Before the Joint Economic Committee

Testimony of Joel Kotkin

June 12, 1995

Before starting I want to assure that my mother raised me to be a relatively well-behaved adult, so felt a little uncomfortable spending my time now essentially telling all you Washington folks how essentially irrelevant much of what you do is and how much more irrelevant it could become in the future.

Fundamentally national politics in America has lost its relevancy because it has--at least until recently--missed many of the key developments and issues that are now transforming reality.

I would like to deal with three aspects of this change--the political, the cultural and the economic--and try to do it in as few words as possible.

Political...The underlying assumption of Washington politics, most particularly for Democrats, has been that most of our problems can, and should be dealt on a national level.

This assumption has its historic base in a series of developments, from the creation of the national road and transit system in the early national period, the civil war, reconstruction, the industrialization process, the first world war, the depression, the second world war, and finally cold war and struggle for civil rights.

With each of these developments, the logic for strong *National* solutions to problems was fairly compelling. It is difficult, at least from my perspective, to see how these problems could have been handled outside of a fundamentally national perspective.

As a Democrat, although clearly one out of step with much of the party, I honor the work of Roosevelt, Truman, Johnson, Humphrey, the Kennedys, and, most particularly, Dr. Martin Luther King in addressing and trying to deal with these national problems.

As an American, I also honor the work done particularly in winning the cold war, by Republicans such as Eisenhower, Nixon and Reagan.

But now the forces of history are moving away from centralized solutions. Rather than a nation becoming more homogeneous we are becoming more and more a collection of quasi-independent states and regions, many of which are essentially at economic and cultural loggerheads with each other.

Today, for example, my adopted home state of California, like the rest of America, competes and trades with foreign countries, indeed we are the predominant trading state. Yet at the same time, we find much of our most ferocious competitors coming not from abroad but from other states, notably in the south and intermountain west, who have invested millions of dollars to pull businesses and investments away from our state and to theirs.

In much of the South, for example, diversity is largely an issue of black and white. The legacy of slavery and its aftermaths are the predominant issue. Whatever the cultural divisions, they center on the aftermath of that experience. A somewhat similar pattern can be found in parts of the Urban Midwest, such as Detroit, where both blacks and whites from the south migrated in huge numbers.

Second, throughout large sections of the rural intermountain west, the plains and the midwest -- as well as selected pockets in various parts of the country -- you have what I call the Valhallan culture, which is overwhelming white and native born. This culture has become even more Valhallan as large numbers of former urbanites flee to these areas, seeking among other things the comfort of a monocultural environment.

Lastly, there are the Cosmopolitan regions, concentrated particularly in the cities of the Northeast, the Gulf Region, Atlantic Florida, and the West Coast. Here the impact of recent immigration is profound: Over 70 percent of all 1980's immigrants landed in seven metro areas-Los Angeles, New York, Miami, San Francisco, Houston, Washington, and Chicago. For example, roughly one-third of Los Angeles and twenty-five percent of Bay area residents are foreign born; the national average is only nine.

These areas are the focal point for both enormous cultural conflict and creativity. They also house many of the ethnic tribes I have written about -- Jews, Arabs, Chinese, Japanese, East Indians, and the other Asians. These areas are also effectively sanctuaries for various "out groups" such as lesbians and homosexuals, as well as numerous creative types.

The issues of integration and assimilation, of language and culture are deeply felt in each of these three zones in profoundly different ways. Any attempt to impose an identikit solution from Washington would be ill-advised.

Yet at the same time, it is a challenge for the national institutions to keep some standards, largely around the ideals bequeathed from the founding fathers; but making it work for three Americas will prove very difficult.

Economy...Finally there is the economic dimension. Historically, both political parties have oriented their message for the old top-down heavily concentrated industrial economy.

Democrats often identified themselves with newcomers and smaller businesses, and later labor, Government-dependent business and various entitlement lobbies. Republicans have largely been the party of larger companies and conservative small business owners.

In Washington, these economic forces remain at the heart of the debate. But in much of America. the dynamism has shifted to smaller firms who create the bulk of the jobs and increasingly dominate the higher-value end as well.

This economy does not have much of a presence in Washington, although some regionally political people understand its importance. This economy is not just a bunch of Mom and Pop business-

(Ed. end of transcript)