By The Economic Development Curmudgeon

Joel Kotkin, The New Class Conflict (Candor, New York, Telos Press Publishing, 2014)

“The greatest existential threat facing America lies with the rise of a new class order that leaves diminished prospects for the vast majority“

The book jacket describes the New Class Conflict as a “call to arms and a unique piece of analysis about the possible evolution of our society into an increasingly quasi-feudal order“. After reading the New Class Conflict, the image of Joel Kotkin as Martin Luther posting his famous 95 Theses came to my mind. A protest … perhaps. But it is much more an expression of outrage, and to many a heresy, concerning the consequences of our “rule” by a new class ensconced in power and determined to have its way with America.

Using metaphors gleaned from the medieval world, Kotkin, the iconoclastic but extraordinarily insightful  master of Curmudgeons, describes a new ruling class which seems to dominate much of contemporary America. What has this got to do with economic development, you ask? Plenty! The New Class, according to Kotkin, follows its own definition of economic growth, and make no mistake, it ain’t your father’s definition of economic growth. Kotkin’s critique of this New Class and its devastating consequences to our society and economy delivers a powerful blow to several prominent economic development strategies.  Anyone in economic development can’t ignore this book–no more than the Pope could ignore the Protestant Reformation.

By way of background, Luther, a Catholic priest, fed up with abuses and misrule by Catholic theocratic ruling elites, nailed a list of ninety-five abuses to the door of his church. This set in motion the Protestant Reformation.  In his famous “Ninety-Five Theses on the Power and Efficacy of Indulgences” (1517) Luther had attacked the pillars of the medieval society, economy and culture by protesting key policies of the Catholic Church (nepotism, indulgences, simony and usury). The net effect of these key policies was that they supported the Catholic theocratic system which parasitically lived  off the poor and the working/middle class (Yeoman) Catholics.

Kotkin embraces this medieval system as a metaphor for a new American ruling system which has come into power over the last decade or two. For Kotkin, the overriding abuse is that the economic development policies pursued by this New Ruling Class have hollowed out the American middle/working class and our workforce. Who is the New Ruling Class? Composed of a technological elite drawn from  the huge technology companies and a “Clerisy” (academia, the media, and Hollywood celebrities), the New Ruling Class has connived with government bureaucrats and politicians to pursue a progressive ideology, he calls “Gentry Liberalism”.

Gentry Liberalism has virtually destroyed our long-standing traditional American culture and replaced it with a new destructive culture suitable only to satisfy the needs, the profits, and the world view of the technological oligarchs/Clerisy.  Because of this new culture, a slow to no-growth economy has caused a steroidal inequality in America, destroyed the American dream of social and economic mobility, and crushed the working and middle classes which are dependent on economic growth for their personal and economic success. Other than that, it’s all good!

Our plan of attack is to explain (1) who is in Kotkin’s New Ruling Class (technology oligarchs and Clerisy); (2) what do they believe (Gentry Liberalism and the Technology Religion); (3) the effects of Gentry Liberalism/Technology Religion on his “embattled Yeoman class”; (4) and the geographical implications of Gentry Liberalism/Technology Religion. Sprinked, sorry saturated, throughout each section I will detail how all this affect current economic development strategies. In the end, of course, I’ll try to wrap it up and explain why I believe Kotkin’s New Ruling Class is a very significant addition to our literature–although, I suspect, most will see the book as a heresy. That is why the article uses Martin Luther as its metaphor.

The 95 Theses: Kotkin’s New Class Order

The church door at Wittenberg

To understand the new order, one must first explain the old one. For Kotkin the old order/ruling class culture rested upon a capitalist society which valued hard work and perseverance as the qualities which led to personal achievement and economic class mobility. This now out-of-favor Protestant ethic, made America the greatest nation on earth, the beacon of freedom–and for over two centuries produced a material economy and political stability which no other nation could match. In this old society inequality existed, but it was a problem that could be corrected through honest sustained work, resilience, personal character, and a can-do attitude. Sounds corny, no doubt, to many readers–but I confess, I’m a sucker–I believed, and I still do.

For Kotkin the old values, while not without their faults,  exercised a commanding influence over our culture until a couple of decades ago. Our culture until then was aspirational and aspirations could be satisfied through hard work, character and resilience and attainable socio-economic mobility. Upward mobility which mitigated societal and economic inequality was “not only possible, but normative” (p .1). Socio-economic mobility ensured that inequality was kept in check, the economy grew, families raised their children, and we avoided a good deal of social unrest, anomie, and revolution. Not so much anymore!

We are losing those values as we have evolved into a new class order reflective of the world view of the New Ruling Class. The great majority of contemporary Americans, he feels, no longer believe they can personally be successful, and that their children will do more poorly than they. Yes, Virginia–there is no Santa Claus. As a workers, we are less aspirational, less career-focused, and more inclined to believe the future, both personal and collective, is negative.  Why? The crushing reality, Kotkin asserts, is that inequality has increased over the last decades of the twentieth century making fatalism more credible.

In ways not seen since the McCarthy era, Americans are finding themselves increasingly constrained by a rising class–what I call the progressive Clerisy–that accepts no dissent from its basic tenets. Like the First Estate (the Catholic Church) in pre-revolutionary France, the Clerisy increasingly exercises its power to constrain dissenting views, whether on politics, social attitudes or science. An alliance of upper-level bureaucrats and cultural elites, the Clerisy for all their concerns about inequality have thrived, unlike most Americans, in recent years. They also enjoy strong relations with the power structure in Washington, Silicon Valley, Hollywood, and Wall Street. As the modern Clerisy has seen its own power grow, even while the middle class shrinks, it has used its influence to enforce a prescribed set of acceptable ideas. On everything from gender and sexual preference to climate change, those who dissent from the official pieties risk punishment. (Kotkin, Daily Beast: 11/12/2014)

Wages at best have stagnated, and for many declined so today our employed overall enjoy less purchasing power than their fathers, and probably grandfathers. Jobs and occupations disappear like there was a job-eating pac-man gorging itself on our economic system. Families break up, children live in one-parent households; young people cannot settle down, but live in a peter pan world instead. The system devised by the New Ruling Class has not delivered social and economic mobility–and now many believe we were sold out by a system that favored only a chosen few.

Max Weber

For those old enough to remember, Kotkin is following in the footsteps of sociologists such as Max Weber (The Protestant Ethic and the Spirit of Capitalism) and  C. Wright Mills (The Power Elite). Weber was focused on the role of culture and the economic system and Mills studied how the various elites came together to dominate society, culture and government.

The people Kotkin calls Oligarchs are the elites who control/operate the major institutions/media/key private companies and governments. The Oligarchs make the decisions which shape the day to day affairs of our lives.  They offer excitement and hope for the future in the form of driverless cars, thin pink smart phones, and drones to deliver your medical marijuana.  

For Kotkin, the critical page-turning factors which allowed all this to happen  are technology, specifically the Internet, and the synergistic alliance of technology companies, with the media, celebrities and intellectuals who, having amassed such power and dominance over society and the economy have joined with government bureaucrats/politicians to provide the financial and policy wherewithal to make the new culture work.. Without any conscious plan or conspiracy a new culture has been created over the last decade or two. That culture is primarily responsible for our stagnation of income, loss of job opportunities, destruction of our families, and the degradation of our personal resilience and capacity to achieve.

Valley of the Oligarch and the New Clerisy

Kotkin begins by detailing the rise of a new type of private business elite, the post-industrial technology elites: such as Gates, Ellison, Zuckerberg, Brin & Page,  Bezos, Downey, and Jobs (CEOs/Owners of Microsoft, Oracle, Facebook, Google, Amazon-Washington Post, Twitter, and Apple). They are “big data”, “the social media” and “the cloud”. Together they dominate the Internet.  They are the tip of a technology industry iceberg which intersects banking/finance, business logistics/operation/sales/management, entertainment and social relationships, and political and policy information, and “get-out-the-vote electioneering”.

These multi-billionaire technology business elites are not comparable with the old industrial/service sector elites like Carnegie, Henry Ford, and the nameless CEOs who operated/dominated American industry through the 1980’s or so (the ones that C. Wright Mills wrote about). The old-style CEOs led companies composed of literally hundreds of thousands of workers and managers. They had facilities in nearly every state and in many countries. They were the head of large bureaucracies and needed resources, logistics and raw materials from thousands of other firms which were beyond their control. Mostly their workers were unionized.

Many of these corporations are still with us today; for example, Wal-Mart with 1.4 MILLION U.S. employees, General Motors over 2 Million, McDonald’s about 1.9 million. They are found in each  and every city and most rural areas of the nation. These non-technology workers are the core of America’s middle class, its middle management, franchise small business ownership, and the cream of its unionized working class. However powerful, they were within their own organizations, these old-style corporate elites were checked and constrained by organizations and people whom the elites needed in order to make their products. They could affect government, but they never came close to controlling it unlike the new oligarchs.

Not so the present-day technology Oligarchs.

Everything today, at some point, and in some way, goes through the Internet. Dating, checking accounts, advertising, reading material and literature, clash of Clans, Candy Crush and music, watching films/TV, getting a cab, getting driving directions, credit cards, paying bills, even porn, the electrical grid and national security. Through the Internet, the technology elites define your personal identity and can “track” a lot of what you do, and sell that data to someone who can sell stuff to you. Wal-Mart or General Motors never controlled these activities! But together the new technology oligarchs do! They control the Internet. Kotkin asserts “they (Oligarchs) depend on mass consumerism, [they] base their fortunes primarily on the sale of essentially ephemeral goods: media, advertising and entertainment (p. 7).

But despite their immense power, these new companies are quite small, with a relatively small, homogeneous, non-unionized workforce concentrated in a few favored urban centers (see Enrico Moretti, the New Geography of Jobs). Google has about 50,000 employees, Amazon has about 110,000 each in a relative handful of locations–principally California, Pacific Northwest and Silicon Valley.  The technology companies build their stuff overseas using low-wage Asian workers and their suppliers are silenced by contracts, patents, and non-compete clauses more crushing than any Wal-Mart contract. They control their supply chains and they distribute their final product over the Web-bypassing transportation logistics. They transport their elite workers from their home to work in self-contained, window-darkened buses.

The technology companies interact, and according to Kotkin are an “American Keiretsu”  (a combination of intertwined big corporation hierarchies) with access to their unique forms of capital (venture capital), powerful links to the media (p. 31), and a sharing of key employees. They buy each other’s companies with cash derived from their operations. They are largely insulated from our financial system. Kotkin says this new technology business elite is “the apotheosis of economic centralization”. Their reach is global. If so, they make C. Wright Mill’s power elite’s look like amateurs.

Japanese symbol for Keiretsu

Technology Oligarchs are only one element of Kotkin’s new ruling class. Most interestingly, Kotkin describes a new “ascendant group”, composed of academic elites, media and the nonprofit sector which have joined with the technology Oligarchs. He calls them “the Clerisy” (don’t ask where he got the name–just go with it). “The power of the Clerisy stems primarily not from money or control of technology, but from persuading, instructing, and regulating the rest of society.

Kotkin argues the Clerisy play an identical role to that the Catholic Church exercised in medieval society (that’s where he got the name; the linkage with religion/Catholic Church is sure to drive secular elites nuts). Anyway, embracing Samuel Taylor Coleridge’s definition of Clerisy as “bearers of the highest ideals of society, charged in part with transmitting them to the less enlightened orders“, maintaining the social order, advocating for a noblesse oblige to “mitigate the worst impacts of the new economic order” often through philanthropic giving (pp. 45-46). The Clerisy include the “creative elite” and constitute  today’s “real college of cardinals—the Academic State”. 

This has particular impact given that the vast majority of the Clerisy are increasingly uniform in their worldview, especially in political matters, … environmental issues, and their social values” (p. 8). “Educated along similar ideological lines at major universities, the Clerisy is concentrated in very ‘progressive’, albeit rich places“. Citing  Walter Russell Mead to support his contention, Kotkin asserts the Clerisy live “within a cocoon, thoroughly absorbed and internalized …  [by] a set of beliefs and behavioral norms” that follow the standard upper-middle-class gentry American set of progressive ideas” (p. 47).

Accordingly, the Clerisy “distill for the masses today’s distinctly secular ‘truths’  on a range of issues, including economics, justice, race, gender, and the environment” (p. 47). The truths to be transmitted are discerned from science/math, research methodologies and data-driven analysis (“technocratic, data-driven solutions to complex social problems“, p. 62).  The transmission of these secular truths is the responsibility of the media which on the whole have wholeheartedly embraced membership in the Clerisy. “(T)he traditional mainstream media like to proclaim their ‘objectivity’, but in practice they maintain the basic Clerical bias that follows a fairly predictable progressive line” (p. 59).

The Clerisy share with the technology elite a set of values and attitudes which unites the New Class. Kotkin labels this politically-correct cultural paradigm,  the “Endgame–the Technological Religion” (p. 63).  The interpretation of this Technological Religion is provided to non-elites by  “guru-type academics”, respected print-broadcast-blog media and network managers,  top scientists, famous “innovative entrepreneurs”, and, of course, popular celebrities.  These fine folk assume the role of “supreme clerics” in the New Class. Technological Religion, derived from science, technology and math, is “the domain of specialists, whose knowledge cannot be widely shared, and is difficult for laymen to challenge“. the Technological Religion encourages ” … particular lifestyles that are approved by Clerisy and sanctified as reflecting the values of science” (p. 63).

Technological sophistication,  advanced education, specialized skills, innovation, creativity, and entrepreneurship and all the gadgets that go with them are the only serious sources of economic and personal growth in the modern economy. But for Kotkin, the obsession on technology serves other interests as well: “Technology essentially supplants divinity [i.e. God], community, and family as the driving force of history”–technology inevitably creates “a relentlessly improved society, powered and shaped by ever more intrusive technology … dominated by those who design or control them” (p. 64).

Highclere Castle aka Downtown Abbey

The rise of the Clerisy (and the informal cooperation of its member-elements) in the last twenty years or so has made them “a huge center of power and influence”. Together, these two separate sets of elites (technology Oligarchs and the Clerisy) have coalesced around a political philosophy/ideology which Kotkin calls “Gentry Liberalism“. Gentry Liberalism in Kotkin’s mind is fairly similar to “progressive politics”–the Democratic Party’s left wing.

He (Kotkin) argues that Gentry Liberalism, despite its middle class-populist rhetoric, reflects the values and career aspirations of upper middle class and the affluent. Above all, it is environmentally conscious and it has increasingly defined the environment in terms of climate change and limited growth. This is where the overlap with economic development becomes especially noticeable.

Gentry Liberalism overlaps with economic development practice  in two related ways: (1) the definition of economic growth, hitherto the principal goal of economic development, has been changed to “sustainable” growth (to be discussed later in the below “Proletarianism) and (2) innovation/technology/information/education  and green/alternative energy sectors as the only legitimate targets of economic development initiatives.

Kotkin believes the common thread between the tech Oligarchs and the Clerisy are these shared conceptions of economic growth which rely upon  sustainability and technology and information sectors, higher education, and environmentally green and alternative energy firms. Kotkin labels the semi-exclusive focus on politically-correct sectors as the “Technology Religion”. The Technology Religion  is the root, he believes, of much of our current economic woes: slow growth, structural employment and inequality. Gentry Liberalism, with its semi-exclusive focus on the Technology Religion “hurts most those ‘tangible’ industries, such as energy, manufacturing, logistics, and housing“–the industries that “employ blue-collar workers” (pp. 12-13). In essence, the Technology Religion achieve success through its destruction of the old economy in which most middle and working class work.

Proletarianism of the Middle Class, The Embattled Yeomanry: Is Mass Serfdom the Future?

Medieval Serfs laboring to support their overlords

Why are the old, non-technological/non-green industries undesirable? The answer lies in the redefinition of economic growth made by Gentry Liberals. Tossing aside the beliefs of old-style Progressives to save capitalism by reforming it, new Gentry Liberals call for a new economy centered around protection of the environment to avoid climate change–which is best accomplished by restricting, if not reducing economic growth itself. We have move into an “era of limits” in which “protecting the environment was no longer a matter of improving technology or industrial methods to minimize physical impacts associated with growth; instead the very operation of the economy was the evil that must be restrained” (p. 136). Or as Christopher Lasch wrote in 1991. “The discovery of the Earth’s ecology will no longer sustain an indefinite expansion of productive forces deals the final blow to the belief in progress“.

This translates into the Gentry Liberal belief “that economic growth constitutes more of a threat than a benefit to society. The traditional focus on enhancing social [and economic] mobility and opportunity as core progressive values has been supplanted by a stronger emphasis on limiting impacts on the environment, even at the expense of broad social uplift” (pp. 136-137). Indeed, Kotkin cites John Holdren, President Obama’s Science Advisor who advocates “de-development” rather than growth as the nation’s economic priority” (p. 137). “For many in the Clerisy … restrain[ing] consumption and production in the name of sustainability is an overwhelming ambition” (p. 138). In essence the new definition of sustainable economic growth both reflects the world view of the technology elite, academics, the media, and adherents of the Technology Religion, but it also provides policy focus and profits to to the technology firms and their supporters.

Gentry Liberal growth contrasts with Kotkin’s more traditional definition of economic growth. Kotkin asserts that traditional economic growth focused on creating many  jobs that allowed working/middle class to achieve sufficient wealth over time so that they could achieve social and economic mobility. Home ownership was key to that socio-economic mobility. Gentry Liberal growth, instead, focuses on industries that usually create fewer jobs, but are “sustainable” and do not hurt the environment . That is why the sectors associated with Technology Religion have become the near-exclusive focus of Gentry Liberals.

But Gentry Liberalism’s redefinition of economic growth has devastated the Yeoman class, composed of the poor, minorities, the working class, private-sector unionized workers, franchise owners who are employees of the non-technology old-style industries. These former sectors, once the pillars, the foundation of the American economy are now in “secular retreat”–and their management and workers are being “proletarianized” [pushed into the working class]. The Yeomanry thus became the vortex of wage and income stagnation, and job insecurity.

Crushed by the Financial Crisis, their capital frozen in place with illiquid homes, the Yeoman-now proletariat–are increasingly unwilling or unable to start new companies. New business formation is further penalized by environmental, health care, and living wage (minimum wage) legislation which are also key tenets of Gentry Liberalism. Instead, the Yeomen are being shunted off to job training and higher education for which they are, at best, ill-prepared, and for the most part uncomfortable, so they become qualified for “the correct” jobs and careers.

The chronic inability of the Yeoman class to qualify and effectively compete for Technology Religion employment has resulted in structural unemployment, wage stagnation, inequality, and slow economic growth. From an economic developer perspective, this is a hurricane-force headwind against which our innovation, entrepreneurial, business formation strategies must struggle. To the extent, economic developers succeed in these strategies, they hollow out the economy, and crush the working/middle class still more because they result in a few, elite jobs for the relatively highly educated. Kotkin, however, advocates for economic development that “… allows for the possibility of greater uplift for the middle and working class without the imposition of politically infeasible … and ineffective widespread redistribution policies. … It is not enough merely to place the blame on ‘the top one percent’ … Instead, we must look for ways to shift the benefits of growth away from the current [financial and technological hegemons] and toward those involved in broad array of productive enterprise” (p. 139).

In past decades the centerpiece of Yeoman financial stability, home ownership, provided the avenue for personal/family and economic mobility. But now home ownership is under attack and the Yeoman with a housing asset if often underwater or unable to sell. Indeed home ownership is attacked by Gentry Liberalism’s on a number of other fronts than financial. Gentry Liberalism’s unambiguous preference for Big City city living and for density has fostered an incredible increase in the price of housing–making it unaffordable to most. For those older Yeomen who own, steroidal housing values and paper profits combine with low millennial–first time buyer demand to drain the liquidity from the Yeoman’s property investment, thus freezing them in place in their retirement and inhibiting a natural tendency to downsize.

Kotkin shudders at this. He questions the Gentry Liberal paradigm and believes it is chiefly responsible for our contemporary cultural and economic woes. In particular, he focuses on what others have described as “the hollowing out of our economy” and the Gentry Liberalism war with traditional American social and economic mobility- through new business formation and home ownership. Mobility and economic security, achieved in the past by home ownership, is now a practical impossibility. These are the factors fueling our growing inequality. He concludes with pessimism on “the prospect that more Americans should become renters, largely in apartments, represents nothing less than an attempt to reverse the class gains of the postwar (World War II) era and return us to a more stratified society” (p. 109).

The  home owning disaster is just the tip of the Yeoman-sinking iceberg. Sociological and demographic factors  have destroyed the institutions of middle, and especially working class life–in a particular aside from a lack of social economic mobility, the Yeoman class has seen the bastion of its way of life, the family, burnt to ashes.  The old culture relied on family; now the new culture’s stresses government subsidy and public sources of support. Yeoman families have broken under these pressures and fractured into single person households with high birthrates (illegitimacy) and low incomes. Marriage is less desirable or no longer practicable in the New Culture. 

The substitution of a government check for the family, important to Gentry Liberals, has not gone unquestioned.  Kotkin approvingly quotes Robert Samuelson who has noted that “the safety net has rescued millions from the worst abject poverty, but has proved ‘a failure as an engine of self-improvement‘” (p. 85). In other words, For Kotkin, Gentry Liberal government assistance, is a mixed blessing indeed–“… large swaths of what might have once been parts of the Yeoman class, both Anglo and minorities, may become more like the traditional poor, whether in the inner city or outside, living paycheck to paycheck. Their descendants may enjoy far fewer opportunities for property ownership, or any form of economic independence …. The devolution of society under a slow-growth regime–or growth that benefits essentially the most well-placed and affluent citizens suggests a further intensification of class divides. Unless broadly based economic growth is restored, large parts of the emergent middle class … are in danger of turning into something of a permanent class of low-wage proletarians, with some falling into the lumpen proletariat or underclass” (p. 85).

The Geography of Inequality

Luther confronting the Diet of Worms

All that remains is now to present one last theme of pure “Kotkin”: his long-standing skepticism of the centrality of the central city in economic development and planning. A defender of suburbs, he consistently sees value in the suburban lifestyle, suburban home ownership as a popular, and effective means to achieve the American Dream.

In his chapter “Geography of Inequality” he strikes hard against “attempts by the Clerisy and urban developers to concentrate people and companies within the centers of core cities, an idea (he suggests which) has gained momentum in the 1970’s as part of the environmental movement’s anti-sprawl campaigns” (p. 87). Indeed, he argues “The ‘back to the city’ movement increasingly relies on a new model of urbanism that is less about creating opportunity for the aspirational class and more about what former New York Mayor Michael Bloomberg calls ‘a luxury product’, a place that focuses on the very wealthy” (p. 87). The city as a luxury product, he believes, means that economic development has become refined to facilitate growth of the “uber-rich” and plutocrats and to redefine urban economic development into projects that satisfy the desires and needs and draw income from the affluent so that they reside and spend their monies in the central city–thus supporting some of the working class jobs.

Agreeing with Aaron Ehrenhalt that this luxury city is a “Great Inversion”, “a return to the nineteenth-century urbanism where the rich cluster in the center and the hoi polloi (working classes) serve them from the dull, dreary periphery” (p. 88). He further cites a 2010 and 2014, Brookings Reports and a more recent (2014) report by University of Washington demographer Richard Morrill, to support Kotkin’s notion that “the highest levels of inequality tend to be in larger metropolitan areas such as New York, Los Angeles, Houston and Miami” (he also includes Washington D.C., San Francisco, Chicago, Oakland, and Boston) (p. 90).

Much of the attack on suburbs and the belief that “heaven on earth” lies in living in the central city flows from the new ruling class and Gentry Liberalism which stress central city, density and sustainable land use planning: “In what resembles a kind of religious certainty, much of the Clerisy, particularly among architects and planners, has divined a direct relationship between climate change and U.S. housing patterns. ‘What is causing global warming is the lifestyle of the American middle class” says new urbanist architect Andres Duany… Densification, claims influential architect Peter Calthrope, is no less than ‘a climate change antibiotic” (p. 100). Further, New Culture adherents (Brookings, Chris Leinberger in this instance) hail the millennial predisposition for dense, renter, central city locations and their rejection of “large-lot homes on the leafy cul-de-sacs that their parents once occupied. Exurbia, he predicts, will largely be populated by poor families crowding into dilapidated, bargain-priced former McMansions in the new ‘suburban wastelands’ …. Suburbs, not inner cities, will be the new epicenter of inequality” (p. 101)

Kotkin clearly is not on board with the current paradigmatic focus on big city metropolitan centers or the “current fashion of focusing on hipsters and the affluent as a ‘biscotti and circuses’ approach (quoting University of British Columbia’s Jamie Peck, p. 92). Citing Richard Florida (who almost certainly will not be on board with this) , Kotkin asserts the benefits of pursuing the ‘creative classes’ as an economic development strategy means that any benefits or successes that follow “flow disproportionately to more highly-skilled knowledge professional and creative workers” (p. 92)–the Technology Religion.

Instead, Kotkin advocates that economic developers and urban communities “would do better to focus on affordability, improving the existing housing stock, and building from their remaining industrial resources … rather than trying to compete with cities like San Francisco” (p. 93). “In the coming decades, the bulk of the nation’s economic and demographic growth likely will continue to occur where the cost of housing is more reasonable and regulatory restrictions and taxes fall less heavily on the working-and-middle class-economy. While much the media has been infatuated with Wall Street and Google, the geography of opportunity over the past decade has largely favored often derided locations like Texas, the South, and parts of the Great Plains” (p. 97). He offers as proof the undisputed, but never acknowledged fact, that the Silicon Valley itself, the unquestioned center of technology and innovation, is suburban Santa Clara where two-thirds of the residents live in single-family housing.

Wrapping Up

Pope Leo X: the personification of Luther’s Clerisy

I am a bit unsure about whether the medieval metaphor works or not. I do believe the metaphor is relevant and surprisingly pretty apt; I think it is especially relevant to the media and academia–the Clerisy. I fear, however, too few possess the historical background to see it’s relevance. Reference to the Middle Ages  will elicit little response and certainly no emotion in today’s world.

Putting the metaphor aside, there is great value and insight contained in Kotkin’s work. Certainly if one is a card-carrying member of the Clerisy, the notion that you practice a secular religion and potentially advance the usual religious baggage of bigotry and biases might engender some defensiveness–to the point of avoidance. But that would be a serious mistake.

My hope and belief is that much of “the Clerisy” do not realize that it conducts its affairs within a (Gentry Liberal) monolithic and closed culture. Also the alliance of media and academia has created the notion that academics can become celebrity-like stars through the media. The resulting, often partisan battle of highly-paid illustrious gurus  has given rise in a publish or perish atmosphere to Piketty-style ideological and manipulated policy “discussion” which embarrass and discredit its participants and leads to distorted, irrelevant, but politically-correct policy proposals. The possibility that this new culture and academic style is being imposed on a new generation of carefully chosen-selected graduate students is truly frightening. That economic developers blindly follow these  self-serving prescriptions is even more terrifying.

Gentry Liberalism has both hollowed out our economy (destroyed working/middle class jobs and careers) and offered in its place a select few”elite” jobs/careers which are restricted to gazelle-like technology-related firms and start ups. That our policy, tools and strategies are increasingly restricted to only those which (1) correspond to the world view of the Clerisy; (2) focus attention, capital and profits on a technology elite; (3) increasingly channel investment into the Internet/Software/Hardware or Life Sciences industry sectors, sectors which create relatively few jobs for a talented/educated few;  and  (4) destroy, depreciate, and make insecure the vast numbers of jobs/careers other non-gazelle industries and sectors. Moreover, the redefinition of growth into sustainable growth means that many sectors and industries, many jobs and careers suitable to large numbers of working and middle class, are being discouraged, depreciated, and when possible, destroyed by the gods of productivity, efficiency and innovation.

By not reading “the New Class Conflict” one would not appreciate what I think is the book’s most important insight: that our contemporary economy is broken because our culture and governance is broken. What do I mean by this? After all, like the Trinity, how can one not believe in the primacy of economics? We are agreed that the economy is broken. Having said that, it does not necessarily follow that we need an economic solution to fix it. The economic engine can grind to a stop because the dipstick behind the wheel forgot to fill the gas tank. Other disciplines such as sociology, history, philosophy and politics affect the economic system. Together these disciplines describe our society and culture. Society and culture are real and the economy affects and is affected by them. That is why Kotkin’s perspective is both important and heresy.  Kotkin believes the engine is broken because of the culture/society imposed by the new ruling class has taken away the past incentive system (the fuel) that motivated the working and middle classes to diligently work/produce so they may attain their personal and professional goals. It is the culture and society that need fixing–not the economy.

The economy is broken because our class structure is imploding, our value system is no longer congruent with the world of work, and the key institutions of our society, for instance family and education, are either collapsing or tilted in favor of a new culture which favors only “correct” forms of economic growth in which only a relatively few elite can participate. It makes matters only worse if the “correct” economic growth destroys whatever opportunities are afforded by the “incorrect” forms of economic growth–leaving far too many unable to effectively participate in the economy or to achieve personal goals and a potential meaningful life. On top of that, if Kotkin is correct, the new ruling class has shoved its foot into the door of government–and at the very least is a player in our current grid-locked political system.

Minimum wage or a fiscal stimulus, more entrepreneurs or more venture capital, not even a balanced budget or tax reform can solve what ails us. We need to restore vigor, vitality, and hope to the working and middle class by creating and making available jobs and careers that are appropriate to entry-level workers, to workers who do not want, and probably cannot achieve a science, math, masters or doctorate. We all can’t graduate from college–nor should we. We all cannot be entrepreneurs–and most of us shouldn’t be. Most of us are journeymen/women; most numerically want to be journeymen/women. Gentry Liberalism offers little to journeymen/women and sadly, it seems, most popular economic development strategies currently pursued do not either. We need to change economic development strategies so they help the journeyman/women, not Gentry-Liberals educated, creative, innovative, entrepreneurial elites.

We need to shift attention toward helping old-style industries and sectors, restoring social and economic mobility through home ownership–the best investment for the journeyman/woman, and we need to revalue their lives, jobs and careers and stop telling them they are dead-end pits.  Not all of us can, or want to become an adherent of technology, innovation and entrepreneurship. Not all of us can acquire the necessary education to enter into the technological elite. As an economic developer, many of our citizens and residents really cannot benefit from our current practice of economic development–an economic development focused exclusively on education, gazelles, innovation, entrepreneurship, and technology in its various forms. It is too narrow and too self-serving to offer hope to our middle and working classes.

Following the strategies advocated by Gentry Liberalism we are hollowing out our economy and not offering reasonable alternative paths to prosperity and individual achievement and meaning. Instead we make serfs of those who fall by the wayside.

 That perspective is a true-Martin Luther-like heresy.

Oh yeah, … Happy Holidays!!

Comments

I have to say that this review does not encourage me to want to read this book.

Why? Because this review gives me the distinct impression that the book allows the author to indulge his biases, without much effort to ground the analysis in empirical reality.If I’m mostly going to read a highly biased perspective, I prefer to just read a short article rather than a lengthy book.

For example, with any discussion of climate change, one must first and foremost ask: is there a scientific consensus that it is true? Is there good economic evidence that some policies to restrict climate change would be both good economics and good science? And I think the answer there would be: Yes, there is a scientific consensus on this. And there is good economic evidence that dealing with climate change would have benefits greater than costs. See, for example, Yale economist William Nordhaus’s recent book, “The Climate Casino”. Or look at the work of economist Robert Stavins at the Kennedy School.

This economic work, by the way, concludes that climate change can be dealt with at a very modest penalty to economic growth. Essentially climate change can be dealt with at a cost of what amounts to 1 or 2 years of economic growth, so we would reach in 2052 the level of world per capita income that otherwise we would reach in 2050 or 2051.

But I suppose this is to be dismissed as the work of “Gentry Liberalism”. But before dismissing something, one must ask whether it is true — that is the important issue, not the labeling on ideological grounds. As Senator Moynihan once said: we are all entitled to our own opinions, but not our own facts.

I also have to ask: as of right now, what on earth is anyone in the U.S. really doing in a serious way to constrain economic growth, including the growth of traditional industries such as manufacturing? We have no carbon tax, no cap and trade system. There are some environmental regulations, but they are hardly impossibly onerous. All levels of government provide extensive economic development subsidies to manufacturing.

The one exception might be restrictions on housing development, which characterizes only a part of the U.S., as economist Ed Glaeser and others have pointed out. The zoning restrictions on housing that characterize parts of the West Coast and New England do not characterize many smaller cities in the rest of the U.S. Perhaps Mr. Kotkin’s experience with California has led him to over-generalize to the U.S. as a whole.

I also think that the notion that the left wing of the Democratic party controls our political system seems very strange. President Obama is hardly left-wing. The Democrats don’t control the Congress or the Supreme Court. The Republicans control most state legislatures and Governorships. Again, California is an exception, which might in part explain what appears, from this review, to be Mr. Kotkin’s perspective.

I suspect the problems of our traditional industries have more to do with the growth of a global economy than to any government policies pursued by “Gentry Liberalism” to restrict traditional economic growth. But judging from this review, it appears that the book finds it more attractive to bash the imagined machinations of some imaginary elite than to advocate an anti-globalization agenda.

In sum:

I don’t think there is any significant empirical evidence that some “gentry liberalism” controls U.S. politics, and has played any major role in restricting traditional U.S. industries’ growth. And it doesn’t sound like the book spends much time presenting any such empirical evidence that would make this at all a plausible theory.

Comment by Tim Bartik on December 3, 2014 at 2:01 pm

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