Posted inPhoenix

How’d that boom work out for you?

The data are in and most Phoenicians have to show for the Great Real Estate Boom…not much. The federal Bureau of Economic Analysis this week released its comprehensive survey of per-capita personal income for metro areas and counties in 2007. It's the gold standard yardstick for measuring how the average person was actually doing after the Bush "boom" and as the nation prepared to slide into recession.

In metro Phoenix, per-capita personal income totaled $35,185, an increase of 1 percent from 2006 vs. the national average of 4.9 percent. From 1997 to 2007, income growth was 3.9 percent, vs. 4.3 percent nationally. More context: Phoenix's 2007 income was only 91 percent of the national average. Although Phoenix is the nation's 13th most populous metro area, it ranks 134th among metros in per-capita personal income. In 1997, it ranked 126th. This should be astonishing, if any one takes note.

Let's drill down deeper. Phoenix doesn't compete for talent and capital against the national average that includes Mississippi and Alabama. It competes against other big cities (here and abroad), whether it wants to or not. How did its competitors do?

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Posted inUncategorized

At the interchange

In the arresting prologue to his book, The Crisis of the Old Order, Arthur Schlesinger Jr. describes America on the day of the inauguration of Franklin Roosevelt — an economy nearly shut down, people starving, machine-gun nests around Washington, opinion-makers taking of the need for dictatorship, capitalism given up as dead, even the March sky dark and foreboding. Pace today's revisionists such as Amity Shlaes, FDR indeed restored confidence and began an economic recovery that was only tripped up when he reverted to his instinctive desire to balance the budget and back away from stimulus. If it makes them feel better, many of the New Deal's successes built off the programs first established by Herbert Hoover, the often unfairly maligned onetime progressive. Yet those policies had not been pushed with the energy or scale demanded by FDR.

Many liberals and progressives want to see the current economic phase of the Great Disruption as a Depression-like opportunity. Meanwhile, conservatives such as Ms. Shlaes — and the reactionary thugs who consider even Social Security, as they would phrase it, SOCIALISM!! — use the Depression and New Deal as a foil. The reactionaries back then wanted to raise taxes to balance the budget. Otherwise, today's right is little changed intellectually from its predecessors.

And yet as I watch us move along the leading edge of history every day, I doubt many of the Depression analogies. We are not yet, most of us, on our backs. We have lost a huge amount of wealth — more than we realize, when one factors in the 25 years of destructive mergers, deindustrialization, deunionization and unwise trade deals. The floodwaters intrude on our peripheral vision — a friend laid off, a "depressing" news story. Otherwise, life goes on. American Idol goes on. A new release of Grand Theft Auto. Watchmen brings to the screen "the greatest graphic novel of all time" (was Sad Sack a graphic novel?). Talk radio continues to stir up the faithful. We are entertained, distracted, agitated, yet sleepwalking. Hoping for the next bubble. The next "Flip this House" casino economy moment. We don't realize how gone it all is, gone with the wind.

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Posted inPhoenix Politics: National

Say you want a revolution?

One of the greatest dangers to peace lies in the economic pressure to which people find themselves subjected.

–Calvin Coolidge

You can't handle the truth!

— Jack Nicholson

The honorary Page One Editor of Rogue Columnist and I have been in a friendly argument of late over when, or whether, the riots will begin. He sees sooner than later, as people are faced with the worst economic crisis in 80 years — perhaps in the history of the nation. Things will not turn around soon, and may well get much worse. And having worked around the world in some miserable and boiling hot-spots, he offers observations that should be discounted at one's peril. Former National Security Adviser Zbigniew Brzezinski echoed this on MSNBC's Morning Joe, saying, "Hell, there could be even riots" as the unemployed take aim at the rich bastards that caused the calamity and are still doing fine.

I've tended to say later or never — the nation is too narcoticized by American Idol, Grand Theft Auto, endless driving, limitless digital distractions, the deadening civic isolation of suburbia. Human nature is unchanging but Americans have changed. They have become easily led. Short-changed of an education in history, civics and the humanities, too many Americans are just plugged into the matrix, sucking Wal-Mart subsistence, waiting for their next cog assignment.

Now, I'm not so sure.

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Posted inPhoenix

Dead town walking

Do even the most sober-minded Phoenicians realize how deep a hole they're in? The depression caused by the housing collapse is undeniable. So the answer is merely to reinflate the housing bubble and happy days are here again, right? More "master planned communities." More paving over Pinal and Yavapai counties and rolling over Wickenburg with lookalike tract houses. More boobs from the Midwest who will put up with anything as long as they don't have to shovel snow.

Indeed, a major effort will be made to craft the Obama stimulus to do just this. Sustainability has no powerful political base. Sprawl does. Even the nominally progressive radio talker Ed Schultz is pushing for a bailout of the house builders — and no wonder: he also owns a small construction company and drives 50 miles each way to work from his suburban home. With progressives like these, who can understand that the old sprawl model is hopelessly broken? Trying to revive it will only increase and lengthen the pain of transition — or leave the country too bankrupt to even get there. Reviving it in Arizona will only hasten the inevitable water emergency.

But Phoenix faces crises beyond the housing depression. As one of America's least literate and most poorly educated big cities — if it can even be called a city — it's not surprising that no one is talking about them. And even the "smart people" assume the growth machine will revive, simply because it always has. Call them the road kill of the Great Disruption, the new era of discontinuity.

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Posted inPolitics: National

Can candidate Hoover fool us again?

John Sidney McCain III said today "the fundamentals of our economy are strong," sounding exactly like Herbert Hoover after the crash of 1929. The parallels are interesting. Republican policies largely caused the Great Depression. Hoover had done honorable and even miraculous work before the presidency (feeding World War I refugees). He was a progressive Republican but became a reactionary. The biggest similarity, besides "the fundamentals" lines, is that the world had passed both men by. The world had become too complex for their remedies or policies. They were/are overwhelmed. Except Hoover didn’t have Karl Rove, "the base" (which interestingly translates in Arabic as al Queda) and so many ignorant, easily led voters.

On the other hand, maybe the key word in McCain’s statement is "our" economy. As in the economy represented by his rich friends and supporters, the nationless corporate oligarchy and his Treasury secretary-to-be, former Texas Sen. Phil Gramm (also prime architect of banking and Wall Street deregulation). He of the "nation of whiners" and "mental recession." For them, the winners at a time when income inequality is worse than anytime since before the crash of ’29, the economy is strong. So maybe unlike his campaign of late, McCain actually spoke the truth.

The recession that’s all in our heads claimed two of the most powerful and influential investment banks in the world over the weekend. Anybody who claims to tell you what will happen next — much less that the worst has passed — is about as reliable as all those telephone mortgage chislers during the housing bubble. What is more clear is how it happened, and, perhaps, some of the ramifications.

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Posted inPhoenix Politics: National

The Republic looks at a tale of three cities

The Arizona Republic’s Chad Graham traveled to Austin and Seattle to report on some lessons recession-slammed Phoenix might learn. Numerous Rogue Columnist readers have asked for my reactions. Chad is a fine journalist and a friend. His story fits into a continuum of sometime efforts by the newspaper to educate the public and policy makers about the real world — this goes back at least to the 1980s. These efforts are ignored as population growth resumes and the nation’s last big factory town returns to churning out suburban tract houses.

The editors tip their hands by, I would assume, inserting this sentence to make defensive "Valley residents" feel better: "Phoenix will never have a gateway seaport to Asia that hums with
activity. Seattle will never have the potential solar power of Phoenix." The sad reality is that the center of solar research, entrepreneurship and use is cloudy Germany. Phoenix literally started the solar power movement in the 1950s and let it get away — therein lies the tale of the town.

Graham’s important point is that Seattle and Austin "have learned the lesson that Phoenix is now being taught: Economic
downturns hit harder when you are overly reliant on one industry."

Rather than go through the story, or even rehash my years of "controversial" efforts to raise these issues, I’d rather make a few key points among dozens that could be discussed. My perspective is as a Phoenician who has lived in Seattle for nearly a year and has seen both close up.

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Posted inPolitics: National

Making serious economic reform, part II

In a previous post, I discussed economic reforms that should be made in the sick, corrupt financial markets. But this is only the start of efforts the next president and Congress must make to prevent a startling decline that is already evident in America. Whatever the Dow shows, most Americans are suffering and for the first time in generations, young people wonder, with good cause, if they can live better lives than their parents.

Real change is needed, and the question is whether the American people and their elected representatives have the guts to face the truth and move ahead. The laughable gas-tax holiday and much wishful thinking about alternative energy and hydrogen cars represent the school of destructive denial. This is "sustainability" that seeks to sustain the current unsustainable economic and social arrangements. It can’t be done.

Yet much of the current mess was caused, not by inexorable laws of economics, but by policy changes to benefit the rich and transnational corporations, as well as a sprawl economy at the root of the current recession. We can change it.

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Posted inPhoenix

The Stack: Turnaround?; Phoenix ‘architecture’; ruining Biltmore; lost HQs; illegal immigrant hypocrisy

The Monday stack is rich, so let’s get right to it.

We’re hearing a lot of talk about seeing lights at the end of the tunnel, that the downturn is over or the recession will be mild…whatever. I hope so. But here are a few things to keep in mind. First, recovering from the collapse of a real-estate bubble takes much more time than the recovery we saw from the tech bubble after ’01. Japan in the 1980s and 1990s is Exhibit A.

Second, America has many "economies." So Wall Street and the globalized macro economy measured by the Dow and the GDP may well "recover." Another economy involves good jobs and diverse opportunities outside of the minority of fortunate cities such as New York, San Francisco and Seattle. I see no signs of that economy turning around. Indeed, by many measures it slips a little further back during and after the end of each business cycle. Jobless recoveries are only one aspect of this troubling trend. Throughout the boom of the past few years, most wages stagnated and many actually lost ground. So hold the celebration.

Read on for more of the Stack

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Posted inPolitics: National

Making serious economic reform, part I

The candidates are giving speeches on the economy, ranging from Obama’s correct diagnosis that corporate political power has driven much destructive policy to Clinton’s programmatic wonkishness to McCain saying speculators should receive no federal bailout. Unfortunately, he means individuals who face foreclosure, not the big financial institutions that caused the housing and mortgage collapse.

The nation faces more economic challenges than at any time since the Great Depression. But overall America is so wealthy that the stresses and dangers are concealed; their most severe consequences may not be felt for decades. Nobody has all the answers, but I will lay down some markers to watch. These are based on history, the test of time and the reality of today’s economy. I wonder if the candidates will address them (we already know McCain’s answer)?

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Posted inUncategorized

Stagflation may be the least of our worries

Stagflation is the worry of the moment. Talk about a ’70s flashback. The term refers to the combination of high inflation, high unemployment and weak growth — trends that weren’t supposed to go together. As Robert Samuelson has pointed out, the current troubles likely won’t be a repeat of the disco age, unless the Fed overreacts. Recessions are natural economic phenomena and sometimes trying to avoid them can make the eventual reckoning worse.

But we shouldn’t stop thinking there. As long as the popular conversation is on stagflation and the 1970s, it’s a chance to follow those themes to some provocative and disturbing questions.

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Posted inPhoenix Politics: National

The recession this time

Another recession, and for many Americans the post-2001 recovery and expansion felt like one long tough slog. It would have felt worse had they been living within their means, but liar-loan mortgages, bottomless credit cards and cheap stuff from China allowed them to think they were rolling in the good times, just like the hedge-fund managers and CEOs.

Another recession, and it won’t be like 2001, when a fraud-driven bubble burst, or 1991, when the savings-and-loan scandal sank the economy. It will have fraud, bursting bubbles and unsustainable finance, to be sure. But it may be far worse than anything we have experienced since 1982, maybe longer.

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