Geography: The Latest Front in the Class War

Upward Mobility Across America

At the heart of today’s political gridlock is a sense of disconnect. Too many Americans feel disconnected from their government, their economy, and even their fellow citizens.

Gone is the collective bond that united us in war and in peace, the sense that we rise together and fall together. In its place is a deeply divided America.

We talk a lot about the partisan divide in this country, but we don’t talk enough about the geographic divide. The citizens who feel the greatest disconnect from collective institutions are often the ones who live farthest away from them.

The latest evidence of this fact comes from a new study by the Equality of Opportunity Project, a team that includes some of the most celebrated young economists in the country. They found that one of the greatest enemies of economic advancement was sprawl.

The more concentrated a city was, they discovered, the more likely its citizens were to climb the economic ladder. Conversely, the lower and middle classes had fewer opportunities to advance in cities that were more spread out.

The release of their findings just happened to coincide with the bankruptcy of Detroit, an episode that illustrated their point quite tragically. Detroit is one of the most spread out cities in America — and one of the most economically segregated. At its core, the average household earns an income that’s half of what suburbanites earn just outside the city’s borders.

This is yet another consequence of the extreme inequality that is rending this nation’s social fabric. Not only have the richest One Percent taken almost all of the income gains in the past thirty years, but they have isolated themselves in communities where they never have to see the pain of the 99 Percent they left behind. Walled up behind their iron gates, they become less and less aware of the struggles of the average American, until one day when the elites who run our country no longer know what our country even looks like anymore.

Nowhere is this disconnect more clear than Washington, D.C., which boasts six of the nation’s ten richest counties alongside one of its poorest cities. Our legislators never seem to notice that the people who need their help the most are in their own backyard.

The famous political scientist Robert D. Putnam made this case beautifully in a sad new essay about his hometown of Port Clinton, Ohio. He talked of how stable and connected the community once was and how that all disintegrated when the manufacturing jobs disappeared. He marveled at how far his classmates had come and how different their experience was from the poor generation that followed them.

Port Clinton no longer lives as one community but two.

“In the last two decades,” writes Putnam, “just as the traditional economy of Port Clinton was collapsing, wealthy professionals from major cities in the Midwest have flocked to Port Clinton, building elaborate mansions in gated communities along Lake Erie and filling lagoons with their yachts. By 2011, the child poverty rate along the shore in upscale Catawba was only 1 percent, a fraction of the 51 percent rate only a few hundred yards inland.”

In this fractured world, it’s easy to see how the average American would feel abandoned — by the government, by the economy, even by their own fellow citizens — and why they would distrust anyone who asks them to bind together in common cause.

I know whereof I speak. This month marks my seventh anniversary of moving from the country to the city. I grew up in rural Pennsylvania and suburban Florida. Since then, I’ve lived in Philadelphia, New York, London, and Los Angeles. I’ve seen the world through two very different lenses, and I don’t blame the one for being suspicious of the other.

But we must overcome this disconnect if we are to rebuild these forgotten communities and resurrect our ailing economy. The more isolated we have become, the more we have all suffered. We must find ways to connect the rural and urban regions, whether through physical connections like high-speed rail or social connections like labor unions. We must work together, and that means we must put our trust where it has always done the most good: in each other.

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This op-ed was published in today’s South Florida Sun-Sentinel.

Romney’s Energy Plans Don’t Bode Well for the Future

Mitt Romney has officially given up on the future. At least, that’s the way it looks from the energy plan he released last month.

The future is in peril for a number of reasons. Climate change is slowly eroding the environmental stability we’ve enjoyed for centuries. The wide gap between what we import and what we export is driving manufacturing jobs overseas. And our dependence on foreign oil embroils our national security in the explosive Middle East.

With his new energy plan, Romney surrendered on all three fronts.

When Romney proposed expanding oil drilling to previously restricted areas, he was probably listening to people like Fox News commentator Peter Morici, who has said, “Oil imports could be cut by two-thirds by boosting U.S. oil production to 10 million barrels a day.”

Only one problem: It’s impossible.

According to the Energy Information Agency, even if we open all those lands to exploration, our current production of 6 million barrels per day will never grow to more than 7.5 million, let alone 10. There just isn’t enough oil under the ground — and even if there were, it wouldn’t be available for another decade.

So we will always import oil — unless we replace it with something else.

By “something else,” of course I’m referring to renewable energy. The Romney plan, however, doesn’t propose a single policy to encourage the development and export of renewable energy technologies. Instead, it advocates even less oversight of an industry that experienced the worst environmental disaster in American history only two years ago.

Romney’s preference for oil over solar and wind power is particularly striking in light of his party’s alarmism over inflation (which never seems to materialize when they say it will). After all, oil prices have been rising for three decades, while manufacturing prices have been falling.

Since the 1990s, installation costs for wind power have fallen by 90 percent. In last year alone, solar panel prices fell 50 percent. Compare that to gas prices, which…well, you know.

Someone needs to tell Mitt Romney: You can’t be an inflation hawk and an oil bull at the same time. If you commit the nation to more oil, you’re committing to rising prices.

For a candidate so enthralled with innovation and entrepreneurship, it’s especially astonishing to see Romney’s indifference to the renewable energy market. If any industry could close the trade deficit with China, it’s solar and wind power, where China has much less advantage than in other manufactured products because labor only accounts for 4 percent of the total cost. “Imported oil and subsidized imports from China account for nearly the entire trade gap,” according to Morici.

So why not kill two birds with one stone?

Once upon a time, the federal government would have supported a blossoming industry like renewable technologies. Back when it was the fastest-growing economy in the world, the United States had the world’s highest industrial tariffs, protecting its young factories until they were strong enough to compete with foreign firms.

No longer. Under the rules of the World Trade Organization, high tariffs are not allowed, except in retaliation to a foreign competitor’s protectionism. China, for example, is now paying such a price for subsidizing its solar companies, giving them an unfair advantage over American firms like SolarWorld.

But, in many ways, the damage is done. Since receiving subsidies from the Chinese government, several Chinese companies have overtaken their American competitors. If we want to fight back, we’ll have to do the same with loan guarantees, tax credits, and major government purchases (all of which are allowed by the WTO).

But the Romney plan features nothing of the sort.

Sadly, we’ve seen this indifference before. As Judith Stein documents in Pivotal Decade: How the United States Traded Factories for Finance in the Seventies, we have watched too many opportunities go by since the 1970s, allowing foreign governments to subsidize their manufacturers while ours closed factories.

This is another such opportunity. But instead of seizing it, Romney is content to allow it to fall into the hands of the Chinese, just as he is willing to let the environment fall into the hands of Big Oil. The future will just have to fend for itself.

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This op-ed was published in today’s South Florida Sun-Sentinel.

The World That Mitt Romney Wants to Build…for the One Percent

“A gaffe is when a politician tells the truth — some obvious truth he isn’t supposed to say.” — Michael Kinsley

Mitt Romney really stepped in it this time. His only saving grace is that no one noticed…yet.

In a recent interview with Fortune magazine, Romney indicated that, under his tax plan, “high-income people would continue to pay the same share of the tax burden that they do today.”

This quote doesn’t sound like a gaffe until you put it together with the rest of Romney’s promises. Under his tax plan, those “high-income people” would face much lower tax rates.

This seemed odd to me. The same tax burden with lower rates? Wouldn’t that mean they’d have to earn a heck of a lot more money before taxes?

As it turns out, yes. Yes, they would.

If Romney gets his way, the top 1 percent will pay an average federal tax rate of 22.5 percent, down from the 28.3 percent rate they paid in 2007. The average federal tax rate for the nation as a whole will fall from 19.9 percent to 17.4 percent. (This is assuming Romney doesn’t eliminate a bunch of deductions and credits, in which case most people’s tax rate would actually go up and the number I’m about to report would be worse. I’m giving Romney the benefit of the doubt here.)

In 2007, the top 1 percent paid 26.2 percent of the nation’s taxes. In order to maintain that share of the tax burden, as Romney suggested in his interview, the top 1 percent would have to earn 33.9 percent of the nation’s pretax income.

33.9 percent. One in three dollars of our nation’s output will go into the pockets of the richest 1 percent. To put that into context, in 2007, the top 1 percent pocketed 18.7 percent of pretax income. In 1979, they earned 8.9 percent.

Let’s take Romney at his word. Let’s try to imagine what the world will look like if the top 1 percent earns 33.9 percent of pretax income.

In order to earn that much income, CEO compensation will soar. The financial sector will probably double its share of corporate profits. Leveraged buyouts and other short-term gimmicks will become more prevalent, and many more manufacturing jobs will disappear, replaced by low-wage, no-benefit service jobsif they’re replaced at all. Wages for the average worker will decline relative to inflation. Most households will have to work more hours just to maintain their standard of living, but even that won’t be enough. Households will sink deeper in debt just to stay afloat. As a result, financial crises will become more frequent and more prolonged. Wall Street will thrive, creating ever more complex financial securities that prey on ever more naïve borrowers.

That’s another thing: Lack of education. Well, you can expect poverty to go up, and therefore students’ test scores will go down. But don’t expect the government to pick up the slack with more funding because the top 1 percent is no friend to high public education spendingor food stamps or Medicaid or pretty much anything that would help poor kids.

And in a world where they’re earning one-third of the nation’s income, the top 1 percent is going to have twice the influence they currently have in Congress. So you can expect plenty of corporate subsidies, especially for Big Oil. Forget about clean energy. We’ll import all that stuff from China. You see, the 1 percent doesn’t like to nurture new industries when they threaten the old monopolies.

Of course, not everyone in the 1 percent thinks or acts the same. They’re a diverse and brilliant and, in many ways, admirable bunch. But 1 percent of the population should not control one-third of the economy, no matter how impressive they may be.

You may think I’m an alarmist. Surely the future won’t be that bad.

Well, guess what: Everything I just described has been happening for the past three decades. And it all happened while the 1 percent doubled its share of pretax income.

Welcome to the future. How do you like it so far?

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This op-ed was published in today’s South Florida Sun-Sentinel.