Sunday, 13 December 2015

Longman reveals – unconsciously – the Enriched World as “circle of exclusive clubs”

Percent of mean national per capita income for each region of the US, 1929-1979
The now-veteran demographer Phillip Longman (he turns sixty in April), whose The Empty Cradle remains the best look – if without likely remedies – at the Enriched and Tropical Worlds’ severe demographic problems, has today showed, without having that aim, just how the Enriched World is becoming nothing except an exclusive club caught in a whirlpool of demographic suicide.

In November’s Washington Monthly, Longman in his new article ‘Bloom and Bust’, has argued that “regional inequality is out of control” after, as the graph on the left shows, having fallen for almost a century and a half until the 1980s. His data show that income inequality in the United States is increasing as
“geography has come roaring back as a determinant of economic fortune, as a few elite cities have surged ahead of the rest of the country in their wealth and income”
“only the very rich can still afford to work in Manhattan, much less live there, while increasing numbers of working- and middle-class families are moving to places like Texas or Florida... even though wages in Texas and Florida are much lower.”
Percent of New York mean per capita income for outlying US regions, 1969 to date
Longman then points out that the cities with highest per capita incomes have tended, in fact, to see large net out-migration, whilst areas where per capita incomes are not growing at all have tended to attract most in-migrants.

Longman’s primary argument is that looser enforcement of antitrust legislation and large amounts of financial deregulation during the 1980s and 1990s has led to the consolidation of extremely wealthy businesses in a small number of major cities on the East and Pacific Coast, notably New York, Boston, the San Francisco Bay Area, Washington D.C., Los Angeles and the cities of the Pacific Northwest. He believed the dominance of what he calls “retail goliaths” has meant much less is invested in “flyover” cities of the Plains, Mountain West and the South, with the result that the economies of these cities have severely declined as even new entrepreneurs must move to technology centres like Silicon Valley. Longman quotes Bill Gates to the effect that patent holders’ monopoly power – which he notes was expanded in the 1980s before which the federal government refused to grant any patents for software – makes it more difficult for inventors not allies with the patent holders. (Whilst I understand the value of patents in the context of agriculture, where Australia’s farmers do not pay anything for fertiliser technologies patented overseas but used to farm inherently unsustainable and exceedingly ancient soils, Gates’ and Longman’s criticism has major value.)

The problem is that Longman gives much too little attention to how impossible it is for the middle class – let alone the working masses – to live in such wealthy cities as New York, Boston, the Bay Area, Seattle, Portland and Washington D.C. Demographers ought to know all too well that:
  1. lowest-low fertility is a consequence of family formation being unaffordable due to limited housing space and consequent:
    1. simple unaffordability of housing for all but the very rich
    2. extreme lack of space in housing that is uncomfortable for all but one- or two-person houses and cannot accommodate families
    3. it is clear to me that, despite minor criticisms I received years ago Wendell Cox, many indices like fertility would correlate much better with:
      1. cost of housing per unit of housing space (relative to income) rather than actual total cost (because cheap housing is not useful for families if it be too small for comfort)
      2. cost of housing relative to each individual worker’s income, rather than with total household income (because a single income allows the mother to take more care of children)
      3. such criteria would show more accurately the problems Enriched World cities have with housing space and the need for women to work to gain basic sustenance – and of course this work tends to require high levels of education
  2. that severe land-use restrictions – in lands devoid of unique biodiversity (ice-free only for 15,000 years) and/or low secondary productivity to justify restrictions – create a large part of this housing shortage
  3. that politics in big “imperial cities” tends to be very left-wing due to the concentration of wealthy entrepreneurs there and resultant extreme levels of class resentment
  4. a fourth insight, which Longman does give, is that as the public sector has retreated from providing transport, government regulation of land supply and roads in “imperial cities” has precluded the private sector doing anything to improve mobility
  5. a fifth insight is that many regulations and much government spending in “imperial cities” is designed to help the very poor but:
    1. exacerbates natural flat land scarcity by means of rent control, which often allows less wealthy people who initially lived there to pay very low rents compared to what the market would charge
    2. create a culture of welfare dependency amongst these cities’ less wealthy populations, who obtain more from welfare than they could from modest-paying employment locally
    3. reduces job and trade opportunities by placing wages far above theoretical market levels given the regions’ resource poverty and dense pre-industrial populations, and by means of extreme and usually unnecessary (vis-à-vis Australia or Africa) environmental regulations
Under these conditions, Enriched World cities have no choice but to compete for the most skill-intensive industries extant. Their lands are generally cool, mountainous and pre-industrially densely populated, so they have large comparative disadvantages in agriculture. Glaciers and the Alpine Orogeny have stripped the Enriched World of difficult-to-smelt lithophile metals and preindustrial mining stripped it of easily smelted chalcophile ores, ruling out mining as a long-term base. The dense population and demands for clean air make unskilled labour totally inadequate as an income even with two partners, so that labour- or capital-intensive manufacturing industries also cannot serve as a long-term base for Enriched World economies.

The educational requirements and demographic consequences of an economy based exclusively upon skill-intensive industries have been documented for over a century. In 1900, when among women generally fertility rates were five to six children per lifetime, those of educated women could be as low as a tenth of that: I recall that one survey estimated the few tertiary-educated women produced merely 0.47 children over their lifetime! The situation has changed little in modern times – the difference is that dependence upon skill-intensive industries is now no isolated phenomenon but characterises most corners of the Enriched World and many of the Tropical, making these regions exclusive clubs for the skilled 1 percent or, in the most mountainous or densely populated, much less than that. Even if they had large pre-industrial populations or rapid modern growth, these nations, as shows dramatically by Japan post-1990, will one by one decline in global importance.

Families – who form the next generation – are being forced to move to land-rich regions like the American South or suburban Australia, which is where the future of the world must lie. Despite these regions’ inherently low soil fertility and generally high species diversity, the former trait tends to enhance cooperation and solid families and minimise the class conflict that produces the excessive regulation in cool climates. This sense of community undoubtedly allows tolerance for much lower quality of life via greater emotional support during social or environmental crises, by avoiding heat-of-passion reactions that can disturb relationships even between those who deeply love each other. It is this family-friendly “community culture” that drives migration to places with poor economies, bad climates and low quality of life, and the politics of the cooler and more mountainous regions of the globe make it unlikely to change.

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