Blog Archives

The Feedback Loop of Doom: When Mobile Creatives and Capital Abandon Unaffordable, Dysfunctional Cities

At the end of any trend, everyone’s a true believer: this trend is so enduring, so broad-based, so based on unchanging fundamentals that it will never ever reverse.

One such trend is the white-hot growth of housing, employment, tax revenues, etc. in major urban magnets for global capital and talent: you know the usual suspects: Dallas, Atlanta, Seattle, Portland OR, Denver, Los Angeles, the San Francisco Bay Area, New York City and so on.

What these urban regions offer are strong job markets, a very desirable dynamic.

For example, over 400,000 jobs have been added to the San Francisco Bay Area in the past few years, basically an entire new city of workers. Very few states have added 400,000 jobs in the past few years, and fewer still have added so many high-wage jobs.

The synergies created by global capital, research universities, a flood of fresh talent and the entrepreneurial drive to conjure up the next IPO Unicorn have been beaten to a pulp. What hasn’t been glorified is the net result of these synergies:

1. Infrastructure that wasn’t designed to handle an extra million residents, and that can only be expanded at tremendous cost and in timelines of a decade or two.

2. Soaring wealth and income inequality as these urban economies become increasingly “winner take most” and housing has skyrocketed out of reach for all but the top 10%.

3. A zeitgeist of self-congratulatory hubris in which locals are confident “we’re so special” that talent and capital will continue to pour in regardless of how fast the quality of life is dropping.

What few seem to realize is much of the talent and capital are mobile and don’t actually have to put up with the declining quality of life in unaffordable, dysfunctional cities: the people and the capital can go elsewhere.

I call this class Mobile Creatives, and they are not just another set of workers.I described this class back in 2014, and it has expanded under the mainstream radar over the past five years.

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Why Is the US Dollar Rising?

On October 3rd I asked Is the U.S. Dollar Set to Soar? It seems the answer was yes. Here’s the weekly chart of the USD I posted on October 3rd:

And here’s the current weekly chart of the USD:

Note the apparent breakout above 100 and the constructive similarities to the 2014 breakout that was followed by a 20% increase in the purchasing power of the USD relative to other currencies.

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The Destabilizing Consequences of Globalization

It is not possible to coherently discuss the “New Normal” economy without discussing financialization–the substitution of credit expansion and speculation for productive investments in the real economy–and its sibling: globalization.

Globalization is the result of the neoliberal push to lower regulatory barriers to trade and credit in overseas markets. The basic idea is that global trade lowers costs and offers more opportunities for capital to earn profits. This expansion of credit in developing markets creates more employment opportunities for people previously bypassed by the global economy. (more…)

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Forget “Free Trade”–Focus on Capital Flows

In a world dominated by mobile capital, mobile capital is the comparative advantage.

Defenders and critics of “free trade” and globalization tend to present the issue as either/or: it’s inherently good or bad. In the real world, it’s not that simple. The confusion starts with defining free trade (and by extension, globalization).

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