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Global cities, global citizens: Plutocratization vs. the rest

“Our great, global cities are turning into vast gated citadels where the elite reproduces itself”

Simon Kruper writes in “Priced out of Paris” (FT) that after gentrification, the world’s most prosperous and desirable cities are now facing the prospect of plutocratization: first the lower classes were displaced, and now the middle class is being squeezed out, too.

This is bad, for a variety of reasons. But the most dangerous reason, to Kruper, is that the world’s great cities – New York, Hong Kong, London – are becoming incestuous domains of privilege, taking the lion’s share of wealth and power. And, crucially, they are keeping others away from that wealth, power, and attendant mobility.

It is very unfortunate for a society when its elite stultify and seek to preserve their position at the expense of new competitors. The same forces that keep the non-elite / non-nobility / plebes / 99% from attaining success and influence also lead the entire society into stagnation. In the long run, the 1% are getting X% of a smaller pie instead of Y% of a larger one.

(Relatedly – what does it mean when, today, the global elite is almost its own trans-national country? That, ironically, the people who come closest to achieving a Marxist ideal of cosmopolitan, global citizenship are the ultimate Capitalist Class?)

I think it is sad and harmful for communities and geographies to stratify in this way. I think a mixing of classes is as essential as a mixing of any other demographic quality for the intellectual, cultural, political, and ethical health of a place. But what should we do about this trend?

That’s my question – what causes it, and what can we do, what should I do, to try to help? Do I lobby for specific legislation or policies that will transform the landscape somehow? Looking at the outcomes from other key efforts to change the socioeconomic makeup of cities, rent control, we see a road to hell paved with good intentions. [1]

Let me begin by saying I’m not in the 1%. But I have enough economic capital and 20% tastes to cause some gentrifying damage. I like artisan ice creams - right alongside my $3 dumplings, mind you.  But the description of the qualities of the 1%, global elite sounds a lot like the people I know from Exeter, Yale:

When one-per-centers travel, they meet peers from other global cities. A triangular elite circuit now links London, Paris and Brussels, notes Michael Keith, anthropology professor at Oxford. Elite New Yorkers visit London, not Buffalo.

So top-level corporate and professional sectors of São Paulo begin to have more in common with peers in Paris, Hong Kong et cetera than with the rest of their own societies. [FT]

In many ways, I’m guilty here, and I am made more aware of it because of my work-related travel. I have a reasonable amount in common with clients and contacts in St. Louis, but on many areas I have more commonality with my colleagues from London, Paris, and Toronto, or my classmates from Singapore and Istanbul. [2]

That isn’t a bad thing and it’s not as if I have ever been really in tune with the median American zeitgeist for culture and attitudes.  I was always going to watch How It’s Made or Modern Marvels, not Duck Dynasty. I’m more likely to listen to Korean pop or Japanese electronica than Country. I think that’s OK.

The problem? And – please note, I experience some of this too, whenever my rent goes up!

Now comes plutocratisation: the middle classes and small companies are falling victim to class-cleansing. Global cities are becoming patrician ghettos. In 2009, says Sassen, the top 1 per cent of New York City’s earners got 44 per cent of the compensation paid to its workers. The “super-prime housing market” keeps rising even when the national economy collapses. After Manhattan, New York’s upper-middle classes are being priced out of Brooklyn.

Global cities are turning into vast gated communities where the one per cent reproduces itself. Elite members don’t live there for their jobs. They work virtually anyway. Rather, global cities are where they network with each other, and put their kids through their country’s best schools.

Interesting claims; are these the real problems? Let’s dissect them…

  1. 1% of NYC taking 44% of the compensation is a little unsavory. (Consultants aren’t the cause of the problem here, though we’re better off than doormen and plenty of others who suffer to make do in the city).
  2. Super prime housing market rising should be a good  thing – rich people supporting the tax base with $100MM pied-a-terres they will rarely use! It is a symptom of the fact that zoning and other strictures mean developers can’t make money unless they go super-luxury, but that’s not really their fault.
  3. Priced out of Brooklyn goes in the same category as (2). Buy in Red Hook today… :(
  4. Gated communities where the elite reproduce – is the problem that the 1% enjoys the city and likes to live there? Is the problem that they want their kids to go to the best schools?

All of these things seem innocuous, more or less… until…

The elite talks about its cities in ostensibly innocent language, says Sassen: “a good education for my child,” “my neighbourhood and its shops”. But the truth is exclusion. (Emphasis mine – SJ)

Aha! Really? I don’t find this compelling reasoning. This implies that it is a conspiracy of the elite to shut others out of great cities so that they will be denied all that they have to offer. While the forces of gentrification and classism and racism have always been factors in exclusion (see, ‘White Flight,’ segregation, etc…) the primary reason here seems economic and social policy.

It’s true that rich, privileged Upper-East-Siders don’t want to remove historical preservation orders and rezone townhouses for 50-story, middle class condos. But does that make them culpable agents of exclusion? Are people saying “I want a good education for my child, by not for yours”? [3]

To me, what has happened is simpler. Cities have become better and more appealing, and they have indeed become a locus for the rich and powerful, who like all that they have to offer. This feeds a virtuous cycle which makes them richer and more influential. Market forces, not helped by social policies, do little to correct the trend. You then end up where you see today. It doesn’t take menace where momentum can do the trick.

Now, there are still plenty of embedded norms and attitudes that are involved here. For instance, if we really wanted to avoid ‘elite ghettos’ we could make mass transit free, and optimize luxury-property taxes, and use those funds to increase density and reclaim land from the sea or from decay and connect Bed-Stuy with Manhattan (socially, geographically, economically) ahead of schedule.

But if the fundamental problem is, people want to pay for a scarce good (access to city), that good becomes more expensive… you can try to increase supply or otherwise create ways to ‘share’ it but I don’t see any really ready solutions.

The problem can’t be solved by letting everyone who wants to, live in New York and Paris. Though we should try to help them out in creative ways. Instead, if it means you need to have a good job to afford the city, we should try to enable everyone the equal opportunity to get that. Which involves access to education, access to networks, access to all kinds of opportunity which is, today, hugely unequally distributed.

That’s the real problem. The cities are more a symptom of a problem than the problem itselfWe don’t need to send down Ivy League grads to the country for forcible re-settlement; we just need to fix systemic inequality in our horribly lopsided world. Which is… much harder.


Notes and other thoughts

  • [1] Rent control and rent stabilization are horribly broken in New York City. The issues are numerous  and are mirrored elsewhere in the U.S. with rent control.  Something like 1 million rental units in NYC are not priced at market rates… but that isn’t the problem per se. It’s not that economics and the free market can’t ‘reign freely’ or some such…
  • The issue is that the ostensibly good goals of rent control initiatives – help people of different socioeconomic strata afford the same neighborhoods – don’t really play out so well in practice. There are too many examples of very well-to-do people effectively getting ‘subsidies’ from others paying market rent. The only winners are those lucky enough to have or have inherited the controlled apartment.
  • It’s a pretty heavy-handed, crude, perversion of the marketplace, with unfortunate repercussions for all involved. This, plus zoning laws, are  reasons why there is an undersupply of housing in many of these cities – which, in turn, drives up prices further, making them that much more unaffordable.
  • [2] Note that my experiences working in Seattle, Minneapolis, and Atlanta were more cosmopolitan in nature since the demographics of those cities or their workers (or my clients) were different.
  • [3] Maybe for pre-school admissions tests, but it’s not like their fellow elites are their allies in class warfare. Everyone wants what’s best for their own.

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