Monday, August 29, 2016

Urban booms for the rich

On a recent trip to Washington, DC, I was fascinated to see the cranes and skyscrapers going up in Crystal City, Arlington.  I was envious of DC, with its long-lasting real estate boom, high property values, and general status as "place to be" for the go-getters of US society.  At the same time, I am critical of many of these trends, since they point to larger themes in our society that are not so good:  concentration of wealth and power in a few urban centers populated by young professionals yet unaffordable to most families; the earning of vast amounts of wealth through rent-seeking connections to public funds as opposed to honest market competition and provision of goods and services to the masses; real estate bubbles that are destined to burst at some point.

But on this particular trip, I was simply awed by the shiny boomtimes in this corner (and many corners) of the DC area, and I wondered if my criticisms and concerns were just sour grapes from a Rust Belt dweller.  I have since gotten over that insecurity, in part because my trip to Chicago shortly thereafter took me through boom areas that dwarfed Crystal City or any other DC development hub.  I was amazed in Chicago to see skyscrapers still springing up at a rapid clip in the South Loop, and even in Streeterville, which I wouldn't have imagined could get any more densely populated.  At the same time, I appreciate that Chicago, unlike DC, still has enough low- and middle-income neighborhoods and vacant land that property values and rents can't go quite so astronomically high; you're always just a short El ride away from $1000/month apartments that are on the edge of, but not submerged in, dangerous blighted areas.  I feel that this will ensure some buffer for years to come to families who want to be near all the benefits of central Chicago but can't afford the elite-area rents.

My cousin recently sent me an article though that has me wondering if all cities, from Chicago to DC, are in fact steadily pricing out normal people and becoming bastions only of the rich.  I'd encourage you to read it.  The basic thesis is that there is a perverse incentive for cities to try to attract childless high-wage singles and couples, because they pay taxes but don't use services like schools, and to push out poorer people with kids, who don't pay as much into the system and do require more public services.  Ideally a city would strive to keep both types of households; the childless rich can contribute economic resources to the city, but rooted families are the ones that give it identity and culture and preservation and meaning.  I can see how this balance might be difficult in cities with a smaller geographical footprint like San Francisco or Washington, DC, or even a densely-populated megacity like New York City, where there just aren't that many places to build up more and thus relieve some of the pressure on the housing market.  But big Rust Belt cities like Chicago may be well-placed to strike a balance, since land and housing-stock aren't so scarce as to drive up prices and drive out the poor.  Here's to hoping.

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