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Misha talks to Joel Kotkin, uber-geographer, about the coming neo-feudalism and “zaibatsuization” of America’s economy, how Chinese and American economic models are converging, and how to preserve liberty in an age of oligarchic tech dominance.
To view the full transcript of this episode, read below:
Misha Auslin: Welcome back to the Pacific Century, a Hoover Institution podcast on China, America, the Indo-Pacific, and the fate of the 21st century. I'm Misha Auslin, you are host, and I am particularly happy today to be joined by Joel Kotkin, whom I think is one of the most perceptive observers on what's happening in the United States, economically, technologically, socially, but connecting it to what is going on in Asia as well, particularly China. Joel is the author of 10 books, the latest, just released, The Coming of Neo-Feudalism: A Warning to the Global Middle Class. He is the Roger Hobbs Presidential Fellow in Urban Futures at Chapman University in Orange, California, and Executive Director of the Houston based Urban Reform Institute. He's also the Executive Editor of newgeography.com and contributes to City Journal, Daily Beast, Quillette, American Affairs, American Mind, basically, everywhere. So Joel Kotkin, welcome to the Pacific Century.
Joel Kotkin: It's my pleasure.
Misha Auslin: Well, I'm so glad, as I said, that you're here. I started reading you, because I'm an American and you're talking about the fate of the country. But the more I read you, the more I saw that, number one, you did, which something that we try to do, or that I try to do in the podcast, which, of course, is link what's happening abroad and link what's happening specifically, in my case, and in a lot of your writing to Asia, to America. Ultimately, the point of this broadcast is really about the United States and what our relations with Asia mean, what they mean for us, how we should be dealing with them. You talk about that, not from the political perspective, but from both a comparative perspective in terms of urban geography and economics, but also from the developmental perspective, in a sense. It's not the policy, per se, but it's a development of where we're going, what's happening here, what's happening there, and how the two are intertwined. So there's so much to talk about. And even though we are an Asia focused podcast, we're going to talk about how this affects America. We'll get into your talks about China, some of your recent work, but let me start with the new book. Again, the book is The Coming of Neo-Feudalism: A Warning to the Global Middle Class. So when I taught Japanese history as a pre-modern historian at Yale, I taught nothing but feudalism. That's all I taught, the real feudalism, the good old days. And there were many who would say that Japan was much more feudal than Europe ever was. I mean, it was a truly feudal society for centuries upon centuries.
Joel Kotkin: And, obviously, more uniform, Europe was a bigger place with lots of variation.
Misha Auslin: Exactly. And you, now, however, are saying that we have the coming of neo-feudalism in the United States, and in the West more broadly. What is that? Can you sum it up for us? What's happening? What do we face? What are the dangers?
Joel Kotkin: Well, there are several things happening at the same time. One is, when you start to look at what's happening on a global level, and particularly in Western countries, we're in an era of pretty much long term economic stagnation. There are increases and decreases, but most of those have benefited a relatively small number of people, and particularly in terms of where the wealth is. And for the large percentage of the population, not just here, but in other countries, things have gotten tougher. People's views of the future are worse. Young people are not doing as well as their parents. That's amazing. This is after, really, centuries, obviously, interrupted by various catastrophes, of upward mobility, including in a place like Japan. I also think that the Chinese upward mobility that was part of the great neoliberal era, that's beginning to fade. And I think we're going to see more decline there. So you've got economic stagnation, you've got demographic stagnation, which is huge. I think in the next 20 to 30 years, it's going to finally dawn upon our leaders that our problem may not be too many people, but not enough young people. I think that's where we're headed. And Japan-
Misha Auslin: And that's clearly... Right, Japan, that's what they face now.
Joel Kotkin: Japan's in it, and we're going to... But the difference is, I would argue, that Japanese society, Chinese is a little bit more unstable, but the Japanese society... A, the Japanese did a brilliant thing, they got rich before they got old. So they've got the money to maintain something over their welfare state. Is Japan going to be a great shaper of the future? Probably not. I forget who wrote about this, as being the next sort of like a Switzerland or a Venice, a place of extraordinary capacity, but no mode of force, it's just going to be there. And then the last part, which is much more difficult to categorize, which is the triumph of ideology or theology over a more cautious, more, can I say, humbler approach, this idea of certainty, of knowing everything, and there's only this point of view, and that's the only one that's allowed. And some of it is, we've allowed a bunch of extraordinarily wealthy nerds to take control of the society. These are nerds who know, for the most part, no history, no literature, have no... I mean, I've talked to these people sometimes about the constitution, and they're willing to get rid of the constitution tomorrow. I did an interview with a guy who's a friend of both Musk and Zuckerberg, and they said, "You have to understand, these people see no future for human beings on Earth. Zuckerberg wants us to lose ourselves in the metaverse, and Musk wants to take us off the planet." I mean, you know.
Misha Auslin: So, Joel, give us the bad news then. I mean, this is... What I think is so prescient about what you're... Well, prescient, we'll see if it's prescient, I think it's prescient. What is so disturbing about what you're doing though, is that as you've outlined this illiberalism, obviously, long term secular stagnation, demographic decline, but you're cutting to the core. The core of what we think it is, quite frankly, to be an American, which is that there is opportunity. And the argument-
Joel Kotkin: Yes.
Misha Auslin: ... that I get in the book is that you better think twice.
Joel Kotkin: Well, I think what's clearly happening is that the opportunity horizon is shrinking. Now, here's the positive side of it, just from an American point of view, the great thing about America is we don't have internal passports, and people can reinvent themselves. Last month, I've been both to Texas and to Florida, and I'm hardly an advocate of either, in the sense that I think... I'm not about to move to either place, because I'm an old guy who bought his first house in California for $150,000.
Misha Auslin: Oh, my... Don't don't say that out loud, that's going to just... People are going to start storming your house here.
Joel Kotkin: Well, they may, but I'm not going to give them my address, but anyway, unless the democratic party decides [inaudible 00:08:15]-
Misha Auslin: They could find it, trust me. Yeah. We've learned that.
Joel Kotkin: I'm sure they could. But I think that what we're seeing is that the middle class is being marginalized all over the world. And in the US, what that means is, the US is a unique country. It's not a racial country, no matter what either the right or left say. It's a country based on ideas that evolve over time, and fortunately have become more inclusive over time. But the problem is what do you do when a society that is not held together by blood ties, common religion, historical traditions. If you go to a village in England, you'll, you might see Roman ruins, and then medieval ruins, and then Victorian buildings. And you'll see different layers, and a history where people can say, "Yes, my family has lived in this place for a long time." That's less the case in America. America is about moving. Now the positive thing, and I was mentioning Florida and Texas, is Americans are reinventing themselves. Now, what I mourn more than anything, perhaps, is when California was the place that people went. When you wanted to reinvent yourself, it didn't matter. I remember going, going to a party of people in the New York law firm, and everyone was so concern about, "What school did you go to? Did you go to this one? Did you go to that one?" I remember, I think Ben Bradley, when I was at The Post, probably thought I was a Savage, because I went to Berkeley and not to Harvard.
Misha Auslin: Well, you have clearly a California accent. Where are you from originally?
Joel Kotkin: New York.
Misha Auslin: Right, so you made that migration yourself.
Joel Kotkin: Right. So when I came to California in 1971-
Misha Auslin: Wow. Wow.
Joel Kotkin: ... nobody left. I mean people left for job opportunities. There was always a group that would go to Manhattan. There was a group that would go to Washington, because they were interested in politics. The more human parts probably went to New York in pursuit of greed, and culture. I mean, New York is a great city. But the reality is that Americans are reinventing themselves, so I'm walking along Clearwater, Florida, on the main street of Clearwater, Florida, and I'm noticing it's not a bunch of old folks, there's a bunch of young folks. And they are, in many ways, like the people who came to LA in the '70s and '80s. My wife and I are watching the Jerry Buss documentary, and that whole period of the '80s, when anything was possible. We were becoming this global city. We were finding new ways of organizing societies. And I thought we it was a really great place. But I think what's happened is that California's become too expensive, too regulated, if you're not part of the sort of tech or Hollywood elite, you really don't have much role here at all. And so those people are now going to Texas and they're going... And I notice it in funny ways, like in Texas, I'm very interested in the behavior of Hispanics and African Americans that I run into. They feel much more a part of those societies, where particularly among a large parts of those people in California, they're very marginal. Silicon valley is basically imported, indentured servants from Asia, and a few American nerds. I think that the promising thing is there is still an opportunity horizon. It just, isn't in California, and isn't in New York.
Misha Auslin: It's interesting that you mentioned, and I'm sure everyone has anecdotes of that. I mean, I have two, one on the Florida side, which is a two young families in our neighborhood, our neighbors just moved down to Florida, and others are following. And like you said, these are not the old people. When I was growing up in Chicago, everyone was going out to Sarasota, because we would go to the Gulf Coast, not the Atlantic Coast, that was for the East Coasters, right?
Joel Kotkin: Right.
Misha Auslin: And, well, it was old folks, and my grandparents would go down every winter, you'd winter down there. And so I've got these young neighbors, two families just in the past couple months have moved, and more are planning on moving. And on the California side, much like you, and I think probably about the same age, a very close cousin of mine, a Chicago boy, dropped off in LA after Vietnam, by the US Navy, never left. Never left for 50 years, until last summer. And after 50 years, he and his native Southern Californian wife moved to North Carolina. They retired and they said, "It's too expensive, and the quality of life..." They lived in the Valley, San Fernando Valley, the quality of life-
Joel Kotkin: I lived there for a long time.
Misha Auslin: ... from when they moved there, has just cratered. And having visited them, I saw it. So everyone has these stories, I'm sure. This is everywhere. It's happening, but what really strikes me is as disturbing about your work is in the system of feudalism, of course, you have the owners of land, you have those who sort of sit on the fringes, the clerisy, the scribes, the scholars, the quasi-professionals of which you and I are probably that class, and then you have the serfs. And you write a lot about this. You write about the feudalization of the serfs in America. That lack of opportunity, has this ever happened before in our country?
Joel Kotkin: Not in our country. I mean, we've obviously had periods of great consolidation. The Gilded Age would probably be the best parallel, where we had the danger that we were moving towards sort of our cartel or zaibatsu state, cartel, being Germans, zaibatsu, being Japanese, in which there would be these sort of incredible combinations. And to our credit, we didn't gut that, but we did restrain it. And then, obviously, in the period, after the Second World War, there was an enormous rise of the middle class. And a lot of that was working class people moving up. Today, we're in a situation where the chances of working class people moving up and buying a house is so minimal. I mean, think about, also, that this "working class" is now, a lot of it is educated or has gone to school. We're producing twice as many BAs as we're producing jobs for BAs, and anyone who teaches is aware that the high schools are not exactly churning out incredibly knowledgeable people. Some of their tech skills are sometimes quite good, and I find with my students, presentation skills, but they've been robbed by the education establishment of all the great joys, of reading of confronting the classics. I mean, thank God, my younger daughter goes to the Orange County School of the Arts, she's graduating, but fortunately they studied Shakespeare. But I wonder what's going to happen to the next generation. Are they is Shakespeare to sexist, racist, whatever you want to call it? Is it too hard to understand? So what we're doing is, and this is where there is an interesting parallel, in the early part of the middle ages. Now, Japan's a different situation, I'll defer to you on that. But at the earliest stages, what we really call the Dark Ages, because there's infinite debates over medievalism, how long did it last? But the initial period, right after the fall of the empire... Now, just so you know, my background, I had seven years of Latin-
Misha Auslin: Oh.
Joel Kotkin: ... and classical history was always, and remains, a big interest of mine. One of the things that's really interesting is that in the initial centuries after the fall of the Roman Empire, there was a conscious attempt, even by the small literate class, to separate from the classical tradition. The classical tradition was seen as pagan and evil and all these other things. Well, we're going through something like that now in which we have the... And by the way, the universities have been at the center of this, obviously. We're systematically undermining our belief in our own culture, our own civilization. And so, and as in the case of the Dark Ages, we are substituting a religion in its place. And that religion is, it's not just one religion, but they intersect. The gender fluidity plus the whole idea of systemic racism, and climate change, all of them have this sort of very much medieval feeling of the apocalypses coming, and human evilness is why this happens. As opposed to the understanding that I think a good liberal historian would have, and I'm still consider myself to be politically a more of a liberal, not a libertarian at all. But one of the big problems is that, if you dissent from this belief, just like in the middle ages, you are immediately sent into what I called the digital gulag. And I even find that, because let's say I may not share their views on several issues, liberal, sometimes, won't even deal with my arguments. Even though my book, I consider to be more Marxist than conservative.
Misha Auslin: Uh-oh, don't say that.
Joel Kotkin: Well, I think it's true. I think, I-
Misha Auslin: I don't know how Hoover's going to feel about that one. We have to scrap-
Joel Kotkin: Oh, that's-
Misha Auslin: ... the whole podcast. I'm just kidding. It's great.
Joel Kotkin: I mean, Marxist, not in the sense that, I mean, look, I think Marx was a brilliant analyst of capital society, and some of his predictions were true. His suggestions of where to go were terrible, and how his work was taken was terrible. But I studied Marxism under Michael Harrington-
Misha Auslin: Oh, wow. Yeah.
Joel Kotkin: ... and I think there's a lot of value there. But what happened today is even somebody who is maybe a conservative or moderate social Democrat, but if I don't believe in racial quotas, and I don't believe in renewable tomorrow, net zero tomorrow, and if I don't believe that sex is something that is a matter of identity and not biology. Well, I guess, I'm in the digital Gulag. I've violated it. And even though sometimes this religion is contradictory in many ways, you can't have that discussion. As a friend of mine said. "If you want to talk about these issues, you have as much chance of discussing these issues in the progressive world, as you would've had to discuss the nature of Christ in the fifth century in Rome."
Misha Auslin: Actually, and to another of your point, we have another adoption from, well, certainly from the Byzantine era, which is iconoclasm. Literally-
Joel Kotkin: Yes.
Misha Auslin: ... the tearing down of idols, the toppling of statues, the destruction of a physical remembrance of the past in terms of people.
Joel Kotkin: Right. And this is where I think some of the Asian influence is important. Now, I think we may end up looking somewhat like Japan, and our industrial structure is increasingly what I would call zaibatsuized. In other words-
Misha Auslin: Yeah. I want to get to that in a minute or two.
Joel Kotkin: We're adopting things also from Asia, but the biggest and most important influence is China. And the system that China's developing, which we are in many ways, paralleling in many ways, the only difference is, in America power still resides among the very rich, as opposed to in China, where power exists in the very rich, but at the sufferance of the cadres.
Misha Auslin: Well, and as you pointed out and others have pointed out, we're seeing an increasing overlap between the rich who are now becoming the top levels of the cadres in the party. They're becoming party members at numbers that you never would've seen. Of course, they weren't rich before, but those who were engaged in the economic sphere, those who are engaged as what we would call business people, they would not have been party members, certainly to these numbers in the past. And now that party is changing.
Joel Kotkin: Right. And then there's the confluence, which is in some ways reminiscent of Japan, in the sense that government officials mix with... particularly, the all descent from heaven in Japan.
Misha Auslin: Yeah, into the... Right, it's called amakudari, which is coming down from heaven for former senior bureaucrats who then take top positions at corporate. But of course that happens here too.
Joel Kotkin: Well. And it's happening more. And what we're seeing is, for instance, there was the recent testimony by a bunch of defense and intelligence people defending the tech oligarchy and saying, "We can't break that up." It turns out that most of them are part of organizations that are paid for. The influence of the tech oligarchs is so extensive now, and I don't know if we can ever really do much about it. I mean, and the parallel with feudalism is, just like the feudal, the initial feudal lords were the strongest barbarian on the block, was the feudal lord, that was basically it. And the same thing's true today. There was this huge field, and I give them credit, they saw something. Why the movie studios didn't see streaming? Why did the bookstores wait around for Jeff Bezos to destroy them? Why didn't they get into these markets? I give them all the credit in the world for seizing an opportunity. But now, like the aristocratic lords, maybe they have created some degree of stability, but on the other hand, they now see themselves as capable and deserving of directing society. So the parallel with medievalism is quite strong. And then there's the clerisy, which is this sort of quasi-religious group, which turns on a dime... I'm an old journalist, both old and a journalist, I am horrified by the transformation of papers that I've worked for into, essentially, in the old days we would've called it mimeographing, but basically copying the talking points, almost immediately. And I don't know who comes first, the DNC or NPR, it's hard to know. And that bothers me. Now, by the way, I have not much more support for Fox News. Fox News, also, I don't necessarily trust what they do, but-
Misha Auslin: Let me ask you then, if I can, because I wanted to, just before we got too far away from it, because you were talking about how the today's feudal lords, the techno lords have, of course, decided that they know best, and therefore they should run society and shape society, as opposed to just in the old days, being the ones who would give us everything we needed, maybe we wouldn't have as much choice, but they didn't tell us how to necessarily to live our lives. Today, they're telling us how to live our lives. How does that connect with your concept economically of zaibatsuization? Because I do want to shift over to the Asia side-
Joel Kotkin: Sure.
Misha Auslin: ... what you've drawn the connections, and others, I mean, I've done it as well between the elites and China. But then if you said that that's the model that we're beginning to pace, what does that mean for us? So let's start with zaibatsuization, if we could, a little bit.
Joel Kotkin: Great illustrations of that. When the tech companies were tech companies, I mean, their job was basically to take existing technology and improve it, to improve productivity and things like that. But increasingly the oligarchs, they want control of everything. I mean, it's no longer just the best widget or the fastest speed. It's also, we're going to control the culture through buying up the means of communication, but then also into the business of supplying the content. Now, by the way, they're not particularly good at this. As an old Hollywood guy, I would say, they're pretty shitty at it. I mean, one of the reasons I think they have problems is that they don't program for anyone but their own group. And therefore they leave out 50, 60% of the population, but the bottom line is there's no alternative. Where is the conservative, or even mainstream centrist version of Amazon Studios or Netflix, and there's no such alternative. Then you look at where they're going. Google and others, they're big into medical. They're moving into space. In some cases they're buying up what's left of legacy media. So in a funny way, during the Gilded Age, we may have had to pay an economic price to John D Rockefeller and the other robber barons, but they didn't [inaudible 00:27:51] to really teach us how to think, or they didn't have the means to control it. In early 20th century New York, you might have had 40 or 50 newspapers in different languages with everything from far left to far right. And today you only have two or three, and if you control those two or three, you can sort of define how people are. So what I think we're seeing is this kind of, just like in Japan, the zaibatsu will be, they'll make cars, they'll make steel, they'll do electronics, they'll have a bank. I mean, the various... And then of course, now we're seeing, they're also going to dominate the space era, because nobody else has the money. I mean, the end of the day, the tech oligarchs, even though they may be having a little bit of a rough time in the recession that's coming, the reality is they have the money, the capacity, the ability to go to the markets and do pretty much whatever they want.
Misha Auslin: Well, zaibatsus and oligarchs have been broken up. We had, obviously, Standard Oil was broken up in 1911. The zaibatsu were broken up after the war, 1945, and, yes, they did sort of reform into what we call today, the keiretsu, which, again, they're relatively integrated, but not in the same way. They don't have the same central holding companies. They've really determined that there was a lockstep sort of closed system of production that would support, as you said, banking, steel, mining, electronics. It would be everything. I think the tech revolution happened so quickly, as we all know, I mean, you're a little bit older than I am. I mean, I'm old enough to remember a largely tech-ish free, certainly today's style of tech free life. And then before we knew it, this is our life. So the fact that Facebook owns all of the competing modes of communication from WhatsApp to Pinterest, to Instagram, or I'm assuming, I don't pay attention to that stuff, try to stay away from it. Can it be broken up? Will it be broken up? Is that a way? But what is the lesson that the tech lords are getting from China, where there is great political control over the system? So how do they navigate that balance? And can the people... Because, again, just to back up for one sec, your point, as you've been writing, is that we do not have a competition or a struggle between the oligarchs and the people. We have a struggle between the oligarchs themselves for who's going to control the whole pie. The people are out of it. That's the feudalization of the American people.
Joel Kotkin: Well, you can use another good Japanese term, daimyo.
Misha Auslin: Daimyo. The daimyo, the feudal lords, are fighting each other. It's not that it's the people versus the lords, which again, Japan has actually never been the case. So first let me ask you, do you see any chance that the government steps in to break up these huge concentrations of power? Secondly, how do they then manage the political threat? And what are they learning from China?
Joel Kotkin: Well, I think they are two different things. One in terms of breaking it up, I'm not sure what the best approach would be. I certainly think that you do not. I do not think Facebook buying Instagram and WhatsApp should have been allowed. I think these could have created their own ecosystems, if you will. And then become a place for developers to sell their products. When you have 80, 90% market share, there's not going to be much opportunity for people at the bottom. So you know how you do it, that's something that, as President Obama would say, "Is beyond my pay grade." But I do think that people are... They don't like where this is going. I mean, nothing annoys me more than I go to a website and they say, "Well, check in through Google or through Facebook." Like I said, "Why don't you just give me your URL? I can go directly to you." I think that something has to be done. Now, the lesson of China may be the exact opposite. What the CIA and "intelligence" people are doing, I put intelligence in quotes because they're usually wrong, right? What they're really saying is, "China has this model of central, control domination by a few companies and to compete against it, we have to create our own authoritarian system." Now they'll still be some constitutional guarantees. And we'll at least go through the charade of elections and things like that. But in reality, our system and the Chinese system are increasingly not that different. Once you have a small group of people with control over things, they're going to be autocratic, because that's the nature of humanity. I don't think, Sergey Brin at Google, who used to say, "Don't be evil," ended up running a company that is, I would argue, pretty evil at this stage of the game. A company that talks about control of speech. In China, the control of speech comes from the cadre. In America, the control of speech basically comes from a bunch of progressive activists, mostly in the Bay Area, and informed by unhinged professors, which are not rare.
Misha Auslin: Go ahead, please.
Joel Kotkin: No, so I just think there were some parallels there.
Misha Auslin: Yeah. So the parallels is obviously extremely concerning. I mean, at some point, we'll figure out if... So my son is in his early 20s, does he view all this differently than we do? Because you and I grew up in a very different system, meaning, as we get to those generations... You said, "What's going to happen in the next generation of education?" Well, the next generation of kids are going to be taught by this generation of teachers. Meaning, they're going to be taught by this generation of students who become the teachers. And if they're miseducated, then there's really no hope, right? Because it's just, you get to a point where no one remember... You're talking about sort of Irish monks at the end of the Roman Empire, who remembers what is to be taught? Same thing with what does a free society look like? Or what is a free exchange of information? All of what you just said, we're going to get to a point where no one born remembers anything before it. So how do you recover it?
Joel Kotkin: That's a good question. I mean, first of all, the reason I wrote the book is to say, "This is where we're at. Now, if you want to keep going this way, don't challenge it. If you want to change it..." And my appeal was not to conservatives or liberals, but across the board. I think most liberals I know are kind of shocked by what they're seeing. Actually, a lot of the opposition to what's going on on campus is coming from traditional liberals. 3. What worries me is not so much the views of people, but fear. And this again is very medieval. For whatever bizarre reason, I'm a young, moderate to conservative or even traditional liberal, and I want a career teaching English. You better be careful. You better be careful what you say. If you express an opinion that is considered to be heretical, and I use that term in the medieval sense, you are going to lose your job. You're going to get a cadre of militant students or militant former students protesting. I can tell you everybody who teaches, at least that I see, everybody is sort of like, you walk on eggshells. You're afraid if I say something... Now-
Misha Auslin: And can we agree by the way that is unAmerican? Can we just agree?
Joel Kotkin: That is-
Misha Auslin: Should it even be controversial that the idea that people are scared to speak is unAmerican, as we understand it?
Joel Kotkin: Of course, it is. It's also anti-Western European. And actually in some ways the Europeans are resisting this a little better than we are, frankly. So I think that we really need to figure out some kind of response that unites parts of the conservative world and parts of the liberal world. The unfortunate tendency, it seems to me is, as the left has become more autocratic, the right is becoming more autocratic. I just finished an article on that, very [inaudible 00:37:31]-
Misha Auslin: Because they feel their back is to the wall, and if you have nowhere left to go, you've got to fight back. But you know what, Joel, I think that probably a lot of listeners at this point are saying, "This is fascinating, where's Asia for us?" Because this sort of an Asia oriented-
Joel Kotkin: Right. Right. Right. Right.
Misha Auslin: I guess not sort of, it is actually an Asia oriented one, although this has been an incredibly important conversation. So what I'd like to do in our last minutes, if I can, is shift over to this article that you recently wrote for American Mind called Red Dusk, which looks at, from your perspective, as again, an urban geographer and a demographer, and a very perceptive observer of economics, the threats to China's future. And I wrote a book in 2017 called The End of the Asian Century, a large chunk of which was devoted directly to these questions of weaknesses in China. But that's actually become very controversial, quite frankly, and I say it's necessarily China boosters versus China critics. It's just, there's a lot of contention over the idea of whether China simply is far more resilient than we give a credit for; that the party is more resilient even with current missteps, that the 30 plus years of growth that China's witnessed, while it may not have gotten it to the point of Japan, like you said before, Japan got rich before it got old, nonetheless have given it much more of a cushion to survive. And we see that in its championing, the leading, the cutting edge technologies that you think are so important. Things like AI, machine learning, trying to become a chip maker. You talk about how Apple is now going to be sourcing some of its chips from China. So enough said on that, let me ask you then to talk about your perspective on why you think, as I certainly have shared for a long time, the sense that China has a lot of real risks and threats ahead of it, or are we just sort of hoping?
Joel Kotkin: Well, here's the way I would like to constitute it. There's nothing inevitable about the Chinese centering. China has enormous weaknesses, demographic among others. It's a uniracial state, which I think hybrids are really a good thing. I think that's what makes America strong. I look at my students and I would say at least a quarter are from mixed race marriages. And every year I see more and more of that. I think that we have this entrepreneurial strength, which frankly, I think the oligarchs are basically threatening. Because it's harder to create a real startup, the startups are created almost as, sometimes, simply to be bought by one of the oligarchs. They're not, the idea, when I used to report on Silicon Valley in the '80s, everybody wanted to build a big company. And now a lot of times they ended up selling the company, but they had that ambition. So I think that if we look at what our strengths are, the demographic strengths, what our societal strengths are, that we are going to have a younger population than China, particularly, if we continue some immigration, and we have a system that is encouraging people to invest in it. You take a look at what's happening now with Europeans. They're saying, "Investing in China may not be that attractive. "There's a price you pay, not to the Wall Street people, because they don't believe in anything, even though they like to say they do, but the reality is, if you're going to build something, I've talked to people, for instance, at Mercedes, and they'll say, "We have to be very careful in China, because we have no rights. They can decide tomorrow that I've got to give you this patent or that patent." Now some companies, like Apple, act like they're independent republics, and they can simply cut their own deal. But in the long run, that's not going to work. But if we try to duplicate the kind of autocratic structures that China has, we're going to be squandering our natural advantages. As we're doing right now, for instance, in energy where we actually are very energy rich country in the midst of an energy shortage and what are we doing? We're buying oil from Saudi Arabia. If they'll give it to us, and we're creating a system where China can build coal plants while we shut down natural gas plants. So we have to have a strategy that says, "America is a resource rich country, with a relatively vibrant demographic," although that's certainly threatened, "with a constitutional system that makes it much more attractive for investors, both domestic and foreign. And we have a history of entrepreneurship." And by the way, we are seeing an entrepreneurial revival at the grassroots level that's very, very encouraging. But America can only win by being America. Now that doesn't mean that you give into the to the market fundamentalists who say, "Well, then we shouldn't ban anything from China." No, if the other side is using slave labor and won't allow your products in, you have to put restrictions on them. Do we need an industrial policy against The Netherlands? I don't think so. But China is a threat, and you have to deal with it. So you can be an entrepreneur, but also understand the importance of protecting the country at the same time. And I think what's happened is our corporate elites are, essentially, not interested in the welfare of the country themselves, basically, and they're looking for how to get quick profits. And very often a authoritarian system allows them the access to cheap profits. They don't have to worry about labor unrest, although I'm not so sure how much longer that's going to last, but you don't worry about labor unrest. You don't worry that somebody's going to put a Yelp review saying, "The LA City Hall is filled with imbeciles." You can't post that in China. So there is a great desire, I think, on parts of, not just corporate world, but in the clerisy to create a Mandarin like state, a state where experts, who are designated, tell us what to think, what's right, what's wrong. And there are many people in academia who love that kind of system, because it empowers them. They become the people who get to tell us what we can think, what we can't think. And if we do that, if we follow the Chinese model, I think we will lose. I think that's not how we win. America wins by being America.
Misha Auslin: Well, that's a great uplifting after what I would say was not a lot of uplifting thoughts, but very important and perceptive thoughts, but a really great uplifting summation. We don't, I think, as much on the podcast try to talk about how all this that's going on in other countries affects America, but your point about things that we don't want to see. I think it would be fun at another time to talk to you a little bit about Japan, more about Japan and what Japan's done right. In terms of its narrowing of certain areas of competition and opportunity, but also a leveling within society, so that you certainly don't have the type of-
Joel Kotkin: Oh yeah.
Misha Auslin: ... the wealth disparities that cause problems. We can get into it another time. But here's where I want to finish up, Joel, I want to ask you two questions, because you've written a lot about, and you've talked about it to us today, America reinventing itself. You've you've mentioned Florida. You've mentioned Texas. Those are the obvious ones that come up, but I want to ask you two questions, and they get to some of your writings. First is, you note that people are moving away from the big cities. We certainly see that here on the East Coast, it's just a flood down south, obviously, you see it out of California. Number one question or first question, not number one, first question is, for a younger person, where are, in your view, the really attractive places to go to be a little bit ahead of the curve? You're you're probably not talking Phoenix. You're probably not talking Bozeman. Those are places that have been well discovered, right? Where is it that they're going to have opportunity, and some of these opportunities you've been talking about? That would be number one. Number two, counterintuitively, for those who don't want to give up on the California Dream, where in California, could you move to have some type of life style the ones that maybe you had when you moved there 50 years ago?
Joel Kotkin: Well, you have to take it from a demographic perspective. One of the things that's really funny is when you read about California, for instance, who's leaving California? It's not the older people, it's the younger people. And those are also the people who are, basically, not coming. Where are the best places? I think there are a bunch of them that are emerging, for instance, I would look at Arizona, at Tucson. Cheaper, less congested, a little bit less of a furnace, beautiful country nearby, a very nice university, University of Arizona, which is not quite the gargantua that Arizona State is, but that would be a place. I would look at Fayetteville, Arkansas is another-
Misha Auslin: Interesting.
Joel Kotkin: ... town that's doing very well. Obviously, Nashville's gotten quite a bit of attention, but Des Moines. And I'll tell you the place that I think is really coming on big time is Columbus.
Misha Auslin: Wow, really?
Joel Kotkin: Well, Intel's putting 20 billion there-
Misha Auslin: Oh, yeah, right.
Joel Kotkin: ... they're talking about putting in a 100. It's the biggest deal, I think, in the history of the semiconductor industry. And they've said, "Look, this is..." You think about what Columbus has it. It's got a huge university. It's a state capital. It's got a growing immigrant population. It already had some industry, and now it's really going gangbusters. And it's got an Appalachian periphery that is absolutely set for development. There's just no doubt about it. So I would look at those areas as being really... And I'm sure there are many others. In California, that's a harder story. If you're a young couple and you want to own a house, you got to look at the interior. You might live in the coast when you're in your 20s, but if you're going to settle down, it's going to be pretty much the interior. It could be parts of even LA County and Orange County, on the eastern edge of those counties. But I would say it'd be mostly in the interior. And then what's really interesting is a lot of tech workers are moving further out, Central Valley, but even beyond the Central Valley into the Mother Lode Country. I think there may be some movement to the Central Coast. But the problem in California is that the regulatory regime is so difficult, and property prices are even high in the interior, relative to the rest of the country. So it's a little bit harder... The real challenge in California is, can you make enough of a living in a place you can afford? And that's difficult.
Misha Auslin: Well, Joel, this has been, well, let's be honest, this has been a little bit more about America today than Asia, but that is okay. That has actually been a fascinating look at where we are, but also related and tied to what's happening in China, our dependence on China, the relations we have. Very interesting comparisons with, with Japan, as I said, it'd be interesting to talk a little bit more about that. But again, really, for those who, and I'm assuming most of the listeners know you and your work, but if you haven't, it's joelkotkin.com, so J-O-E-L-K-O-T-K-I-N.com, where you archive almost all of your work. The new book, The Coming of Neo-Feudalism, but really just one of the most insightful observers of what's happening today. And I'm really glad you could take time to join us.
Joel Kotkin: It was my pleasure.
Misha Auslin: So for the Pacific Century, this is Misha Auslin, in a very special America edition. But next time we will see you, and we will return back out to the Pacific.
Speaker 3: This podcast is a-
Misha Auslin: Bye-bye.
Speaker 3: ... production of the Hoover Institution, where we advance ideas that define a free society, and improve the human condition. For more information about our work or to listen to more of our podcasts or watch our videos, please visit hoover.org.
