Sunday, May 13, 2012

develop don't destroy

In Vanishing New York a couple of the talking heads deplored the expansion and the upscale development of New York that is displacing communities. They don't want to see any more development, they don't believe New York's population will expand, and they don't believe that development would bring jobs. Their view seems economically naive.

The documentary recognizes the reality of the loss of manufacturing, but also criticizes Bloomberg's observation that New York is a luxury economy. The loss of manufacturing has led to the reliance on luxury economy. For better or worse, it's our economic staple, aside from tourism/nightlife, and manufacturing is not likely to return.

There's actually nothing wrong with a luxury economy, as long as it doesn't destroy communities. The rich drive the New York economy. You see it everywhere. Millions make their livelihood serving them. If the rich left the city, we'd be living in one huge slum.

The problem with the rich is that they successively occupy more of our communities, displacing those communities. If developers could find a place for the wealthy, they'd leave us alone in our communities, and still employ us as we need them to.

The answer is not to curtail development, but to encourage development -- in areas where the upscale already congregate and away from older neighborhoods. Otherwise -- if there's no development -- then the wealthy will spread further into our communities and displace us and our local commerce, as they have been in the East Village and in Harlem.

on the other hand: government ownership

At a screening of Vanishing New York at Mary House (Catholic Worker), Eric Ferrara suggested that communities ought to pool their resources and buy up all the land of their neighborhoods. There's a kind of populist appeal to the idea, but I'd worry that turning everyone into property owner -- sending the entire community into the commerce of property -- would end in disaster. Cooperative boards are notoriously vicious and unhealthy, and I don't see why ordinary people would do any better in the cut-throat economy of landlords and developers. Maybe if there were rules to govern them, constraints on how people could sell and rent...

But why reinvent the wheel. The notion of community ownership already exists, and it's called Government. Of course, everyone complains about government management of housing projects, for example, so why would anyone want to expand the government into communities?

Government poorly manages housing projects because government doesn't have the budget surplus -- after spending on its priorities that mostly go to keep the wealthy around -- to spend on mere people in low-income housing. But what if the city owned the Upper East Side and the Upper West Side as well?

Here's an extreme Georgist plan: tax the hell out of upscale properties, get the landlords to disinvest and abandon their properties to the government. With sufficient funding, the city is quite effective. The parks and libraries are well managed, and upscale properties could too, especially garnering all those exorbitant rents. And instead of taking the profits off to Westchester where the landlords live now, the money could be reinvested in the city itself in, for example, housing project management.

If the city did a good job serving the rich, they'd make a bundle for its treasury. Rent-taking -- landlords, in this case -- is the black hole of every economy. It's unproductive, non-innovative, mere wealth that skims off commerce and residential incomes. Development is productive, but the city can develop too. And if the city were successful at an upscale landlord, there'd be every incentive for the city to develop and bring more rich folks into their rental economy. And the wealthy could in turn drive the rest of the economy with their needs that labor services.

Friday, May 11, 2012

how to win

If you stand up only for your side, you struggle uphill, and if you're an activist, you stand for the lesser power and will likely lose. To win, activists need to solve for their opponent. In the end, the market wins, so activists might win more battles if they'd broaden their analysis and strategy to include the entire economy.

Activists never seem to do this. The West Village spends its energy and organization protesting NYU expansion, but doesn't spend it on brokering a deal with Community District 1 to take the expansion where it would be welcome and where NYU would, given the right tax breaks, be willing to locate.

Every NIMBY struggle has this failure: it shoves the problem somewhere else, rather than solve the problem.

Tenant activists focus on the struggle for rent regulations, but don't consider the larger economic forces that resist the expansion of regulations. The only way to ease the housing market is glutting it with housing. And since only luxury housing is lucrative enough to justify construction, housing advocates should be advocating for luxury housing in neighborhoods that welcome it -- the Financial District, the ex-Flower and Garment Districts, Chelsea -- anywhere far from residential low-income community neighborhoods.  The tenant advocates should work with the developers and landlords to upzone those luxury neighborhoods, and ask for means to expedite construction in the city those neighborhoods.

Instead of complaining about real estate tax breaks for developers, tenant activists should advocate for them -- in upscale neighborhoods where renters are paying upscale rents so they can relocate at no significant cost. There should be Beeckman Towers in all those neighborhoods, drawing the wealthy away from the tenements that they gentrify in lower-income neighborhoods. Leave the older buildings to the locals. Luxury, after all, is an excess. Decent people can live well in older buildings without a doorman and elevator. I do, and I'd never want to live in an elevator building with a doorman. What for? It's disgusting. If the upscale want that, let them. 

Warehousing of luxury units should be prohibitively taxed -- equal to the rate of its rent. And yes, most upscale people would live in Manhattan and most down-scale folks would live in the outer boroughs and that's unfair. Just like now. If the city would invest in a subway system for Queens and Brooklyn that will conveniently connect them, living in the outer boroughs might actually be more fun than Manhattan.

Low-income communities -- Chinatown and Harlem in Manhattan, for example -- should be protectively zoned to retain their streetscapes and commercial vitality. And their rents should remain regulated at low levels, including commercial rents for small shops (no chains, limited banks, no expanding nightlife strips).

Unless the tenant movement can game the market, the market will gradually eliminate regulations. The alternative -- organizing renters throughout the five boroughs into a voting block -- is not being done either. Tenant advocates use tenants as foot soldiers, pawns: they bring tenants out to a demonstration once or twice a year in a meaningless and discouraging gesture.

Tenant advocates should create a city-wide tenants union where all renters can vote, communicate and run their own union. Currently, groups like Tenants and Neighbors are top-down, with paid organizers who, though knowledgeable and dedicated, are not a mass of angry voters empowered to speak for themselves in their own voice with their own organization for which they themselves feel ownership.

But if advocates could solve for the economy overall, there'd be no need to organize tenants.

The only danger I see in huge luxury construction in upscale areas is the chance that it will attract even more upscale renters from other cities, keeping the rent market tight. In that case, it would at worst not change the current market. But even so, the expansion of upscale residents in upscale areas away from smaller communities would benefit those smaller communities, since services for the wealthy create a lot of employment, which means many more waiter-artists and produce drivers and ushers and doorman and janitors and electricians and plumbers... In a city bereft of manufacturing, that's the only future, for better or worse.

But here I'd trust in the Pareto distribution that holds of cities. New York will never be more than twice the size of the next largest city -- that seems to be a generalization of human aggregation. If it doesn't hold, then we'll just have to bring back street crime and drive the rich back out, and settle for Detroit-on-the-Hudson.