Atlantic’s Take on California

From the Atlantic Magazine.

An excerpt.

“Behold california, colossus of the West Coast: the most populous American state; the world’s fifth-largest economy; and arguably the most culturally influential, exporting Google searches and Instagram feeds and iPhones and Teslas and Netflix Originals and kimchi quesadillas. This place inspires awe. If I close my eyes I can see silhouettes of Joshua trees against a desert sunrise; seals playing in La Jolla’s craggy coves of sun-spangled, emerald seawater; fog rolling over the rugged Sonoma County coast at sunset into primeval groves of redwoods that John Steinbeck called “ambassadors from another time.”

“This landscape is bejeweled with engineering feats: the California Aqueduct; the Golden Gate Bridge; and the ribbon of Pacific Coast Highway that stretches south of Monterey, clings to the cliffs of Big Sur, and descends the kelp-strewn Central Coast, where William Hearst built his Xanadu on a hillside where his zebras still graze. No dreamscape better inspires dreamers. Millions still immigrate to my beloved home to improve both their prospects and ours.

“Yet I fear for California’s future. The generations that reaped the benefits of the postwar era in what was the most dynamic place in the world should be striving to ensure that future generations can pursue happiness as they did. Instead, they are poised to take the California Dream to their graves by betraying a promise the state has offered from the start.

“The writer Carey McWilliams captured that promise in California: The Great Exception, the definitive celebration of California’s founding myth—the way the Golden State long preferred to understand itself. “Published in 1949, just ahead of the state’s centennial, it told the story of California’s rise from a sparsely populated Spanish territory to a world-altering force. McWilliams’s tale begins on the eve of statehood with the discovery of gold on a river near the western slopes of the Sierras. That find sparked the Gold Rush and then a mass migration that transformed the Pacific Rim. Northern and southern whites mingled with free Blacks, runaway slaves, newly naturalized immigrants, and foreign dreamers from the Americas, Asia, Australia, and Europe. “We have here in our midst a mixed mass of human beings from every part of the wide earth, of different habits, manners, customs, and opinions, all, however, impelled onward by the same feverish desire of fortune-making,” wrote Peter H. Burnett, who soon became the state’s first governor.

“By 1850, when California entered the union with a constitution that banned slave labor by consensus, the features that would define the state were already established: It attracted a wildly diverse population and offered everyone save its Native tribes unprecedented opportunity, if not yet equal rights. California, the social scientist Davis McEntire observed, meant to America what America meant to the rest of the world.

“The Gold Rush made San Francisco a global capital. And in its earliest years, the city was more closely connected to the Pacific Rim than to the East Coast establishment, permitting it to enter the global stage on its own terms. “Of all the marvelous phases of the Present,” the poet Bayard Taylor wrote, “San Francisco will most tax the belief of the Future,” as it “seemed to have accomplished in a day the growth of half a century.” In the 1850s, McWilliams wrote, the city published more books than the rest of the U.S. west of the Mississippi, printed more newspapers than London, and popped seven bottles of champagne for each one opened in Boston, thanks to North America’s highest per capita income. Circa 1860, with the transcontinental railroad incomplete and the Panama Canal a distant dream, four people out of five residing in California were born elsewhere. Mexicans had just been overtaken as the largest foreign-born group––that year, every 10th person in California was Chinese, and both would soon be overtaken by the Irish.

“The easy gold didn’t last forever, but the state continued to thrive. “In California the lights went on all at once, in a blaze,” McWilliams wrote, “and they have never been dimmed.” Across its first century, California kept attracting fortune seekers both foreign and domestic, its population always growing.Then came World War II and the postwar boom, transforming Southern California as dramatically as the Gold Rush had changed the Bay Area.

“Of course, that celebratory narrative elides California’s many failures to do right by its wildly diverse inhabitants. The Gold Rush devastated Indigenous people in mining regions and coincided with atrocities against Native tribes. Californians later played an outsize role in lobbying for the passage of the Chinese Exclusion Act. During the 1930s, Angelenos were so resistant to Dust Bowl migrants that they deployed a posse of Los Angeles Police Department officers to the state lines to turn back “Okies” and other “undesirables.” And Japanese Americans were forced into internment camps during the war years. Yet even when its intolerance was waxing rather than waning, the state was often more diverse and inclusive than the rest of the world.

“On one hand, Jefferson Edmonds, the editor of a newspaper serving Los Angeles’s Black community, declared in 1902 that “California is the greatest state for the Negro,” and W. E. B. Du Bois echoed the sentiment in 1913, writing,

“Los Angeles was wonderful. The air was scented with orange blossoms and the beautiful homes lay low crouching on the earth as though they loved its scents and flowers. Nowhere in the United States is the Negro so well and beautifully housed, nor the average efficiency and intelligence in the colored population so high. Here is an aggressive, hopeful group––with some wealth, large industrial opportunity and a buoyant spirit.

“On the other hand, the optimism of African Americans who moved to the state in the first decades of the 20th century gave way to feelings of betrayal at subjugation, famously boiling over in riots in 1965 and again in 1992.

“As recently as the 1990s, the state appeared to be trending less toward easygoing diversity than toward violent balkanization and draconian crackdowns on undocumented immigrants. As murders spiked, doomsayers talked as if additional newcomers would make the state more dangerous.

“Yet more immigrants came. Those most uncomfortable with diversity left. Crime fell significantly. And the xenophilia that followed––the relaxed attitude so many Californians exhibit in the face of difference––is a triumph. Californians are more committed than ever to equality under the law. Past mistreatment of Indigenous peoples, Chinese nationals, African Americans, Dust Bowl transplants, Japanese Americans, Hispanic immigrants, gays and lesbians, and trans people are now appropriately sources of shame. Enormous inequalities of opportunity remain, and the state is far from perfect. Still, California continues to welcome fortune seekers of widely varying backgrounds, and has never come so close to living up to half of its mythic inheritance.

“But even as California began to truly embrace its diversity, laying part of the foundation for a better future, the state’s leaders and residents shut the door on economic opportunity, betraying the other half of the state’s foundational promise. They forgot that California has always thrived by embracing both cultural and economic dynamism. There are still neighborhoods enough to house the wealthy. The brightest still thrive at Stanford, Berkeley, and UCLA. Tech investors and innovators still strike gold in Silicon Valley. Alas, the economic prospects for the typical resident have dimmed. Millions of people lack adequate housing, education, or jobs. College-educated Millennials can’t afford homes of their own. Poverty-stricken Californians dwell in growing tent cities. “During the pandemic, something occurred that McWilliams would have found unthinkable: a net loss in population. California is still forecast to add millions of additional residents in coming years, but though they may be treated more equally than in the past, the state is unprepared to offer them upward mobility.

“If California fails to offer young people and newcomers the opportunity to improve their lot, the consequences will be catastrophic—and not only for California. The end of the California Dream would deal a devastating blow to the proposition that such a widely diverse polity can thrive. Indeed, blue America’s model faces its most consequential stress test in one of its safest states, where a spectacular run of almost unbroken prosperity could be killed by a miserly approach to opportunity.”

Retrieved July 22, 2021 from The California Dream Is Dying – The Atlantic

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Money for Sacramento

A lot of it; from the new state budget, as reported by City Express.

The article.

“The new state budget signed by Gov. Gavin Newsom last week contains millions of dollars earmarked for specific projects in the city of Sacramento, including new urban amenities and at least $33.4 million over the next two years to address homelessness.

“The allocation for homelessness will be used to help fund the homelessness siting master plan that is scheduled to come to City Council on Aug. 10; it is expected to create more than 5,000 safe camping, shelter and housing spaces city wide. Sacramento County will receive a separate allocation.

“A major thank you to Gov. Gavin Newsom and the Legislature for empowering our cities and counties to help the thousands suffering in the streets,” Mayor Darrell Steinberg said. “You led big once again, and we are grateful. We will use these resources wisely and aggressively.

“I would also like to thank Sen. Richard Pan and Assembly members Kevin McCarty and Jim Cooper for ensuring that their districts were represented in this budget and for championing various projects that will have a huge impact on our city and our residents,” Steinberg said. “You have our gratitude as well.”

“In addition to the money for homelessness, Sacramento and the state’s other 13 largest cities will each receive a proportional share of $150 million allocated to increase employment opportunities for youth, including with part-time or summer jobs.

“Here’s a list of funding in the new State budget earmarked for the city of Sacramento and local projects:

  • $30 million for infrastructure needed to develop the Sacramento Railyards
  • $30 million to provide grants to organizations to provide diapers to low-income families with infants or toddlers, including the Sacramento Food Bank and Family Services
  • $5.7 million for cannabis assistance grant funding
  • $2 million for the Planting Justice project at Mangan Park, which will convert the shuttered City Tree Nursery into an urban agricultural hub
  • $3 million to fund a public health program and educational exhibit at Sacramento’s new Museum of Science and Curiosity.
  • $1.8 million to the City of Sacramento for an expansion of Fairytale Town
  • $13.5 million to the City of Sacramento for community reinvestment
  • $1 million for the Sacramento LGBT Community Center for capital improvements and costs
  • $1 million for Capital Public Radio for equipment and seating for public performance space at 1010 8th Street in downtown Sacramento
  • Up to $10 million to the Sacramento River Cats for COVID-19 losses via the California Venues Grant Program
  • $12 million for Cal Expo and the State Fair
  • $750,000 for Habitat for Humanity for Greater Sacramento for the Mandolin Estates housing development in the Glen Elder Neighborhood

“The new State budget also includes a $6 billion expansion of Project Homekey, which provides funding for local organizations to transition hotels into housing for people experiencing homelessness. This expansion could add 42,000 additional housing units statewide, officials said.

“The new Project Homekey funding is part of the State’s $12 billion investment to address homelessness over the next two years. In addition, the new budget also contains $3 billion for the construction of affordable housing projects.”

Retrieved July 22, 2021 from New State budget will deliver nearly $150 million to improve quality of life in Sacramento – City Express % (sacramentocityexpress.com)

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Fighting Over California Water

Nothing has changed, as this 2015 story from City Journal reports.

An excerpt.

“In mid-December, the first large storms in three years drenched California. No one knows whether the rain and snow will continue—only that it must last for weeks if a record three-year drought, both natural and man-made, is to end. In the 1970s, coastal elites squelched California’s near-century-long commitment to building dams, reservoirs, and canals, even as the Golden State’s population ballooned. Court-ordered drainage of man-made lakes, meant to restore fish to the 1,100-square-mile Sacramento–San Joaquin River Delta, partly caused central California’s reservoir water to dry up. Not content with preventing construction of new water infrastructure, environmentalists reverse-engineered existing projects to divert precious water away from agriculture, privileging the needs of fish over the needs of people. Then they alleged that global warming, not their own foolish policies, had caused the current crisis.

“Even as a fourth year of drought threatens the state, canal water from the Hetch Hetchy reservoir in Yosemite National Park keeps Silicon Valley and the San Francisco Bay Area a verdant oasis. This parched coastal mountain range would have depopulated long ago without the infrastructure that an earlier, wiser generation built and that latter-day regulators and environmentalists so casually deprecated. (See “California’s Promethean Past,” Summer 2013.) Gardens and lawns remain green in Palo Alto, San Mateo, Cupertino, and San Francisco, where residents continue to benefit from past investments in huge water transfers from inland mountains to the coast. They will be the last to go dry.”

“I grew up in the central San Joaquin Valley during the 1950s. In those days, some old-timers remembered with fondness when the undammed Kings River’s wild, white water would gush down into the sparsely populated valley. But most Californians never had such nostalgia. Past generations accepted that California was a growing state (with some 20 million people by 1970), that agriculture was its premier industry, and that the state fed not just its own people but millions across America and overseas. All of that required redistribution of water—and thus dams, reservoirs, and irrigation canals.

“For 50 years, the state transferred surface water from northern California to the Central Valley through the California State Water Project and the federal Central Valley Project. Given these vast and ambitious initiatives, Californians didn’t worry much about the occasional one- or two-year drought or the steady growth in population. The postwar, can-do mentality resulted in a brilliantly engineered water system, far ahead of its time, that brought canal water daily from the 30 percent of the state where rain and snow were plentiful—mostly north of Sacramento as well as from the Sierra Nevada Mountains—to the lower, western, and warmer 70 percent of the state, where people preferred to work, farm, and live.

“Everyone seemed to benefit. Floods in northern California became a thing of the past. The more than 40 major mountain reservoirs generated clean hydroelectric power. New lakes offered recreation for millions living in a once-arid state. Gravity-fed snowmelt was channeled into irrigation canals, opening millions of new acres to farming and ending reliance on pumping the aquifer. To most Californians, the irrigated, fertile Central Valley seemed a natural occurrence, not an environmental anomaly made possible only through the foresight of a now-forgotten generation of engineers and hydrologists.

“Just as California’s freeways were designed to grow to meet increased traffic, the state’s vast water projects were engineered to expand with the population. Many assumed that the state would finish planned additions to the California State Water Project and its ancillaries. But in the 1960s and early 1970s, no one anticipated that the then-nascent environmental movement would one day go to court to stop most new dam construction, including the 14,000-acre Sites Reservoir on the Sacramento River near Maxwell; the Los Banos Grandes facility, along a section of the California Aqueduct in Merced County; and the Temperance Flat Reservoir, above Millerton Lake north of Fresno. Had the gigantic Klamath River diversion project not likewise been canceled in the 1970s, the resulting Aw Paw reservoir would have been the state’s largest man-made reservoir. At two-thirds the size of Lake Mead, it might have stored 15 million acre-feet of water, enough to supply San Francisco for 30 years. California’s water-storage capacity would be nearly double what it is today had these plans come to fruition. It was just as difficult to imagine that environmentalists would try to divert contracted irrigation and municipal water from already-established reservoirs. Yet they did just that, and subsequently moved to freeze California’s water-storage resources at 1970s capacities.

“All the while, the Green activists remained blissfully unconcerned about the vast immigration into California from Latin America and Mexico that would help double the state’s population in just four decades, to 40 million. Had population growth remained static, perhaps California could have lived with partially finished water projects. The state might also have been able to restore the flow of scenic rivers from the mountains to the sea, maintained a robust agribusiness sector, and even survived a four- or five-year drought. But if California continues to block new construction of the State Water Project as well as additions to local and federal water-storage infrastructure, officials must halve California’s population, or shut down the 5 million acres of irrigated crops on the Central Valley’s west side, or cut back municipal water usage in a way never before done in the United States.

“When the drought began in autumn 2011, the average Californian barely noticed. Mountain reservoirs remained full throughout 2011 and much of 2012, thanks to ample rainfall in previous years. Though rain and snowfall plunged to as much as 40 percent below average in most inland counties, shortages affected only large agribusiness conglomerates on the west side of the San Joaquin Valley—a small group of corporate grandees with plenty of land and little public sympathy.

“During that first year of drought, quarrels over water were mostly confined to farmers and environmentalists. Confident that stored surface water in mountain reservoirs would remain plentiful, the Greens insisted that the state continue to divert reservoir water away from agricultural usage—at roughly the same rate as during pre-drought years—in order to replenish rivers. In practical terms, however, the diversions meant that substantial amounts of stored snowmelt were released from mountain dams and allowed to flow freely to the Pacific Ocean. Farmers called that wasted water; environmentalists called it a return to a natural, preindustrial California. The Green dream was not simply river restoration and beautification, however. Bay Area environmentalists also believed that vastly increased freshwater inflows would help oxygenate the San Francisco Delta, thereby enabling the survival of the Delta smelt, a three-inch baitfish, while ensuring that salmon could be reintroduced into the San Joaquin River watershed.”

Retrieved July 17, 2021 from The Scorching of California: How Green extremists made a bad drought worse | City Journal (city-journal.org)

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Mass Cyclists

From The Times

An excerpt:


“My bike is a rusty wreck known as The Squeaker and our cycle track is riddled with cracks. So I descend the steep hill slowly, often overtaken by speedy Lycra types. Too often I’m avoiding a pothole as they brush by. With no idea they’re behind me, I jump in alarm. They yell, I yell back.

“In the Netherlands when someone is about to overtake or you’re blocking their way, you hear a firm ding-ding. At first it seems impertinent. But the Dutch, a bracingly direct people, have figured out how to make mass cycling safe.

“Putting bells on new bikes has been a legal requirement in Britain since 1999. But no one checks they stay on. In April, it was suggested in a Lords debate they be mandatory as in Europe under the 1968 Vienna Convention on Road Traffic. Baroness Vere of Norbiton, the transport minister, said enforcement would be “disproportionate”. Except we’re rearranging our whole society to encourage silent vehicles. Not just push-bikes but souped up e-bikes, and e-scooters for lazy poseurs. New transport means new rules. But you know nothing will be done until someone is killed. Then urgent questions will be asked and a hasty bill drawn up. Why not enforce bells now and teach silent but deadly road users the Dutch ding-ding?”

Retrieved July 15, 2021 from Alarm bells should be ringing over mass cycling | Comment | The Times

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California Leaving

We still love living here, but apparently many do not, as this article from City Journal explains.

An excerpt.

“Some longtime Californians view the continued net outmigration from their state as a worrisome sign, but most others in the Golden State’s media, academic, and political establishment dismiss this demographic decline as a “myth.” The Sacramento Bee suggests that it largely represents the “hate” felt toward the state by conservatives eager to undermine California’s progressive model. Local media and think tanks generally concede the migration losses but comfort themselves with the thought that California continues to attract top-tier talent and will remain an irrepressible superpower that boasts innovation, creativity, and massive capital accumulation.

“Reality reveals a different picture. California may be a great state in many ways, but it also is clearly breaking bad. Since 2000, 2.6 million net domestic migrants, a population larger than the cities of San Francisco, San Diego, and Anaheim combined, have moved from California to other parts of the United States. (See Figure 1.) California has lost more people in each of the last two decades than any state except New York—and they’re not just those struggling to compete in the high-tech “new economy.” During the 2010s, the state’s growth in college-educated residents 25 and over did not keep up with the national rate of increase, putting California a mere 34th on this measure, behind such key competitors as Florida and Texas. California’s demographic woes are real, and they pose long-term challenges that need to be confronted.

“The state has suffered net outmigration in every year of the twenty-first century, but its smallest losses occurred in the early 2000s and the years following the Great Recession, when housing affordability was closer to the national average. Home prices have risen since then—and so have departures. Between 2014 and 2020, net domestic outmigration rose from 46,000 to 242,000, according to Census Bureau estimates.

“The outmigration does not seem to have reached a peak. Roughly half of state residents, according to a 2019 UC Berkeley poll, have considered leaving. In Los Angeles, according to a USC survey, 10 percent plan to move out this year. The most recent Census Bureau estimates show that California started falling behind national population growth in 2016 and went negative for the first time in modern history last year.

“The comforting tale that only the old, bitter, and uneducated are moving out simply does not withstand scrutiny. An analysis of IRS data through 2019 confirms that increasing domestic migration is not dominated by the youngest or oldest households. Between 2012 and 2019, tax filers under 26 years old constituted only 4 percent of net domestic outmigrants. About 77 percent of the increase came among those in their prime earning years of 35 to 64. In 2019, 27 percent of net domestic migrants were aged 35 to 44, while 21 percent were aged 55 to 64. (See Figure 2.)

“To be sure, the largest increase in net domestic migration was among those aged 65 and over. But the second-largest increase came in the 25 to 34 categories—with the state’s exorbitantly high cost of living the likely culprit.

“Nor is it primarily an exodus of the poor driving the trend. Of the increased net domestic migration from 2012 to 2019, only 14 percent came from those in the under-$25,000 income category. Those with higher incomes accounted for 82 percent; indeed, 38 percent of the increase came among the over-$100,000 category. (See Figure 3.)”

Retrieved July 13, 2021 from California Fleeing | City Journal (city-journal.org)

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Knowledge Intensive Jobs & High Taxes

Interesting article about the connection, from New Geography.

An excerpt.

“There are two key lessons that the US can learn, from the competition amongst European countries to attract knowledge-intensive jobs. One lesson is that it is possible to encourage the growth of knowledge-intensive jobs in regional clusters. Another is that while several high tax European countries have fallen behind the competition for knowledge-intensive jobs, Sweden and other Nordic nations combine high taxes with strong concentration of knowledge-intensive jobs. Nordic countries also have the best ability to attract investment capital into start-ups, despite high taxes.

“A key reason for this success is a smart tax policy, through which funds from a successful investment in one company may be invested in new companies, and taxation applies first when the gains are realized. Also, Sweden is among European countries that have abolished taxation of wealth and inheritance – which has limited effect on the tax base but makes the country significantly more attractive for entrepreneurs and investors. The European experience might provide useful insights for US policymakers, which face the challenge of fostering knowledge-intensive jobs in a time when there is a push for increasing private-sector tax revenues.

“The European Centre for Entrepreneurship and Policy Reform (ECEPR) has in collaboration with Nordic Capital, a leading Nordic private equity firm, for the fifth year in a row mapped the knowledge-intensive jobs of Europe through the Brain Business Jobs Index. As we have previously written in New Geography, geographical equalization of knowledge-intensive jobs is a strong trend in Europe. Growth is particularly strong in Eastern and Central Europe, and some Southern European nations.

“A challenge for US innovation is that, while many of today’s large companies grew from small operations set up in garages of Silicon Valley, prices there have risen so much that young entrepreneurs often cannot even rent a garage. Developed innovation regions such as New York, Los Angeles, and San Francisco attract many young talents. Yet, the cost of living is so high that even some young talents hired by tech companies have a strained economic situation. A similar situation exists in Europe, with regions such as London and Paris having many brain business jobs, but relatively stagnant development. Growth is instead occurring in lower-cost regions that have a good talent supply.

“Knowledge-intensive firms in expensive European regions often focus on climbing the value chain and outsourcing new jobs, such as programming, to Eastern European capital regions. Southern Europe is also benefiting from this shift. Countries such as Portugal, which previously had low concentrations of knowledge-intensive work, are increasingly attracting young global nomads with programming skills, who appreciate the many sun hours and low cost of living.

“We believe there are two key policy lessons for the US, from the European development of knowledge-intensive jobs. One is the opportunity to encourage growth of knowledge-intensive jobs in regional clusters, an already ongoing trend in the US. Perhaps a more important challenge is how the US can maintain the growth of knowledge-jobs, while business taxes may be raised. In Europe, some high-tax countries have fallen behind the race. France, Austria, Belgium, and Norway already have a lower share of their working-age population employed in knowledge-intensive businesses than Estonia and Hungary.

“Out of 31 European countries, France ranks at 22nd place when it comes to the share of the share of working age population employed in highly knowledge intensive sectors. Only 5.6 percent of the French working age population is employed in such sectors, and the rate of growth is best described as stagnant. Between 2014 and 2020, brain business jobs concentration grew with as little as 2 percent in France.

“Cyprus currently has surpassed France, with 5.7 percent working in brain business jobs – an increase of 50 percent since 2014. Austria ranks slightly above Cyprus, with 5.9 percent of working age population employed in highly knowledge intensive companies. But there is no growth happening in Austria, which in fact has lost 2 percent of the highly knowledge intensive jobs since 2014. In Slovakia, as comparison, the growth during the same period has been 42 percent. Currently 6.2 percent of the population of this former communist country is employed in brain business jobs, outpacing Austria.

“Estonia, a country whose economy was in shambles when the Soviet Union collapsed some three decades ago, is the Eastern European country which has highest concentration of knowledge-intensive jobs. Since 2014, the rate of change has been 32 percent, and currently 7.5 percent of the Estonian population is employed in brain business jobs. The capital of Estonia, Tallin, is a small city – yet an innovative IT-hub.

“Clearly, much of the growth is happening in up-coming nations that combine lower cost of talent with overall lower tax rates. Yet, Sweden next to Switzerland has the second-highest concentration of knowledge-intensive jobs in Europe, despite relatively high taxes. Sweden has fully 9.6 percent of its working age population employed in highly knowledge intensive jobs. And while the rate of increase since 2014 is just below 7 percent, it is a relatively ok development for a country with already high level of development.

“The Nordic region was the only greater region of Europe that managed to add brain business jobs even during the 2020 pandemic-year. A possible explanation is that Nordic firms have good access to growth capital. In the 2021 brain business jobs index, we find that the average highly ranked innovation firm in Nordic brain business regions attracted 85 million Euros in investment. This is far higher than 35 million in Western Europe, 23 in Southern Europe and 10 in Eastern Europe.”

Retrieved July 13, 2021 from Nordics Attract Knowledge Capital Despite High Taxes | Newgeography.com

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Housing Markets

Going crazy right now, good article about it from City Journal.

An excerpt.

“There’s something deeply wrong in many big cities’ housing markets. Prices are through the roof, but governments won’t let developers build more housing to accommodate soaring demand. Thanks to regulations, achieving homeownership is a struggle for the middle class, to say nothing of the poor, in several of the nation’s most economically vibrant places.

“A new NBER working paper by economists Joseph Gyourko and Jacob Krimmel helps to quantify a big part of the problem: the “zoning tax” that regulations impose on land used for single-family housing. The paper provides concrete numbers for the cost of these regulations in 24 metropolitan areas, both overall and in relation to homes’ distance from the urban core.

“The size of the zoning tax is most shocking for houses within 15 miles of the core. Some are so high that one might as well round them to the nearest $100,000: roughly $500,000 per quarter-acre in New York, $400,000 in San Francisco and Chicago, $300,000 in Seattle, and $200,000 in Philadelphia and Los Angeles. And in some big West Coast metros, there’s no escaping the zoning tax by moving farther out but still within reasonable commuting distance. “In the San Francisco, Los Angeles, and Seattle metropolitan areas,” the authors note, the price of land everywhere in the market has been inflated “by amounts that at least equal [the] typical household income.”

“Other places in the country fare much better. The zoning tax is small in big and prosperous cities like Atlanta, Dallas, and Orlando, as well as struggling Rust Belt metros like Detroit and Cincinnati. In some areas where the zoning tax runs high near the core, such as Chicago, Philadelphia, and New York, it drops off rapidly as one moves outward. Fifteen to 30 miles from the core, those three metros’ zoning taxes will run you about $25,000, $30,000, and $50,000, respectively—a lot of extra money to put into a house, but far less than the worst offenders.

“The NBER study does two important things. First, it provides another needed wakeup call about the ways in which big cities are handicapping themselves and hindering social mobility more broadly. As Aaron M. Renn explained in a report for the Manhattan Institute last year, the nation’s “superstar” cities are growing slowly despite their economic successes; as housing regulations have proliferated over the years, residents have come to believe that there’s little benefit to growth. Making it easier to live in thriving cities would help Americans move to where the jobs are and thereby boost the nation’s GDP by matching workers to their most productive uses.

“Second, the study is a fascinating illustration of how economists calculate the zoning tax. (The term originally comes from work that Edward L. Glaeser, a Harvard economist and City Journal contributing editor, published with Gyourko.) The insight here, somewhat tricky to grasp, is that land can cost different amounts on different economic “margins.” The “intensive” margin is how much value a little extra land gives to a home; the “extensive” margin is how much builders have to pay for the same amount of land to develop.

“In a hypothetical world without regulation, market forces should keep these two prices the same. When developers value land more than the current owners, the owners should subdivide it and sell it to developers, up to the point that the owners value their land no less than the developers do.

“By contrast, when regulations make development difficult, the price on the extensive margin gets bid up. In that case, the right to build is valuable in itself, above and beyond the value of extra land as such. The difference in price on these two margins is the aforementioned “zoning tax.”

“Calculating the zoning tax, though, involves some educated guesses. To value land on the intensive margin, economists need to compare similar homes statistically to see how much value a bit of extra land adds. And to figure out the value of land on the extensive margin, past studies have looked to the difference between construction costs and homes’ overall prices.

“The big advantage of the new study is that, instead of estimating the extensive margin in a roundabout way, the authors used proprietary data on sales of actual vacant land intended to hold single-family housing from 2013 to 2018. This approach isn’t without its difficulties—some important details need to be “imputed,” for instance—but it allows the authors to confirm the results of previous work with a different method, avoid some guesswork, and produce fresh findings with recent data.

“An especially important new finding is that “Seattle has joined the two big California metros of Los Angeles and San Francisco in having the largest zoning taxes in the nation.” (This refers to the overall zoning tax for the metros, not the numbers for homes within 15 miles of the core noted above.) “

Retrieved 7/9/21 from New Research Quantifies ‘Zoning Tax’ Exacted by Land-Use Regulations (city-journal.org)

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Parkway Fires

As reliable as the summer, especially in the Parkway Skid Row area—Discovery Park to Cal Expo—story from KCRA 3.

The story.

“Fire crews on Wednesday battled two vegetation fires that ignited along the American River Parkway.

“The fires started mid-morning Wednesday near mile marker 6, not far from Cal Expo, according to the Sacramento Fire Department.

“Video from LiveCopter 3 showed crews working to quash the blazes and stop forward progress. A second alarm was called for the fires, meaning that additional personnel and resources were sent to help extinguish the flames.

“The fire department initially said a fire had burned 30 acres but later clarified that there were two separate fires that charred an estimated 5 acres in total.

“No injuries were reported and the cause of the fire is under investigation.”

Retrieved July 7, 2021 from Vegetation fire sparks along American River Parkway in Sacramento (kcra.com)

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Food Innovations

This is a fertile area and is covered well in this article from the Flyover Coalition.

An excerpt.

“As the food industry followed American consumers into better-for-you eating, and Silicon Valley turned dietary consumption – like everything else – into a digital pursuit, the nation’s breadbasket lost relevance to the coasts.

“But lately, entrepreneurs and big companies alike in Flyover Country are demonstrating they’re every bit as inventive as their counterparts on the seaboards. And they’re collectively determined to reassert the region’s rightful place as the font of innovation in agricultural technology and food development as well as in the more traditional pursuits of harvesting and processing foodstuffs.

“Consider Matt Crisp, CEO of Benson Hill, the startup based in St. Louis that now is looking at a valuation of more than $1 billion after its pioneering scientific work on creating better plant proteins.

“Also an outfit in Chicago called Bigger Table, a coalition of food and beverage companies that are coming together to source donated ingredients and manufacture them into healthy products that are given directly to food banks and food pantries around the area.

“And Journey Foods, whose Austin-based founder, Rianna Lynn, is leveraging data to help food companies effectively manage and launch products and ingredients.

“Still another Flyover Country innovator to consider these days is Dairy Farmers of America. If ever there were a traditional group, the Kansas City-based cooperative of 7,500 dairy farmers might just be it. But look at what DFA is doing nowadays, after swooping in last year to acquire the carcass of America’s largest milk producer, Dean Foods.

“By far the nation’s largest milk producer, DFA has also become first to market with a hybrid product that combines milk and plant-based milk analogs into a new type of beverage meant to appeal to America’s growing class of “flexitarians.”

“Now in its second market test, in New England, after DFA’s initial test in Minneapolis, the new brand called Live Real Farms offers five SKUs of “real milk blended with plant goodness.” Each of the beverages is at least 50 percent milk and is combined with either almond or oat ingredients.

“The gambit is a huge one for DFA, which sees big reasons for hope that Live Real Farms could be a significant help in finally reversing the decades-long decline in fluid-milk sales.

“As we saw the flexitarian trend grow, it was important from our perspective to find ways to deliver modern beverages that get dairy to consumers,” said Rachel Kyllo, senior vice president of marketing and innovation for DFA dairy brands. She told me that about one-third of US consumers describe themselves as flexitarians. “We believed this product could be the best of both worlds.”

“Of course, Live Real Farms also is heavily based on a brand and product narrative that weaves a sustainability ethos with Americans’ growing concerns about consuming locally originated products.

“This is a brand that could connect brand-to-table,” Kyllo said. “The back story for Live Real Farms is very much about ‘farmed from the heart,’ about working for a cause we believe in and being passionate about things rooted in goodness and honesty. It’s America’s story that goes along with Live Real Farms. And it’s very resonant with our target audience.”

“It helps that, unlike most other mainstream beverages in the U.S., fluid milk remains highly fragmented on a regional basis, for a number of reasons. So, not only are there no real national brands for regular milk, there’s a predisposition by American consumers to believe that their local milk brand indeed is already “farm-to-table.”

“Some handicappers believe DFA may succeed with its trailblazing hybrid line. “The dairy category has lagged many of the other beverage categories in innovation, so these products may be a welcome development for some consumers,” Gary Hemphill, managing director of research for Beverage Marketing Corporation consultants, told me. “The knock on some plant-based dairy alternatives has been limited protein content, and products like this may be the answer to that.”

Retrieved July 1, 2021 from Food, Ag Innovations Keep Springing from Flyover Country (flyovercoalition.org)

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Urban Planning

After the tragic destruction of the condo in Florida, this history of urban planning is very informative, from the Anti-Planner.

An excerpt.

“The next time you travel through a city, see if you can find many four-, five-, or six-story buildings. Chances are, nearly all of the buildings you see will be either low rise (three stories or less) or high-rise (seven stories or more). If you do find any mid-rise, four- to six-story buildings, chances are they were either built before 1910, after 1990, or built by the government.

“Before 1890, most people traveled around cities on foot. Only the wealthy could afford a horse and carriage or to live in the suburbs and enter the city on a steam-powered commuter train. Many cities had horsecars—rail cars pulled by horses—but they were no faster than walking and too expensive for most working-class people to use on a daily basis.

“Most urban jobs were in factories and most factories were located in transportation hubs where the factories could get easy access to raw materials and easy shipment of their finished products. Single-family homes were not particularly expensive: a Chicago homebuilder named Samuel Gross sold them for under $500, or about $15,000 in today’s dollars—but building enough single-family homes for all of the factory workers in major cities would mean that some of those workers would have to walk long distances to and from work.

“Mid-Rise Before 1900

“The alternative was mid-rise apartments. Unlike high rises, mid rises did not require expensive construction methods and could be built with wood and bricks (“sticks and bricks”). Some residents had to climb four or even five flights of stairs to get to their apartments, but that would have been easier than walking an extra mile or two.

“As documented in an 1890 photo book, How the Other Half Lives, the living conditions in these apartments could be pretty bad. Many were built with only two toilets per floor, with the intention that each floor would have four separate three- or four-room apartments. But sometimes families crowded into these buildings so that each room would house a single family, meaning a dozen or more families might share two toilets.

“These crowded conditions weren’t found everywhere and no doubt many mid-rises had, as intended, one toilet per two families or even one toilet per family. Still, quarters were small and noisy, privacy was minimal, and sanitation was questionable.

“In 1892, the high-speed electric elevator was perfected by Frank Sprague, the same man who perfected the electric streetcar in 1888 and electric rapid transit, also in 1892. Rapid transit and streetcars made it possible for more people to live in single-family homes and elevators made people less willing to live in multi-story, walk-up apartments without an elevator.

“Also in the 1890s, fire departments began to question the construction of wooden mid-rise buildings. Although wood was a strong enough material to support five-story buildings, those buildings could easily become fire traps, with a fire on one floor sweeping into the higher floors and trapping people from escape. Soon, fire codes were written to require concrete floors as fire barriers, and the extra weight of the concrete meant that mid-rise buildings required more steel. Add that to the cost of elevators and developers stopped constructing mid-rise buildings.

“The Economic Problem with Mid-Rise

“Journalist Joel Garreau explains this in his 1992 book, Edge City. In a chapter called “The Laws” or “How We Live,” he explains a number of land-use principles, or rules of thumb, that developers have come to understand based on long experience with housing and building markets. One of those laws is that Americans are willing to climb or descend, at most, one flight of stairs. This means a three-story building is feasible if the second story is near the ground level, so that people only have to go up or down one flight.

“Since elevators and escalators demand rigid and heavy support structures, buildings that require them are more easily built of concrete and steel than Sticks and Bricks, thereby substantially increasing the cost,” says Garreau. That means that “residential structures either have to be less than three stories above the main entrance, in order for you to build them without elevators, or they have to be high-rise. Once you start building a residential structure of concrete and steel to accommodate an elevator, your costs kick into so much higher an orbit that you have to build vastly more dwelling units per acre in order to make any money.”

“As a result, for nearly a hundred years, very few mid-rise buildings were constructed in this country, and most of them were built by the government—for example, the Pentagon, which is five-stories tall.

“As more single-family suburbs were built, accessed by first streetcars and then the mass-produced automobile, the mid-rise buildings built before 1900 began to empty out. Less crowded conditions were good, but the buildings were also seen as less desirable to live in than single-family homes. Rents were low, building upkeep was sometimes poor, and the buildings were also viewed as fire hazards.

“What to Do with Older Mid-Rises

“People called these buildings “slums” and urban planners argued that individual property owners would not be willing to improve or replace them with more modern buildings because adjacent slums would bring down the value of any improvements by so much that it wouldn’t be worth the cost. A 1954 Supreme Court decision unanimously ruled that, if a neighborhood was blighted, a city could use eminent domain to acquire all of the properties in the neighborhood, tear them down, and encourage redevelopment. This endorsed an urban renewal boom that had begun when Congress passed the Housing Act of 1949.

“In the meantime, a Swiss architect named Le Corbusier had argued that high-rises provided the optimal housing in a city. Planning historian Peter Hall called Corbusier “the Rasputin of the tale” of urban planning because, where earlier planners were democratically oriented and tried to build cities that people wanted to live in, Corbu and his followers believed that they knew how people should live and the people should just accept what they were given (although he himself never lived in a high rise).

“Inspired by Corbusier, urban planners of the 1950s saw their job as replacing mid-rise slums with high-rise apartments. After 1956, where the funds for building apartments weren’t available, they were willing to direct interstate highway funds to clear slums and build highways through the former neighborhoods.

“Today, because many of the residents of these mid-rise buildings were blacks, many people consider slum clearance programs to be racist. They weren’t, really; what was racist was the many other government and private policies that kept blacks poor and thus made them some of the last residents of these sometimes overcrowded tenements. The real question was whether government action was really needed to clear out blighted slums or whether private gentrification would have done the job as the buildings emptied out. I suspect the latter, but it’s too late to do anything about it now.

“Enter Jane Jacobs

“Slum clearance hit a roadblock when New York City planners attempted to replace part of Greenwich Village, a typical pre-1900 mid-rise neighborhood, with a freeway. Among the residents who fought this plan was Jane Jacobs, a journalist who wrote for Architectural Forum magazine. She ended up writing The Death and Life of Great American Cities, a book whose opening sentence was, “This book is an attack on current city planning and rebuilding.”

“Jacobs correctly argued that city planners did not really understand how cities worked. Their preoccupations with high-rises, based on Le Corbusier’s fantasies, simply made no sense in an age when single-family homes were less costly and easily accessed with affordable automobiles. Urban planning, she said, was a “pseudoscience” that had not yet “broken with the specious comfort of wishes, familiar superstitions, oversimplifications, and symbols.”

“Unfortunately, Jacobs was equally convinced that she did understand how cities worked. She argued that great cities required four conditions: mixed uses, short blocks, a mix of old and new buildings, and a dense concentration of residents and workers. This is what Greenwich Village looked like, so she imagined that was the only way residents of great cities should live.

“She admitted that her principles didn’t apply to “what goes on in towns, or little cities, or in suburbs,” but at the same time she didn’t like suburbs, calling them “city destroying” entities. In reality, her ideas were just as wrong as the urban planners’. She understood something about how her neighborhood worked but she failed to realize that her neighborhood was just a remnant of a building pattern that hadn’t made sense since 1900.”

Retrieved June 29, 2021 from Jane Jacobs and the Mid-Rise Mania – The Antiplanner

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