with the reluctance of some to be vaccinated are strong indicators that the future of work and the most crowded parts of cities (whether residential or employment) may not return soon to “business as usual.”

Photograph: Midtown Manhattan. Highest density employment in the United States (by author).

Gavin Newsom Won His Recall. What's Next for California?

Joel Kotkin — Wed, 15 Sep 2021 20:28:58 -0400

What started as a lark, then became an impossible dream—a conservative resurgence, starting in California—ended, like many past efforts, in electoral defeat. With his overwhelming victory in the recall election, California governor Gavin Newsom and his backers have consolidated their hold on the state for the foreseeable future.

One can quibble about the political wisdom of the recall gambit, particularly given that Newsom was up for reelection next year. But the main reason for the stunning defeat lay with the state’s highly bifurcated political economy, which might sustain a progressive mega-majority in the Golden State, but also alienates some voters—and limits the national appeal of the progressive governance model that Newsom embodies.

The sinking of the state’s once-buoyant middle class undermines the base for a two-party politics in California. The kinds of taxpayers who called the state home during the 1980s and 1990s are leaving, and few families are moving in. Many of the leading companies that employed middle-class workers—McKesson, Hewlett Packard, the oil and aerospace industries—are fleeing at a quickening pace.

California today works primarily for two key Newsom constituencies: unionized public employees and pop culture, tech, and financial leaders. Money from these groups gave Newsom a massive advantage in advertising and organizing. Newsom’s coffers exceeded those of the nearly bankrupt recall campaign and all the prospective candidates combined by almost three to one. The combination of tech IPOs and federal money has also financed massive relief funds for a third Newsom constituency—California’s highest percentage-in-the-nation poor population—allowing the governor to act like a modern-day Boss Tweed.

This electoral triangle remains too entrenched to dislodge, at least for now. Massive spending secured the votes of disengaged voters, even as the San Francisco Chronicle warned about “an alarming enthusiasm gap” among Democrats. The effort to reach enough of these voters clearly worked.

The media played its assigned role. The overwhelmingly progressive press never much liked Newsom, but the threat of a potential Republican governor in the person of Larry Elder, the leader among the challengers, drove them to partisan distraction. Paul Krugman framed the recall as an assault on California’s “progressive success story.” The New York Times’s Ezra Klein referred to Newsom as a leader of “substance,” just months after he’d observed that the state has deteriorated so badly that it makes “liberals squirm.”

With the recall threat gone, Sacramento insiders expect more progressive moves—such as attempts to tax wealth, including unrealized gains, from the upper-middle class. More pressure will be brought to bear to restrict the use of contract workers, particularly with the recent court overturning of Proposition 22. The state will accelerate its program of ever-more stringent restrictions on water and energy use.

Read the rest of this piece at City Journal.

Joel Kotkin is the author of The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the 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 credit: Gage Skidmore via Flickr under CC 2.0 License.