Thursday, February 11th, 2010
Joel Kotkin is an unpopular figure in many urbanist circles. I suspect that doesn’t bother him too much. His writing suggests he even delights in it at times, as he seeks out perhaps the most provocative contrarian examples he can find to challenge urbanist conventional wisdom. He champions Houston as a paragon of urban success, for example. And he’s been known to extol the popularity and virtues of the suburbs. A typical piece is his 2005 “Rule, Suburbia: The Verdict’s In, We Love It There.”
Among his various ventures, Kotkin is the executive editor of New Geography, where I post articles from time to time. I started writing for NG when Kotkin emailed me after I had taken issue with some of his ideas, and asked if I’d be interested in writing for the site. This made me start paying closer attention to his work.
Kotkin has written some books, but most people know him through his various web opinion pieces like the one above or his weekly column at forbes.com. These are often written in the sharp, opinionated style expected of the genre. But if you actually look beyond that, many of his actual positions aren’t that different from some of those who hate him, often differing more in degree than in kind. For example, in the Rule, Suburbia piece he says:
What [the suburbs] have failed to do, often miserably, is to live up to their promise of becoming self-contained, manageable communities that can both coexist amiably with the natural environment and offer a sense of identity. The prospect of a nation crisscrossed by ugly sprawl corridors like Lee Highway in Virginia or Interstate 10 between Los Angeles and San Bernardino may be too gruesome to contemplate….The great challenge of the 21st century — not to mention the main economic opportunity — lies in transforming suburban sprawl into something more efficient, interesting and humane….the suburbs need to evolve from a pale extension of the city into something more like a self-sustaining archipelago of villages.
This isn’t totally dissimilar to the goals of those new urbanists who seek to retrofit suburbia into more sustainable communities.
Kotkin’s latest book, The Next Hundred Million: America in 2050 was recently released. As the title suggests, this is a future look at the United States, rooted in the impact of the arrival of one hundred million new residents by 2050. This projection, by the way, is simply the Census Bureau’s medium scenario projection for US population, not anything proprietary to Kotkin.
I won’t go into detail on book. Suffice it to say that the suburbs and Houston continue to feature prominently. However, the writing style largely avoids the “op-ed voice” in favor of a more traditional journalistic narrative. This, I think, allows one to get a more clear picture of Koktin’s views without getting hung up on incendiary rhetoric. I’d recommend reading it for yourself. Many would disagree with his unconventional views on many topics. I certainly don’t agree with everything he says. But I’m confident anyone reading it with an open mind would find it interesting – and even have parts they agree with. And I think we all benefit from being forced to engage with ideas that are contrary to our own.
I do, however, want to examine some of Kotkin’s predictions about what he calls the Heartland. Among his contrarian notions is that the Heartland, far from being consigned to the scrapheap of history by economic change, is actually poised for a rebound. He devotes an entire chapter to this theme of Heartland resurgence. Kotkin doesn’t define his Heartland geography, but it appears to be mostly a combination of the Midwest and Great Plains. While it clear that he’s mostly focused on the Great Plains, an area he previously called the “zone of sanity,” a lot of his logic applies to the Midwest as well.
Kotkin’s prediction comes from both demographic growth and structural economic changes. On the demographic front, the US is poised to grow its population by 1/3 or 100 million people in the next 40 years. This begs a very simple question: where the heck are we going to put all those people? Regardless of whether in some sense it is the preferred destination, the Heartland is where a significant number of them are going to end up.
Partially this is because of increasing development restrictions on the coasts that make it difficult to expand housing supply. As our population grows, this puts upward pressure on prices in those areas and leads cost sensitive people to head to the interior where there have been fewer restrictions on building. This price phenomenon was identified some years back by Paul Krugman who argued there are really two Americas, the coasts, which he calls the “Zoned Zone” and the “Flatlands.” Per Krugman:
In Flatland, which occupies the middle of the country, it’s easy to build houses. When the demand for houses rises, Flatland metropolitan areas, which don’t really have traditional downtowns, just sprawl some more. As a result, housing prices are basically determined by the cost of construction. In Flatland, a housing bubble can’t even get started.
But in the Zoned Zone, which lies along the coasts, a combination of high population density and land-use restrictions – hence “zoned” – makes it hard to build new houses. So when people become willing to spend more on houses, say because of a fall in mortgage rates, some houses get built, but the prices of existing houses also go up.
Reading this made me think again of California and Texas. While Kotkin doesn’t make this claim in the book, another way to look at the California population flatlining vs. the growth of Texas is as simply an artifact of this housing dilemma. You can’t grow population easily if you can’t grow housing supply. Places like Texas take off because of both the lumpiness of migration due to network effects and such, as well as greenfield economics.
What Kotkin does believe is that the Heartland is positioned to capture some of this market, and with projected market growth of one hundred million, it isn’t hard to imagine it figuring out how to grab at least some of it.
There’s a tendency in all of us to simply extrapolate trends onward into the future. But things are seldom so predictable. Even 20 years ago, would anyone have predicted our world today? Perhaps that inherent unpredictability of the future is one of the reasons we in the greater Midwest should retain hope for the future.
As a bit of a contrarian myself, I can’t help but observe that often when negative sentiment is the highest, that is sometimes the marker of an inflection point. As they say on Wall Street, until the market reaches the point of “capitulation” in a downtrend, it is tough to turn around.
This makes me think of pieces like Ed Glaeser’s, “Can Buffalo Come Back?” He immediately answers his own question in the dek, saying, “Probably not—and government should stop bribing people to stay there.” Glaeser’s logic is based on a type transportation determinism. Buffalo existed for the era of water transport, that’s over, ergo Buffalo no longer has a raison d’etre.
Now I happen to agree that perhaps there is no other major Rust Belt city more poorly positioned than Buffalo for many reasons. Many other places are likewise challenged. I myself have noted that many cities like Detroit have lost their economic rationale and must reinvent it, and shrinkage is probably part of the story for many places. Richard Longworth wrote that “The first task is to tell the truth, that the Midwest’s golden era is gone forever. Much of the Midwest is in denial. It will take courageous leadership to speak the truth.”
But there’s a big difference between telling hard truths, recognizing that we can’t adopt a “no casualties” policy, and simply writing off a large chunk of America. When I read articles like Glaeser’s, Buffalo implies much more than just that city. It seems to be a sort of shorthand for the whole Midwest apart from a few favored locales like Madison.
But while there are changes in transportation and the economy that have undermined and are undermining this region, there are others that offer significantly more hope. For example, population growth + permissive zoning can equal picking up a reasonable sized chunk of an expanding market. That’s what Krugman implies and Kotkin argues.
Kotkin’s demographics also give reasons for optimism even for the Midwest’s urban cores. Even he estimates 15-20 million new urban dwellers by 2050. Consider this: that range is equal to the populations of New York City, Los Angeles, Chicago, San Francisco, Boston, Seattle, and Washington – all combined. Given the prices and development constraints in those cities, even a low estimate for urban growth like Kotkin’s shows an incredible opportunity for Midwest and other cities to capture new residents. The supply of urban spaces simply isn’t enough to meet the projected demand. If Midwest cities are able to field a reasonable urban product – currently a challenge to be sure – then there is reason to believe they can capture part of this growth as well.
And keep in mind, this is Kotkin’s prediction. If people who take a more optimistic view about the preference for living are right, the potential market for new urban residents is much greater – giving even more room for optimism.
This the beauty of trying to reverse decline in a nation with strong population growth. In Europe, post-industrial regions in Germany and Eastern Europe will face a much tougher time since they face an environment of population stagnation or decline, even with the immigrants they are already having trouble integrating into their societies.
Demographics also play a role in Kotkin’s prediction that agricultural expansion will play a role in the Heartland’s change of fortune. The world as a whole is going to add something like three billion people in the next 40 years, and those people need to eat. With the largest quantity of arable land in the world and them most productive agricultural industry, the United States is poised to grow output significantly. The Midwest is the epicenter of this. Kotkin notes that from 2002-2009, for example, the number of farms increased by 4%.
But it’s not just industrial agriculture. Kotkin believes that the sustainable agriculture movement also benefits the Midwest:
The growing popularity of organic products has opened new market opportunities for producers, and organic farming is now one of the fastest-growing segments of US agriculture….This phenomenon has tremendous long term potential for American farmers…At the same time, community-supported agriculture – in which farmers sell directly to individual or groups of consumers on a regular basis – has emerged as a new model of food production, sales, and distribution, aimed at heightening both the quality of food and the quality of care given the land, plants, and animals…The rise of smaller-scale agriculture, more specialized and more closely linked to urban consumers, offers a glimpse into an emerging future for the Heartland.
Kotkin also sees potential in energy production, both in traditional fossil fuels, which the Heartland has aplenty, and also cleaner energy sources:
The shift to alternative fuels should be encouraged…Over time biofuels will create new jobs, increase commodity prices and farm income, improve the country’s balance of trade, and reduce our dependence on imported fuel and chemicals. These products will likely expand well beyond corn-based ethanol and towards other, perhaps more sustainable nonfood fuels based on wood and agricultural waste in addition to switchgrass….The Heartland is well positioned also to play a greatly expanded role in the development and implementation of new energy solutions.
The Great Plains have been referred to as “the Saudi Arabia of wind;” North Dakota alone could eventually provide enough win power, by some estimates, to supply 20 percent of the nation’s electrical needs.
Also on the economic front, Kotkin sides with the notion that longer term the Internet will level the playing fields for the Heartland, allowing even specialized production to occur anywhere. While certainly the highest value activities will continue to be concentrated in places like Silicon Valley and New York, that still leaves plenty of opportunity for the Heartland to both capture other parts of the value chain, as well as to develop its own indigenous companies.
Kotkin cites an impressive list of places and firms ranging from Renaissance Learning, a software company that employs 700 people in Wisconsin Rapids, to Great Plains Software in Fargo, now part of Microsoft but still employing over 1,000 people locally. He also noted the trend towards more use of onshore outsourcing, a trend I previously discussed at length.
The book doesn’t even scratch the surface of this phenomenon. I think about things like the internet marketing cluster in Indianapolis or the emerging “Tech Belt” between Cleveland and Pittsburgh, where initiatives like the wildly successful Youngstown Business Incubator are gathering national attention.
The plural of anecdote isn’t data, and it’s clear the Midwest has a long way to go in transforming its economy. But it is still early days. The success stories in the region suggest that it is possible to develop technology businesses in the Midwest. The question is whether that can scale up over time or whether it will end up constrained by talent or some other issue. Time will tell.
And to bookend this with another demographic point, Kotkin, like Longworth, sees the promise of renewal in the increasing levels of international immigration to Heartland locations:
From an economic point of view, immigrants have transformed dying places into enlivened ones. Where small stores had once been languishing, there are now Latino markets and restaurants. Rural Wal-Marts offer yucca roots, tomatillos, and tripe. Communities like Lexington, Nebraska that were otherwise losing families, jobs, and workers now feel tensions but also a sense of a future. “I can remember when every house on the street was for sale except ours and our neighbor’s,” recalls Barry McFarland, a local resident, reflecting on how much has changed due to newcomers.
Will Kotkin be right? Any look into even the near future, much less 40 years out, is certain to be wildly wrong in many respects. But with all the doom and gloom about the future of the Midwest, it is nice to read someone who has something positive to say, and provide a multi-faceted look at why this region can be successful if it gets its act together.
A growing Heartland population, with more immigration, agricultural and energy growth, onshore outsourcing, high tech, and recreational amenities. If nothing else, this is one Kotkinesque prediction that I think many could at least hope comes true.