What Happened Today: July 7, 2023
Yellen visits China; No Sweden in NATO; No tomatoes for India's McDonald's
The Big Story
Despite ongoing efforts by the White House to calm the waters with Beijing, Treasury Secretary Janet Yellen made fresh waves on Friday when she opened her diplomatic visit to China by noting that she’s been “particularly troubled” by the government’s punitive treatment of American companies doing business in China. Citing “China’s use of nonmarket tools like expanded subsidies for its state-owned enterprises and domestic firms, as well as barriers to market access for foreign firms,” Yellen told a gathering of American business executives that during her weekend of meetings with top Chinese officials, she would attempt to unwind some of the hostile conditions they’ve faced.
The tense business environment, however, cuts both ways, with Chinese executives encountering their own hostilities while doing business in the United States. American lawmakers have held congressional hearings and blasted China’s TikTok for national security concerns, and the Biden administration continues to ramp up restrictions against using Chinese manufacturers for American technology production.
Yellen was slightly more reserved in her meeting with Chinese Premier Li Qiang, the nation’s number two under Xi Jinping, underscoring the need for “healthy competition” between the world’s two largest economies but adding that no “disagreement [should] lead to misunderstandings that needlessly worsen our bilateral economic and financial relationship.”
In the Back Pages: Kill Off the Old City so New Cities Can Be Born
The Rest
→ The annual NATO summit next week was set to be a major welcome celebration for Sweden as the newest member, but ongoing foot-dragging by Hungary and Turkey have essentially nullified the possibility that Sweden could join the alliance in time. The delays in securing the final two votes from Hungary and Turkey to form a unified 31-vote bloc to allow for a new member raises fresh speculation if the holdouts will ever be satisfied. Continued objections from Turkey’s leader, President Recep Tayyip Erdogan, over Sweden’s unsatisfactory implementations of new anti-terrorism policies against groups it says are hostile to the Turkish government have become the sticking point that NATO leaders now hope to mollify at the summit.
→ A series of major land purchases worth almost $1 billion has American officials a bit spooked, as the true identities of the buyers are not known and the parcels are near sensitive military operations in California. The group facilitating the buys, Flannery Associates, has quickly become the largest real estate land holder in Solano County, much of its land near Travis Air Force Base, though an attorney for the firm says “speculation that Flannery’s purchases are motivated by the proximity” to the base are false, adding that 97% of the investment money comes from U.S. citizens. Such information hasn’t satisfied lawmakers. “We don’t know who Flannery is, and their extensive purchases do not make sense to anybody in the area,” said Rep. John Garamendi, a California Democrat on the House Armed Services Committee. “The fact that they’re buying land purposefully right up to the fence at Travis raises significant questions.”
A witness who had yet to appear in the House Oversight Committee’s ongoing investigations into the Biden family’s foreign business relationships says he was forced to flee after being arrested in Cyprus—a tactic, he claims, used to prevent him from presenting evidence to the committee. The witness says that his evidence proves “the Biden family received payments from individuals with alleged ties to Chinese military intelligence and that they had an FBI mole who shared classified information with their benefactors from the China-controlled energy company CEFC.” In a video testimony shared with the New York Post, the witness, an Israeli professor named Dr. Gal Luft, says he is “patient zero of the Biden family investigation.” Standing accused of conspiring to sell arms to foreign nations in violation of the Foreign Agents Registration Act, Luft says he is innocent of the weapons charges he’s since ducked out on while awaiting trial. His location is currently unknown and he says that he, “may have to live on the run for the rest of my life on the run …”
→ There is money to be made by automakers picking up massive government subsidies as they shift their fleets to electrical vehicles. But workers say the money from the government to green the auto industry is not making its way down the food chain, a problem that the United Auto Workers union says will need to be fixed before it backs President Joe Biden in his bid for re-election.
Though historically aligned with Democrats, some Republicans are trying to leverage the auto union frustration as they make their opposition to the Biden administration’s green energy subsidies a flank of their 2024 campaign.
It seems, though, that green energy isn’t the problem for the unions—it’s just the lack of green in their pockets. “The Big Three automakers: Ford, General Motors, and Stellantis, are taking billions of dollars in government subsidies to go electric, but those benefits aren’t trickling down to UAW members,” said UAW President Shawn Fain in a recent video.
In 2019, a GM auto plant was on track to pay auto workers $30 an hour before it was shut down. Nearby, GM opened a new battery plant, but union workers were only offered $16.50 an hour. “The EV transition is at serious risk of becoming a race to the bottom. We want to see national leadership have our back on this before we make any commitment,” said Fain.
→ McDonalds customers in India will have to hold the tomatoes on their Big Mac order as the fast-food chain says it can no longer offer the fruit on account of supply chain issues. In some parts of the country, the price of tomatoes, which is a staple in Indian cuisine, is up 288% this month for wholesale buyers and even more on retail shelves. Fresh-ingredient troubles aside, customers can still find ketchup packets available for free at all double arches.
→ Despite a botched campaign announcement on Twitter, stilted media appearances on the campaign trail, and a set of policies likely to alienate voters in the center, Florida Gov. Ron DeSantis says his sinking poll numbers are largely the result of an inhospitable corporate press. “I think if you look at all these people that are responsible for a lot of the ills in our society, they’re targeting me as the person they don’t want to see as the candidate,” he said during a Fox News interview on Thursday. “Look at the people like the corporate media, who are they going after? … Who do they not want to be the nominee? They’re going after me.” The interview follows shortly after Steve Cortes, the representative for a DeSantis super PAC, called Donald Trump the “runaway front-runner” for the GOP nomination. Cortes has since walked back his comment.
→ World leaders across four continents have taken to Twitter to all but plead with Taylor Swift to add their nations to her blockbuster Eras Tour, though every new date added is likely to leave someone feeling left out. Already, recently added stops have ruffled feathers down under, where the meager set of dates in Australia left Andrew Wallace, a member of parliament, willing to trade his dignity for the chance to sing along to “Anti-Hero.” “I’m asking you, I’m begging you, I’m pleading with you, I’ll get down on my knees if I have to, please come to Queensland,” Wallace said in an interview. “There are so many Swiftie fans in Queensland. I am one of them.” Swift’s current plans to stop in Mexico and Brazil are sure to also hit close to home for Chilean President Gabriel Boric, who likely mentioned that folklore is his favorite album when he wrote to the singer in June asking that she include Chile on her swing through Latin America.
→ Birkenstocks could soon walk onto the stock ticker, as the iconic German sandal company looks to be valued somewhere in the ballpark of $6 billion should it go public. A private equity firm working on behalf of French luxury fashion house LVMH has tapped Goldman Sachs and JPMorgan to kick the tires on a potential IPO in the United States, a move that could finally crack the freeze that’s settled over the IPO market amid turbulence in the economy. Around for almost 250 years, the sandal has found a new generation of fans and cachet as a high-style fashion item after similar cycles of popularity in the ’90s and 2000s. Birkenstock has dropped $130 million on a new German production facility to keep up with surging demand.
TODAY IN TABLET:
Introducing ‘What Really Matters’ by Tablet Podcasts
A new podcast hosted by Walter Russell Mead and Jeremy Stern will help you understand the news, decide what news matters and what doesn’t, and enjoy following the story of America and the world more than you do now
The Bold Jewish Woman Who Created Barbie by Susan Shapiro
How Ruth Handler dreamed up the doll that feminists loved—or loathed
SCROLL TIP LINE: Have a lead on a story or something going on in your workplace, school, congregation, or social scene that you want to tell us about? Send your tips, comments, questions, and suggestions to scroll@tabletmag.com.
Kill Off the Old City so New Cities Can Be Born
Urban centers are being hollowed out while their peripheries are booming. This is the emerging shape of the American city.
By Joel Kotkin
After decades of self-celebration and relentless media hype, the great “urban renaissance” predicted by the New Urbanists—a vision of cities built by and for the creative class—has come crashing down. Where the smart set once proclaimed that mayors should rule the world or that economic growth would increasingly cluster in a handful of super cities, now even The New York Times bleakly warns of an “urban doom loop.”
The very impressive blocks of skyscrapers that housed many of the world’s leading corporations have gone from harbingers of the future to something resembling the abandoned factory towns of the Industrial Revolution. Transit systems critical to the old urban model are in free fall. In great cities like New York, Los Angeles, or San Francisco, criminals and the homeless, many of them mentally disturbed and unstable, lurk on the streets, in the parks, and in the stores.
At the same time, residential neighborhoods in places like New York, Boston, and even much of San Francisco have retained their streetwise vitality. Since the pandemic, Brooklyn has experienced a resurgence of new businesses while Manhattan has seen large declines, particularly in its office-dependent retail sector. Additionally, a new and largely unheralded chapter of urbanity is being written in suburbs and exurbs as these areas, once derided as cultureless wastelands, are increasingly walkable and diverse, in some ways challenging the supremacy of traditional cities by becoming more like them. Even as urban centers struggle, their peripheries are flourishing. This is the emerging shape of today’s American urban landscape.
The decline of the transactional city
Urban history is about change. In classical times, imperial cities—Babylon, Rome, Beijing, Constantinople, Baghdad, Tenochtitlan—dominated by feeding off the wealth and labor of subject peoples. Later, in the West at least, urban giants were supplanted by small, nimble trading cities such as Genoa, Florence, Lubeck, Antwerp and Amsterdam—places that offered, as Rene Descartes put it, “an inventory of the possible.” With the industrial era came another urban form, this time built around mass manufacturing, epitomized by Manchester, Leeds, Dusseldorf, Osaka, Wuhan, Sao Paolo, Chicago, Cleveland, and Detroit.
As manufacturing hubs suffered de-industrialization in the late 20th century, prospects rose instead for what Jean Gottman described as the “transactional city,” characterized by massive high-rise office buildings filled with elite professionals occupying “the commanding heights” of towers in London, New York, San Francisco, Chicago, and Tokyo. These cities were widely hailed by academic researchers as presaging a high-tech economic future where, as The New York Times’ Neil Irwin predicted, “a small number of superstar companies choose to locate in a handful of superstar cities.”
Yet even as the transactional city was being praised, there were clear (albeit ignored) signs of a slow, inexorable decline. Office occupancy has been declining since the turn of the 20th century, and the construction of new office space has also fallen. In 2019, before the pandemic, construction was at one-third the rate of 1985, and half that of 2000.
Wealth and educated people, meanwhile, continue migrating to the periphery. As are the big multinationals, with some companies planning to reduce their office footprint by as much as 20%.
The pandemic clearly accelerated this process, impacting dense transit oriented urban centers. This was especially the case in New York, which had higher adjusted COVID fatalities than car-dominated suburbs. The lockdowns, and the ensuing riots over the murder of George Floyd, generated a devastating rise in crime and lawlessness in London, Paris, Washington, New York, Los Angeles, San Francisco, Philadelphia, and Chicago, further accelerating flight from dense urban areas. In some parts of Chicago and Philadelphia, young men now have a greater chance of being killed by firearms than the American soldiers who served during the wars in Afghanistan and Iraq.
Remote work and its implications for core cities
Cities were once hubs of labor, but this is no longer the case. According to Nicholas Bloom, an economist at Stanford, remote workers will soon constitute at least 20% of the workforce—more than three times the pre-pandemic share. A study from the University of Chicago suggeststhat online work will constitute as much as one-third of the workforce, and up to 50% of the workforce for the kind of tech and marketing jobs generated by Silicon Valley. Today a majority of workers are able to work from home part time (46%) or all (19%) of the time.
“I don’t know when we’ll get back to the pre-pandemic asset values because I do think there’s something structural and permanent about this,” Ted Egan, the chief economist of San Francisco, recently said. “I don’t think office workers are ever going to be spending that much time in the office and we’re just going to have to figure out ways, in office centers, to accommodate more people who are there less often. I think that’s kind of the future of office space.”
As for the economic fallout, it may just be beginning. Office buildings in the 10 leading metros remain roughly 50% occupied, and Wall Street is clearly losing interest in new projects. In recent months, many of the property giants—RXR, Columbia Property Trust, Brookfield Asset Management—have defaulted on billions in commercial property loans. The Atlantic reports some $1.5 trillion in commercial loans will soon be coming due, with many holders unlikely to be able to pay them. The collapse of regional financial institutions like Silicon Valley Bank, First Republic, and Signature are all partially the results of aggressive real estate lending.
San Francisco, once home to one of the nation’s strongest Central Business Districts (CBD), has suffered office vacancies three times pre-pandemic levels and is now experiencing record high vacancy rates. This recently led the San Francisco Chronicle to editorialize that the city’s downtown was “on the verge of collapse.” A Bay Area Council survey projects most companies will expect employees to come to the office three days a week or less, with barely one in five seeing a return to “normal.” Similarly, a Partnership for New York survey of its members revealed the expectation that roughly three in four employers will allow either a hybrid model that requires two to three days at the office or no office days at all. Today, 26 Empire State Buildings could fit into New York City’s empty office space, as occupancy in the city is hovering around 50% of pre-pandemic levels.
Despite optimistic predictions of a wide-scale return to the office, “zombie office spaces” continue to plague downtowns around the country. Even in New York City, leaders realize that the high-rise office tower is increasingly obsolete. Many embrace plans to convert these towers to housing but this may be difficult—especially for newer high rises. According to one recent estimate, barely 20 million of the city’s 420 million square feet of office space is suitable for conversion, however much this is desired by the building’s desperate owners. New York City office buildings alone, according to one industry estimate, are suffering a 44% decline in long run value.
You can read the rest of Kotkin’s piece on cities, here: https://www.tabletmag.com/sections/news/articles/kill-off-the-old-city-so-new-cities-can-be-born
I don’t want to make light of the Solana county story, but it does remind me that when the developer Jim Rouse was buying up rural parcels in the 60s to develop what is now Columbia, Md., he used multiple straw companies to avoid tipping his hand about his plans and thereby keep prices down. The mysterious transactions led to rumors that the Soviet Union was buying the land for a compound!
" Despite a botched campaign announcement on Twitter, stilted media appearances on the campaign trail, and a set of policies likely to alienate voters in the center,...."
Not sure you listened to DeSantis announcing his run for president on Twitter but what was really groundbreaking was that it completely bypassed the legacy media outlets. You only had to read their headlines the next day to see how devastated they were by the rise of a free speech outlet like Twitter.
"Fiasco" "Botched" "Disaster" "Failure" "Incompetent". None of that is true. Just another false narrative being pushed by those being threatened by DeSantis.
As for "stilted media appearances", listen to one of DeSantis's speeches yourself. Don't believe the media assassins.
Those are some of the words the mainstream media used to describe DeSantis's appearance on Twitter with Elon Musk. But is that what really happened or is that the narrative the mainstream media wants to establish?