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The End of Suburbia and Economic Apocalypse

Blixtein

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DISARRAY
by James Howard Kunstler
The dark tunnel that the U.S. economy has entered began to look more and more like a black hole recently, sucking in lives, fortunes, and prospects behind a Potemkin facade of orderly retreat put up by anyone in authority with a story to tell or an interest to protect – Fed chairman Bernanke, CNBC, The New York Times , the Bank of America... Events are now moving ahead of anything that personalities can do to control them.

The “housing bubble†implosion is broadly misunderstood. It’s not just the collapse of a market for a particular kind of commodity, it’s the end of the suburban pattern itself, the way of life it represents, and the entire economy connected with it. It’s the crack up of the system that America has invested most of its wealth in since 1950. It’s perhaps most tragic that the mis-investments only accelerated as the system reached its end, but it seems to be nature’s way that waves crest just before they break.

This wave is breaking into a sea-wall of disbelief. Nobody gets it. The psychological investment in what we think of as American reality is too great. The mainstream media doesn’t get it, and they can’t report it coherently. None of the candidates for president has begun to articulate an understanding of what we face: the suburban living arrangement is an experiment that has entered failure mode.

I maintain that all the “players†– from the bankers to the politicians to the editors to the ordinary citizens – will continue to not get it as the disarray accelerates and families and communities are blown apart by economic loss. Instead of beginning the tough process of making new arrangements for everyday life, we’ll take up a campaign to sustain the unsustainable old way of life at all costs.

A reader sent me a passel of recent clippings last week from the Atlanta Journal-Constitution . It contained one story after another about the perceived need to build more highways in order to maintain “economic growth†(and incidentally about the “foolishness†of public transit). I understood that to mean the need to keep the suburban development system going, since that has been the real main source of the Sunbelt’s prosperity the past 60-odd years. They cannot imagine an economy that is based on anything besides new subdivisions, freeway extensions, new car sales, and NASCAR spectacles. The Sunbelt, therefore, will be ground-zero for all the disappointment emanating from this cultural disaster, and probably also ground-zero for the political mischief that will ensue from lost fortunes and crushed hopes.

From time-to-time, I feel it’s necessary to remind readers what we can actually do in the face of this long emergency. Voters and candidates in the primary season have been hollering about “change†but I’m afraid the dirty secret of this campaign is that the American public doesn’t want to change its behavior at all. What it really wants is someone to promise them they can keep on doing what they’re used to doing: buying more stuff they can’t afford, eating more bad food that will kill them, and driving more miles than circumstances will allow.

Here’s what we better start doing.

Stop all highway-building altogether. Instead, direct public money into repairing railroad rights-of-way. Put together public-private partnerships for running passenger rail between American cities and towns in between. If Amtrak is unacceptable, get rid of it and set up a new management system. At the same time, begin planning comprehensive regional light-rail and streetcar operations.

End subsidies to agribusiness and instead direct dollar support to small-scale farmers, using the existing regional networks of organic farming associations to target the aid. (This includes ending subsidies for the ethanol program.)

Begin planning and construction of waterfront and harbor facilities for commerce: piers, warehouses, ship-and-boatyards, and accommodations for sailors. This is especially important along the Ohio-Mississippi system and the Great Lakes.

In cities and towns, change regulations that mandate the accommodation of cars. Direct all new development to the finest grain, scaled to walkability. This essentially means making the individual building lot the basic increment of redevelopment, not multi-acre “projects.†Get rid of any parking requirements for property development. Institute “locational taxation†based on proximity to the center of town and not on the size, character, or putative value of the building itself. Put in effect a ban on buildings in excess of seven stories. Begin planning for district or neighborhood heating installations and solar, wind, and hydro-electric generation wherever possible on a small-scale network basis.

We’d better begin a public debate about whether it is feasible or desirable to construct any new nuclear power plants. If there are good reasons to go forward with nuclear, and a consensus about the risks and benefits, we need to establish it quickly. There may be no other way to keep the lights on in America after 2020.

We need to prepare for the end of the global economic relations that have characterized the final blow-off of the cheap energy era. The world is about to become wider again as nations get desperate over energy resources. This desperation is certain to generate conflict. We’ll have to make things in this country again, or we won’t have the most rudimentary household products.

We’d better prepare psychologically to downscale all institutions, including government, schools and colleges, corporations, and hospitals. All the centralizing tendencies and gigantification of the past half-century will have to be reversed. Government will be starved for revenue and impotent at the higher scale. The centralized high schools all over the nation will prove to be our most frustrating mis-investment. We will probably have to replace them with some form of home-schooling that is allowed to aggregate into neighborhood units. A lot of colleges, public and private, will fail as higher ed ceases to be a “consumer†activity. Corporations scaled to operate globally are not going to make it. This includes probably all national chain “big box†operations. It will have to be replaced by small local and regional business. We’ll have to reopen many of the small town hospitals that were shuttered in recent years, and open many new local clinic-style health-care operations as part of the greater reform of American medicine.

Take a time-out from legal immigration and get serious about enforcing the laws about illegal immigration. Stop lying to ourselves and stop using semantic ruses like calling illegal immigrants “undocumented.â€

Prepare psychologically for the destruction of a lot of fictitious “wealth†– and allow instruments and institutions based on fictitious wealth to fail, instead of attempting to keep them propped up on credit life-support. Like any other thing in our national life, finance has to return to a scale that is consistent with our circumstances – i.e., what reality will allow. That process is underway, anyway, whether the public is prepared for it or not. We will soon hear the sound of banks crashing all over the place. Get out of their way, if you can.

Prepare psychologically for a sociopolitical climate of anger, grievance, and resentment. A lot of individual citizens will find themselves short of resources in the years ahead. They will be very ticked off and seek to scapegoat and punish others. The United States is one of the few nations on earth that did not undergo a sociopolitical convulsion in the past hundred years. But despite what we tell ourselves about our specialness, we’re not immune to the forces that have driven other societies to extremes. The rise of the Nazis, the Soviet terror, the “cultural revolution,€ the holocausts and genocides – these are all things that can happen to any people driven to desperation.
Regards,
James Howard Kunstler
for The Daily Reckoning
 
Typical Kunstler, but good. Where's this from anyway?

From time-to-time, I feel it’s necessary to remind readers what we can actually do in the face of this long emergency. Voters and candidates in the primary season have been hollering about “change†but I’m afraid the dirty secret of this campaign is that the American public doesn’t want to change its behavior at all. What it really wants is someone to promise them they can keep on doing what they’re used to doing: buying more stuff they can’t afford, eating more bad food that will kill them, and driving more miles than circumstances will allow.
Sad, but true. It may actually take an economic apocalypse before the beltway, the media and suburban America starts to question its way. Not to suggest that things are any better in Canada btw.

We need to prepare for the end of the global economic relations that have characterized the final blow-off of the cheap energy era. The world is about to become wider again as nations get desperate over energy resources. This desperation is certain to generate conflict. We’ll have to make things in this country again, or we won’t have the most rudimentary household products.
I'm not sure if I believe this will happen by 2020, but regardless, I do feel the days of China being a factory to the world will be numbered as energy gets far more expensive and conservation/enviromental efforts continue to weave their way through the market.

Prepare psychologically for the destruction of a lot of fictitious “wealth†– and allow instruments and institutions based on fictitious wealth to fail, instead of attempting to keep them propped up on credit life-support. Like any other thing in our national life, finance has to return to a scale that is consistent with our circumstances – i.e., what reality will allow. That process is underway, anyway, whether the public is prepared for it or not. We will soon hear the sound of banks crashing all over the place. Get out of their way, if you can.
Quite possibly what the coming economic "recession" will be characterized by.
 
great article! very much along the lines of how I perceive things, though I didnt quite get his lead in tying all this to the sub-prime housing loans as the first sign of things to come. I guess thats what other segments of the economy will look like as they are no longer financially viable... Us western "consumers" have had it way too easy - even though we dont like a lot of things governments and corporations do, we are generally reluctant to make much of a fuss because, well, life is just too cushy and easy. Why would we chance losing it? But now reality is catching up with us... our life styles are not sustainable and we will be forced to change. Start stocking up on canned vegetables and buy yourself a gun! Nature has her revenge...
 
I think masses of newly armed people upset about their misguided investments in canned vegetables would also constitute quite a danger to our societies.
 
Kunstler has some interesting things to say, but his delivery is all too often so way over the top.
 
Still, his sociological critique almost makes up for his architectural critique...
 
Well, with stuff like this:

We’d better prepare psychologically to downscale all institutions, including government, schools and colleges, corporations, and hospitals.

Howard forgot to mention population. I wonder if sees the need for that to be rapidly downscaled as well? The yak of long emergencies and apocalypse blurs out some ideas that are worth consideration.
 
Hey, why not America as well. After all, it's mostly the morons in Jesusland who're procreatin'.

And let it be a "natural" downscaling as a byproduct of cultural enlightenment--sort of like where Europe would be were it not for immigration...
 
Yeah, but by 2020? Howard would a need a plan for population reduction. Besides, a considerable portion of U.S. population growth is from immigration - and will be so for the foreseeable future.
 
Well, as he says

Take a time-out from legal immigration and get serious about enforcing the laws about illegal immigration. Stop lying to ourselves and stop using semantic ruses like calling illegal immigrants “undocumented.â€
 
Ah, James Howard Kunstler! I read his Clusterfuck Nation posting every Monday on http://kunstler.com. I actually purchased and read The Long Emergency and enjoyed most of it, though I think he needs a better editor to keep him on topic. When he meanders too far from his key topics (oil and economic collapse) he sometimes starts to sound very crazy indeed.

I view Kunstler as a fairly wise man who will probably be 75% correct in his predictions, which is still pretty darn scary, but his extreme phrasing does tend to damage his credibility somewhat (and he never learns not to make concrete date-specific predications).

That said, the headlines of the last few months regarding the collapse of the sub-prime mortgage market and all the interrelated businesses are very similar to what he has been predicting for a while. I also love his condemnation of what he calls our "something for nothing" society, epitomized by Las Vegas, and now by those who seem astonished that they actually have to pay the mortgages they signed up for.

However, it is worth keeping in mind that he was also apparently a very strong doom-and-gloom predictor of utter disaster on Y2K. And we know how that turned out...
 
Unfortunately, amidst many good points, some of it is ridiculous. If you downsize government, you cannot "get serious about enforcing the laws about illegal immigration". If fact, in the globalization trend tends to erode the authority of government regardless of size, and opens up borders. The world isn't going to get wider.

Cheap energy from oil may be on its way out, but there are plenty of alternatives that as technology improves can replace it. I think he misses how regional rail can easily substitute a highway to the suburbs with enough investment, and even if you build urban friendly development around this rail right of way, you're still expanding the city outward. To prevent this, you need to lower the population numbers. He recommends no action for protecting places of higher eduction despite the prediction that there will be a shift to neighbourhood clinics. We will need more doctors. And does he think our supertalls will be abandoned?

Still, I like the article as it reflects the seriousness of the situation. Expanding highways, bailing out those who bought more than they could afford, and encouraging production of cars that are inefficient is regressive. Yet, that's exactly what millions are calling for.
 
More of the same from the WSJ:

[link]http://online.wsj.com/article/SB121366811790479767.html?mod=hps_us_editors_picks[/link]

Suburbs a Mile Too Far for Some
Demographic Changes, High Gasoline Prices
May Hasten Demand for Urban Living
By JONATHAN KARP

June 17, 2008; Page A18

Pasadena, Calif.

Abandoning grueling freeway commutes and the ennui of San Fernando Valley suburbs, Mike Boseman recently found residential refuge in this Southern California city. His apartment building straddles a light-rail line, which the 25-year-old insurance agent rides to and from work in Los Angeles.

Richard Wells is more than a generation older but was similarly attracted to the Pasadena apartment building. The British-born scientist retains what he calls a European preference for public transportation despite his nearly 30 years in California. Plus, he said, the building's location means, "I can walk to a hundred restaurants, the Pasadena symphony and movie theaters."

Messrs. Boseman and Wells embody trends that are dovetailing to potentially reshape a half-century-long pattern of how and where Americans live: The driveable suburb -- that bedrock of post-World War II society -- is for many a mile too far.

In recent years, a generation of young people, called the millennials, born between the late 1970s and mid-1990s, has combined with baby boomers to rekindle demand for urban living. Today, the subprime-mortgage crisis and $4-a-gallon gasoline are delivering further gut punches by blighting remote subdivisions nationwide and rendering long commutes untenable for middle-class Americans.

Just as low interest rates and aggressive mortgage financing accelerated expansion of the suburban fringe to the point of oversupply, "the spike in gasoline prices, layered with demographic changes, may accelerate the trend toward closer-in living," said Arthur C. Nelson, director of Virginia Tech's Metropolitan Institute in Alexandria, Va. "All these things are piling up, and there are fundamental changes occurring in demand for housing in most parts of the country."

Christopher Leinberger, a visiting fellow at the Brookings Institution and a developer of walkable areas that combine housing and commercial space, describes the structural shift as the "beginning of the end of sprawl."

Recipe for Reurbanization

Todd Zimmerman, a housing consultant and an early advocate of pedestrian-friendly community planning known as New Urbanism, said demographic and cultural factors explain a big part of the trend. Baby boomers and millennials are the country's two biggest generations, with some 82 million and 78 million people born during their respective eras. Both flocks are leaving their nests and finding that higher-density urban housing fits their lifestyles.

"Millennials and baby boomers are in perfect sync. They are at a stage where they both want the same thing," said Mr. Zimmerman, a co-managing director at Zimmerman/Volk Associates Inc. in Clinton, N.J. He said the populations of Americans in their 20s and in their 50s are rising and will add eight million potential housing consumers by the time their numbers peak in 2015. "You've got a recipe for reurbanization on a dramatic scale," he said.


While baby boomers may be looking to downsize their homes and simplify their lives in urban condominiums, millennials often look to cities as a way of rebelling against the suburban cul-de-sac culture that pervaded their youth, Mr. Zimmerman said. That is no different than past generations of twentysomethings, but the numbers of millennials are larger.

Even families who sought the suburbs or were priced out of cities now have an economic imperative to find their way back closer to town. Transportation is the second-biggest household expense, after housing, and suburban families face a relatively greater gas burden. At the same time, distant suburbs, or exurbs, where housing growth was predicated on cheap gas, have experienced the biggest declines in home values in the past year, according to a May report by CEOs for Cities, a nonprofit group of public- and private-sector officials that seeks to promote urban areas. "The gas-price spike popped the housing bubble," said Joe Cortright, the report's author.

The demand for housing near urban centers isn't going to snuff out suburbs overnight. Several satellite towns around cities continue to lure jobs and are reinventing themselves with their own city centers. About half of the walkable urban areas that Brookings's Mr. Leinberger identified in a recent survey are located in suburbs, though generally close to major cities.

A Challenge for Cities

While high gas prices are a boon to New Urbanism and other "smart-growth" planning concepts, in practice such mixed-use projects often are harder to execute -- from acquiring local approval to securing Wall Street financing -- than the traditional suburban tract-housing model. The challenges for cities are considerable, from investing in public-transportation systems to creating incentives for developers to accommodate the new urban housing demand.

Cities such as Denver, Charlotte, N.C., and Portland, Ore., are making investments in public transportation and spurring the construction of symbols of the new housing era: multifamily residential and retail complexes at or next to transit stations. Reconnecting America, a nonprofit group committed to transit-oriented development, estimates that the number of households near transit stations will soar to 15 million by 2030, from six million now.

Even in the auto mecca of Southern California, attitudes are changing, and transit-oriented development is gaining traction along subway, light-rail and commuter-train lines serving Los Angeles. In Pasadena, an apartment and retail complex built around the Del Mar light-rail station is doing brisk business. Some 95% of the 347 units are rented, the highest occupancy rate since the building opened two years ago, said Dave Brackett, executive vice president of Archstone, which owns the building.

Fuel-Efficient Fun

Mr. Boseman, the insurance salesman, found his way to Archstone Del Mar Station from Encino, to the west in the San Fernando Valley. The 75-minute commute from Encino to downtown Los Angeles tried his patience and lightened his wallet. "I'd go through a tank of gas every four days," he said.

After a year, he and his girlfriend decided to move to downtown Los Angeles. They rented a renovated loft, and dumped one of their two cars to avoid the expense and parking hassle. But the area wasn't lively enough at night, so they looked along public-transportation lines for their next apartment.

Pasadena, home to the Rose Bowl, is a leafy city with stately houses and a thriving shopping area in a reinvigorated old downtown. Archstone Del Mar Station is near the commercial center, and a 26-minute ride on one of Los Angeles's metro lines. With a train change, Mr. Boseman is at work within 35 minutes from his doorstep. He also takes the light rail into Los Angeles on weekends for entertainment events. With his car use limited to Saturday and Sunday at most, he said, "I'm filling it up once a month."

Mr. Wells, too, got rid of one of his cars after moving into Archstone Del Mar Station 10 months ago, and "my aim is never to use the car I kept," he said. The 71-year-old scientist reckons he has saved 500 gallons. Last week, he moved out of the apartment building -- but not far. For the same rationale, he bought a condo at the next light-rail station along the metro line.

In Los Angeles's central Koreatown neighborhood, developer Urban Partners LLC last year opened a 449-unit apartment building with 36,000 square feet of retail space atop a subway station. Twenty percent of the units are rented at below-market rates in an effort to provide affordable housing without an "hour or two commute," said Dan Rosenfeld, an Urban Partners principal.

With more than 30 U.S. cities that have or are developing commuter-rail systems, demand for mixed-used, mixed-income projects is bound to increase, said Mr. Rosenfeld. But even with an emphasis on public transport and walkable urban neighborhoods, one staple of American culture is so entrenched that it is bound to take years to reverse.

"We never reduce the amount of parking at our developments. People still want their cars," he said. "Nothing would make us happier than to reduce the expensive underground parking."
 

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