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California’s Neo-Feudal Future

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California’s Neo-Feudal Future

10 Blocks podcast August 26, 2020
California
Covid-19
Economy, finance, and budgets
Politics and law

Joel Kotkin joins Brian Anderson to discuss California’s “increasingly feudal” political and economic order, the impact of the Covid-19 lockdown on the state's lower- and middle-class residents, what Joe Biden's selection of Senator Kamala Harris means for the Democratic ticket and U.S. politics, and Kotkin’s new book—The Coming of Neo-Feudalism: A Warning to the Global Middle Class.

Audio Transcript

Brian Anderson: Welcome back to the 10 Blocks podcast. This is Brian Anderson, the editor of City Journal. Joining me on today's show is longtime writer for the magazine, Joel Kotkin. Joel was the presidential fellow in Urban Futures at Chapman University in Orange County, California. He's the executive director of the Houston based Urban Reform Institute. And he's a contributing editor to City Journal. And as I noted, he writes for us frequently. He's the author of many books, the newest of which has just come out and we'll talk a bit about that later. It's called The Coming of Neo-Feudalism: A Warning to the Global Middle Class. Joel, thanks very much for joining us.

Joel Kotkin: It's my pleasure.

Brian Anderson: First, you've been writing for years for us on your own state of California about its economic and political conditions. And it's been a while since we've talked about California on this podcast, other than homelessness, which we have brought up in LA and San Francisco, that's been a focus of ours. But your recent piece for us, Kamala's America, describes California as increasingly feudal and that also is a theme that's picked up in the title of your new book. So, perhaps you could just start by giving us a breakdown of where, before we talk about Kamala, where you think California is right now, how the pandemic has effected its politics and economy, and what do you mean by a feudal backdrop or environment?

Joel Kotkin: Well, the first thing is, in terms of the California and the pandemic, even though we've been far from the worst hit state, the economic impact of the lockdown, how it's been used, has been really kind of catastrophic. I think we have the sixth highest unemployment rate if you look at, by Metro regions. The California regions of LA, San Francisco, Silicon Valley, and the inland empire are all towards the bottom of the Metro. So the only Metros generally doing worse are the completely tourist dependent places like New Orleans, Las Vegas, Orlando. They still have been hit hardest.

So, we're not doing particularly well in the pandemic. And what's bizarre is we're ratcheting up our regulatory and tax policies in ways that make it even harder. For instance, we have this AB 5, which basically doesn't allow people to work as contractors. I can tell you that when you do business here in California, I always prefer to hire somebody from out of state, particularly if it's a larger contract, because I don't want to be assaulted by the state. "Well, this person worked for you for $10,000 and therefore you have to pay for their social security and a bunch of other things." I mean... And it's much worse-

Brian Anderson: We've editoralized against this several times. Allison Schrager has been writing a lot about just how misguided that measure is and what a negative impact it's going to have on California's recovery from the pandemic.

Joel Kotkin: Well, and we've already seen companies like Vox have to lay off large numbers of people. A lot of people are now doing their production outside of the state in terms of the entertainment industry. And of course the tech industry is very dependent on contract labor, so that's an issue as well. And there's also, other measures is one to allow for the fairly major increase in property prices, right in the midst of a absolute apocalypse for small business, we're going to raise property taxes and rents on people.

And in this, I've been writing a lot about this recently, and I know Robert Bryce has also written about it, this unbelievable decision that we're going to have to go all electric on everything, even though in some cases, the products don't exist and we're cutting back our both nuclear and natural gas. So, guess what? We have constant outages. I mean, it's now become... I wrote recently that it was just like the swallows come to Capistrano in the spring, the fires and power outages come in the summer.

Brian Anderson: Yeah, it's really tough for Californians dealing with this and the fires have become a kind of annual occurrence, but these rolling brownouts, we're in the 21st century, they shouldn't be happening, especially in a state that prides itself on its technological savvy.

Joel Kotkin: And a state that has enormous energy reserves of its own and was renowned for its energy production. And obviously, one of the great problems we have is that California, because the people at the top and the power structure, the greens, the oligarchs, the upper end of the bureaucracy, they're all doing fine. And so to them, this is not a big problem. What we're losing, of course, are mid-skilled jobs, manufacturing jobs. So upward mobility is being destroyed. So instead of a large, what I would call, a yeoman middle class of small property owners, we increasingly have rich people and serfs.

Brian Anderson: And this is what you're referring to by talking about this kind of 21st century feudalism that's emerging in California.

Joel Kotkin: Right.

Brian Anderson: Your most recent piece, as I mentioned at the top, is on the new vice presidential candidate or nominee, I should say, Kamala Harris for the Democratic Party. She is a California Senator. She's someone we've written about a number of times, including a feature essay by Mark Pulliam that we published all the way back in 2016 calling her the next Obama and predicting that she would be a very plausible national candidate, so someone to keep an eye on. And you've been her constituent for a long time as a Californian. In your piece, you note her close ties with Silicon Valley and Hollywood, but you also caution readers not to underestimate her. Could you give our listeners a sense of what you think Kamala Harris represents and the Democratic Party and what she'll bring to the ticket?

Joel Kotkin: Well, I think she's really in a very sweet spot because, unlike let's say a Bernie Sanders or even Elizabeth Warren, she is not somebody who's going to stand up to the tech companies who increasingly dominate our economy as other parts of the economy are systematically destroyed. She's also able to cover a good part of the intersectionality quotient. She's part Asian, part black, although from the West Indies, not from the United States in terms of her parents. And obviously she's a female, so she sort of passes all those intersectional tests that seem to be determinative now in progressive politics. But she's very odd in the sense that she also has a history of a kind of ruthless prosecutor and-

Brian Anderson: Right. She is attorney general in California.

Joel Kotkin: Right. And then as Attorney General, she does clearly have an authoritarian streak. I always think that Donald Trump comes off as a second rate Mussolini, kind of a buffoonish figure, but the real authoritarian wave in America is not going to come out of Donald Trump, it's going to come in the form that Kamala Harris represents. Where if you disagree on certain issues, you get banned from internet platforms, if you disagree, for instance, on climate change, you could be sued and even go to jail. I think we're going to see a real authoritarian regime. And in terms of California's insane zoning and planning policies, she's been a key enforcer telling people, "No, you have to put everything in high density. It has to be near transit stops," even though such a tiny percentage of people in California take transit.

But this idea of imposing a San Francisco model on the rest of the state, which is insane given the fact that San Francisco is really kind of unique in California for its density, for its transit dependency, and yet the state and Harris personally push this. And then lastly, I think she's pretty well known as being a very haughty and authoritarian personality. I mean, that's what I've heard from people who've worked with her. But she's very, very smart. She has a good sense of what to do when and she obviously has the political skills since she basically called Joe Biden a racist and then became his vice presidential candidate, that shows a certain amount of skill.

Brian Anderson: True. Well, it certainly, we're going to see, and it'll be fascinating over the next few months to discover what kind of an impact she's going to have on the campaign and on the Biden chances to win the presidency. To get back to this question of neo-feudalism, this is the title of your new book, the coming of neo-feudalism, it's published by Encounter and we'll link to it in the description of this podcast. I wonder if we could talk a little bit more about it? You talk in the... Or you refer in the subtitle to it being a warning to the global middle class, which you see as being replaced by a kind of California type model of a hierarchical economy kind of new class structure. Could you talk a bit about how that is manifesting itself globally? California, but are we seeing this in other countries as well?

Joel Kotkin: Oh yeah. That was one of the most interesting parts of doing the research is almost every country, even countries that we think of as egalitarian, like Japan or Denmark or Sweden or Finland, are showing the same characteristics, they're maybe not quite as extreme, Sweden has some, but they don't have the poverty populations that we have. But the UK certainly, if anything is even more feudal than the United States, because basically there's not much economy outside of London, so the competition is pretty extreme. And what you have is you have a sort of desire, I think in almost all these countries, to favor policies, particularly on the environment that make it almost impossible for manufacturing businesses, logistical businesses to compete on a global level against countries that don't have these regulations. And you also have a... What you really have is we've created this large class of people that I call the clerisy, who are at the universities, in the media, at the nonprofits, and they're fundamentally not directly affected by the market economy.

Brian Anderson: What do you mean by that?

Joel Kotkin: Other words, okay, if you're teaching at the University of California, it's going to be a long time and it would take a really long recession for you to be hit. The adjuncts may be hit, the students may be hit, but you're pretty insulated. I mean, we're talking about people, a friend of mine was talking, his neighbors, two retired associate deans from UCLA and they get about, between the two of them, like $300, $350,000 a year in pension. I mean, nobody has that. So what do they care if the economy's falling apart? They're kind of guaranteed and in some cases, parts of the clerisy actually benefit because they actually get more power and then we need more of them.

So, I think that fundamentally, and this is happening in some cases even more so in Europe. And then I just want to mention China, which has had a great growth of its middle class in the last 20 years, but that seems to have stalled. And there's an enormous poverty population that isn't going anywhere and really has very little chance of upward mobility. So this really is a global phenomena. It's driven by things like technology, the environmental movement, and frankly, neoliberalism, if you want to put it that way. And it's pretty much felt almost every, certainly almost every advanced country, and the middle class, the OECD even wrote a whole report, is really on retreat virtually everywhere in the world.

Brian Anderson: Well, this poses real problems for democracy, which historically has required strong middle class. What kind of steps can be taken to break apart this neo-feudalism and restore some kind of a more variegated economy where middle-class opportunity is available for people who aren't part of the clerisy?

Joel Kotkin: Well, I would say, first of all on the first point that you made, which I think is clear is that Barrington Moore made the great comment, "No bourgeois, no democracy." I mean, once you begin to lose an independent middle-class of small property owners, and I think the founding fathers understood this well and so did Lincoln, and Roosevelt as well, you can't have a democracy where the vast majority of people essentially have no stake in the game and are basically just looking for the opportunity to get money out of the government.

So what can we do? One, we can get rid of some of these zoning and planning policies in many countries, including the US, Canada, Australia, and the UK, which have all driven up the price of property so people can't get in the property market. Then you have to start saving on energy, instead of making energy incredibly expensive, which really destroys the opportunity for job creation and particularly middle-class job creation, maybe we should think about natural gas or nuclear power instead of relying on what is clearly expensive and unreliable fuel. And the third part, which I think maybe some conservatives don't like, but I'm not a conservative so I'll say it anyway, antitrust enforcement. We have allowed these tech companies to literally go and consolidate virtually their entire niches.

I mean, we have companies now with 80%, 90% market share in critical niches. I don't think that would have been allowed 20, 30 years ago, but it's being allowed now. So you have a small group of companies who not only control the pipelines, but increasingly control content. I mean, I'm very concerned that tech oligarchs are in control of the Washington Post, the New Republic, the Atlantic, and at Time magazine. I mean the ability of these people to not only control the pipeline, but what goes into it, you absolutely have to break up this group who now are... To show you how large they've become, Apple is now worth by some estimates, more than the entire American energy industry. Musk is worth more than virtually all the car companies put together, the Tesla.

I mean, you have a concentration of wealth that historically Progressive's would have opposed, but now are enabling and are now being funded by. So, this power has to be broken because if we don't break this power, Jeff Bezos, Mark Zuckerberg, Bill Gates, and the other oligarchs will dominate our future in the media, at the university level, and politically through contributions, and sometimes most effectively through nonprofit organizations that they fund.

Brian Anderson: Well, we do see growing concern among some conservatives anyway, about the control over information and censorship that has been going on via Google or YouTube. I think there's at least an awareness that there is a potential problem there and that these platforms have started to act more as editorial entities, rather than neutral platforms. And that raises a lot of questions about their civic responsibility and free speech. So I think that is a debate you're going to be seeing more of and there is some sympathy for at least looking into antitrust questions from people like [Luigi Zingales 00:19:29] and others who are broadly on the right, in some sense. I do think we're going to see more of that going forward.

Joel Kotkin: I certainly hope so. And look, there are many people who are Democrats or former Democrats, like me, who feel the same way and feel that what... And in this area, this is one area where Bernie Sanders and Elizabeth Warren were much more likely to, as they say, speak truth to power, than Joe Biden or Kamala Harris.

Brian Anderson: What is the intent of the book, I guess, is just to open up some of these questions? What's been the reception so far?

Joel Kotkin: It's been very interesting.

Brian Anderson: It's been released during the pandemic. Have you getting some attention for it?

Joel Kotkin: Yeah. Very nice attention. National Review gave it a very good review. Oddly enough, probably more attention on the right than the left, and more attention in Europe than in the US. The Times of London did a big piece about it. Figaro had a full page interview with me. I think partially because Europeans maybe because feudalism is not an abstraction to them. They kind of get it. The two groups that have... And then I have some nice comments coming from the more traditional left in this country.

The two groups that don't want to hear it are the gentry left, because obviously the book is about them in many ways, and some libertarians who can't get it through their brains that the people that they are so interested in supporting are people who would like to put them in the digital gulag. And also that you can't have a functioning democratic capitalist system if only a small group of people control the vast majority of resources. It just doesn't work. You could have something like China, Russia, you could have some sort of oligarchic regime, which is, I think, where we're headed. But I think libertarians in many cases are being very shortsighted and they don't recognize the sociological basis of conservatism and libertarianism, which is based on the small property owning class.

If the way to upward mobility is to go through the bureaucracies and the credential granting institutions, I don't see where there's going to be any constituency for a politics that's based on property rights and rule of law and competition. I mean, I find myself all the time, I started covering Silicon Valley in the 80s, the incredible rate of improvement. Every year somebody was coming out with something that was better than the guy before. I'd like to ask our listeners, do you think Microsoft works any better than it did 20 years ago? 10 years ago? Is Google search any better than it was five years ago? The lack of real progress in technology is really quite marked. It's actually interesting contrast from the progress that's made in fields where there's much more competition, whether it's in food or in markets. I mean, when you have a market that's 80%, 90% controlled by one company, there's no incentive for them to improve their product. It's just, how do they further monetize it?

Brian Anderson: Well, thanks, Joel. Very, very provocative and interesting comments and look forward to talking with you again. Don't forget to check out Joel Kotkin's work at City Journal. He's been writing for us for many years. His latest piece is called, Kamala's America. You can find it on our website, www.city-journal.org, and we'll link to it in the description. You can also follow him on Twitter @JoelKotkin and he has a website called newgeography.com where his work is also posted. Or you can visit the Urban Reform Institute's website to learn more about his work. Make sure you follow City Journal on Twitter, @CityJournal and on Instagram @cityjournal_mi. And as always, if you like what you've heard on today's podcast, please give us a rating on iTunes. Thanks for listening. And thanks again, Joel, for joining us.

Joel Kotkin: It's my pleasure.

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