In Prospect

Autumn 2012

At a time when Americans could use good news, Joel Kotkin’s important cover story, “The Third Coast,” has lots. As Kotkin describes, an American economy long dominated by the East and West Coasts is experiencing a dramatic shift south, to the urban coastal region stretching from Brownsville in Texas to Tampa in Florida, which is becoming a hotbed of job-creating innovation and industry. Why are companies and people flocking to the Third Coast? A welcoming business environment, inexpensive housing, and high-functioning ports are among the reasons, Kotkin maintains. The region even has its own megacity-in-the-making to compete with New York and Los Angeles: Houston.

Things are a lot grimmer to the west, as City Journal has chronicled in recent issues. California—with budget gaps widening, cities fighting bankruptcy, unemployment high, unfunded retirement systems, too many lousy schools, and clueless politicians making everything worse with byzantine regulations and profligate spending—is indisputably in crisis. Lots of taxpaying families and firms are, unsurprisingly, picking up and leaving. Victor Davis Hanson isn’t ready to join them, though, and in “California, Here We Stay,” he gives his reasons. Among them: the state’s agricultural bounty, abundant natural resources, breathtaking weather, industrious and open culture (see also “Tom Wolfe’s California,” by Michael Anton), and still-worthy state universities—all of which would fire a powerful comeback if lawmakers did some sensible things, such as reform pensions and keep taxes from rising.

Whichever presidential candidate winds up elected in November, he’ll need to tackle America’s debt problem. When debt hits 90 percent of GDP, experts say, it becomes a significant damper on growth. We’re getting there fast. Stimulus spending and entitlements have helped push federal debt to 80 percent of GDP, and unless policymakers get serious about deficit reduction, it will soon be 120 percent. Harvard economist Alberto Alesina’s “The Kindest Cuts” offers a primer on how to rein in deficits without harming the economy. Hiking taxes often pushes an economy into deep recession, Alesina argues; far better to cut government spending, which rarely brings a serious recession and—especially when accompanied by pro-growth tax and regulatory reforms—tends to energize investment. What would also unleash investment, says Guy Sorman in “A Brief History of American Prosperity,” is a return to the predictable fiscal, monetary, and regulatory policies that the Obama administration has abandoned.

Local governments, with Washington’s aid, have been loading up on borrowed money to build new airports or expand existing ones, believing that such measures will draw firms looking for convenient air connections and thus encourage greater regional development. In “Airfields of Dreams,” Steven Malanga exposes the airports-as-drivers-of-growth idea as a myth—one that will leave taxpayers with a big bill. While investing in an airport in an already vibrant area might make sense, Malanga points out, such facilities don’t generate growth on their own. The list of underused and even nearly empty airports around the country is getting longer.

The Port Authority of New York and New Jersey’s founding mission was to build, maintain, and run regional transportation infrastructure, which includes bridges, tunnels, and bus terminals as well as ports and airports. Unfortunately, as Nicole Gelinas documents in “The Port Authority’s Cloudy Future,” the agency has its own debt woes, having borrowed massively to rebuild the World Trade Center. Those billions of dollars won’t be at hand to repair the region’s crumbling infrastructure, let alone launch much-needed new projects. Gelinas shows how the authority can begin to climb back.

Who is Fethullah Gülen? Claire Berlinski tries to answer that question in her riveting story. The controversial Turkish Muslim preacher has inspired a global movement ostensibly dedicated to democracy and tolerance but possibly concealing a darker agenda. Gülen happens to live in Pennsylvania, Berlinski reports—and he’s the inspiration for the largest network of charter schools in America, some of which seem to be serving as visa machines for his followers. Americans need to start paying attention.

—Brian C. Anderson