The New Economy and the Trump Economic Rump

A billboard in West Des Moines, Iowa, in January 2016.

Time and time over the years I have argued that rural areas that reject modernity, cling to right wing Christianity and remain outwardly racist are cutting their own throats economically and thriving businesses increasingly locate in urban and/ suburban areas that offer better educated work forces and are more hostile to racial bigotry and religious extremism.  Here in Virginia, both the McAuliffe and now the Northam gubernatorial administrations have pushed a "welcoming to all" effort to attract new businesses to the state.  Sadly, it's a hard sell to parts of Virginia like Southwest Virginia or the area along the southern border from Emporia westward where racism and right wing religion predominate.   Yet, as a column in the New York Times lays out, right wing Republican areas are slowly dying - in no small part because of their hostility to diversity and political liberalism.  The recent announcement by Amazon of its new headquarters locations and the results of the 2018 midterm elections underscore the argument of the column.  Here are column highlights:   

A little over a year ago, Amazon invited cities and states to offer bids for a proposed second headquarters. This set off a mad scramble over who would gain the dubious privilege of paying large subsidies in return for worsened traffic congestion and higher housing prices. (Answer: New York and greater D.C.)

But not everyone was in the running. From the beginning, Amazon specified that it would put the new facility only in a Democratic congressional district.

O.K., that’s not literally what Amazon said. It only limited the competition to “metropolitan areas with more than one million people” and “urban or suburban locations with the potential to attract and retain strong technical talent.” But in the next Congress the great majority of locations meeting those criteria will, in fact, be represented by Democrats.

Over the past generation, America’s regions have experienced a profound economic divergence. Rich metropolitan areas have gotten even richer, attracting ever more of the nation’s fastest growing industries. Meanwhile, small towns and rural areas have been bypassed, forming a sort of economic rump left behind by the knowledge economy.

Amazon’s headquarters criteria perfectly illustrate the forces behind that divergence. Businesses in the new economy want access to large pools of highly educated workers, which can be found only in big, rich metropolitan areas. And the location decisions of companies like Amazon draw even more high-skill workers to those areas.

In other words, there’s a cumulative, self-reinforcing process at work that is, in effect, dividing America into two economies. And this economic division is reflected in political division.

In 2016, of course, the parts of America that are being left behind voted heavily for Donald Trump. . . . . But this was, it turns out, fighting the last war. Trumpism turned America’s lagging regions solid red, but the backlash against Trumpism has turned its growing regions solid blue.

Why have lagging regions turned right while successful regions turned left? It doesn’t seem to be about economic self-interest. True, Trump promised to bring back traditional jobs in manufacturing and coal mining — but that promise was never credible. And the orthodox Republican policy agenda of cutting taxes and shrinking social programs, which is basically what Trump is following in practice, actually hurts lagging regions, which depend a lot on things like food stamps and disability payments, much more than it hurts successful areas.

As documented in “Identity Crisis,” an important new book analyzing the 2016 election, what distinguished Trump voters wasn’t financial hardship but “attitudes related to race and ethnicity.”

Yet these attitudes aren’t divorced from economic change. Even if they’re personally doing well, many voters in lagging regions have a sense of grievance, a feeling that they’re being disrespected by the glittering elites of superstar cities; this sense of grievance all too easily turns into racial antagonism. Conversely, however, the transformation of the G.O.P. into a white nationalist party alienates voters — even white voters — in those big, successful metropolitan areas. So the regional economic divide becomes a political chasm.

We can and should do a lot to improve the lives of Americans in lagging regions. . . . . . But restoring these regions’ dynamism is much harder, because it means swimming against a powerful economic tide.

And the sense of being left behind can make people angry even if their material needs are taken care of. That is what we see, for example, in the former East Germany . . .

So the bitter division we see in America — the ugliness infecting our politics — may have deep economic roots, and there may be no practical way to make it go away.

But the ugliness doesn’t have to win. Most rural white voters still support Trumpism, but they aren’t a majority, and in the midterms a significant number of those voters also broke with the white nationalist agenda. . . . the better angels of our nature can still prevail.

Richard Florida who coined the term the "creative class" also noted that the more accepting a city of region was of gays, the stronger its technology based economy (Florida called this the "gay index").  If one looks at the economically lagging red states - or regions of Virginia - the common thread is that they are anti-gay and racist.   These aren't traits forced on them by outsiders.  Rather, it is the inbred bigotry and right wing religious extremism of the local populace which is the root of the problem.  True, Republicans play to these prejudices to win votes, but in doing so, they and those who vote for them are merely making the downward economic spiral accelerate.  Blacks and Hispanic immigrants are not the source of these regions' economic problems.  If they want to see the real cause, the locals need only look in the mirror.

Virginia GOP Wrong on Tax Cuts and Attracting Entrepreneurs

Republicans in the Virginia General Assembly constantly blather that cutting taxes is the way to attract new businesses and entrepreneurs to Virginia.  Meanwhile, they seek to slash education spending, allow the Commonwealths infrastructure to crumble and maintain a societal atmosphere that enshrines Christofascist religious values into the civil laws, making Virginia look like it is governed by the Christian Taliban.  Based on a new study, the Virginia GOP has things ass backwards to put it mildly.  Quality of life, good schools and other factors are much more important in attracting entrepreneurs than low taxes.  But then again, today's Virginia GOP has most things ass backwards.  Here are highlights of a review of the study findings:

Cutting state taxes to attract entrepreneurs is likely futile at best and self-defeating at worst, a new survey of founders of some of the country’s fastest-growing companies suggests.  The study, which is consistent with other research, should be required reading for state policymakers — especially those in [Virginia,] Michigan, Missouri, Nebraska, Ohio, Oklahoma, South Carolina, and Wisconsin who are pushing for large income tax cuts.

The 150 executives surveyed by Endeavor Insight, a research firm that examines how entrepreneurs contribute to job creation and long-term economic growth, said a skilled workforce and high quality of life were the main reasons why they founded their companies where they did; taxes weren’t a significant factor.  This suggests that states that cut taxes and then address the revenue loss by letting their schools, parks, roads, and public safety deteriorate will become less attractive to the kinds of people who found high-growth companies.

• “31% of founders cited access to talent as a factor in their decision on where to launch their company. . . .  A number of founders also highlighted the link between the ability to attract talented employees and a city’s quality of life.”
• “Only 5% of entrepreneurs cited low tax rates as a factor in deciding where to launch their company” and only 2% mentioned “business-friendly regulations” and other government policies.

Kansas, North Carolina, and Ohio have cut personal income taxes significantly in the last two years, and in each case the governor argued that it would give a big boost to creating or attracting new firms.  This new study provides more compelling evidence that that’s the wrong approach.  Let’s hope other states don’t start down the same dead-end path.

Richard Florida who coined the term the "creative class" has further observations in The Atlantic:

But what really attracts innovative entrepreneurs who create these economy-boosting companies?

The answers: talented workers, and the quality of life that the educated and ambitious have come to expect – not the low-tax, favorable-regulation approach that many state and local governments tout.

Endeavor identified two fundamental patterns.

For one, size matters. These top business-creators gravitated towards cities with at least a million residents in the metro area. This offered the scale and diverse array of offerings needed to attract talent.   

A city also needs to be able to appeal to the young and the restless. The entrepreneurs surveyed were a highly mobile bunch when they first started out. 


The top rated factor by far was access to talent. Nearly a third of those surveyed mentioned it as a key factor in their decisions for where to live and work (many specifically prized access to technically trained workers). Entrepreneurs explained that they proactively sought out the places that educated and ambitious workers want to be.

The study found that two other key factors in the location choices of entrepreneurs are major transportation networks (like airports and highways that can connect them to other cities) and proximity to customers and suppliers. This echoes MIT’s Eric von Hippel's claim that end-users and customers are key innovators.

Perhaps even more interesting from the perspective of urban policy are the location factors that did not make the cut – those that high-growth entrepreneurs found to be of little consequence in their location decisions. At the very bottom of the list were taxes and business-friendly policies, which are, unfortunately, exactly the sorts of things so many states and cities continue to promote as silver bullets. Just 5 percent of the respondents mentioned low taxes as being important, and a measly 2 percent named other business-friendly policies as a factor in their location decisions.

Here in Hampton Roads we meet the 1 million plus population factor, but thanks to years of neglect and GOP refusal to raise taxes our transportation system is inadequate.  Adding to the problem is the poor air service available at the regions two airports.  If Virginia wants areas like Hampton Roads to prosper, they need to (i) drastically improve the transportation infrastructure and quality of air travel service and (ii) cease trying to drag Virginia back into the 1950's.  For now, Washington, DC, and Northern Virginia alone meet this requirements and, as a result, they are booming while areas like Southwest Virginia atrophy and become increasingly unattractive to anyone other than religious fanactics and rednecks.

Economic Winners and Losers Among America's Cities - The Cost of Intolerance

Click image to enlarge

Since the economic crash of 2008, economic winners and losers have been shaking out among America's cities.  Not surprisingly, cities in more liberal states and/or which are liberal islands in their own states are leading the pack among the winners while conservative (perhaps anti-knowledge is a better term) cities with low wages are filling the ranks of the losers as evidenced by the map above.  In Virginia, outside of the Northern Virginia suburbs of Washington, D.C., and Charlottesville - perhaps the most liberal city in Virginia outside the D.C. area - the loser category predominates.  So what is a city to do to prosper?  As a lengthy piece in The Atlantic suggests, welcoming diversity, innovation and knowledge are perhaps the key.  Sadly, outside of less than a dozen or so cities in Republican dominated states, diversity, innovation and modern knowledge are not welcome.  Low taxes are not the panacea that the GOP claims to be the cure for economic backwardness.  Here are highlights from the article authored by Richard Florida:

Back in the spring of 2009, I wrote in these pages that the financial crisis would “permanently and profoundly alter the country’s economic landscape.” Some cities and regions “will eventually spring back stronger than before,” I predicted. “Others may never come back at all.”

It might have sounded apocalyptic, but tectonic shifts of this kind are not unprecedented. They are the geographic counterpart to what the economist Joseph Schumpeter dubbed “creative destruction”—the great gales of change that level some companies and industries, and give rise to others. As powerful as they might seem in the moment, it is only when we look back through the lens of history that the full extent of economic and geographic changes becomes clear.

Five years after the crash, with the national economy just beginning to return to something resembling normalcy, we can begin to trace the outlines of America’s emerging economic map—and take inventory of the places that are thriving, those that are declining, and those that are trying, in novel ways, to come back.

A variety of measures can be used to divine the health and prospects of these different places—population growth, job growth, housing prices, and the unemployment rate are among the more common. Each of these measures has its uses, but some of them can conceal as much as they reveal. Population growth, for instance, tells you nothing about the skills and education of the people arriving; job growth says nothing about whether the new jobs are good or bad.

Throughout this article, I will draw on some of these measures. But I’ll lean most heavily on three measures less commonly seen in the popular press, but perhaps more telling: the composition of job growth (high-wage, mid-wage, or low-wage); productivity growth (which is the basis for improvements in the standard of living); and venture-capital funding (a proxy for the sort of entrepreneurial innovation that can power future growth).

The economic landscape is being reshaped around two kinds of hubs—centers of knowledge and ideas, and clusters of energy production. Overwhelmingly, these are the places driving the economic recovery. Outside them, the economy remains troubled and weak.

New York City was widely expected to be devastated by the financial crisis. Wall Street’s collapse, the conventional wisdom went, would bring the whole city down with it. In 2009, I predicted that New York would in fact prove to be one of the country’s most resilient places. Even so, the speed and strength of its rebound has surprised me—its explosive growth as a start-up center especially so.

New York’s rise as a tech center signals a major shift in the locus of venture-capital-fueled innovation. For a long time, high-tech start-ups have clustered in suburban office parks along freeways, places that are sometimes called “nerdistans.” But since the crisis, start-ups have taken an urban turn. San Francisco, which has fared extremely well since the crash, is a striking case in point. Over the past several years, Twitter has established its headquarters downtown, Pinterest has moved from Silicon Valley to San Francisco, and even Yahoo has created a new facility in the old San Francisco Chronicle building in the South of Market neighborhood.

America’s “knowledge metros,” large and small, make up perhaps the biggest group of winners, overall, since the crash. Data provided by Economic Modeling Specialists International show that a handful of knowledge metros have an overwhelming lead in generating the high-wage jobs (those paying more than $21 an hour) that America needs. Nearly two-thirds of San Jose’s new jobs have been high-wage, as have nearly half of the new jobs in nearby San Francisco. San Jose also leads the nation in productivity growth . . . .  Portland, Oregon, posted the second-highest level of productivity growth among large metros, nearly 7 percent, belying its Portlandia caricature as a place for slackers. Austin’s tech-fueled economy combined the fastest job growth of all large metros (10.5 percent between 2009 and 2013) with well-above-average growth in productivity and in high-wage jobs.

Knowledge, it turns out, is what allows metros to generate good high-wage jobs. Across America’s metro regions, I have found that high-wage jobs are closely related to several key markers of regional knowledge economies: the share of adults who are college grads; the share of the workforce in professional, technical, and creative jobs; the levels of innovation and venture-capital investment.

The Sun Belt features two kinds of regional economies: declining real-estate economies and booming energy economies. Energy stands alongside knowledge as the second pillar of America’s recovery.

Houston’s high-wage-job growth stems from two main sources—the fossil-fuel industry and information technology. The city is home to more than a third of the country’s petroleum engineers and by far the highest concentration of geoscientists. From 2009 to 2012, Houston added 30,000 jobs in a mix of industries related to oil and gas extraction and scientific and technical consulting services. These pay an average salary of $124,000. Houston has also seen rapid growth in software-development jobs (16 percent) and information-technology jobs (12 percent), along with consistent growth in its medicine-and-health-care sector.

Back in 2009, I predicted that the crisis would exact its steepest toll in “the interior of the country—in older, manufacturing regions whose heydays are long past,” and “in newer, shallow-rooted Sun Belt communities whose recent booms have been fueled in part by real-estate speculation, overdevelopment, and fictitious housing wealth.”

Sadly, the data bear me out. Just before the crisis, greater Las Vegas was one of the nation’s leaders in population growth; today it has the highest concentration of fast-food jobs in the nation. Palm Coast, Florida, the metro with the fastest population growth since 2001, has seen the nation’s worst rate of growth in economic output per person since that same year (negative 3.2 percent through 2011).

Population growth alone has never proved a sufficient foundation for future prosperity—not when many of the new arrivals are retirees or modestly educated people looking to get in on a real-estate boom. But since the crash, even that imperfect engine has failed many Sun Belt cities.

The metros where low-wage jobs make up the largest share of job growth since 2009 are in the Rust Belt and the Sun Belt: St. Louis (where 90 percent of new jobs are low-wage); California’s so-called Inland Empire of Riverside–San Bernardino (where nearly three-quarters of new jobs are low-wage) . . .

The main threats to America’s growth model don’t come from other countries, but from domestic contradictions. The more talented people cluster, the greater the economic returns they produce.

The cultural, political, and economic gulfs that separate advantaged and disadvantaged people and places go well beyond the wage gap. Knowledge workers benefit from living in neighborhoods with better schools, better amenities, and lower crime rates, while less advantaged groups are sometimes stuck in place, with limited prospects for climbing even one rung up the economic ladder, and insufficient resources to move out of stagnant areas. Americans have seen a dramatic decline in economic mobility, overall. But a poor person from a knowledge center like San Jose or San Francisco has twice the chance of becoming wealthy as a poor person from some Rust Belt or Sun Belt centers like Cleveland or Atlanta.

On November 5, 2013, here in Virginia voters will select a new Governor, Lt. Governor and Attorney General as well as a new House of Delegates.  Sadly, the Republican ticket is a case study on those who reject knowledge, reject diversity, and reject innovative thinking as they seek to drag Virginia and society backwards in time.  For future economic reasons alone, they need to be defeated.  Meanwhile, localities need to stop trying to do things the way they have always been done and make themselves more welcoming for diverse and innovative individuals.  Hampton Roads has a long, long way to go on this front. 

Pro-Gay States Luring Discriminated Couples to Relocate

Numerous posts on this blog have tracked research that underscores that a thriving gay community is one of the hallmarks of cities and localities that attract the so-called creative class.  Similar research has led to the formulation of a "gay index" which shows that a large population of gays correlates with high tech businesses.  States like Virginia and North Carolina go out of their way to make life intolerable for gays and have written anti-gay discrimination into their laws.  Now, as Bloomberg reports, gay friendly states are seeking to lure gays to relocate from their hostile home states and to bring their talents and assets to those gay friendly states.  Here are articles from Bloomberg:

Hans Bernhard and Mitch Null say they may leave North Carolina -- taking their daughter, their jobs as a veterinarian and an information technology business operations manager at Cisco Systems Inc. (CSCO) and the tax revenue from their properties.

Following the U.S. Supreme Court’s decision to overturn a key part of the Defense of Marriage Act, the couple is considering moving to Maryland, where they could have a recognized marriage and guaranteed access to the related federal benefits. Bernhard could also become a lawful father to the couple’s 1-year-old daughter, Eva, since North Carolina law prevents residents from adopting a child if they aren’t married to the legal parent.

Thirteen states and the District of Columbia, making up 34 percent of gross domestic product, have legalized same-sex marriage, including Minnesota and Rhode Island, where laws took effect Aug. 1.

Bernhard and Null’s dilemma illustrates the economic benefits and consequences of a state’s same-sex marriage policy. Following the Supreme Court’s June 26 ruling, gay rights proponents and some economic development officials say states with gay-friendly laws can leverage them for financial gain, while those with prohibitive policies will miss out. 

The Supreme Court ruling will force some states to examine whether it’s worth losing out on talent and businesses that are attracted to areas that allow same-sex marriages, said Richard Florida, a professor at the University of Toronto Rotman School of Management. Acceptance of gay communities signals cultural openness and attracts highly educated people and innovators, Florida wrote in his 2002 book “The Rise of the Creative Class.” 

Welcoming all people is necessary for states that want to “flourish economically and be an engine for innovation,” Chris Hughes, co-founder of Facebook Inc. and a native of Hickory, North Carolina, said in an e-mail. Hughes, now the editor-in-chief and publisher of the New Republic magazine, wrote an open letter to the North Carolina General Assembly in 2011 opposing the constitutional amendment banning same-sex marriage. 

“Entrepreneurs are very careful when deciding where to start a company,” said Hughes, who now lives in Shokan, New York, with his husband Sean Eldridge. “Building a business in a state that denies basic rights to LGBT couples is difficult to justify to potential employees -- straight or gay.”

It all is actually common sense.  Not that common sense means much to lunatics like Cuccinelli and the hate merchants at The Family Foundation.

Hampton Mayor Ward Signs Mayors for the Freedom to Marry Pledge

Mayor Molly Ward

Studies have shown that an openness to diversity and a welcoming atmosphere for LGBT citizens enhances a city or state's economic vibrancy and is in the final analysis good for business and economic well being.  Indeed, such an atmosphere makes a city more attractive to the so-called creative class and there is a strong correlation between how a city or region scores on Richard Florida's "gay index" and how it does with attracting high tech companies.  Sadly, this reality is largely lost on most political leaders in Virginia, especially those in the Republican Party who grovel to the reactionary and theocratic dictates of The Family Foundation based in Richmond.  But things are changing - even in Virginia.  This week Hampton Mayor Molly Ward (pictured) joined mayors across America who have signed the freedom to marry pledge originated by the organization Freedom to Marry.  In doing so, she joins Alexandria, Virginia mayor, William Euille, and Charlottesville mayor, Satyendra Singh Huja, the only other Virginia mayors who to my knowledge have likewise signed the pledge.  Here are key excerpts from the Mayors for Freedom to Marry Pledge:

As mayors of great American cities, we proudly stand together in support of the freedom of same-sex couples to marry. We personally know many gay and lesbian people living in our cities who are in committed, loving relationships, who are active participants in the civic life of our communities, and who deserve to be able to marry the person with whom they share their life.
  
We are proud that at its 2009 annual meeting, the U.S. Conference of Mayors unanimously approved a resolution stating that: “The U.S. Conference of Mayors supports marriage equality for same-sex couples, and the recognition and extension of full equal rights to such unions, including family and medical leave, tax equity, and insurance and retirement benefits, and opposes the enshrinement of discrimination in the federal or state constitutions.”

Our cities derive great strength from their diversity, and gay and lesbian families are a crucial part. Studies have shown what we know through our hands-on experience—that cities that celebrate and cultivate diversity are the places where creativity and ideas thrive. They are the places where today’s entrepreneurs are most likely to choose to build the businesses of tomorrow. Allowing same-sex couples the right to marry enhances our ability to build this kind of environment, which is good for all of us.  

We stand for the freedom to marry because it enhances the economic competitiveness of our communities, improves the lives of families that call our cities home, and is simply the right thing to do.  We look forward to working to build an America where all people can share in the love and commitment of marriage with the person with whom they share their life.

Mayor Ward is a good friend and I am honored to know her.  She realizes that the City of Hampton's future is best served by supporting diversity and full equality of citizens under the civil laws in all their aspects.  Hopefully more mayors in Virginia will see this reality and have the courage to to refuse to continue looking backwards in time. 

 

The Geography of Tolerance - Virginia Doesn't Place

Click map to enlarge

I've written before about Richard Florida's studies on the rise of the creative class, the so-called gay index and how states that are more liberal socially are in general pulling ahead of states that are "conservative."  Florida has a new piece in The Atlantic that looks again at this issue and tracts metropolitan areas across America.  He also lays out the top 20 metropolitan areas in therms of how they score on the "Tolerance Index" which is based on "The share of immigrants or foreign-born residents, the Gay Index (the concentration of gays and lesbians), and the Integration Index, which tracks the level of segregation between ethnic and racial groups."  Not surprisingly, no where in Virginia makes the top 20 list.  The map above shows the USA based on the tolerance index.  Here are highlights from the article:

The map above shows how metros across the U.S. score on the Tolerance Index, as updated for The Rise of the Creative Class, Revisited. The chart below shows the top 20 metros. Developed by my Martin Prosperity Institute colleague Kevin Stolarick, it ranks U.S. metros according to three key variables—the share of immigrants or foreign-born residents, the Gay Index (the concentration of gays and lesbians), and the Integration Index, which tracks the level of segregation between ethnic and racial groups.

The top 20 is a mix of big diverse metros like San Diego and Miami and smaller ones. Many of these smaller metros are college towns that are home to large concentrations of professional, technical and knowledge workers from diverse backgrounds, which lead to higher levels of ethnic and racial integration than larger metros, where economic differences are often greater.



Even more than its natural resources and native ingenuity, what has stood at the heart and soul of U.S. prosperity historically has been its openness to hard working, ambitious, and talented immigrants of all stripes—doctors, engineers, and uneducated laborers alike. Roughly half of Silicon Valley start-ups have a foreign-born person among their founding team, according to several recent studies. Careful studies by the economist Giovanni Peri of the University of California at Davis have found that immigrants add rather than detract from American prosperity, for the simple reason that "the skill composition of immigrants is complementary to that of natives."  .  .  .  .   A "more multicultural urban environment," Peri concludes, "makes U.S.-born citizens more productive."


Openness to gays and lesbians similarly reflects an ecosystem that is open to new people and new ideas. It’s amazing how consistently people have misconstrued what my colleagues and I have had to say about the connection between gays and economic growth. They miss the point. A strong and vibrant gay community is a solid leading indicator of a place that is open to many different kinds of people. Ronald Inglehart, who has studied the relationship between culture and economic growth for some four decades, has noted that the lack of societal acceptance of gays is the most significant remaining bastion of intolerance and discrimination around the world. Accordingly, communities that have long been more accepting and open to gay people have an underlying ecosystem which is also more likely to be accepting of new ideas and different types of people, including the eggheads and eccentrics who invent new things and start new enterprises. As Bill Bishop put it, "where gay households abound, geeks follow."

Economists frequently note the importance of industries having low entry barriers, so that new firms can easily enter and keep the industry vital. Similarly, a place can benefit from low entry barriers for people—where newcomers from different backgrounds are accepted quickly into all sorts of social and economic arrangements. All else being equal, such communities have an advantage in attracting and retaining the diverse and different types of people who power innovation and growth.


Tolerance - and openness to diversity and inclusiveness - is not an afterthought or something that happens when communities get rich. It is a key element of the new economic development equation.

These basics of good economics and ways to stimulate an improved economy are utterly lost on the Republican Party of Virginia as it prostitutes itself to hate merchants such as those at The Family Foundation and other allied organizations that seek to marginalize and stigmatize gays, immigrants and non-whites.  Of course, most of the states in the Bible Belt act the same way and, not surprisingly, their economies suffer as a consequence.

Religiosity Inversely Related to Upward Mobility

It seems that increasingly religiosity - certainly of the Christian fundamentalist variety - correlates with an embracing of ignorance and a rejection of science and modernity in general.  This does have real world consequences if one seeks to move upward economically both for individuals and states.  Not surprisingly, a new Pew study and analysis by Richard Florida find that the lowest economic upward mobility is in the Bible belt states (Note: the results for Georgia and Tennessee are likely skewed by Atlanta and Nashville) .  Likewise median incomes are higher in states where there is less extreme religious fervor.  The message: innovative individuals and companies are attracted to more tolerant and diverse states.  It's a message that Virginia ought to get as the Republican Party of Virginia works to drag the state backwards in time and to establish a quasi-theocracy run by The Family Foundation and its Christianist extremist allies.  Here are highlights from Richard Florida's article on the phenomenon:

Economic mobility - the quintessentially American idea (ideal, really) that any one, no matter how humble their origins, can become wealthy - has taken some terrible hits in the last few years. Writing in The New Republic, Timothy Noah notes that. . . .  “Mobility in the United States has fallen dramatically behind mobility in other comparably developed democracies," . . . we can now add Switzerland, Japan, New Zealand, Singapore, and Pakistan to the list of societies that are more mobile than the United States.

[E]conomic mobility varies by geography within the United States as well. The map above shows that economic mobility is highest in the New England and the mid-atlantic states, especially New York, New Jersey, and Maryland. The states where residents experience the least economic mobility are all in the south, with Louisiana, Oklahoma, and South Carolina scoring at the bottom.

I enlisted my Martin Prosperity Institute colleague Charlotta Mellander to help me examine the possible effects on economic mobility at the state level of factors like economic output and income, poverty, inequality, knowledge/ high-tech economies versus working class structures, college grads, religion, openness to immigrants, artistic creative and gays, and political affiliation. 

Education is a key driver of economic development. Incomes and wages are higher in states with more highly educated people. So it stands to reason that mobility would favor states with more highly educated populations.  .  .  .  .  absolute national mobility to be positively associated with public education spending per student . . . .

Openness matters to mobility. Places that are more open to outsiders appear to have more mobility. Immigrants, for example, signal openness. And there are positive correlations between immigrants and national relative upward mobility (.57) and regional relative upward mobility. . . .

Despite President Obama’s embrace of same sex marriage, gays and lesbian remain among the most discriminated-against groups in society. Recent successful moves to ban same-sex marriage in a number of states reflect this. We found positive correlations between the Gay Index and national relative upward mobility (.37) and regional relative upward mobility (.21).

Click image to enlarge

Religion factors in as well. The percentage of adults who say they are "very religious” according to Gallup polls is negatively associated with national relative upward mobility (-.51)—a pattern that is graphically represented on the above scatter graph.

Much has been made of America’s sorting across political lines, into the proverbial “red” versus “blue” states. Economic mobility maps onto this divide. Mobility is higher in blue states and lower in red ones.  .  .  .  .  There is a positive correlation between national relative downward mobility (.46) and whether or not a state voted for McCain.

In its slavish obedience to The Family Foundation and its support for religious extremism, the Republican Party of Virginia may well be killing Virginia's future.  Ignorance and bigotry carry a high economic price.

Do Gays Really Boost Property Values?

Friends and I frequently joke that if you want to raise property values and spur gentrification, then get the gays and lesbians to move into the neighborhood. We also have been documented as being a good measure of the attractiveness a city to the so-called "creative class." These stereotypes hold true in many areas even in the Hampton Roads area of Virginia, particularly in Norfolk's Ghent area which has transformed itself form borderline slum a number of years ago to one of the most sought after areas replete with shops, restaurants and arts venues. The stereotype even extends to our neighborhood in Hampton which for the most part - sadly, we do have a few reactionary, bigoted residents - is gay friendly and has seen LGBT homeowners make major upgrades to properties. The same phenomenon has even been seen in Cape Charles on Virginia's Eastern Shore. Now a study has conformed the positive influence that gays have on property values. At least in liberal, open minded neighborhoods. In areas favored by conservative bigots, we don't work the same magic. Here are highlights from the Vancouver Sun on some of the new study findings:

A controversial new study suggests that in neighbourhoods where extreme conservatism prevails, the presence of one more same-sex couple for every 1,000 households is linked to a one per cent drop in housing prices. In liberal neighbourhoods, by contrast, researchers find the associated effect of gays and lesbians on housing prices to be positive.

The study, which appears in the Journal of Urban Economics, draws data from more than 20,000 home sales, and controls for such mitigating factors as access to amenities, racial homogeneity, education, income, housing characteristics and quality of nearby schools.

"Gays and lesbians feel that they're not welcome in certain areas," says Susane Leguizamon, a professor of economics at Tulane University. "This study suggests it's not just a feeling; people are responding to the presence of gays and lesbians in the ways we'd expect."

Leguizamon suggests cohabitating same-sex couples are actually quite visible to their neighbours, and thus can have an effect on what people will pay to come or go — much the same way ethnicity has been shown to do in other studies.

She and co-author David Christafore used voting outcomes of the U.S. Defense of Marriage Act to classify neighbourhood values (the Act stated that marriage could only be entered into by a man and a woman), and called on census data to determine the number of same-sex couples in the area.

Affirming previous research, their analysis showed that sexual diversity was positively correlated with housing prices in most neighbourhoods — and most significantly in very liberal areas, dubbed "gaybourhoods."

In communities with high levels of conservatism, however, greater concentrations of same-sex couples was linked with lower housing prices.

Importantly, however, research led by Richard Florida at the University of Toronto's Rotman School of Management has consistently shown that higher concentrations of gay people are linked with economic prosperity, innovation and creativity within a region.

The Correlation Between Conservativism and Ignorance and Economic Backwardness

Richard Florida - who has done studies on the so-called "creative class" and entrepreneurship and economic vitality has done another study that seems to demonstrate a direct correlation between the economic well being of states and the level of conservatism of the states' residents. Also directly tracking the level of conservatism in states is the level of education of residents. The more poorly educate a state's population, the more conservative the state. Yes, ignorance and bigotry does seem to have a high and direct price. Unfortunately, states that are politically lurching to the right are the antithesis to long term economic success and vibrancy. The chart above from The Atlantic also shows a direct correlation with between religiosity and lack of education to the Bible Belt. As for the "average" ranking for Virginia, the study obviously failed to fully factor in the maleficent influence of The Family Foundation and the Virginia Republican Party. Here are some highlights from Richard Florida's article in The Atlantic:
*
[S]tates with more conservatives are considerably more religious than liberal-leaning states. The correlation between conservative political affiliation and religion (the share of state population for which religion is an important part of daily life) is considerable (.63).
*
Conservative states are also less well-educated than liberal ones. The correlation between conservative affiliation and human capital (that is, the percent of adults who have graduated college) is substantially negative (-.53).
*
States with more conservatives are less diverse. Conservative political affiliation is highly negatively correlated with the percent of the population that are immigrants (-.59) or gay and lesbian (-.66).
*
Conservative states are more blue-collar. Conservative political affiliation is strongly positively correlated with the percentage of the workforce in blue-collar occupations (.73) and highly negatively correlated with the proportion of the workforce engaged in knowledge-based professional and creative work (-.61).
*
Conservatism, more and more, is the ideology of the economically left behind. The current economic crisis only appears to have deepened conservatism's hold on America's states. This trend stands in sharp contrast to the Great Depression, when America embraced FDR and the New Deal.
*
[L]ong-term danger is economic rather than political. This ideological state of affairs advantages the policy preferences of poorer, less innovative states over wealthier, more innovative, and productive ones. American politics is increasingly disconnected from its economic engine. And this deepening political divide has become perhaps the biggest bottleneck on the road to long-run prosperity.
*
I have noted before that the biggest threat to the USA's future is not liberalism, gay marriage or diversity. Instead, it is individuals and states that embrace ignorance and backwardness by choice. Yes, its those like Sarah Palin, Michelle Bachmann and the Tea Party crowd and similar know nothings that are the real threat to America. As the USA slides towards regression, the rest of the world marches forward.

America's Top 20 Gayest Cities

Richard Florida - the researcher that coined the phrase the "creative class" and who has correlated the presence of LGBT populations with cities and regions with rising economies has a new piece at the Daily Beast that not only looks at the "gayest cities" in America but also gives a good recap on the thesis that tolerance and diversity - including gays - are good for business. Not surprisingly, the Norfolk area (or most of Virginia except the Northern Virginia suburbs of Washington, D.C.) doesn't makes the cut in Florida's analysis - something that indeed correlates with the economic backwardness of the area which would be far worse but for the huge military presence that cushions the economy in relative terms. Here are a few highlights:
*
The U.S. metropolitan region with the largest concentration of gay and lesbian people is San Francisco. That’s not exactly news, but there are more than a few surprises in the Gay/Lesbian Index’s metro-area rankings. Developed by Gary Gates, a demographer at UCLA’s Williams Institute, the Gay/Lesbian Index value tells you how the proportion of same-sex couples among all households of a given metro area compares to the average for the entire U.S. An index value of 2, for example, means that the proportion of same-sex couples in that metro area is twice that of the nation.
*
A gallery of the nation's top 20 gay cities can be found here. The U.S. metropolitan region with the largest concentration of gay and lesbian people is San Francisco. That’s not exactly news, but there are more than a few surprises in the Gay/Lesbian Index’s metro-area rankings. Developed by Gary Gates, a demographer at UCLA’s Williams Institute, the Gay/Lesbian Index value tells you how the proportion of same-sex couples among all households of a given metro area compares to the average for the entire U.S. An index value of 2, for example, means that the proportion of same-sex couples in that metro area is twice that of the nation.
*
New York, Los Angeles, Miami, Washington, D.C., Boston, San Diego, Denver, Seattle, and Portland, Oregon, all make the list of the 20 gayest metros. But so do Dallas, Columbus, Ohio, Santa Rosa and Sacramento, Springfield, Massachusetts, Portland, Maine, and college towns like Eugene, Oregon, Ann Arbor, Michigan and Ithaca, New York.
*
The idea that most gay people live in urban enclaves like the Castro in San Francisco or Chelsea in New York City is something of a myth, Gates notes. "Gay people live everywhere," says Gates, "in cities, suburbs, and even in the country—one in seven same-sex couples live in rural areas." The 2000 Census found same-sex couples living in 99 percent of U.S. counties.
*
Research I conducted with Charlotta Mellander revealed that metro areas with higher proportions of gay men and lesbians also have higher housing values—a finding that landed me on The Colbert Report. A study I conducted with Gates in 2001 discerned a close association between regions with higher proportions of same-sex couples and concentrations of high-tech businesses. And there’s more:

• Ronald Inglehart’s World Values Survey has found that tolerance in general, and tolerance toward gays and lesbians in particular, is associated with the shift to a more modern, more democratic, and more affluent “post-materialist” political culture.

• Soul of the Community, a study conducted by the Gallup Organization, found that more open and tolerant attitudes toward LGBT people (as well as to other groups) was one of two key factors, along with natural beauty and environmental quality, that corresponded with higher levels of satisfaction with and emotional attachment to a community.
*
[P]laces that attract gay people and lesbians tend to have the same open-minded attitudes and business styles that foster innovation. A visible LGBT community is the proverbial “canary in the coal mine,” signaling openness to new ideas, new business models, and diverse and different thinking kinds of people—precisely the characteristics of a local ecosystem that can attract cutting-edge entrepreneurs and mobilize new companies.
*
Christianist nut cases like Bob "Taliban Bob" McDonnell and Ken "Kookinelli" Cuccinelli really need to crawl out of their Medieval caves, smell the coffee and start making Virginia gay friendly - for the economic good of all Virginians.

The Elephant in the Room for "Demographically Challenged" Hampton Roads

The May 16, 2010 Daily Press lead editorial bemoaned the fact that the Brookings Institute report released a week ago was less than kind to the Hampton Roads area. In fact, the report called the region "demographically challenged" both in terms of levels of education and in terms of diversity. The Daily Press editorial rightly noted some of the obvious problems cited by the Brookings Institue: lower level than average number of college graduates, lack of high paying high tech jobs, etc. Missing, however, from the analysis was one of the underlying causes for the region's relative backwardness and lack of progressive business: the religious intolerance that pervades in the area.

*

The Daily Press wimps out and ignores the closed mindedness and intolerance of the still powerful Christian Right in this region which in large part fuels the "brain drain" that witnesses educated and progressive individuals leaving the region. Not surprisingly, part of this intellectual flight process includes gays leaving the region if possible - usually for Washington, D.C., New York City, Atlanta, or the West Coast. Why stay where one is treated as a second class citizen? Those who are tied here for now by their businesse- like the boyfriend and I presently - leave as soon as we retire or once elderly parents die off. Why? Because Virginia is an extremely hostile place for gays to live and prosper. Similarly, progressives who do not conform to or want their families raised surrounded by a reactionary Christianist world view likewise often find the region unattractive.

*

The irony is that NONE of the local economic development departments of the cities of Hampton Roads or the state economic development offices have the balls to flat out state that religious based bigotry and intolerance is not a positive recruiting tool. Matters have only been made worse since the election of Gov. Bob "Taliban Bob" McDonnell and AG Ken "Kookinelli" Cucinelli to office last fall. Local politicos may feel safe kissing up to the likes of Pat Robertson, but progressives and members of the creative class flee and/or avoid the area. Richard Florida has documented the correlation between tolerance and acceptance of gays with economic prosperity. A number of media outlets have cited Florida's work. Here are highlights from a Salon article:

*
And countless Republicans and conservatives have taken umbrage at the suggestion that economic vibrancy no longer resided in traditional development strategies or that the road to economic recovery did not involve reopening a steel plant but soliciting young people with tattoos and piercings. Those even further to the right blanched at Florida's notion that successful resurgence was predicated and even helped by concentrations of gay and ethnic populations. Clearly, the thought that queers and people of color were anything but talking points to scare the populace into reelection on an gay-marriage-cum-anti-immigrant platform was completely beyond the pale.
*
Cities are the places that attract talent. I mean, consider that 90 percent of GDP comes out of metropolitan areas. And yet somehow some people think that we don't need cities. Not only do we have to open our borders, we have to strengthen our cities massively because they're the cornerstones of our ability to compete for talent. But for the past four years the Bush administration has done everything to prevent that, from huge decreases in infrastructure spending to drastic cuts in block grants. And now most cities aren't equipped to compete anymore. The only policy we seem to have to revive our cities is to build another stadium.
*
The bigger issue is the class divide, which is destroying our country. And that divide is between people who are members of the creative class and fortunate enough to migrate from Pittsburgh or Cleveland or Buffalo or St. Louis to these great thriving creative centers like New York and Boston and Washington and San Francisco and Chicago and Los Angeles. Those people are doing just fine. But the people left behind got really pissed off and got angrier and angrier and madder and madder, and they looked at these cities filled with single people, filled with young people, filled with successful people, filled with immigrants, filled with people cohabitating, having fun, vibrant night life, filled with gay people, and they said "Enough's enough!"
*
What's happening in Canada, in Australia, in Scandinavia -- I went and met with the premiers of West Australia, South Australia, Victoria and New South Wales. I met with labor governors and liberal party mayors. All of them are building platforms, and the one in South Australia was remarkable -- they invest in productivity and prosperity, invest in economic opportunity, use the market and make sure they're a creative society with ecological sustainability and social inclusion.
*
Gays and to a lesser extent women and to some degree immigrants, but gays most of all, become the target of all of this hatred. But it's not hatred that comes out of thin air: It's fear. It's fear that the economy is going somewhere that gives advantages to these people who live in gay neighborhoods, who live in places like Washington, D.C., who have all of these advantages -- education, skill, cosmopolitism and abilities. And if they're not gay, they surely must be French. So that becomes a scapegoat issue and a way to organize.
*
The point is that if all this continues, America's economic advantage is gone. It'll become an intolerant place, the kind of place where lines are drawn in the sand, where gays don't feel comfortable, where young people don't feel comfortable, where immigrants and newcomers don't feel comfortable. The fact is that according to our rankings, the U.S. is 20th in tolerance out of 45 countries. As a country we're not ranking with the equivalent of the San Franciscos or Austins, we're ranking with the equivalent of the conservative Southern areas. And that's a huge problem.

*

The sad truth is that Bob McDonnell, Ken Cuccinelli and too many city council members are chasing after visions of a time that has passed on by. Instead of fostering prosperity and economic development, their policies are slowly killing the prospects fro the future if they do not open their eyes and accept the new reality. Following World War I, the UK tried to go on doing things as they had been done for decades before the war. But times had changed and so had the economic competition. Doing the same old thing and expecting different results after past failures is a sure sign of stupidity and/or insanity. The Daily Press can whine all it wants, but until something is done to address the religious intolerance and closed minded bigotry of far too many people in the Hampton Roads region, it is foolishness to expect that things will change for the better.

How The Economic Crisis Will Reshape America

Richard Florida who wrote The Rise of the Creative Class has a lengthy new piece in the Atlantic Monthly that looks at the current economic crisis and speculates as to which areas in the USA will best weather the economic storm and/or arise stronger in its aftermath. Likewise, he looks at which regions are likely to rebound the least or even stay depressed and increasingly outside of the economic mainstream. In the course of the article, Florida looks at various areas of the country and changes in technology and innovation. The prospects while not assured seem to greatly favor areas of high innovation and diversity in thought and higher education. In short, many of the "blue" states appear better postured than "red" states that are not welcoming to change and diversity. Here are few of his concluding highlights:

*

[W]e need to encourage growth in the regions and cities that are best positioned to compete in the coming decades: the great mega-regions that already power the economy, and the smaller, talent-attracting innovation centers inside them—places like Silicon Valley, Boulder, Austin, and the North Carolina Research Triangle.

*
Whatever our government policies, the coming decades will likely see a further clustering of output, jobs, and innovation in a smaller number of bigger cities and city-regions. But properly shaping that growth will be one of the government’s biggest challenges. In part, we need to ensure that key cities and regions continue to circulate people, goods, and ideas quickly and efficiently. This in itself will be no small task; increasing congestion threatens to slowly sap some of these city-regions of their vitality.

*

Just as important, though, we need to make elite cities and key mega-regions more attractive and affordable for all of America’s classes, not just the upper crust. High housing costs in these cities and in the more convenient suburbs around them, along with congested sprawl farther afield, have conspired to drive lower-income Americans away from these places over the past 30 years. This is profoundly unhealthy for our society.

*

What will this geography look like? It will likely be sparser in the Midwest and also, ultimately, in those parts of the Southeast that are dependent on manufacturing. Its suburbs will be thinner and its houses, perhaps, smaller. Some of its southwestern cities will grow less quickly. Its great mega-regions will rise farther upward and extend farther outward. It will feature a lower rate of homeownership, and a more mobile population of renters. In short, it will be a more concentrated geography, one that allows more people to mix more freely and interact more efficiently in a discrete number of dense, innovative mega-regions and creative cities. . . . . . But most of all, it will be a landscape that can accommodate and accelerate invention, innovation, and creation—the activities in which the U.S. still holds a big competitive advantage.

*

One cannot help but wonder what these economic trends, if correct, will portend for areas like Alabama, Mississippi, portions of the Mid-West and even large parts of Virginia where xenophobia and religious based hostility to diversity and intellectual openness are prevalent. Closed mindedness and hostility towards those who are different may well carry a high price indeed.