Thanks for this column, Prof. Krugman. One of the most enjoyable things about The New York Times is the constant commentary about the hardships of living in Manhattan.
10
It seems odd that so many commenters believe that a "solution" exists. Millions more people want to live in NYC and Vancouver and San Francisco, etc. than these cities can accommodate (at least in any reasonable way that would not create another Hong Kong).
So, if not price as the allocation mechanism, what should be preferred? Lottery, political connections, family ties, long-term residency, social merit?
The problem is not creating affordable housing for all who might want it. The problem: How to allocate (what mechanisms) this highly desirable and relatively scarce space.
Any allocation system from free market to socialized planning will still leave the vast majority without homes. Orlando, Dallas, Kansas City, Kamloops and Gainesville all offer great places to live at reasonable prices--as do hundreds of other towns and cities. Let's focus on reality, not imaging that some "solution" exists that a few favored cities can house all who would like to live in them.
So, if not price as the allocation mechanism, what should be preferred? Lottery, political connections, family ties, long-term residency, social merit?
The problem is not creating affordable housing for all who might want it. The problem: How to allocate (what mechanisms) this highly desirable and relatively scarce space.
Any allocation system from free market to socialized planning will still leave the vast majority without homes. Orlando, Dallas, Kansas City, Kamloops and Gainesville all offer great places to live at reasonable prices--as do hundreds of other towns and cities. Let's focus on reality, not imaging that some "solution" exists that a few favored cities can house all who would like to live in them.
20
With others I decry your focus on land use restrictions.
Richard Applebaum wrote a book back in the 80s which persuasively showed that the cost of rental housing does not respond in any simple way to supply and demand. His arguments also make sense for owned housing.
The price of housing in NYC and in the SF Bay area and in other high cost areas is a function of the fact that there are very high wage earners, often with no or very few children who have a lot of disposable income. Housing costs a lot because there are people who can afford it. The international investment community sees this, and also bids up prices.
Yes cities are desirable places to live - but crime is such a small piece of this. The bulldozing of what is left of the industrial landscape, and its replacement with what some have called a disneyland like environment for adults has certainly contributed.
And yes as you say, the increasingly terrible commutes also pay into it.
But please don't blame land use regulation. It contributes only a small part of the hyper-inflated prices.
Richard Applebaum wrote a book back in the 80s which persuasively showed that the cost of rental housing does not respond in any simple way to supply and demand. His arguments also make sense for owned housing.
The price of housing in NYC and in the SF Bay area and in other high cost areas is a function of the fact that there are very high wage earners, often with no or very few children who have a lot of disposable income. Housing costs a lot because there are people who can afford it. The international investment community sees this, and also bids up prices.
Yes cities are desirable places to live - but crime is such a small piece of this. The bulldozing of what is left of the industrial landscape, and its replacement with what some have called a disneyland like environment for adults has certainly contributed.
And yes as you say, the increasingly terrible commutes also pay into it.
But please don't blame land use regulation. It contributes only a small part of the hyper-inflated prices.
8
It would be interesting to see how much housing would have to be added to NYC generally (and Manhattan particularly) so that the average home would become affordable.
Would it require a doubling of housing stock? a 50% increase? Would it require building on top of all the 5 story buildings to make them 10 stories?
I see some commenters think that all housing being built would be for luxury building but, quite frankly, if there was a tremendous supply of homes added to the market irrespective of the quality level, it would help the middle class the most and we would have a balance between supply and demand.
Would it require a doubling of housing stock? a 50% increase? Would it require building on top of all the 5 story buildings to make them 10 stories?
I see some commenters think that all housing being built would be for luxury building but, quite frankly, if there was a tremendous supply of homes added to the market irrespective of the quality level, it would help the middle class the most and we would have a balance between supply and demand.
3
New York may learn something from the Washington D.C experience. Some of the wealthiest counties in the country are around D.C. The people who live in the 4,000+ sq.ft houses in Loudoun county are mostly working for government contractors. Lowly software developers in these companies make $200K+ a year. So, New York, if you want to raise the income levels of your residents, get more federal agencies to come to NYC. They'll create a cushy layer of overpaid government contractors who charge $400/hour. All this as a favor to you from the American taxpayer. Problem solved.
13
Without some sort of alternative, say mixed housing, what happens when the worker-bees have to live further and further away from their jobs--albeit minimum wage as they are? With the cost of mass transit in “The City” being placed on the backs of the commuters, there is just so much blood that you can squeeze out of a job flipping b burgers or parking cars. And, that's when the Escape from NYC truly begins. So far, even the Giants and the Jets have escaped.
http://thetruthoncommonsense.com
http://thetruthoncommonsense.com
7
On another thought, many of these city dwellers and their sky high incomes affords them another home in a rural landscape. This being said the real estate in many areas of the country are becoming more and more out of reach for the year-round inhabitants and therefore is creating even more inequality. Second home owners are almost always from the over priced urban areas. I live in a desirable beach town where 3 out of 4 houses are second homes. There's no place left to rent or buy for the locals because of the over inflated real estate prices. This is being rapidly carried over into many rural areas and affecting those communities inordinately. It is out of control. Some people have way too much money and the rest of us, not too much. This class struggle is not within the cities alone.
35
Much like Paris, Rome, and London, etc Manhattan has become something of a historic center, where only the wealthy can afford to live. The "rings" of boroughs are absorbing other types of wealth but the middle class and poor have yet to find placement in this pool, unlike their European counterparts.
Density will only bring in more wealth - that's all developers want and build for - so improved public transportation to bring workers in from farther out locations may be the only answer. Not the best solution but it'll satisfy those who the city now belongs.
Density will only bring in more wealth - that's all developers want and build for - so improved public transportation to bring workers in from farther out locations may be the only answer. Not the best solution but it'll satisfy those who the city now belongs.
3
Is Krugman saying that crime is down in New York City because the core of New York City is richer, more educated and whiter than it was when crime was soaring? "Specifically, urban America reached an inflection point around 15 years ago: after decades of decline, central cities began getting richer, more educated, and, yes, whiter." I am shocked and mortified at the implications of Krugman's statement.
7
The decline of urban crime is largely attributable to the aging of the baby boomers and the concomitant decline in the proportion of young males in the population since young males are so disproportionately represented in the criminal justice system.
In many cities the pricing out of the middle classes from the housing market is attributable to runaway economic crimes of the international affluent who use real estate as a repository for the proceeds from corruption and tax evasion.
In many cities the pricing out of the middle classes from the housing market is attributable to runaway economic crimes of the international affluent who use real estate as a repository for the proceeds from corruption and tax evasion.
9
There are probably multiple reasons for the decline in crime in the cities. One may be the aging U.S. population. The hoodlums are aging out, sort of. Another may be, as a poster noted earlier, street criminals tend not to venture far from their own neighborhoods. Sure, they'll hit gentrified areas, but gentrified areas tend to get additional police patrols assigned to them because the new and affluent neighbors complain more than the old timers do, generally speaking.
3
I wonder if high rate of incarceration is the cause of low crime rate in NYC.
10
I think Mr. Krugman misses the fact that many affluent people have decided that living in a dense urban environment is not only more convenient but a lot more fun than coming home to the dark, empty streets in a suburb. It's also a lot easier taking a black car, cab or, yes, a subway (the wealthy -- or at least the smart ones -- use it, too) than the hassles of a car.
5
Krugman, Trolling on the Op-Ed page?
- Build more housing, that will bring the prices down - that was called the "Housing Crisis" 8 years ago.
- Change Zoning Laws to build MORE / Bigger / Taller affordable housing- Giant housing projects are being razed in cities across the country (Newark, Chicago, Baltimore).
Benefits of NYC's building boom over the past decade: jobs, jobs, new residents, City Tax (property/income/ sales) income has grown exponentially. People are calling for the heads of Developers, government intervention in housing costs or decrying NYC's recent revival.
OK Krugman, you got people talking!
- Build more housing, that will bring the prices down - that was called the "Housing Crisis" 8 years ago.
- Change Zoning Laws to build MORE / Bigger / Taller affordable housing- Giant housing projects are being razed in cities across the country (Newark, Chicago, Baltimore).
Benefits of NYC's building boom over the past decade: jobs, jobs, new residents, City Tax (property/income/ sales) income has grown exponentially. People are calling for the heads of Developers, government intervention in housing costs or decrying NYC's recent revival.
OK Krugman, you got people talking!
2
EAST SIDE, WEST SIDE All around the town, the elite are flooding in and driving out residents who pay low rent. It's a story being replayed nationally. In Europe, though, it's ever been so. In older cities, the nobility congregated in the centers of cities to be close to the royal courts. There was nothing to be done about it; it's just the way things worked. Even in France, where its Revolution led to the French brand of democracy, Paris is the jewel in the crown. Very expensive and always moreso. Those of more modest means live in the donut surrounding the center while the affluent live in the donut hole.
In NYC, for many many years, even with rent control, the deck has been stacked against residents of modest means. Could the city pass ordinances requiring a certain proportion of affordable housing for those of modest means? Who knows? But DiBlasio will have a chance to try to help those of modest means remain in Manhattan. It is a daunting task, with many decks stacked against it. Will the national trend continue, peak or grow? Sadly, I'd place my bets with the 1%. Unless the 99% have a larger say in how things are done. Till then, we have to make do with the ghost of Trickle Down Resganomics, where decisions were made on the crunch of a jelly bean. Two if it was a tough decision. Sometimes you can't hold back regress.
In NYC, for many many years, even with rent control, the deck has been stacked against residents of modest means. Could the city pass ordinances requiring a certain proportion of affordable housing for those of modest means? Who knows? But DiBlasio will have a chance to try to help those of modest means remain in Manhattan. It is a daunting task, with many decks stacked against it. Will the national trend continue, peak or grow? Sadly, I'd place my bets with the 1%. Unless the 99% have a larger say in how things are done. Till then, we have to make do with the ghost of Trickle Down Resganomics, where decisions were made on the crunch of a jelly bean. Two if it was a tough decision. Sometimes you can't hold back regress.
5
Not the NYC it used to be....with neighborhoods of note....just expensive..
rather a big obsolescent glass and steel shell...with ostentatious new and
not so nice sharp corners...people always in a hurry cell phones in every ear.
...no one remembers to say hello...or please....or thank you...or even smile.
New York City....nowadays...cacophony and no more city rhythms....to
remember fondly...sorry...that is how it is NOW...
rather a big obsolescent glass and steel shell...with ostentatious new and
not so nice sharp corners...people always in a hurry cell phones in every ear.
...no one remembers to say hello...or please....or thank you...or even smile.
New York City....nowadays...cacophony and no more city rhythms....to
remember fondly...sorry...that is how it is NOW...
4
I lived in Manhattan in the 70's. In the only building on the block with a lock on the front door. Supposedly it was a dangerous neighborhood; it certainly was a poor neighborhood. Da Loisaida. I saw crime every day, but no violent crime, mostly guys stripping hubcaps so fast it was like an assembly line. And yeah nobody kept their radio in the car, but most people didn't have a car. Yeah the subway was a mess and there was a puddle of urine between the curb and street all the way through mid town, as if leaking up from some underground mystic river of pee.
But the food was so so so much better than it is now in Manhattan and rents were sufficiently low that there were literally 75-100 great neighborhood pizzerias scattered throughout Manhattan. And actual neighborhood Jewish delis as opposed to today's theme park delis.
Downtown and Soho were with filled lofts and new music; creative music, black music, experimental music, punk music and rock&roll. It was the era of the Latin Music revival, with NYC as home base for Fania records, Ray Barretto, Eddie Palmieri, Larry Harlow, Grupo Folklorico Experimental, the Nuyorican poets cafe, Patato and rest.
Yeah there were the Rockefeller drug laws, but everyone smoked on the street anyway, so that you would see cops chasing an illusive cloud of smoke on every other corner, like you were in a Mack Sennett comedy all the time.
Manhattan is so dead now that only rich white people would be corny enough to live there anyway.
But the food was so so so much better than it is now in Manhattan and rents were sufficiently low that there were literally 75-100 great neighborhood pizzerias scattered throughout Manhattan. And actual neighborhood Jewish delis as opposed to today's theme park delis.
Downtown and Soho were with filled lofts and new music; creative music, black music, experimental music, punk music and rock&roll. It was the era of the Latin Music revival, with NYC as home base for Fania records, Ray Barretto, Eddie Palmieri, Larry Harlow, Grupo Folklorico Experimental, the Nuyorican poets cafe, Patato and rest.
Yeah there were the Rockefeller drug laws, but everyone smoked on the street anyway, so that you would see cops chasing an illusive cloud of smoke on every other corner, like you were in a Mack Sennett comedy all the time.
Manhattan is so dead now that only rich white people would be corny enough to live there anyway.
13
Any interesting take on a complex problem. However, to claim that land-use restrictions are to blame for the high cost of property in NYC is simplistic. Land-use restrictions have not substantially increased in the past 15 years while real estate prices have soared. In fact, every Mayoral administration since the beginning has encouraged real estate development - NYC is a town based on real estate.
Furthermore, the average commute in NYC is longer than most places in America - there's more to do here but it takes substantially longer to get to & the City is not investing in the transit infrastructure needed to sustain its growth or make the center accessible to those who can't afford it.
Furthermore, the average commute in NYC is longer than most places in America - there's more to do here but it takes substantially longer to get to & the City is not investing in the transit infrastructure needed to sustain its growth or make the center accessible to those who can't afford it.
13
Good commentary. The one advantage NYC has to increase density is good public transit infrastructure "bones". The disadvantage is that is costs a fortune to build out new infrastructure in such a high COL, high price location.
Surely density could be increased in NJ, Queens, etc. We've seen it obviously in Williamsburg.
SF is the model of what not to do--it's so hard to build there that housing prices are through the roof.
Surely density could be increased in NJ, Queens, etc. We've seen it obviously in Williamsburg.
SF is the model of what not to do--it's so hard to build there that housing prices are through the roof.
4
I favor high-density living, but I'm skeptical that a place like New York can accommodate a lot more people. To do that, you have to give up the historical character of the place, and I doubt that the people with money and power in New York would want that.
I always remember someone saying that the high traffic congestion in San Francisco would be remedied if they just finished a freeway between the Golden Gate Bridge and the San Francisco-Oakland Bay Bridge. Well, to do that, you'd have to cut through the mostly wealthy part of the city, and of course the residents didn't allow it.
I have moved across the country for a job, and I guess I have a bias in favor of the idea that people should be willing to move. If you live in the Northeast, bring your progressive ideas to the South, Midwest, or some other less expensive place. I have friends who left the Northeast and came here for those reasons. Go to visit New York occasionally. You don't have to live there.
I always remember someone saying that the high traffic congestion in San Francisco would be remedied if they just finished a freeway between the Golden Gate Bridge and the San Francisco-Oakland Bay Bridge. Well, to do that, you'd have to cut through the mostly wealthy part of the city, and of course the residents didn't allow it.
I have moved across the country for a job, and I guess I have a bias in favor of the idea that people should be willing to move. If you live in the Northeast, bring your progressive ideas to the South, Midwest, or some other less expensive place. I have friends who left the Northeast and came here for those reasons. Go to visit New York occasionally. You don't have to live there.
5
San Francisco is creating more housing by building upward. The consequences include tall buildings with no character, like the Victorian flats which are part of the city's unique architecture, blocked waterfront fronts views, traffic jams from construction, and delayed buses due to traffic jams. Recently the voters passed a proposition to increase the height limit in the Mission Bay neighborhood to build tall high rises. The main opponent was the Sierra Club, who opposed it because these tall buildings would block city residents' views of the San Francisco Bay. At the same time, I think the cost of housing in San Francisco is either the highest or second highest in the country. I have serious doubts about whether making San Francisco resemble New York and getting rid of zoning laws will solve the city's problem with the high cost of housing, especially if the high rises that go up are high rent units. Even if the cost of housing decrease it may be at the cost of destroying the city's character.
9
It isn't just San Francisco that is the problem. The City is much smaller than Manhattan physically, and holds a substantially less dense population. The peninsula suburbs also need to become the cities they already are and build out housing. Building "character" is largely in the eye of the beholder. Much of the mid and high rise built in SF is very nice. This is a solvable problem if you fix CEQA and the perverse incentives built into Prop 13.
1
America has really bought into the idea that if you do manual labor, that is, if you actually WORK for a living, you are some sort of loser. It seems to then be a forgone conclusion that workers are "takers", "moochers" who are ruining the system for the rich, and THAT, in turn, justifies slave wages. We have, in essence, legalized slavery again.
Workers are the true engine of our country.
Workers are the true engine of our country.
20
It's interesting that economists, sociologists, and psychologists are all puzzled by the crime decline.
Here's Paul Krugman: "Let’s start by admitting that one important factor has surely been the dramatic decline in crime rates. For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened."
It's the technology! There are surveillance cameras everywhere -- in the banks, in the stores, on the streets, in homes and apartments. It's very hard to commit an unobserved crime. You can't even get away with driving through a red light.
Here's Paul Krugman: "Let’s start by admitting that one important factor has surely been the dramatic decline in crime rates. For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened."
It's the technology! There are surveillance cameras everywhere -- in the banks, in the stores, on the streets, in homes and apartments. It's very hard to commit an unobserved crime. You can't even get away with driving through a red light.
3
The kind of people who commit street crimes are completely unaware of such subtleties.
2
Living in New York, my hometown, became a bang for the buck issue. I could afford it - but not with a lot to spare...and so the question became, do I want to put most of my resources into living in a neighborhood where everything I like is being replaced by Duane Reades. Or should I move into another neighborhood/borough...and eventually watch the same thing happen again?
And the truth is the same thing is happening in all the other cities I've tried - Boston, San Francisco, LA, and, more slowly but still inevitably, Minneapolis and Milwaukee.
All I've figured out so far: There's not such thing as a perfect place, but some cost more than others.
And the truth is the same thing is happening in all the other cities I've tried - Boston, San Francisco, LA, and, more slowly but still inevitably, Minneapolis and Milwaukee.
All I've figured out so far: There's not such thing as a perfect place, but some cost more than others.
6
So is it better to be New York, Washington and San Francisco, Austin, which are gentrifying, or to be Baltimore, Detroit, Newark which are dying?
Gentrification simply mean, this place is now good enough to be desirable.
The opposite, like decay in Baltimore, simply means that this place is now so bad, people want to escape.
It is a fool's errand to try to have the government micro manage who should live where. But liberals love that, so that is what we will have in NYC.
Gentrification simply mean, this place is now good enough to be desirable.
The opposite, like decay in Baltimore, simply means that this place is now so bad, people want to escape.
It is a fool's errand to try to have the government micro manage who should live where. But liberals love that, so that is what we will have in NYC.
7
I agree with the first part of your comment, but then you go off the rails denouncing the "micro managing" by NYC government of who should live where. You're buying into a myth. Since Ed Koch, NYC government has been moving steadily away toward a free-market real estate economy. And, as the Times has noted in several stories, De Blasio is not decelerating that process. Of course, the NY Legislature has been staying his hand also.
1
Progressive Philosophy:
1. Have government try to solve some perceived societal ill by government regulation/dictate/tax or other coercive means.
2. Have those government policies result in unintended consequences compounded the initial problem.
3. Seek more of number 1 !
1. Have government try to solve some perceived societal ill by government regulation/dictate/tax or other coercive means.
2. Have those government policies result in unintended consequences compounded the initial problem.
3. Seek more of number 1 !
9
I would urge Paul Krugman to be careful of the dubiously useful term, "gentrification" as a significant player in the housing policy game. It is not.
The fundamental story is of the necessary role of government to ameliorate the excesses of our American free market economy with regards to housing.
The standard political response to a so-called “housing crisis” is to throw more taxpayer dollars at the problem which they always deliberately misidentify as “affordable housing” * when what they are really talking about is PUBLIC HOUSING.**
What is always missing are the facts that support exactly which economic constituency(s) has a “housing crisis”, to what degree and in which neighborhoods. Defining the problem and solution by neighborhoods is absolutely necessary for the public to understand how the government’s decision making will affect them. Explaining housing decisions by neighborhood is anathema to every politician because it exposes their ignorant, indefensible protectionist and economic segregationist views.
And so it goes.
Richard Ellmyer
Portland, Oregon
*
AFFORDABLE HOUSING is a mathematical construct defined as, Rent/Mortgage + Insurance + Taxes + Utilities <=30% Household Income. EVERY house, condo and apartment is AFFORDABLE to someone.
**
PUBLIC HOUSING is a class of housing defined as, Means Test (<=80%MFI) + Government Subsidy (any government any type) + rental agreement.
The fundamental story is of the necessary role of government to ameliorate the excesses of our American free market economy with regards to housing.
The standard political response to a so-called “housing crisis” is to throw more taxpayer dollars at the problem which they always deliberately misidentify as “affordable housing” * when what they are really talking about is PUBLIC HOUSING.**
What is always missing are the facts that support exactly which economic constituency(s) has a “housing crisis”, to what degree and in which neighborhoods. Defining the problem and solution by neighborhoods is absolutely necessary for the public to understand how the government’s decision making will affect them. Explaining housing decisions by neighborhood is anathema to every politician because it exposes their ignorant, indefensible protectionist and economic segregationist views.
And so it goes.
Richard Ellmyer
Portland, Oregon
*
AFFORDABLE HOUSING is a mathematical construct defined as, Rent/Mortgage + Insurance + Taxes + Utilities <=30% Household Income. EVERY house, condo and apartment is AFFORDABLE to someone.
**
PUBLIC HOUSING is a class of housing defined as, Means Test (<=80%MFI) + Government Subsidy (any government any type) + rental agreement.
4
With few exceptions, New York City has been a trial case for liberal policies for generations and yet the wealth gap remains so wide there. If Government is the answer to wealth equality, why has it not been achieved in New York City?
I am not surprised to read what Dr. Krugman found in that 1955 article. The typical executive arrives at the office by 9:00 and leaves at 6:00 with a briefcase full of work. I know this might be a little simplistic, but much of the reason the wealthy are the way the are is hard work. The rest of why they are wealthy is smart work, seizing opportunities to get ahead.
I am not surprised to read what Dr. Krugman found in that 1955 article. The typical executive arrives at the office by 9:00 and leaves at 6:00 with a briefcase full of work. I know this might be a little simplistic, but much of the reason the wealthy are the way the are is hard work. The rest of why they are wealthy is smart work, seizing opportunities to get ahead.
8
You leave out the one main reason the elite are elite. They were born elite.
9
Pampering the filthy rich is always a problem. Where do you keep the unwashed who service the elite? You don't want the doorman, or the housekeeper, or the gardener, or the garbage man, or the plumber, or the pool boy, or, or, or....(Goodness, the elite are high maintenance, aren't they?) living next door. Riff raff bring down property values so quickly.
Where do you keep them? Ghettos are a good idea, although the term has such negative connotations these days. Build public (tax the riff raff to build their own) housing in crappy areas with no glitter appeal. At the same time, build public (more riff raff taxes) transportation to speed the ebb and flow of the worker ants to the alters of wealth. Dubai has a system worth copying. So do Vail and Aspen.
These are just a couple of suggestions that Doctor Krugman might consider to ease his liberal conscience.
Where do you keep them? Ghettos are a good idea, although the term has such negative connotations these days. Build public (tax the riff raff to build their own) housing in crappy areas with no glitter appeal. At the same time, build public (more riff raff taxes) transportation to speed the ebb and flow of the worker ants to the alters of wealth. Dubai has a system worth copying. So do Vail and Aspen.
These are just a couple of suggestions that Doctor Krugman might consider to ease his liberal conscience.
5
In real life, this shouldn't be such a problem. The rich build their $zillion condos in the sky, and move out of their now outmoded coops, while the middle class occupies the coops, and the poor move into the rentals vacated by the middle class. However, in today's fantasy world, the rentals are being knocked down in order to make space for $zillion condos that nobody lives in, and the rich are forced to stay in the coops while the poor are crowded out. Gentrification doesn't have to be a bad thing, people just parking huge sums of money in space that should be living space, upsets the balance.
11
Gentrification is a synonym for renovation and reinvestment.
8
Gentrification is a synonym for greed and dislocation.
5
Good column, but I'm not in agreement with, "Let’s start by admitting that one important factor has surely been the dramatic decline in crime rates. For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened.'
In Freakonomics, by Steven Levitt, Levitt writes a chapter on how the rise of available birth control and abortion in the 1970's, helped produce a rapid decline in crime just about 22 years later. He concluded that there was data to support that it was the decline in unwanted pregnancies by women who couldn't afford them that led to the rapid decline in crime.
Has this hypothesis been proven wrong?
In Freakonomics, by Steven Levitt, Levitt writes a chapter on how the rise of available birth control and abortion in the 1970's, helped produce a rapid decline in crime just about 22 years later. He concluded that there was data to support that it was the decline in unwanted pregnancies by women who couldn't afford them that led to the rapid decline in crime.
Has this hypothesis been proven wrong?
10
Underprivileged women are much more prone to have many more children than more affluent women. The population is increasing. So this theory is way off base.
1
It hasn't, but it also doesn't account for a vital variable. The removal of lead in the environment that occurred around the same time. It could be both, one or the other or neither. However, there still is a very high correlation to environmental lead and crime throughout the world.
4
Haven't read through the comments lately, but wanted to make the point that France, or, at a minimum, Paris, has established limits on residential real estate purchases by absentee foreign owners, in an attempt to make housing more accessible to even affluent French citizens. New York could do the same.
So many posting here are New Yorkers who love their city, but it's not the only place in which most could thrive and even accumulate some wealth through lower housing costs and other savings. After all, those of us in the hinterlands, including my family whose ancestors were among the earliest foreigners to arrive in NYC, now have access to all of the amenities for a comfortable life. Not being able to afford a place in New York isn't the end of the world.
So many posting here are New Yorkers who love their city, but it's not the only place in which most could thrive and even accumulate some wealth through lower housing costs and other savings. After all, those of us in the hinterlands, including my family whose ancestors were among the earliest foreigners to arrive in NYC, now have access to all of the amenities for a comfortable life. Not being able to afford a place in New York isn't the end of the world.
7
I am a long-time follower and devout reader. Also I lived in New York in the '70s. I love the city and doubt if I could afford it now. However I am stunned by this comment.
"national housing prices have risen much faster than construction costs since the 1990s, and land-use restrictions are the most likely culprit. Yes, this is an issue on which you don’t have to be a conservative to believe that we have too much regulation." "land-use restrictions"? Are you implying that green spaces and parks should be turned into residential spaces? What exact "land-use restrictions" are you referring to? Generally speaking restrictions are minimally assuring us that we have a livable city.
"national housing prices have risen much faster than construction costs since the 1990s, and land-use restrictions are the most likely culprit. Yes, this is an issue on which you don’t have to be a conservative to believe that we have too much regulation." "land-use restrictions"? Are you implying that green spaces and parks should be turned into residential spaces? What exact "land-use restrictions" are you referring to? Generally speaking restrictions are minimally assuring us that we have a livable city.
8
There is a basic dilemma here that Dr. Krugman doesn't address: The fact is that we can talk about building "upwards" at higher density as well as the need affordable housing until the cows come home, but there are too many vested interests lined up against such action.
But here's the problem that elected officials have to deal with every day and that is that they need people to want to move into their community. But what is one of the main drivers that pushes people to a specific community? Money. Making money, that is. People want and expect their homes to APPRECIATE in value.
Once it has past a critical mass, nothing kills home values faster than over-supply and higher density. When you spending $750k + for a tiny piece of real estate where you can barely see the sun and the building craze threatens to lower the value of what you are buying, you are going to walk away.
So the difficulty for local elected and appointed officials is that the RESIDENTS (as well as future residents) are holding their feet to the fire to keep prices appreciating. This is in direct contradiction to wise public policy that would keep the affordability factor under some kind of control.
But here's the problem that elected officials have to deal with every day and that is that they need people to want to move into their community. But what is one of the main drivers that pushes people to a specific community? Money. Making money, that is. People want and expect their homes to APPRECIATE in value.
Once it has past a critical mass, nothing kills home values faster than over-supply and higher density. When you spending $750k + for a tiny piece of real estate where you can barely see the sun and the building craze threatens to lower the value of what you are buying, you are going to walk away.
So the difficulty for local elected and appointed officials is that the RESIDENTS (as well as future residents) are holding their feet to the fire to keep prices appreciating. This is in direct contradiction to wise public policy that would keep the affordability factor under some kind of control.
I spent a large portion of my life within the gravitational pull of NYC, but now the city I visit most often is poor, bleeding Baltimore. This is a town that has had its ups and down, and now the governor of Maryland is kicking it when it's down. Not only do the poor and middle class denizens have to cope with gentrification, but now the long-awaited Red line of the Metro - intended to make it easier to make a commute from the less expensive external environs into the jobs in the downtown area - has been nixed as 'too expensive,' while a multi billion, high speed mag lev train to Washington DC has been put on the fast track. So the wealthy will cut their commute time in half while the poor get screwed again. This is an example of how our elected officials are failing the bulk of the people who live and work in our cities.
8
I find it remarkable that: a) there is no mention of immigration. Surely it's impossible to see the dramatic growth in cities and not see the immigrants who are doing the work in the service industries the wealthy executives -- and less wealthy middle management types -- rely upon. And look at the Census data for the city for the last 25 years. The story of growth is a story of immigration.
and: b) there's no mention of the massive amount of development and housing construction that's already in the works in the city. The scale and scope of housing development in the five boroughs is astonishing, and professor Krugman's last two paragraphs betray an astonishing blindness to it.
He can, and does, do a lot better in his columns than what he's done here...
and: b) there's no mention of the massive amount of development and housing construction that's already in the works in the city. The scale and scope of housing development in the five boroughs is astonishing, and professor Krugman's last two paragraphs betray an astonishing blindness to it.
He can, and does, do a lot better in his columns than what he's done here...
1
I'd be curious to hear what Mr. Krugman, an economist and a liberal, thinks of rent stabilization and whether it should be abolished. In Econ 101, we learned that average rents would decrease if rent control/stabilization were eliminated. Or, at least, the higher rents would go down while rent stabilized rents would likely go up. Does Mr. Krugman support rent stabilization and what are his arguments for or against?
3
He has addressed rent control before and believes it to be misguided.
Krugman seems to be heralding a Postmodern Gilded Age via Gentrification.
4
Krugman's usual good analysis neglects the lack of income tax in Conn. for many years. Years ago, commuters from Greenwich were buying homes and spending time commuting to avoiding NY taxes. The incentive to live in Greenwich declined when Conn. imposed a state income tax.
3
Thank you for raising consciousness about the importance of housing policy. I can't wait for you to "return to" it another day. I am surprised that you don't address the importance of public education, especially public higher education, since you receive a paycheck signed by Governor Cuomo and are paid to act within its framework to change it. You are a union member of the CUNY City University of New York (originally known as the Free Academy) system, and with your title and renown could help educate those less privileged members of the society you defend. Although your salary is much higher than our union's wage (investigative reporting, anyone?), your economic thinking and teaching has yet to reach and influence the campuses and students of CUNY you work for. Methinks it's time for you step into the mire and DO, not just pontificate.
2
If you are old enough to remember "white flight" what you lived through was the decline of American cities brought about by the decline of the majority of blue collar jobs. Factories, mills, stockyards were closed, or were relocated to cheaper labor markets, and the people who wanted to stay were left with few options.
No jobs, no hope, cheap drugs. The results were societally what you would expect. Housing was cheap if you didn't mind a daily morning routine of your car being broken into, or, "even more reality".... a homeless person still sleeping in the back seat that you had to wake up to go to work.
That was my life circa 1980 when I worked in Silicon Valley but could only afford the cheap (ex-blue collar) housing in San Francisco's less attractive neighborhood.
Gentrification is not the wealthy gliding in on white stallions with bags of gold. It's a pawn rank of people with lots to hope for and little to lose. There are large economic forces and they grind at a glacial pace (in human terms).
The world of uber-wealthy techies or young "hedgies" is not the reality. Yes there are some, but let's not expand it into a narrative. The change in demographics in American cities is explained by the change in demographics of jobs.
No jobs, no hope, cheap drugs. The results were societally what you would expect. Housing was cheap if you didn't mind a daily morning routine of your car being broken into, or, "even more reality".... a homeless person still sleeping in the back seat that you had to wake up to go to work.
That was my life circa 1980 when I worked in Silicon Valley but could only afford the cheap (ex-blue collar) housing in San Francisco's less attractive neighborhood.
Gentrification is not the wealthy gliding in on white stallions with bags of gold. It's a pawn rank of people with lots to hope for and little to lose. There are large economic forces and they grind at a glacial pace (in human terms).
The world of uber-wealthy techies or young "hedgies" is not the reality. Yes there are some, but let's not expand it into a narrative. The change in demographics in American cities is explained by the change in demographics of jobs.
6
I usually agree wholeheartedly with Professor Krugman but, in this case, I think Jane Jacobs is the wiser voice. We do need to build more housing into our urban cores but if regulations are simply lifted and developers left to do what they want, we could easily end up destroying the character and mix of uses that make cities desirable places to live in the first place. To oversimplify, we need to encourage more diffused development rather than the market-driven tendency to build frantically in a few hot neighborhoods which are left with homogenized, over priced housing, an abundance of bank branches and a 20 or 30-year glide into has-been decrepitude.
5
Socially, it is the bourgeois privilegencia waking up to the fact that commute by automobile is a high-risk waste of time, for suckers and losers. So, long commutes by auto will be henceforth reserved for the working class. U.S. cities will increasingly resemble the European and Latin American city, where the bourgeoisie monopolize the urban centers, the workers and poor get the suburbs.
Economically, it is about the appropriation of surplus profits in the form of rents. That is why housing costs outstrip inflation, and why supply does not meet demand. Economists who specialized in the geopolitical economy of trade should understand this.
The root of both is of course the institution of private property in urban land. Make all urban land public property, convert rents into taxes paid to support residential and commercial services in the metropolitan according to real need. Land taxes will be lower than current land rents on average with the "profit" motive eliminated, while public ownership will open the way to a real democratic governance of the urban environment, rather than what it is now:
The dictatorship of the bourgeois privilegencia.
Economically, it is about the appropriation of surplus profits in the form of rents. That is why housing costs outstrip inflation, and why supply does not meet demand. Economists who specialized in the geopolitical economy of trade should understand this.
The root of both is of course the institution of private property in urban land. Make all urban land public property, convert rents into taxes paid to support residential and commercial services in the metropolitan according to real need. Land taxes will be lower than current land rents on average with the "profit" motive eliminated, while public ownership will open the way to a real democratic governance of the urban environment, rather than what it is now:
The dictatorship of the bourgeois privilegencia.
2
The super-rich are super-rich because the system is rigged in their favor. The politicians both Left and Right do the bidding of the super-rich because, well, they have to if they wish to continue to hold power. Housing, being a basic human right, especially in a nation as wealthy as ours, is subject to the same system that is rigged in favor of the wealthy, and thus adequate and reasonably price housing is not available for those who need it (and not just the poor). Pretty darn hard to have 'life, liberty' and pursue happiness if you are living on the street, or sub-standard housing, or spend half you paycheck on housing.
7
Thank you for writing about this Mr. Krugman. Of course people want to live in a world class city while at the same time having a single family home with a large yard and an easy commute alone in their car to work. The reality is that kind of city does not and cannot exist. For all the complaining about cities becoming too dense and unaffordable, the reality is that there are only a small handful of cities in this country that are the least bit liveable. This is the reason that places like NYC, San Fran, DC, Seattle, etc have become so expensive--there are so few other cities to choose from where you can actually live downtown. Look at cities like Houston and Phoenix that are very affordable but their downtowns are absolutely void of life after working hours. We need more dense and liveable cities in this country or else the extreme inequalities we are seeing in the few coastal cities will only continue to be exacerbated by the privileged.
1
"Call me Snake". Funny, I just re-watched "Escape From NY" last week.
In this gilded era, the inverse of the movie's dystopian NYC seems a lot more likely. Look for a re-make called "Escape TO New York". Plot: a 0.01%-er loses everything in a leveraged buyout gone bad, and is exiled from the billionaire enclave of NYC by the NYPD, the world's 7th largest paramilitary force protecting the gates, tunnels, and bridges from non-High Net Worth Indviduals. From the grimy, debris-filled streets of Fort Lee, he plots a Fed Bailout which will restore the value of his trashed 401k and earn him re-admission to the billionaire's paradise between the Hudson and Harlem Rivers.
In this gilded era, the inverse of the movie's dystopian NYC seems a lot more likely. Look for a re-make called "Escape TO New York". Plot: a 0.01%-er loses everything in a leveraged buyout gone bad, and is exiled from the billionaire enclave of NYC by the NYPD, the world's 7th largest paramilitary force protecting the gates, tunnels, and bridges from non-High Net Worth Indviduals. From the grimy, debris-filled streets of Fort Lee, he plots a Fed Bailout which will restore the value of his trashed 401k and earn him re-admission to the billionaire's paradise between the Hudson and Harlem Rivers.
1
One issue imposing mathematical limits on gentrification is labor costs. As the city gentrifies, service workers find that their living costs increase faster than their wage growth, be it through housing costs or very long commutes. This makes the city inordinately costly-- a recent refrigerator repairman was based in Lake Ronkonkomo and his price included the cost of the commute. This process can be programmed into a mathematical model which will easily show that uncontrolled development in the present mode is unsustainable.
2
The solution for large cities, in large part, is required affordable housing set-asides for all newly-built multi-family properties, plus density bonuses for the provision of affordable housing in excess of requirements.
3
"Solution"????? With such a program, the number who will want this "affordable" housing will exceed any quantity that is built by a large multiplier. Next Question: What allocation system will you rely on to assign these homes to the lucky few?
3
In San Francisco, the population has risen from approx 750,000 to 850,000 in twenty years with no commiserate increase in housing, so the average two bedroom apartment rents for $5000 per month. Plus the city has strict height limitations on what is built, which is both good and bad for the housing crunch - good in that we won't be seeing mega skyscrapers, bad in that building up is an easy way to increase housing.
Since the influx of people is largely made up of tech workers and most of them are well paid rents will continue at their current rate, which means that teachers, blue collar and service workers are increasingly being forced out. While most neighborhoods still have a lot of character, only the well-off can afford to live in them.
As to why wealthy people move to the city instead of the suburbs - the availability of great restaurants, music venues, museums and a sense of vibrancy probably has as much to do with the executive migration as commuting time, at least in San Francisco.
Since the influx of people is largely made up of tech workers and most of them are well paid rents will continue at their current rate, which means that teachers, blue collar and service workers are increasingly being forced out. While most neighborhoods still have a lot of character, only the well-off can afford to live in them.
As to why wealthy people move to the city instead of the suburbs - the availability of great restaurants, music venues, museums and a sense of vibrancy probably has as much to do with the executive migration as commuting time, at least in San Francisco.
5
Smaller households, too.
First let me say we love Manhattan but a weekend every three or four years is all we can handle.
I never know what to say when the fifth estate suddenly discovers what we have been saying for decades becomes accepted truth. The right wing has long understood that loud and repetitious is the way to go and people like myself who have been saying that a small downtown condo and a table waiting for you at a upscale neighbourhood cafe is the ultimate sign that you have made it are considered beyond the fringe.
My wife and I have left the heart of Montreal's intellectual bourgeoisie elite for a working class neighbourhood in a village far away from our former urban enclave. We are retired, we do not need jobs and we have no end of intellectual engagement. Most people are not that lucky.
We have lived rich rewarding lives we are tired and people come here for the quiet the great food and the intellectual engagement. We have come here for time to read The Walrus and the walrus said the time has come to speak of many things. This is where a Maserati is still a sign of wealth not insecurity.
The Walrus is Canada's New Yorker with perhaps a little less emphasis on seeing the right things and being seen in the right places. We cannot afford Manhattan economically but especially emotionally and intellectually.
I never know what to say when the fifth estate suddenly discovers what we have been saying for decades becomes accepted truth. The right wing has long understood that loud and repetitious is the way to go and people like myself who have been saying that a small downtown condo and a table waiting for you at a upscale neighbourhood cafe is the ultimate sign that you have made it are considered beyond the fringe.
My wife and I have left the heart of Montreal's intellectual bourgeoisie elite for a working class neighbourhood in a village far away from our former urban enclave. We are retired, we do not need jobs and we have no end of intellectual engagement. Most people are not that lucky.
We have lived rich rewarding lives we are tired and people come here for the quiet the great food and the intellectual engagement. We have come here for time to read The Walrus and the walrus said the time has come to speak of many things. This is where a Maserati is still a sign of wealth not insecurity.
The Walrus is Canada's New Yorker with perhaps a little less emphasis on seeing the right things and being seen in the right places. We cannot afford Manhattan economically but especially emotionally and intellectually.
7
San Francisco is witnessing the same dramatic rise in real estate prices and rent as New York. Ironically the small businesses that made neighborhoods interesting and attractive are being forced out. Young professionals seem to be willing to pay any price to be in the inner city - a city that has no real room for housing growth. If the City, as it is fondly referred to, is to maintain its character, and not be join the ubiquitous homogeneous city centers of chain stores and restaurants, then aggressive rent control is the only real answer, and that includes rent control for small commercial properties.
5
Thank you for speaking the truth Dr. Krugman. It's disheartening to see self-described "progressive" city politicians in Seattle, Denver, Portland, Boulder, and Austin fight to expand exclusionary zoning, while working families continue to get priced out of the cities in which they work.
9
Manhattan is only affordable for bankers (mostly men), ITs (mostly men) doctors, successful lawyers and upper management. Most of these are men, which is why most women, who mostly work in liberal arts or teaching jobs, live with roommates until old age. We are talking about an entire city, not about Park Avenue. The few housing projects are all for blacks and Spanish (in Harlem), and the 80/20s are expiring and closing down, when they should be in perpetuity if we don't want to turn Manhattan in an Orwell farm. DeBlasio is all talk; if he really meant business he should have preserved the existing 80/20s and perhaps increased them to 70/30 and expanded it among all new developments?
4
Puhleeeaaaasse.
This another Democratic scheme to both buy votes and waste money. What they want is control of NYC's wealth and to get that they have to pack the poor into NYC like Boss Tweed used to pack new immigrants into LES tenements.
Affordable housing is available in the outer boroughs, New Jersey and Long Island with great commuter rails to use. Let Manhattan be what it can be, not the bastion of wealth it's critics decry, but the generator of prosperity it has become and can become better. That means let productive people gather and work wonders for everyone. Put the housing projects someplace inexpensive, without negative externalities, and viable.
This another Democratic scheme to both buy votes and waste money. What they want is control of NYC's wealth and to get that they have to pack the poor into NYC like Boss Tweed used to pack new immigrants into LES tenements.
Affordable housing is available in the outer boroughs, New Jersey and Long Island with great commuter rails to use. Let Manhattan be what it can be, not the bastion of wealth it's critics decry, but the generator of prosperity it has become and can become better. That means let productive people gather and work wonders for everyone. Put the housing projects someplace inexpensive, without negative externalities, and viable.
2
Puhleeeaaasse. Stop with the elitist logic. It may be hard for you to believe, but once New York was New York, and not 'Manhattan and the Outer Boroughs'. If Manhattan is to be what it can be, it should be for ALL. It's bad enough that truly "productive people" like artists, have been chased out of the Lower East Side, SoHo, TriBeCa, DUMBO etc. because developers picked up the scent. But now the entire City is on the verge of total homogenization. "Put housing projects someplace inexpensive....", you say. If anything, that's a "scheme", and a very bad one. It sounds like you would be someone to advocate the building of Walls next.
6
Work wonders for everyone ? Puhleeeaaasse.
3
I have to say, I don't like the term "gentrification".
I've known several people who had very little money (ex. artists, musicians, dancers) but who were willing to move into or buy rundown properties in out-of-the-way and high-crime areas and fix them up slowly with their own hands. Sometimes tenants had to unite and go through a long process to get from the city buildings landlords had abandoned.
Yes, large numbers of poor people eventually ended up displaced as the buildings grew better and the neighborhoods grew safer, and yes, they need places to live too. But I won't use a that snobbish term for what my not-at-all affluent friends did with enterprise, grit, and hard work.
A person who's willing to buy a place so messed up that it a 4' x 4' hole in the wall between rooms and fix it up himself, or one who's willing to stick with a place that has no heat or hot water in the middle of winter because the landlord has abandoned it deserve whatever break they get for it.
I've known several people who had very little money (ex. artists, musicians, dancers) but who were willing to move into or buy rundown properties in out-of-the-way and high-crime areas and fix them up slowly with their own hands. Sometimes tenants had to unite and go through a long process to get from the city buildings landlords had abandoned.
Yes, large numbers of poor people eventually ended up displaced as the buildings grew better and the neighborhoods grew safer, and yes, they need places to live too. But I won't use a that snobbish term for what my not-at-all affluent friends did with enterprise, grit, and hard work.
A person who's willing to buy a place so messed up that it a 4' x 4' hole in the wall between rooms and fix it up himself, or one who's willing to stick with a place that has no heat or hot water in the middle of winter because the landlord has abandoned it deserve whatever break they get for it.
8
I strongly resonate with this column, except for the fact that I'm skeptical about Dr. Krugman's "top 10%" figure. Before I stopped working FT, my salary put me just inside the top 10%. But I still couldn't fathom living in NYC, my hometown, without surrendering large chunks of my lifestyle. Let's shrink that advantaged percentage down to perhaps top-5% for a more realistic view of who can afford to buy into that inner city gentrification in the US's largest cities. As much as I hated the idea that I couldn't go home again, the reality of the financial situation was too blatant to ignore. I'm grateful to live in a medium-sized city in which gentrification has not had such a diversity-destroying effect.
8
What are the amenities of urban life that so attract the wealthy? Art, music, theater, performances of all kinds, kicky little shops, little restaurants serving great food, and so on. All of these things depend on the services of mostly young, talented people who are willing to work for peanuts to follow their muse. The small shops and restaurants need cheap rental space.
As long as the inner cities were shunned by people with money, creative people and innovative small businesses could thrive. The environment created by their efforts is what lured the moneyed classes back. Properties changed hands at ever-increasing prices and rents had to rise to pay off those loans.
And in the nation at large we have a consumer economy with an ever-greater proportion of citizens unable to participate.
Just more of the contradictions of 21st century capitalism.
As long as the inner cities were shunned by people with money, creative people and innovative small businesses could thrive. The environment created by their efforts is what lured the moneyed classes back. Properties changed hands at ever-increasing prices and rents had to rise to pay off those loans.
And in the nation at large we have a consumer economy with an ever-greater proportion of citizens unable to participate.
Just more of the contradictions of 21st century capitalism.
4
Re "and rents had to rise to pay off those loans,"
If nobody was willing to pay those rents, they couldn't rise. Owners who bought more than they could afford could either rent them out for less, or not get any subsidy at all. Simple supply and the demand. The demand actually exists for the rents to rise.
If nobody was willing to pay those rents, they couldn't rise. Owners who bought more than they could afford could either rent them out for less, or not get any subsidy at all. Simple supply and the demand. The demand actually exists for the rents to rise.
I was listening to a similar NPR about a similar situation in Chicago, although the roots may be different. Retail is going through a transition, and in general cutting jobs. Smaller, contracting companies don't need expansion space, they need the dynamism of downtown, so they are moving there. At some point they may move back into an expansionary mode, but that's the current situation.
One of the notable parts of the piece was that this desire for downtown has nothing to do with taxes. Companies are moving to higher tax areas, not lower tax ones, because taxes are a tertiary concern to making their business work better.
One of the notable parts of the piece was that this desire for downtown has nothing to do with taxes. Companies are moving to higher tax areas, not lower tax ones, because taxes are a tertiary concern to making their business work better.
3
NYC and other major cities have at least two other powerful levers to address housing and inequality - (1) mass/public transport and (2) real estate tax. Each is at least as effective as land use restrictions.
#1 mass and public transport: new train tunnels (such as those that Christie indefensibly cancelled) and bridges, improved subways, buses and highways would almost immediately relieve transport and housing congestion in NYC.
To live in a commuter neighborhood now (NJ, LI, Westchester, etc) and work in NYC means a real sacrifice to family time, or that you likely have a high-end exec job with flex hours and a stay-at-home spouse. Compare to other mega cities (London, Tokyo, Beijing) and see their relative success.
#2 real estate tax: Paul, I think you would have a field day examining the silent, middle-class predatory tax of real estate taxes, especially on Manhattan coops. In the same 15 year span you describe, actual taxes on coops in Manhattan have skyrocketed between 200 and 300%, which has driven out middle class professionals such as teachers, engineers, lawyers and doctors. Few can afford $25k to $40k in RE taxes per year (say on a 2 BR apt), or to hold onto one bought decades ago. Only the very rich can afford a townhouse, which owes pennies on the dollar in RE taxes in comparison.
It's time for NYC to freeze Manhattan RE taxes on coops, increase them somewhat and gradually in the boroughs, and stop turning Manhattan into a millionaires-only island.
#1 mass and public transport: new train tunnels (such as those that Christie indefensibly cancelled) and bridges, improved subways, buses and highways would almost immediately relieve transport and housing congestion in NYC.
To live in a commuter neighborhood now (NJ, LI, Westchester, etc) and work in NYC means a real sacrifice to family time, or that you likely have a high-end exec job with flex hours and a stay-at-home spouse. Compare to other mega cities (London, Tokyo, Beijing) and see their relative success.
#2 real estate tax: Paul, I think you would have a field day examining the silent, middle-class predatory tax of real estate taxes, especially on Manhattan coops. In the same 15 year span you describe, actual taxes on coops in Manhattan have skyrocketed between 200 and 300%, which has driven out middle class professionals such as teachers, engineers, lawyers and doctors. Few can afford $25k to $40k in RE taxes per year (say on a 2 BR apt), or to hold onto one bought decades ago. Only the very rich can afford a townhouse, which owes pennies on the dollar in RE taxes in comparison.
It's time for NYC to freeze Manhattan RE taxes on coops, increase them somewhat and gradually in the boroughs, and stop turning Manhattan into a millionaires-only island.
7
Baby boomers are en masse moving back to the city they grew up in. And they have money - lots of money. With the kids grown, gone, and out of college the reasons for the suburban 4-5 bedroom home on a half to acre lot and, of course, in a good school district (with the associated sky high property taxes), no longer make financial or lifestyle sense.
Now the Boomers can actually afford the Broadway shows and the pricy restaurants too. And then there are the summers in Florence and the south of France. Yessiree - life is damn good for the Boomers!
Now the Boomers can actually afford the Broadway shows and the pricy restaurants too. And then there are the summers in Florence and the south of France. Yessiree - life is damn good for the Boomers!
5
Although I am one of the "fortunate" boomers who has saved and invested well, you cannot say the same about the "boomers" as a generation, per se. Moreover, early boomers who scored their housing at 1970s prices stand far better off those who came later--or those who continue to rent.
6
Have the greeders (a sociological identifiable group of uber-haves that includes individuals and families who have upwards of 350k incomes and want more) who are buying NYC let go of their country estates?
2
The largest American cities begin to resemble thos sprawling, fetid megalopolises of the formerly colonial world: urban eruptions like Kinshasa, Manila, even Buenos Aires. At the center are the homes, cultural distractions and gentile amenities of the privileged ringed by an expanse of squalid homes, shacks and hovels housing the working class and the unemployed kept on tap to keep wages low. Yes, capitalism is revealing a putrid global future.
3
The putrid global future stems from billions and billions of homo sapiens outgrowing their ecosystem.
1
In my city and many others housing is no longer a human necessity and human right, but a speculative commodity and repository for the proceeds of international corruption and parasitism of the overclass.
14
I have lived in Vancouver off an on (currently on) for 35 years. Cannot remember when Vancouver homes were ever a human right. Even when you could buy a West Point Grey house for $100,000, the general thought and refrain, "houses are unaffordable." [Today, that house would sell for $2mm (more or less depending on lot size and views.]
1
Patti Smith and Eight Jelly Rolls
Patti Smith fairly recently recommended Peekskill as a place for young artists to start out. That is, Patti Smith of the dirty, nasty '70s New York.
A while ago Twyla Tharp's company came by to perform at the David H. Koch Theater. Her work "Eight Jelly Rolls" can be seen as a point along a line formed by Petipa, Balanchine, and Robbins.
Balanchine was formed in the era of, and met, Tsar Nicholas. The David H. Koch Theater is an effort to give class, with a capital "K" to the image of a successor to the John Birch Society.
The environment New York presented at it what is often deemed its nadir allowed venturesome people a low threshold to creating an improbable artistic self. As well as Patti Smith, among them was George Balanchine who was part of a revolution that built upon traditions from an imperial age. The David H. Koch Theater is emblematic of culture that comes with a business plan. It serves to improve the image of someone who is hollowing out the social and economic fabric of this nation.
New York City is part of the movement to evaluating the public good as a function of the desires of the ultra-wealthy. Perhaps that is why what used to be The New York State Theater is now the David H. Koch Theater.
Patti Smith fairly recently recommended Peekskill as a place for young artists to start out. That is, Patti Smith of the dirty, nasty '70s New York.
A while ago Twyla Tharp's company came by to perform at the David H. Koch Theater. Her work "Eight Jelly Rolls" can be seen as a point along a line formed by Petipa, Balanchine, and Robbins.
Balanchine was formed in the era of, and met, Tsar Nicholas. The David H. Koch Theater is an effort to give class, with a capital "K" to the image of a successor to the John Birch Society.
The environment New York presented at it what is often deemed its nadir allowed venturesome people a low threshold to creating an improbable artistic self. As well as Patti Smith, among them was George Balanchine who was part of a revolution that built upon traditions from an imperial age. The David H. Koch Theater is emblematic of culture that comes with a business plan. It serves to improve the image of someone who is hollowing out the social and economic fabric of this nation.
New York City is part of the movement to evaluating the public good as a function of the desires of the ultra-wealthy. Perhaps that is why what used to be The New York State Theater is now the David H. Koch Theater.
8
What about the effect of homes held for investment, rather than residence? Just a few days ago, the Times published a detailed piece on how Chinese cash is flooding U.S. real estate markets, particularly upscale ones. The demand is not for a place to live, but for a place to store wealth--but it displaces others just as surely. Surely this ought to be part of the narrative, Professor?
14
"The good news is that this is an issue over which local governments have a lot of influence. New York City can’t do much if anything about soaring inequality of incomes, but it could do a lot to increase the supply of housing, and thereby ensure that the inward migration of the elite doesn’t drive out everyone else. And its current mayor understands that.
But will that understanding lead to any action?"
Local governments all over North America are populated by politicians being told by their donors not to create conditions for sustainable and affordable development, enforced by parking minimums, zoning maximums and resistance to higher order transit. So I'm guessing no.
But will that understanding lead to any action?"
Local governments all over North America are populated by politicians being told by their donors not to create conditions for sustainable and affordable development, enforced by parking minimums, zoning maximums and resistance to higher order transit. So I'm guessing no.
3
"For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened."
Only if you purposefully put your blinders on. The intolerable localized big-city crime from the 1970s to the early 1990s was met by a War on Crime and a War on Drugs, which incarcerated scores of criminals and cleaned up the cities.
Polite company won't allow for that, however. The end result is that liberals can curse Giuliani while running through the Park at night and then heading home on the subway after a 9 PM dinner.
Only if you purposefully put your blinders on. The intolerable localized big-city crime from the 1970s to the early 1990s was met by a War on Crime and a War on Drugs, which incarcerated scores of criminals and cleaned up the cities.
Polite company won't allow for that, however. The end result is that liberals can curse Giuliani while running through the Park at night and then heading home on the subway after a 9 PM dinner.
6
If this is true, why did crime in other countries that pursued less aggressive strategies also go down by a similar amount? The truth is that it was primarily a reduction in environmental lead.
3
Young people are flocking to San Francisco not because of commute- they often commute to Silicon Valley- but because they can create the suburban mall of their youth in the new hipster city mall. They can drink artisan coffee, eat Mexican tapas at the new fusion Mexican which replaced the actual Mexican taco place, go bowling while eating sushi and imagine themselves in this gritty urban maelstrom without the bother of those pesky minorities. The city now has the sensibility of a more crowded Palo Alto.
6
Another factor is the growing number of apartments taken off the market because the owners are renting them out on Air B&B and similar sites. This drives up the rent for the remaining houses.
4
"For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened.'
Yes, they do.
Yes, they do.
2
Great. Now let's cut to the chase, and address the code words of the real elephant in the room, and in this piece. Namely 'Urban' = Black and 'Suburban' = White; because everybody knows that's what it's all about. And that is also why "Gentrification" is threatening to purify this city of every kind of socioeconomic diversity. Just for the record, MOST New Yorkers Black, White, etc. are having a hard time keeping up with these exploding rents which has caused artists to flee, the middle-class to dissipate, and the homeless population to continue to rise precipitously. When the city's housing stock is kept artificially low to maximize profit over a large amount of time, of course there is going to be a problem. Too bad it doesn't look like that's going to change any time soon.
2
As the affluent flock back to the urban centers, there also needs to be enough housing for everyone else. Uh, NO.
1
More than any other city in North America (the Vancouver market may be similar), the market for real estate in NYC is international and it has little to do with the demand for accommodation. The buyers are investors and others who want to park money in America (their condos sit empty), investors who rent, people who want a pied-a-terre in NY where they spend a few days or a few weeks per year, and last but not least, people who actually reside in NY. This is not just about the 1.0% or the rich, this is a manifestation of fears and beliefs affecting the broader world economy, namely a concern that financial markets could fail again, the sense that we are balanced on a knife edge teetering between spiraling deflation and spiraling inflation, too much money chasing too low returns. I wonder if much can be done about this.
4
Housing is a place where the market has broken down. We need a preferential bias in favor of the poor, we need respect for cultural communities. WE need SRO's and confiscatory tax rates on developers of high end housing. One reason the market is broken is that all any developer wants to do is build for the 'upscale clientele". People should be free to do that but get taxed at 110%. Funny how the things those of us who where anti gentrification activists in the 1980's ( Tompkin Square police riots etc...)were protesting are now recognized as serious issues. Maybe we were right about other stuff too
4
While I know that there is only so much you can fit into a column, I am surprised that Dr. Krugman did not mention the role of the current housing bubble. Yes, we have one. Yes, it is driving up housing prices and rents alike. And yes, it is pricing average income Americans out of cities and their closest suburbs.
While land use restrictions definitely play their part in the cost of housing, I think the housing bubble is a more pressing concern.
While land use restrictions definitely play their part in the cost of housing, I think the housing bubble is a more pressing concern.
1
Want to be astonished? Create a chart that examines the ratio of 1) the average (American) salary and 2) the median cost of a new home from the end of WW2 to today.
Please note -- in that chart you just created -- that the jump since the early 1970s is probably due to the dramatic rise in energy prices since the Arab Oil Embargo of 1973. Plenty of cheap energy is to a modern post-industrial economy what plenty of cheap water was to all those ancient civilizations: an absolutely essential ingredient for growth and prosperity. Making either energy or water subject to the whims of the free market is asking for trouble.
Also please note that many of the new homes in the post-WW2 era -- most notably, the Levitt Homes -- were build simply and were affordable to a family with just one bread-earner; and quite often a blue-collar one at that. They were located on land close to the urban core (land long since gone), and what's more, the plot of land the house was sold on was large enough to accommodate expansion -- by adding a garage, dormers or even an addition into the backyard -- over the course of decades. This allowed a dramatic increase in the value of that asset while at the same time providing a necessary function (shelter). An interesting contrast to today's cookie-cutter McMansions built on postage stamp-sized plots of land.
Please note -- in that chart you just created -- that the jump since the early 1970s is probably due to the dramatic rise in energy prices since the Arab Oil Embargo of 1973. Plenty of cheap energy is to a modern post-industrial economy what plenty of cheap water was to all those ancient civilizations: an absolutely essential ingredient for growth and prosperity. Making either energy or water subject to the whims of the free market is asking for trouble.
Also please note that many of the new homes in the post-WW2 era -- most notably, the Levitt Homes -- were build simply and were affordable to a family with just one bread-earner; and quite often a blue-collar one at that. They were located on land close to the urban core (land long since gone), and what's more, the plot of land the house was sold on was large enough to accommodate expansion -- by adding a garage, dormers or even an addition into the backyard -- over the course of decades. This allowed a dramatic increase in the value of that asset while at the same time providing a necessary function (shelter). An interesting contrast to today's cookie-cutter McMansions built on postage stamp-sized plots of land.
7
Don't just claim "inequality" is the culprit. That's a catch-all phrase. What's causing all this money to flood into cities and drive up prices? Not the low crime rates but the surge in rich foreigners. Of course, that's a lot harder to contend with than something as nebulous as "income inequality".
How would Prof. Krugman shut off that foreign spigot? Good luck with that.
How would Prof. Krugman shut off that foreign spigot? Good luck with that.
5
Shame on Mr. Krugman for wanting to continue the distortion of the free rental market by continuing disastrous housing policies which have decimated the number of affordable market rentals. It sounds like Mr. Krugman believes there is a constitutional right for low income people to live in the most desirable areas, subsidized of course by others. Rather than the poor commuting to their jobs in the city like everyone else he instead wants to favor them staying in the city at the expense of all others.
1
The USA has the highest incarceration rate in the world (with the Seychelles islands). Eight million people are under justice supervision. Police brutality helped. This may be why nobody knows why New York is so much safer; nobody wants to know.
Housing policy, thus the build-up of infrastructure, is crucial for the economy. But, because of the necessary involvement of public infrastructure, it requires more PUBLIC spending, hence more taxes on the wealthy.
An example is schools: they can be made profitable, thus private, as long as they cater to the top 10% To cater to everybody, thus make a suustainable city, taxes will have to be augmented and redistributed to public schools.
So sustainable cities will require a change in the philosophy of the socio-economy.
Housing policy, thus the build-up of infrastructure, is crucial for the economy. But, because of the necessary involvement of public infrastructure, it requires more PUBLIC spending, hence more taxes on the wealthy.
An example is schools: they can be made profitable, thus private, as long as they cater to the top 10% To cater to everybody, thus make a suustainable city, taxes will have to be augmented and redistributed to public schools.
So sustainable cities will require a change in the philosophy of the socio-economy.
People with the most money get to live in the best places. While increasing affordable housing in cities might work, it will most likely mean that those who are just a little less wealthy will have bid up the prices of 'affordable' housing, unless that housing is cost controlled, which seems unlikely.
The only solution to the problem is attacking inequality directly.
The only solution to the problem is attacking inequality directly.
1
What about the creation of new urban centers? With modern transit systems??
Affordability in NYC/SF is a lost cause, at best a rear guard action to ensure that at least a few middle-class and working people remain in the city core. Millions of millenials and immigrants will not be able to afford to live there.
You are thinking too small here. We should identify 1/2 dozen smaller cities and invest/encourage development around there. Worcester in Massachussets, Sacramento in CA are examples that come to mind (california is building a world-class rail service to support this).
Affordability in NYC/SF is a lost cause, at best a rear guard action to ensure that at least a few middle-class and working people remain in the city core. Millions of millenials and immigrants will not be able to afford to live there.
You are thinking too small here. We should identify 1/2 dozen smaller cities and invest/encourage development around there. Worcester in Massachussets, Sacramento in CA are examples that come to mind (california is building a world-class rail service to support this).
1
NYC is a place I love to visit, but even more so...love to leave. I'll take my Utopia in the woods any day over the concrete jungle.
With that being said, I think this all has to do with the commoditization of just about anything, a leftover side effect of the "greed is good" crowd that even Krugman is a part of. Everyone gets a piece of that pie from the rich land owner to the developer who creates the "new" living space to the person who buys the tiny space in which they live to the neighbors who restrict the building to certain people to the Wall Street banger who wraps up this mortgage in an attractive package that he can oversell to his perspective victim as part of his retirement package.
Perhaps the solution is not to buy in the city at all?
With that being said, I think this all has to do with the commoditization of just about anything, a leftover side effect of the "greed is good" crowd that even Krugman is a part of. Everyone gets a piece of that pie from the rich land owner to the developer who creates the "new" living space to the person who buys the tiny space in which they live to the neighbors who restrict the building to certain people to the Wall Street banger who wraps up this mortgage in an attractive package that he can oversell to his perspective victim as part of his retirement package.
Perhaps the solution is not to buy in the city at all?
3
Housing...food...?
Oh come on, Paul, what's wrong with cardboard boxes, wicker baskets, and under-bench sleeping accommodations the kleptocracy is offering? And for food, a few crumbs of the table of all masters of the universe should be plenty! We're in a 'new golden age,' after all, right?
Oh come on, Paul, what's wrong with cardboard boxes, wicker baskets, and under-bench sleeping accommodations the kleptocracy is offering? And for food, a few crumbs of the table of all masters of the universe should be plenty! We're in a 'new golden age,' after all, right?
4
What, specifically, about land use regulations is the big contributor? Unlike a Krugman column to point to a cause but not go into it at all.
Personally, I think Prof Krugman should spend more time in his new city before so casually impugning zoning restrictions. It takes awhile in an urban setting to understand why zoning restrictions can be so important to daily life, and to continuity of a residential community. The closer people live to one another, the more important these types of rules are. Not saying that zoning doesn't have plenty of its own problems, but this rush to judgment is unbefitting to the best columnist around...
Personally, I think Prof Krugman should spend more time in his new city before so casually impugning zoning restrictions. It takes awhile in an urban setting to understand why zoning restrictions can be so important to daily life, and to continuity of a residential community. The closer people live to one another, the more important these types of rules are. Not saying that zoning doesn't have plenty of its own problems, but this rush to judgment is unbefitting to the best columnist around...
2
When we moved to Canada 50 years ago, Toronto had plans to build low cost housing for the average and lower class wage earner. However, it became a haven for real estate operators to build condominiums and plans for such low cost housing were scuttled. It is now a condominium city, often with investments from foreign wealthy members of other countries who rent out their investment and hence similar to the set up in NYC today. Various ghetto like areas exist and housing costs for the average income earner are hard to come by. Many people working in Toronto have to live in urban areas with long commutes to work.
I grew up in the Amalgamated Cooperative in the Bronx where people owned their apartments and had jurisdiction over how it was run. It was a haven for those of average income but how it is working today is something I don't know about.
Yes, the same wealthy class has infiltrated the housing market and I am sure many problems with crime, etc. results from the those who have to live in substandard, unsafe housing areas.
The real estate operators call the shots.
I grew up in the Amalgamated Cooperative in the Bronx where people owned their apartments and had jurisdiction over how it was run. It was a haven for those of average income but how it is working today is something I don't know about.
Yes, the same wealthy class has infiltrated the housing market and I am sure many problems with crime, etc. results from the those who have to live in substandard, unsafe housing areas.
The real estate operators call the shots.
16
PVOLKOV,
Fifty years ago Toronto was Hogtown and the last place an 18 year old would want to be on a long weekend especially when New York was only thirty minutes further away. Today I would be hard pressed to know where Toronto ends and Burlington begins except for the Skyway.
Toronto is a great city but it sure doesn't feel Canadian or feel like that soft gentle urban oasis the urban planners envisioned back in the 70s. Greed sure has a way of deflecting us from our goals.
Fifty years ago Toronto was Hogtown and the last place an 18 year old would want to be on a long weekend especially when New York was only thirty minutes further away. Today I would be hard pressed to know where Toronto ends and Burlington begins except for the Skyway.
Toronto is a great city but it sure doesn't feel Canadian or feel like that soft gentle urban oasis the urban planners envisioned back in the 70s. Greed sure has a way of deflecting us from our goals.
2
There are two other symptoms. First, rent rules hide the growing demand for housing and the impact it is having on values. It is true that as crime receded many neighbors saw no rent movements until new buildings were either built or renovated. Rent laws benefit older more long term renters over new tenants. The other issue is low scale neighborhoods using landmark designations and zoning to keep the scale existing tenants enjoy. The problem is it keeps enough units of housing from being built.
Hmm, less crime.
That's good, right?
Whiter urban areas, hmm; seems like an overtly racist observation.
Better food, better services, better living conditions.
What's wrong with any of these developments?
Mr. Krugman, exactly what is wrong with any of this?
What action are you suggesting?
More crime?
A less enjoyable urban experience?
Fewer Caucasians?
NYC is a better place today.
What possibly could be wrong with this?
Are you never happy, never satisfied?
That's good, right?
Whiter urban areas, hmm; seems like an overtly racist observation.
Better food, better services, better living conditions.
What's wrong with any of these developments?
Mr. Krugman, exactly what is wrong with any of this?
What action are you suggesting?
More crime?
A less enjoyable urban experience?
Fewer Caucasians?
NYC is a better place today.
What possibly could be wrong with this?
Are you never happy, never satisfied?
1
Dr. Krugman and Readers: 1) According to the DOL's October CPI report, rents were up +3.7% in October year-over-year, while the overall index was up only +0.2% on this basis. These are unadjusted figures. 2) In the financial markets recently, private equity funds seem to be flourishing while hedge funds and bank trading via proprietary trading and other bank trading revenue sources are down. No doubt, new regs from Dodd/Frank legislation are reducing production from these very lucrative NYC profit centers, as per pre-legislation passage. 3) In prior columns, Dr. Krugman has discussed how the sheer lack of expandable housing space in cities such as NYC and San Francisco have resulted in soaring housing market prices during economic booms. Whereas, cities such as Phoenix, Las Vegas, and some cities in Calif., at least before the drought, offered more abundant land for housing expansion, with smaller price acceleration, as a result. 4) In NC, the Research Triangle Park (RTP) is located in a rural section of the state near Raleigh, the capital, and two other major university cities. Yet, scientists and IT professionals are increasingly reluctant to pay the opportunity costs in the form of inefficient commute times and energy wasted from such commutes, in a period of global warming. In the RTP, there are few [work site/domicile] opportunities; so, its industrial sites have seen reduced demand.
[Mon., 11/30/2015, 11:47 a.m.; Greenville, NC]
[Mon., 11/30/2015, 11:47 a.m.; Greenville, NC]
Wait a minute. The answer to the lack of affordable urban housing is to weaken land-use restrictions? I guess this is what happens when Paul Krugman ventures into a topic that's outside his area of expertise. You get a grossly uninformed oversimplification.
Sure, there are places like New York City (actually, San Francisco and other Bay Area cities are far better examples) where the building of more urban housing is being held back by overly restrictive land-use codes that legislate nimbyism and privilege the old-money ownership class.
But it's only through some painful and controversial zoning that our metropolitan areas would be able to achieve any sort of density or a semi-sane transportation system to begin with. The Seattle area would be another LA or Houston by now if it weren't for our Growth Management Act which for decades now has funneled growth into urban cores and prevented our farmland from being swallowed up by suburban sprawl.
And I should add, to go back to something that's more in Prof. Krugman's wheelhouse, that if we're seeing a lack of affordable urban housing for those outside the top 10%, that could be due to a lack of good-paying jobs for workers outside the top 10%.
Sure, there are places like New York City (actually, San Francisco and other Bay Area cities are far better examples) where the building of more urban housing is being held back by overly restrictive land-use codes that legislate nimbyism and privilege the old-money ownership class.
But it's only through some painful and controversial zoning that our metropolitan areas would be able to achieve any sort of density or a semi-sane transportation system to begin with. The Seattle area would be another LA or Houston by now if it weren't for our Growth Management Act which for decades now has funneled growth into urban cores and prevented our farmland from being swallowed up by suburban sprawl.
And I should add, to go back to something that's more in Prof. Krugman's wheelhouse, that if we're seeing a lack of affordable urban housing for those outside the top 10%, that could be due to a lack of good-paying jobs for workers outside the top 10%.
5
Housing and energy have risen at about 3 times the rate of over-all inflation for most of the last 30 years. If HUD were funded to return to it's subsidized housing program that existed between 1950s and 1980s where 200,000 units of government housing were produced a year, then all housing costs would be lower. In most areas housing cost have become one of the chief drivers of income inequality.
"...national housing prices have risen much faster than construction costs since the 1990s, and land-use restrictions are the most likely culprit. Yes, this is an issue on which you don’t have to be a conservative to believe that we have too much regulation."
Speaking as an urban planner, I must observe that there are quality of life issues behind land use regulations, or as you also call them. restrictions.
At the extreme, do we want the entire island of Manhattan built uniformly to 100 stories? Water, sewer, electric? Can we provide these services without limit?
It's possible, I suppose. Still, we may reach a density of development that will make scenes from Blade Runner or The Minority Report look pastoral and bucolic. Though maybe that's what people do want. We look at everything now through an LED screen. No one is really present in their physical location anymore; we prefer the virtual, digital one. We can stumble down Fifth Avenue looking at images of Yosemite on our smart phones.
It's agreed! Let's go "Milton Friedman" on land use. A good plank for Mr. Trump's platform.
Speaking as an urban planner, I must observe that there are quality of life issues behind land use regulations, or as you also call them. restrictions.
At the extreme, do we want the entire island of Manhattan built uniformly to 100 stories? Water, sewer, electric? Can we provide these services without limit?
It's possible, I suppose. Still, we may reach a density of development that will make scenes from Blade Runner or The Minority Report look pastoral and bucolic. Though maybe that's what people do want. We look at everything now through an LED screen. No one is really present in their physical location anymore; we prefer the virtual, digital one. We can stumble down Fifth Avenue looking at images of Yosemite on our smart phones.
It's agreed! Let's go "Milton Friedman" on land use. A good plank for Mr. Trump's platform.
4
Oh boy - you see a photo of Paul Krugman and then "inequality" in the headline and you know you are in for a world class liberal rant. Earth to liberals: Not every DESERVES to live on Park Ave. You have to be able to AFFORD it, and most can't, some at no fault of their own and many because they are lazy and/or stupid. If wealthy whites want to live in the center of Harlem and can afford to pay the price, of course they should be allowed to live there. If that forces the current residents to the Bronx, so be it.
2
If we had a rational transportation system Manhattan would be served by multiple high-speed spokes which themselves would be fed by local transport and which would provide parking for commuters to leave their cars outside town.
2
Gentrification has been greatly aided by urban renewal in the effort to clean up slums. The marginal element of the population were able to sustain themselves in the impersonal environment the city afforded as sanctuary from the pressure of adapting to the mores of their communities in the hinterlands. "I live by my wits" was the byword for many who dwelled in or near skid row. Public safety, although not a priority for the police, was relatively secure. SRO hotel rooms could be had for little more than pocket change through the 60s in many cities. Day labor was available & cheap, greasy spoons abounded. Remnants of this substrata culture are seen today sleeping over heating grates with tell tale signs of their bodily presence visible & detectable by the olfactory senses.
Now that industry has fled the greater urban scene, the middle class are dispersed, humbled & reduced to penury with the added insult of uncertainty & job insecurity. The 1 to 10 percenters do need serviced however, so get a grip, slackers!
Now that industry has fled the greater urban scene, the middle class are dispersed, humbled & reduced to penury with the added insult of uncertainty & job insecurity. The 1 to 10 percenters do need serviced however, so get a grip, slackers!
2
The same people who have fought to "landmark" entire neighborhoods for architectural preservation are now complaining about housing shortages. This is yet another example of pervasive liberal hypocrisy.
3
At least one element in Prof. Krugman's analysis doesn't quite ring true. Here in NYC, the crime rate, though still well below that of past decades, has been creeping back up- though most of those new and affluent residents would not likely be aware of this. The truth is that violent crime is almost exclusively relegated to those areas in which racial minorities continue to dominate the population (i.e., where gentrification hasn't yet taken root). Unfortunately, out of sight general means out of mind at least insofar as the police and the politicians are concerned. Still, black lives do matter, and black-on-black crime deserves no less attention from the powers that be than the occasional stolen wallet in Midtown or Tribeca.
3
The top 1% global financial elite own multiple properties all over the world and fly to them in their privately owned planes with bodyguards and other attendants. The properties are managed by "keepers" so when the masters come they are well taken care of. This is why the wealthiest want us to watch Downton Abbey - to try to make us believe in the good old days of immense concentrated wealth, power and peons - and why I refuse to watch it or "Game of Thrones" or any of the other power-over-peons garbage. No, society has not always been that way and I'm going to do all I can to make sure history does not repeat itself for the greedsters who have stolen over one-half the world's wealth and want it all.
9
Why do people say crime is down when one of the biggest criminal actions in our history took place before the fall of the subprime industry in 2008.
These people got away with "murder" and not one of them went to jail. And none of them had to give back their ill-gotten gains -- in fact, they got to reap the rewards of the recovery to the rest of the countries detriment.
Now they get to make Manhattan into an island and do things with their toys.
In some ways, I wish the banks had been allowed to fail in 2008 so that we could have had a clean slate. This will not hold and one of these days this new gilded age will come to an end. I just hope I'm still around when it happens.
These people got away with "murder" and not one of them went to jail. And none of them had to give back their ill-gotten gains -- in fact, they got to reap the rewards of the recovery to the rest of the countries detriment.
Now they get to make Manhattan into an island and do things with their toys.
In some ways, I wish the banks had been allowed to fail in 2008 so that we could have had a clean slate. This will not hold and one of these days this new gilded age will come to an end. I just hope I'm still around when it happens.
12
Oh Paul, a touchy subject for all of the "liberal" NIMBYs in these cities who know that restricting supply through zoning will increase their home values over time. Don't you think it's better to pretend to solve the city inequality problem by building a wildly insufficient amount of affordable housing, and also raising minimum wages (thereby largely imposing the costs for partially, but insufficiently, fixing this problem on people other than those who cause it)? I do. Then after that a nice pat on the back is in order for what wonderful, generous people we are.
5
Wasn't there an article about how Singapore was solving this problem? Mainly by making taxes unattractively high they don't move in and invest in real estate? As you build housing creating Manhattan's population density in the outer boroughs how will people move around with additional subway and elevated lines. Bulding vertically is a great idea but it needs infrastructure.
On a side note motorcycle manufaturers Europe are advertising against mass transit. Scooters gas and electic being an alternative to the underground. I envy those that could walk to work.
On a side note motorcycle manufaturers Europe are advertising against mass transit. Scooters gas and electic being an alternative to the underground. I envy those that could walk to work.
3
in the West Village of Manhattan, one of the most expensive and low rise areas in the city, scores of buildings are dark at night, owned by the wealthy who don't live here, using these desirable properties as bank accounts, accumulating value until they are flipped for high returns. not only is this jacking up housing costs, as the professor points out, it kills local business for lack of customers, and creates a strange , ghostly atmosphere at night. in the past few years , many small excellent restaurants and stores have shuttered and are still vacant while the landlords wait for national chains to take their place. it is destroying the character of the Village that made it so attractive in the first place. absentee investor owners is as big a problem as any building restrictions.
17
We should take a lesson from the island of Bornholm in the Baltic. They don't allow you to buy property if you don't live in it.
1
Yes, unoccupied investment properties are a problem, but shouldn't we think about what incentives are driving their popularity? Rich people are not stupid and are generally utility maximizers, so why would they choose to let an investment property to remain unused for most of the year when they could be collecting rents? Or better yet, what is incentivizing them to not sub-divide large residences to make middle income rental units?
They would still be holding that chit in the bank to sell whenever prices rose. Why not allow it to be used to its maximum efficiency?
The answer is, of course, rent stabilization laws and tenant protection regulations. These owners would be much more likely to open these units to the rental market if they felt confident that they could get tenants out of a unit at the end of the lease. However, the current system makes it near impossible to remove a recalcitrant tenant and the rent stabilization and the threat of further future measures make it very, very risky to open up your property to that kind of regulation. The entire economic value of the property can be taken away with the swipe of a pen.
In that context, it makes a lot of sense that these units are left unoccupied. If I was lucky enough to own one, that is sure as heck what I would do.
They would still be holding that chit in the bank to sell whenever prices rose. Why not allow it to be used to its maximum efficiency?
The answer is, of course, rent stabilization laws and tenant protection regulations. These owners would be much more likely to open these units to the rental market if they felt confident that they could get tenants out of a unit at the end of the lease. However, the current system makes it near impossible to remove a recalcitrant tenant and the rent stabilization and the threat of further future measures make it very, very risky to open up your property to that kind of regulation. The entire economic value of the property can be taken away with the swipe of a pen.
In that context, it makes a lot of sense that these units are left unoccupied. If I was lucky enough to own one, that is sure as heck what I would do.
1
Professor:
I would be interested in how (if at all) a Keynesian would evaluate how rent control and stabilization would play into gentrification. It would seem to me that a below-equilibrium pricing structure would increase demand and lower supply (in essence, resulting in producers shifting to non-controlled luxury units and foreign investment properties). And that is pretty much what we are seeing; demand for stabilized housing outstrips by far the supply (ever seen the queues three blocks long when new units come on the market?).
For years, opponents of NYC City' Council's meddling in the housing market have predicted exactly this result and were ignored. I am a Keynesian myself and am very concerned about how the government can provide for a framework to allow a stable supply of low and middle income housing. Progressives like me are appalled by how the present system skews the market and results in so much misery for lower and middle class New Yorkers.
Could you help us understand your informed take on the issue?
I would be interested in how (if at all) a Keynesian would evaluate how rent control and stabilization would play into gentrification. It would seem to me that a below-equilibrium pricing structure would increase demand and lower supply (in essence, resulting in producers shifting to non-controlled luxury units and foreign investment properties). And that is pretty much what we are seeing; demand for stabilized housing outstrips by far the supply (ever seen the queues three blocks long when new units come on the market?).
For years, opponents of NYC City' Council's meddling in the housing market have predicted exactly this result and were ignored. I am a Keynesian myself and am very concerned about how the government can provide for a framework to allow a stable supply of low and middle income housing. Progressives like me are appalled by how the present system skews the market and results in so much misery for lower and middle class New Yorkers.
Could you help us understand your informed take on the issue?
5
I'm sure Dr. Krugman travels widely, but he seems to be missing out on the flourishing of cities in almost every state -- Raleigh, Durham, Greensboro, Winston and Charlotte are examples in my home state. It is getting harder to tell Flatbush in Brooklyn from Fayetteville Street in Raleigh or 5th Street in Winston, except for the difference in prices. They don't charge a toll to enter or leave town, either.
You don't need to live in New York to have the lifestyle. And, by the way, the weather is so much better in about half of the states.
You don't need to live in New York to have the lifestyle. And, by the way, the weather is so much better in about half of the states.
3
Dr. Krugman is off on this one. You cannot build your way to affordability. There is simply too much demand and too much inequality. Also, the incentive for developers is to build the most expensive units possible.
4
One thing that struck me on a recent visit to Chicago was that the urban renaissance does seem affordable to young single adults. They were all over the place. But they can add roommates to cut costs. The people who seem priced out of the urban market are young families. I saw very few of those. Having a kid means you take an income hit from one spouse or a huge day care expense, space needs increase, and adding roommates is less practical. I saw a few signs of experiments to solve the problem -- kid-friendly family apartment complexes, but there was still a major kid shortage downtown, compared to the Burbs.
3
You are correct about the young single adults. But a single adult who is no longer interested or willing to live the life of a newly graduated college student is priced out. We don't have anyone at home to do our chores. We don't have two cars. We may have a very demanding job that precludes our taking on a second job to pay the rent for a semi slum that's close to where we work.
In America everything is for the family. Single people are seen as useless except for being worked when the family men and women cannot be in. We're excluded from any sort of assistance because of the low income thresholds. It's also assumed, wrongly, that we can live wherever we want since we're single.
For a country that claims to value its citizens America does very little to make them feel valued or important or needed. Housing, H1-B visas, the fragmentation of our health/wealth care system, the attitude that privatizing everything is the answer is shutting more and more middle and working class Americans out of a decent life. We will be joining the ranks of the poor and near poor very soon if things don't begin to change.
In America everything is for the family. Single people are seen as useless except for being worked when the family men and women cannot be in. We're excluded from any sort of assistance because of the low income thresholds. It's also assumed, wrongly, that we can live wherever we want since we're single.
For a country that claims to value its citizens America does very little to make them feel valued or important or needed. Housing, H1-B visas, the fragmentation of our health/wealth care system, the attitude that privatizing everything is the answer is shutting more and more middle and working class Americans out of a decent life. We will be joining the ranks of the poor and near poor very soon if things don't begin to change.
3
NYC also has one million rent controlled or stabilized apartments and another 250,000 that are subsidized.
No one ever leaves any of these apartments and their children can inherit them, so the apartments are permanently off the market.
A huge three bedroom apartment will be lived in by a single person, as when their life circumstances changed, they never moved into smaller units, as do renters in a free market.
If the city wants to subsidize certain people's rent, subsidize the people, not the apartment, so they can move where best suits them.
And I think we can all agree that $200,000 a year, the maximum income allowed for a rent controlled or stabilized apartment, is not exactly poor, not even in NYC.
No one ever leaves any of these apartments and their children can inherit them, so the apartments are permanently off the market.
A huge three bedroom apartment will be lived in by a single person, as when their life circumstances changed, they never moved into smaller units, as do renters in a free market.
If the city wants to subsidize certain people's rent, subsidize the people, not the apartment, so they can move where best suits them.
And I think we can all agree that $200,000 a year, the maximum income allowed for a rent controlled or stabilized apartment, is not exactly poor, not even in NYC.
8
Very few apartments are rent controlled and can be passed along. Very few. and rent stabilized apartments are nowhere near the deal they use to be. Section 8's have been on the decline for years. The parameters set for "affordable housing" is a joke. How the working class in this city is treated is disgraceful. How they allow themselves to be treated this way is even worse.
2
I am observing this phenomena first-hand with my children, who focus on low commute times and more time with family. This decision means housing costs that increase by 20% or more, with less space, no yard, and less than desirable parking situations. Having made the opposite decision in my career ---big house, big yard, big garage---but long commutes, and less time with the family --- my children are making the right decision.
7
The decline in crime parallels the diaspora of the poverty stricken to the surrounding communities. Is someone really going to get on a train in Newark to mug someone in Manhattan?
4
Dear Prof. Krugman,
You are usually so impeccably researched. This time, however, I believe you are off the mark.
Crime fell due, I believe, primarily because of CompStat and the "broken windows theory."
https://en.wikipedia.org/wiki/CompStat
While economics and demographics may now play a role, these two approaches, which permitted police to identify areas of high crime and then flood them with officers and send people into the criminal justice system for lesser crimes...leading eventually to large three-strikes sentences...regardless of questions of fairness... really led to the fall in crime, I believe.
You are usually so impeccably researched. This time, however, I believe you are off the mark.
Crime fell due, I believe, primarily because of CompStat and the "broken windows theory."
https://en.wikipedia.org/wiki/CompStat
While economics and demographics may now play a role, these two approaches, which permitted police to identify areas of high crime and then flood them with officers and send people into the criminal justice system for lesser crimes...leading eventually to large three-strikes sentences...regardless of questions of fairness... really led to the fall in crime, I believe.
5
In the movie "Escape from Now York" an SLA type flies the President's plane into a building in downtown NYC. The Twin Towers come into the plot later in the movie.
So speaking of denial by the VSPs I still will never believe that "nobody ever thought of flying a plane into a building" was a possible scenario as Condaleeza Rice liked to claim.
In the sequel, Escape from LA, the conservatives have taken complete control over the country and all aspects of life are regulated according to religious conservative rules. Step out of line and you're sent to LA, a maximum security camp. Satellite technology ensures gov't control.
I think we have missed that dystopian scenario since two minorities have bucked the system that marginalized their votes and Trump keeps pushing fascism's line. Will they vote this election? Probably. But the Right hasn't let go of their dream of owning everything. How long will it take before they let go of their dreams of a complete sweep of gov't?
So speaking of denial by the VSPs I still will never believe that "nobody ever thought of flying a plane into a building" was a possible scenario as Condaleeza Rice liked to claim.
In the sequel, Escape from LA, the conservatives have taken complete control over the country and all aspects of life are regulated according to religious conservative rules. Step out of line and you're sent to LA, a maximum security camp. Satellite technology ensures gov't control.
I think we have missed that dystopian scenario since two minorities have bucked the system that marginalized their votes and Trump keeps pushing fascism's line. Will they vote this election? Probably. But the Right hasn't let go of their dream of owning everything. How long will it take before they let go of their dreams of a complete sweep of gov't?
I'm a tenant organizer in NYC and while I do agree that there is a lot of red tape involved to get housing built, it is still being built--but only for those at the very top of the 1%. This is not an accident. The tax breaks that developers receive cost the city millions in foregone revenue, and they are given to builders on the premise that they set aside 20% (sometimes slightly more) of the units to be "affordable." But even those units are often out of reach for the tenants I work with, and it is all too easy for builders to shirk the affordability requirement entirely. I'm sure there will be comments here decrying rent regulation, but the entire system is rigged--if tenants benefit from rent regulation, so too do developers benefit from a generous tax system. New Yorkers are not against new housing being built, but they aren't stupid. They are not willing to be put through the hassle and danger of constant construction for buildings that will do nothing to address the overall housing crisis.
5
Mr. Krugman's article is well taken and could apply to many cities across the United States. From all reports, as someone in California, the new New York sounds horrid. A couple of Republican mayors, some general gestapo-like years of poilcing. And then, the babbling class of the new economy shoving their way in. No offense, but it's kind of worse in San Francisco regarding tree trimmers having to drive 70 miles just to get to work, but it is prettier.
Oh, that magic marketplace, the wonders it can do...
Oh, that magic marketplace, the wonders it can do...
1
Any city government that was sincere about ending the shortage of affordable housing would simply place a moratorium on building permits for housing that was not affordable to people earning the city's median income or less.
The "luxury" apartments I see going up in downtown Minneapolis feature thin walls, tiny spaces, and lots of shiny but unnecessary extras for the building as a whole. Affluent young people (yes, they still exist, although their numbers are smaller than before) may want the postgraduate equivalent of a posh college dorm, but most people just want a livable space.
The "luxury" apartments I see going up in downtown Minneapolis feature thin walls, tiny spaces, and lots of shiny but unnecessary extras for the building as a whole. Affluent young people (yes, they still exist, although their numbers are smaller than before) may want the postgraduate equivalent of a posh college dorm, but most people just want a livable space.
4
Welcome to Brasil! If you want to see where exactly this leads, please research "Rio de Janeiro, South Zone" over the last 60 years.
3
There seems to be a contradiction. Krugman claims that "land-use restrictions are the most likely culprit" in rising prices of housing; in this "we have too much regulation". Then he says that "New York City...could do a lot to increase the supply of housing, and thereby ensure that the inward migration of the elite doesn’t drive out everyone else", "an issue over which local governments have a lot of influence". That influence is "land-use restrictions". Which does he want: more lower-income housing or fewer land-use restrictions?
2
Krugman's article and De Blasio's rezoning attempts are part of the same logic as the recent Supreme Court case, Inclusive Communities Project and the subsequent set of rules for development promulgated by Obama's HUD. In short, this logic says that the poor not only have a right to housing, but they also have a right to subsidize that housing to such an extent that they can live in very pricey areas. Funny, but no one every thought to give me a subsidy when I was choosing where I could afford to live and raise a family ?
There are several issues with this reasoning:
1. Inclusiveness - As urban rents are increasing, you are effectively increasing the redistribution inherent in subsidized housing. What about all the poor who are not lucky enough to win the lottery for subsidized housing ?
2. Big Brother - This is consistent with an over-arching belief by liberals that they know better what is good for us. Instead of people living where they choose, liberals insist on pushing people together at any cost.
3. Politics - Some of this is politics. Democrats are increasingly reliant on the urban vote. While urban whites have historically supported Democrats, some politicians may want to cement the focus of cities on liberal priorities by ensuring that the poor can also live in the city.
While this may sound like worthwhile goals, none of this does anything to address the two points that really help erase poverty - education and family.
There are several issues with this reasoning:
1. Inclusiveness - As urban rents are increasing, you are effectively increasing the redistribution inherent in subsidized housing. What about all the poor who are not lucky enough to win the lottery for subsidized housing ?
2. Big Brother - This is consistent with an over-arching belief by liberals that they know better what is good for us. Instead of people living where they choose, liberals insist on pushing people together at any cost.
3. Politics - Some of this is politics. Democrats are increasingly reliant on the urban vote. While urban whites have historically supported Democrats, some politicians may want to cement the focus of cities on liberal priorities by ensuring that the poor can also live in the city.
While this may sound like worthwhile goals, none of this does anything to address the two points that really help erase poverty - education and family.
2
Krugman will never ever blame the high cost of living in New York on the very simple economic calculation of supply vs. demand.
Likewise, he will never ever blame the rules and regulations for building or renovating or even just simply owning property in New York for reducing the supply.
Why would Krugman refuse to point a finger at government interference in a marketplace as the cause of expensive housing? Because it would violate his belief that more government interference in peoples' lives is better.
If you want a great example of this government destruction, read "The Death of Common Sense" by Philip K. Howard. The first section describes how Mother Theresa wanted to convert an abandoned building into a homeless shelter, and gave up because of NYC's arbitrary, archaic, arcane, building codes.
Likewise, he will never ever blame the rules and regulations for building or renovating or even just simply owning property in New York for reducing the supply.
Why would Krugman refuse to point a finger at government interference in a marketplace as the cause of expensive housing? Because it would violate his belief that more government interference in peoples' lives is better.
If you want a great example of this government destruction, read "The Death of Common Sense" by Philip K. Howard. The first section describes how Mother Theresa wanted to convert an abandoned building into a homeless shelter, and gave up because of NYC's arbitrary, archaic, arcane, building codes.
3
In NYC, $500,000 and some creative construction 'accounting' gives any Chinese citizen a green card. NYC has become unaffordable to all but the most high corporate executives with commensurate equity and Hedge-Funders and foreign wealthy.
As a result, NYC for most has become a place where the working poor continue to work for the landlord not themselves...This is in reality, a form of voluntary METROPOLITAN SLAVERY.
As a result, NYC for most has become a place where the working poor continue to work for the landlord not themselves...This is in reality, a form of voluntary METROPOLITAN SLAVERY.
2
A weekend spent in downtown San Francisco taught me that the sunny, laid-back city of fifty years ago has been replaced by a dark, congested series of canyons dominated by high-rise hotels, apartment- and office-buildings, some of the latter under-occupied in empty spaces whose rent no one can afford. Here in Berkeley, the prospect of high-rise, high-price condo buildings fills the residents with dread. Rent-control on older buildings gives incentives to demolish, condominiumize, or turn to Airbnb, a truly loathsome alternative, and rent-control fosters inequities on landlords and tenants alike. But what is the solution? Population in San Francisco and Berkeley is twice what it was half a century ago - living space must be manufactured for the extras. Gentrification is creeping into downtown Oakland, a city in the throes of transformation, in the manner of Brooklyn. The extra people have to live somewhere. Better mass transit is one partial answer. Finding a way to exclude or tax non-resident owners who keep empty apartments as investments is another. Sharing the wealth more equitably is a good idea, if it could ever be achieved. But more people crowding into the cities guarantees that rents will rise, and the likelihood is that they'll get used to it. Children raised in high-rise apartments will find this a normal and natural way to live, and will one day lament its passing if some other arrangement is adopted.
2
Crime is down but not a mention that we incarcerate a huge number of people way more than any other industrial country since the onslaught of the private prison industry and the war on drugs. Costing of taxpayers more $$$$$$$$$$$$$$$.
Now he gets to regulations of urban growth boundaries and development regulations in cities. My city Portland Oregon has been on a development kick for the last 20 years but mostly for the rich with promises of low cost housing and we only see buildings being bought and sold and people being displaced. City dwellers large, tall buildings and you cannot see the sky, sun or moon. Small little starter houses in neighborhoods torn down to build these monster houses that block the sky, sun and moon. Where will first timer home buyers buy starter homes?
Oregon/Portland has regulations for development and please don't get on the band wagon to gut them. I for one in my neighborhood 64 blocks from central city which is now close in do not want mega houses surrounding my garden lot so my vegetation and food production during the short summer months will be nil.
Paul, you've been talking about the same stuff over and over again for I don't know how many years and who takes your advice? I used to wish they would listen to you but not on this one. Let make housing more affordable but let's not destroy our live ability.
Live like the rest of us Paul and not in your McMansion in the suburbs or your city condo.
Now he gets to regulations of urban growth boundaries and development regulations in cities. My city Portland Oregon has been on a development kick for the last 20 years but mostly for the rich with promises of low cost housing and we only see buildings being bought and sold and people being displaced. City dwellers large, tall buildings and you cannot see the sky, sun or moon. Small little starter houses in neighborhoods torn down to build these monster houses that block the sky, sun and moon. Where will first timer home buyers buy starter homes?
Oregon/Portland has regulations for development and please don't get on the band wagon to gut them. I for one in my neighborhood 64 blocks from central city which is now close in do not want mega houses surrounding my garden lot so my vegetation and food production during the short summer months will be nil.
Paul, you've been talking about the same stuff over and over again for I don't know how many years and who takes your advice? I used to wish they would listen to you but not on this one. Let make housing more affordable but let's not destroy our live ability.
Live like the rest of us Paul and not in your McMansion in the suburbs or your city condo.
2
Gentrification is a byproduct of the concentration of wealth in our society. The best means of mitigating gentrification is to broaden the middle class and spread the wealth. Such a result can be achieved through structural changes in public policy, such as tax policy, educational reform, and government programs targeted to help the poor. Only government can police capitalism.
3
Why can't companies just get better at managing remote workers? I'm a senior web developer and I'm amazed by the sheer concentration of jobs in relidiculously expensive places. How do Silicon Valley tech companies grow with such a crazy real estate market? Isn't it abusive to the Talent???
I actually moved from San Francisco to Baltimore - just for an affordable house. But getting remote work is too difficult. Unnecessarily difficult. I have worked remotely with a couple of great managers but they are the exception not the rule. For the love of sanity and affordability please please please get better at managing remote workers! Thanks.
PS Baltimore is still great and very affordable but we really need more business here.
I actually moved from San Francisco to Baltimore - just for an affordable house. But getting remote work is too difficult. Unnecessarily difficult. I have worked remotely with a couple of great managers but they are the exception not the rule. For the love of sanity and affordability please please please get better at managing remote workers! Thanks.
PS Baltimore is still great and very affordable but we really need more business here.
3
Indeed, the move from suburbia to the city is happening fast enough, as architects and urban planners scramble to hope to combine work and leisure to everybody's satisfaction; well, to those that can afford it, as you said, and therein lies the rub. Having moved from Florida to Williamsburg (New York) five years ago, I ca attest to the 'gentrification' taking place, at an uncomfortably high speed and scope. As housing and transport take well over half of our disposable income, something has to give; you may want to ask why our epidemic of obesity (and its faithful side effects, hypertension, diabetes and increased risk for strokes, heart disease and cancer) has something to do with the junk food (cheaper) we consume (high sugar, salt and fat), along with our unrelieved chronic stress from long hours at work and 'having' to satisfy our habits as a 'proud' consumption society. While it lasts, at least to some of us, let us enjoy the freedom not to have to drive, as public transportation is readily available (just don't get sick or too old, so you can maneuver an old subway system that requires walking ans using stairs often and in crowded conditions), along with the potential for entertainment, museums and parks (the latter, our preference, readily available and free of charge, healthy enough to run with the grand-kids and maintain your social skills). In brief, an active urban life, with plenty of sights and shops and libraries, is the way to go. Suburban life, cars, bye!
16
Manfred,
We live surrounded by many of North America's intellectual and creative elite. The food here is as good as anywhere in the world. The air is clean and fresh and we have to drive for an hour to experience traffic jams. We live close to many of North America's best walking and cycling trails but the grandchildren never come to visit.
We live surrounded by many of North America's intellectual and creative elite. The food here is as good as anywhere in the world. The air is clean and fresh and we have to drive for an hour to experience traffic jams. We live close to many of North America's best walking and cycling trails but the grandchildren never come to visit.
1
Dr. Krugman, I'm disappointed that you would call out land use regulations as cause for escalating housing costs. Most developers have no shame and any capitalist system built on self regulation is, as you know, a total fraud. Government must be able to regulate for the safety & protect the sustainability of their communities; after all who gets called when sewer lines break, when there's a fire, when there's a sinkhole in the spot where your car used to be? The price of housing isn't high because of regulations, although developers would like the public to think that. In 2015 the price of housing in metro/exurban/suburban cities large & small is built upon creating scarcity through gentrification. Even rural areas are now beset with in-affordability, prairie castles instead of cattle.
3
I admire Krugman and enjoy reading his essays, but he's trying to hard to connect the dots on this one. The reality is that cities are expensive and there is no good reason or right for the poor to be located in an urban center. They do nothing for the city, because they have no resources. So how are they helping make the place better? It's like going to a fancy shopping mall. Yes, folks WANT to be in a nice mall, but no one NEEDS to be in one. There are plenty of other less affluent areas that would fit the bill for them. In short, cities have gotten BETTER to live in over the past 1 years by every metric. If someone wants to live within that metric, they have to pay to play. What's so hard to understand about that?
2
Housing policy is a black box. Nobody seems to be able to make it comprehensible to the average citizen, including Professor Krugman. Until somebody unpacks it and comes up with credible proposals for reform, nothing will change. People feel the symptoms, but they don't "get" the layers upon layers of causes.
1
This is my experience.
I was raised in New Jersey.
I went to college where Patti Smith went to college in N.J.
I taught school in Woodbury Heights, N.J.
I completed my career after 33 years in Arizona.
I have Social Security and Arizona State Retirement.
I have a home in Tucson owned free and clear.
I have a Citi card and a Chase Sapphire Card.
I pay them off every month.
Every month I clear all that I owe with auto-pay.
My FICO score was 762.
But I can not rent an apartment in NYC where I want to live.
I was absolutely blocked from renting an
apartment 4 times in the last 33 days while I have been
spending a fortune (foolishly I realize now) living in a hotel.
I am not allowed to pay in advance for the year.
Even if I rent my home in Tucson or sell it I can not use the money to rent an apartment in NYC.
I did not realize people are mean-spiritedly, forcibly refused living in NYC-
NIMBY-style.
'Such Is The Way Of The World': and a way to cause the disappearing of the middle class.
I was raised in New Jersey.
I went to college where Patti Smith went to college in N.J.
I taught school in Woodbury Heights, N.J.
I completed my career after 33 years in Arizona.
I have Social Security and Arizona State Retirement.
I have a home in Tucson owned free and clear.
I have a Citi card and a Chase Sapphire Card.
I pay them off every month.
Every month I clear all that I owe with auto-pay.
My FICO score was 762.
But I can not rent an apartment in NYC where I want to live.
I was absolutely blocked from renting an
apartment 4 times in the last 33 days while I have been
spending a fortune (foolishly I realize now) living in a hotel.
I am not allowed to pay in advance for the year.
Even if I rent my home in Tucson or sell it I can not use the money to rent an apartment in NYC.
I did not realize people are mean-spiritedly, forcibly refused living in NYC-
NIMBY-style.
'Such Is The Way Of The World': and a way to cause the disappearing of the middle class.
36
One of the ways to encourage elite to move out of NYC is to build several more tunnels out of the city to NJ. It cost surely much less than than 10% for wars in Iraq. Also, a direct tunnel from Long Island to NJ would spur economic growth on LI.
Decreasing land use regulation? And just what will that bring? Look at Vancouver, BC, to see.
Here we have rampant development bringing more towers and ruining neighbourhoods. There's no coordination with transit planning authorities and the city is increasingly in gridlock much of the time. And has that super supply of soulless high rises--Vancouver is building "upward," as Krugman suggests--done everything for prices? No. In fact, Vancouver has enjoyed dramatic increases in home prices over the past 15 years or so. And "studies" have shown (search on the Canadian Centre for Policy Alternatives website) that increasing density, which is essentially what Mr. Krugman is advocating, does little to nothing to affect prices of homes.
And why won't the province or city regulate land speculation, assumed by many to be a "driver" in price rises? Because if real estate prices drop it would mean economic calamity (and, disappointment for the class that benefits from high prices).
Somehow I'm guessing that turning things over to the market even further--the effect of de-regulation--won't help. In fact, won't it just make matters worse in matters other than affordability, especially since land use regulation is the only thing preventing the wanton and recurrent trashing of neighbourhoods for the benefit of developers?
A question that needs to be answered by Mr Krugman: just how much "supply" would be necessary to accommodate "demand" to the point where prices would be reasonable?
Here we have rampant development bringing more towers and ruining neighbourhoods. There's no coordination with transit planning authorities and the city is increasingly in gridlock much of the time. And has that super supply of soulless high rises--Vancouver is building "upward," as Krugman suggests--done everything for prices? No. In fact, Vancouver has enjoyed dramatic increases in home prices over the past 15 years or so. And "studies" have shown (search on the Canadian Centre for Policy Alternatives website) that increasing density, which is essentially what Mr. Krugman is advocating, does little to nothing to affect prices of homes.
And why won't the province or city regulate land speculation, assumed by many to be a "driver" in price rises? Because if real estate prices drop it would mean economic calamity (and, disappointment for the class that benefits from high prices).
Somehow I'm guessing that turning things over to the market even further--the effect of de-regulation--won't help. In fact, won't it just make matters worse in matters other than affordability, especially since land use regulation is the only thing preventing the wanton and recurrent trashing of neighbourhoods for the benefit of developers?
A question that needs to be answered by Mr Krugman: just how much "supply" would be necessary to accommodate "demand" to the point where prices would be reasonable?
2
It is important to understand that the median cost of an apt in NYC is slightly over a million dollars. By no stretch of the imagination can someone making $60,000 or even $100,000 a year afford to live in these apts. With low interest rates, you still need nearly $300,000 a year to afford these. This income may not make you ultra rich but it represents only a tiny percentage of American salaried workers. Many of these apts are bought outright in cash. All over the world, housing in world class cities is being purchased by the new global super rich. No nation has developed rules for dealing with the outright purchase of its "best" housing by these many foreigners who push out the local population but don't spend the majority of the year in their new homes.
65
Wish Prof. would give some examples of "... too much regulation...." because Building Codes and Zoning laws are based on the safety of the people and there is no reason to reduce public safety just to mollify the inequitable distribution of wealth.
2
I live in the city now after raising my kids in the burbs. A lot of us are single at this stage of life, and we can enjoy carefree living in a 1 bedroom plus den apartment. We shop at quaint little neighbourhood markets because we no longer have to lug home a station wagon full of groceries from Costco. We have gotten over the old skool ways of keeping a big house into our 80's "in case" visitors come, or the grandchildren might want to spend part of their summer at Grandma's. We can take the family out for Thanksgiving dinner if they come to the city, or better yet, happily download the T-Day festivities onto the mother of those grandchildren, and Grandma now becomes the invited guest.
Times have changed. Norman Rockwell living is kaput. I like the freedom and the reduced stress, so bring on city living, and especially if safety is less of a concern as well.
Times have changed. Norman Rockwell living is kaput. I like the freedom and the reduced stress, so bring on city living, and especially if safety is less of a concern as well.
3
The same thing is happening albeit on a smaller scale in Seattle. I live in the Central District, which is slowly but surely becoming more 'gentrified'. A solution the major and many environmentalists favor is changing the zoning laws to allow for duplexes, mother-in-laws, etc on the same currently single family zoned lots, but with the same height and square footage restricts so the neighborliness of areas isn't lost as density grows. More density messes well with more rapid transit and less greenhouse gases, etc.
1
We can only hope that life in the increasingly wealthy boroughs will become so dull, that the rich will move to where the artists and vibrancy thrive. It'll be rough on the artists, as always, but there might just be enough urban decay over a few decades that the poor will move back into the city along with the artists and the rest of the middle class including academics.
Unless we're entering an era of permanent serious inequality, which is what will happen if the 1% get their way.
Unless we're entering an era of permanent serious inequality, which is what will happen if the 1% get their way.
1
I generally find the good Professor K's columns full of solid thinking. However, I think he may have low-balled an important issue in today's piece: financial racism.
For example, Russell Simmons did an interview, 10-15 years ago, with High Times magazine, in which he made an explicit point that gentrification policies set by lenders forestalled financing for manufacturing facilities and affordable housing in New York City, but that a wide range of financial options were available for developing high-end office, retail, and residential space throughout the city.
Banks, Wall Street, angels, REIFs, and more, have driven the evolution of 21st Century red-lining through projected ROIs.
For example, Russell Simmons did an interview, 10-15 years ago, with High Times magazine, in which he made an explicit point that gentrification policies set by lenders forestalled financing for manufacturing facilities and affordable housing in New York City, but that a wide range of financial options were available for developing high-end office, retail, and residential space throughout the city.
Banks, Wall Street, angels, REIFs, and more, have driven the evolution of 21st Century red-lining through projected ROIs.
2
Regulations that limit the supply of housing benefit all existing property owners, who make up a large majority of the electorate. While scrapping many of those regulations would eventually solve the affordability crisis, politically there is no chance of scrapping them because of the vast constituency behind them.
A politically winning solution would have to grandfather in the value of existing primary residences up to a ceiling that might vary by state or region, perhaps through government-sponsored insurance guarantees. The guarantees would expire upon the sale of each residence. The government would also need to get back into the business of building and administering large amounts of public housing, preferably in scattered small developments built to fit their surroundings rather than the massive slum "projects" that were built in the mid-20th century. The public housing should be attractive and should offer rents based on a percentage of income to attract the working poor and working lower middle class. To pay for this, income taxes would need to increase at the top, as well as property taxes on properties valued above the local protected ceiling (perhaps $450,000 for a single-family house in greater New York).
A politically winning solution would have to grandfather in the value of existing primary residences up to a ceiling that might vary by state or region, perhaps through government-sponsored insurance guarantees. The guarantees would expire upon the sale of each residence. The government would also need to get back into the business of building and administering large amounts of public housing, preferably in scattered small developments built to fit their surroundings rather than the massive slum "projects" that were built in the mid-20th century. The public housing should be attractive and should offer rents based on a percentage of income to attract the working poor and working lower middle class. To pay for this, income taxes would need to increase at the top, as well as property taxes on properties valued above the local protected ceiling (perhaps $450,000 for a single-family house in greater New York).
If you have only elite in the city and drive everyone else out then eventually you have only politicians catering to the rich. This means any opening to the poor and middle class will not happen leaving only slums for those who would be only their servants.
Our downtown area here in St Paul is different. Yes, we have the wealthy people in the high rises and brick townhouses. However, when the downtown was developed 25 years ago to attract people to move downtown, our forward-thinking mayor and planning group reserved buildings for middle income and local art talent when they froze rents in exchange for tax breaks. The group turned a $10 million grant into $1 billion in investment in our Lowertown neighborhood. Their efforts paid off with others investing heavily in the area still today. We can enjoy an outdoor music event with everyone from the working class to the wealthy in our beautiful parks when all can afford to live here. Demand continues to be strong as more apartment buildings are under construction. Maybe ours is a good model for other cities.
61
I generally love your columns, but you're way off the mark here. Land use restrictions? Seriously? Have you looked up at all the new construction going on in your new hometown? Did you read the Times series on global parking of capital in NY real estate? There's plenty of new construction, more than the "top 10%" who need to be near their offices can use. These high rise glass boxes that devour our skyline are being built as huge safe deposit boxes. Most of them have only 20% of their space designated for "affordable" housing, so of course there's a crisis when the 80% are expected to fit into 20% of the housing stock. What we need is full, fair taxes on luxury properties as well as stiff penalties for absentee ownership, with tax breaks only for construction that houses primarily the ordinary citizens who create real neighborhoods.
81
It is a problem that so much development money is flowing towards unaffordable housing. However, if land-use restrictions were loosened, it would become less difficult to develop generally. Yes, this could and probably would result in more luxury offerings, but it might also result in a lot more affordable housing in the outer boroughs. There are a lot of restrictions on the books, and sometimes informal restrictions, aimed at preventing "overcrowding"--a largely imaginary ill that inspired a lot of our worst urban planning policies.
It surely merits study and a measured approach, but Professor Krugman is (as usual) correct: in order to reduce housing prices in New York City one must either increase supply or reduce demand. New York cannot prohibit wealthy foreigners from buying pied a terres and investment properties (it lacks the authority), and other forms of demand reduction are undesirable. However, New York can allow supply to increase more quickly than it currently does.
It surely merits study and a measured approach, but Professor Krugman is (as usual) correct: in order to reduce housing prices in New York City one must either increase supply or reduce demand. New York cannot prohibit wealthy foreigners from buying pied a terres and investment properties (it lacks the authority), and other forms of demand reduction are undesirable. However, New York can allow supply to increase more quickly than it currently does.
"high rise glass boxes as huge safe deposit boxes." Great concept. How about a column just on that by the liberal economist Krugman?
2
You know, being a liberal (like me), doesn't exempt you from supporting your opinions with facts.
Plenty of new construction? Apparently not. Population increase has dwarfed new construction in the relevant past.
"During the city period from 2010 to 2013, when the city gained 215,000 residents, only 21,688 new housing units were built." - See more at: http://therealdeal.com/blog/2014/05/24/nyc-population-boom-underscores-h...
http://therealdeal.com/blog/2014/05/24/nyc-population-boom-underscores-h...
Plenty of new construction? Apparently not. Population increase has dwarfed new construction in the relevant past.
"During the city period from 2010 to 2013, when the city gained 215,000 residents, only 21,688 new housing units were built." - See more at: http://therealdeal.com/blog/2014/05/24/nyc-population-boom-underscores-h...
http://therealdeal.com/blog/2014/05/24/nyc-population-boom-underscores-h...
1
Crime may be down in NYC, but in other cities crime--and homicides in particular--are on the rise, where gentrification has gone completely out of control.
Three examples: Washington, DC, Los Angeles, and Orlando, where I currently live. So part of Prof. Krugman's argument holds water--at least in New York--but I'm not so sure about the rest of the country.
Is there a reason for the uptick in violent crime? The jury seems to be out on that one.
Three examples: Washington, DC, Los Angeles, and Orlando, where I currently live. So part of Prof. Krugman's argument holds water--at least in New York--but I'm not so sure about the rest of the country.
Is there a reason for the uptick in violent crime? The jury seems to be out on that one.
Although elites' move towards "inner-city" areas is increasing the gentrification there, the peripheries of such areas have been degenerating.
And apart from "downtowns," peripheries, which are often referred to as "inner-city" and darker, from where the (affluent) whites as well as non-whites have been fleeing. The rents there are very low. The crimes there are very high. A good example is Ferguson, at the northern periphery of St. Louis city.
Unlike NYC, STL city has only a population of 320K, a third of what it had some 90 yrs ago. Whites fled the city to suburbs in droves; few of its magnificent mansions have any demand now. There has been a growing fear of crimes in the city, which led to more gentrification between city & STL county with rising crimes in the city. And the Ferguson effect led to a sharp rise in murders in the city. By July/15, total murders surpassed 2014! Some say STL-C is the murder capital of the country!
I would say the indifference, not racism of white majority is one big reason for high crime rates in black (& Hispanic) areas; they are more prone to violence, unfortunately. To my surprise the total murder rate in the US is low compared with many Latin American countries; even a little less than in Cuba! A solution, provide jobs for inner city blacks with a minimum wage of $15/hr., which is still a modest hike compared with 1968 minimum wage. Offer $3/hr to employers to hire ex-felons to minimize recidivism.
And apart from "downtowns," peripheries, which are often referred to as "inner-city" and darker, from where the (affluent) whites as well as non-whites have been fleeing. The rents there are very low. The crimes there are very high. A good example is Ferguson, at the northern periphery of St. Louis city.
Unlike NYC, STL city has only a population of 320K, a third of what it had some 90 yrs ago. Whites fled the city to suburbs in droves; few of its magnificent mansions have any demand now. There has been a growing fear of crimes in the city, which led to more gentrification between city & STL county with rising crimes in the city. And the Ferguson effect led to a sharp rise in murders in the city. By July/15, total murders surpassed 2014! Some say STL-C is the murder capital of the country!
I would say the indifference, not racism of white majority is one big reason for high crime rates in black (& Hispanic) areas; they are more prone to violence, unfortunately. To my surprise the total murder rate in the US is low compared with many Latin American countries; even a little less than in Cuba! A solution, provide jobs for inner city blacks with a minimum wage of $15/hr., which is still a modest hike compared with 1968 minimum wage. Offer $3/hr to employers to hire ex-felons to minimize recidivism.
2
In-town gentrification is not only happening in big cities but small ones such as the Rocky Mountain West town in which I live. It's boom times in the city with its emphasis on research and high-tech with the result that hospital workers, teachers and the like cannot afford to live in town where real estate prices have soared and continue to soar. In-town, in-fill buildimg is keeping apace but only affordable to the "top 10%". While the city is considering proposals for affordable housing, such proposals have not kept up with the times as the emphasis is on single-family free-standing homes. Cities such as mine should wake up...plenty of us including myself grew up in a big city at a time when working class and single-earner teacher families lived in a four-room walk-up and were quite happy to do so as long as the neighborhood was safe and well-kept, had good schools and was near public transportation even when it meant that a third child slept on the living room couch. Many low-income families would be quite happy to give up space and single-home ownership for affordable in-town condos, townhouses or well-kept apartments to cut down drive time or to avail themselves of downtown attractions and amenities just as do the wealthy. Further, all cities undergoing a housing boom should consider subsidizing rentals for its necessary low income workers (EMT, 911 responders, hospital workers, etc.)
26
The US might also want to take a leaf out of Switzerland's playbook and ban the purchase of houses by people who don't live in the country. Rich citizens of other countries have snapped up so much property in the world's major cities that they are pricing out those of us who'd like to live there, while meanwhile they remain in Russia, China or Venezuela, waiting for the day when they can no longer make money at home and they have to flee to the safety of the US. Or maybe their wives use their $20mn apartment in New York once or twice a year when she goes shopping. Meanwhile, the apartment buildings are dark at night. (Well, in London at least this happens in the posher neighborhoods.) Non-residents should be taxed 10% a year on the value of their apartments if they're not rented out to someone who actually lives there. That would increase the supply of housing and allow prices to fall back to where ordinary mortals could afford to live in these places again.
3
Just a few weeks ago, here in Boulder we fought a contentious political fight over this very issue. Over the last several decades, highly paid, highly skilled professionals have been moving here in increasingly greater numbers, and with 1800 Google employees slated to move here in 2018, that trend is only accelerating. With that, there has been an explosion of high-end restaurants, but by some estimates, 80% of those waiting tables at those restaurants can't afford to live here. With its green belt and tight land-use regulations, including a 55-foot limit on building heights, the influx has caused a major housing crunch, with prices rising 15% year-on-year. The median house price is now $600k, and those without deep pockets are being forced further and further afield. Every weekday, 60,000 people commute to Boulder, causing massive traffic jams on Colorado's poorly-funded roads and highways. Low state taxes leave little room for infrastructure projects, such as a badly-needed commuter rail network.
The response of many Boulder residents was to put questions 300 and 301 on the ballot, with the populist titles "Development Shall Pay Its Own Way" and "Neighborhoods' Right to Vote" disguising a political bomb-throwing NIMBY agenda. If they had passed, any new affordable, urban-style development would have been mired indefinitely in costly legal and political battles. Thankfully, both questions were defeated, but the tide of inequality continues to rise, leaving many underwater.
The response of many Boulder residents was to put questions 300 and 301 on the ballot, with the populist titles "Development Shall Pay Its Own Way" and "Neighborhoods' Right to Vote" disguising a political bomb-throwing NIMBY agenda. If they had passed, any new affordable, urban-style development would have been mired indefinitely in costly legal and political battles. Thankfully, both questions were defeated, but the tide of inequality continues to rise, leaving many underwater.
1
Let's not forget that massively wealthy foreign buyers from the Near East or China are helping push prices up in NYC as in other large cities in the U.S. Some realtors specialize in marketing inner city dwellings to the foreign customers. I'm not sure what the solution is here, but we need to recognize it as a factor in what kind of housing gets built, and housing shortages.
3
We could quickly solve this problem by giving all city owned housing to the people who live there now with no restrictions on resale. These are people who currently have the rights of ownership without the profits.
1
I would be curious what land-use regulations Dr. Krugman has in mind. Many commentors seem to asume that it is rent regulation, but it sounds to me more like old fashioned zoning, historic preservation, and OSHA protections.
I live in lower Manhattan on a block of tenements over a century old, with many rent regulated apartments, in a landmarked district which is undergoing a building boom of new towers.
When apartments on my block are deregulated, or buildings emptied, the landlords renovate. Since the buildings have decades of differed maintenance this is necessary and productive. However, no affordable housing is created. What results would be classed as luxury in anyone's book and it replaces what had been middle-income spaces and families. When buildings are torn down in my neighborhood (and they are with regularity despite the landmarking) they are replaced by new luxury towers.
If the law stepped back, the whole neighborhood would be torn down and replaced with new, taller, housing towers that would ALL be luxury. The only meaningful downward drag on prices would come from destroying the character and visible history that hops make the neighborhood desirable.
Manhattan is an island and market is not just the US top 10%, it is the whole world's top 10%. Tall and dark as you make it, there simply isn't enough island to build us out of that kind of price pressure. Supply and demand have little elasticity here.
I live in lower Manhattan on a block of tenements over a century old, with many rent regulated apartments, in a landmarked district which is undergoing a building boom of new towers.
When apartments on my block are deregulated, or buildings emptied, the landlords renovate. Since the buildings have decades of differed maintenance this is necessary and productive. However, no affordable housing is created. What results would be classed as luxury in anyone's book and it replaces what had been middle-income spaces and families. When buildings are torn down in my neighborhood (and they are with regularity despite the landmarking) they are replaced by new luxury towers.
If the law stepped back, the whole neighborhood would be torn down and replaced with new, taller, housing towers that would ALL be luxury. The only meaningful downward drag on prices would come from destroying the character and visible history that hops make the neighborhood desirable.
Manhattan is an island and market is not just the US top 10%, it is the whole world's top 10%. Tall and dark as you make it, there simply isn't enough island to build us out of that kind of price pressure. Supply and demand have little elasticity here.
33
There is more to New York than Manhattan, and more to Manhattan than downtown. Queens and Brooklyn, in spite of being the most populous boroughs (and having been the most populous for decades now) continue to lag in services and, relatively speaking, in real estate investment. In addition to reducing land-use restrictions--for example, those aimed at maintaining a "suburban" character in parts of Queens--the City could invest more in transit and associated services in the outer boroughs.
1
yes, the constricted are of narrow Manhattan between the rivers is a big factor. No room to expand.
1
An article in the Economist explained that New York's tax policies are a significant factor. Dr. Krugman, a follow-on explanation is warranted.
2
I don't know Paul, more crowding and congestion, is that really what we want for our cities? Have you ever tried to travel across Manhattan in a car or taxi at rush hour? Ever seen an emergency vehicle try to get through that traffic? Certainly people die because of those delays. Seems that better income distribution is still the better approach.
3
The gentrification phenomenon presents itself in different ways in different places. In a place like Cincinnati, there is no lack of housing, in fact a lot of vacant housing. The conversion of inner-city housing for high-income households is accompanied by housing opportunities in nearby suburbs, and the increased tax take for the central city also benefits the low-income population. For large and growing city like NYC, it is hard to imagine it housing a growing population by growing anywhere but up. There is a problem everywhere of the capacity of the low-income population to pay rents, but this, too, is much more severe in a city like NYC than Cincinnati. I view that as a problem of poor poverty-alleviation policy at the Federal level, as there is only so much a city can do about it.
1
A few facts here:
1) Land in NYC is expensive
2) There is no building type where the combination of land cost, development cost, and regulatory cost including taxes can make housing affordable to the lower middle classes without government subsidy.
3) Any government intervention either by subsidy, mandate, or rent control distorts the market and makes the government the arbiter of who benefits and who doesn't.
1) Land in NYC is expensive
2) There is no building type where the combination of land cost, development cost, and regulatory cost including taxes can make housing affordable to the lower middle classes without government subsidy.
3) Any government intervention either by subsidy, mandate, or rent control distorts the market and makes the government the arbiter of who benefits and who doesn't.
3
Professor Krugman omits a key factor in the rise of property values in New York. Money is flowing into New York City (as well as London, Paris, etc) from every heck hole on the planet. Vladimir Putin, for example, may win election after election in Russia, but his capos and underlings all want to squirrel their money away in a place they can escape to when Russia either explodes in rebellion or the economy goes belly up. And what better investment for a potential refugee than a condo in midtown.
5
We have, in the chronological blinking of an eye, become the most powerful, most prosperous nation in the history of the world. Yes, Liberals feel squeamish describing our country as such, but it is undeniably true--and to ignore the prime mover behind our success--the celebration of the individual-- is an exercise in willful ignorance and blindness.
In earlier times, we celebrated the accomplishments of successful individuals--of Thomas Edison, Alexander Graham Bell, Henry Ford, and hundreds of others. They were held up as examples of what hard work and determination could achieve--their wealth showcased in the society pages of newspapers and magazines--not with an aura of envy and jealousy--but of wonderment and encouragement. There was pride in American Exceptionalism--along with a sober realization that not everyone possessed what it takes to become fabulously wealthy.
The Left's obsession with income equality borders on foolishness. Cuba has nearly complete equality--as does North Korea--as did the old Soviet Union--and China 30 years ago. Anyone want to live in those moribund places?
Our system is successful in spite of the inequality--and in fact thrives because of it. Get used to it Mr. Krugman--and perhaps learn to celebrate it as we did 100 years ago. It's why millions still want to come here--but there is little clamoring to emigrate to Cuba.
In earlier times, we celebrated the accomplishments of successful individuals--of Thomas Edison, Alexander Graham Bell, Henry Ford, and hundreds of others. They were held up as examples of what hard work and determination could achieve--their wealth showcased in the society pages of newspapers and magazines--not with an aura of envy and jealousy--but of wonderment and encouragement. There was pride in American Exceptionalism--along with a sober realization that not everyone possessed what it takes to become fabulously wealthy.
The Left's obsession with income equality borders on foolishness. Cuba has nearly complete equality--as does North Korea--as did the old Soviet Union--and China 30 years ago. Anyone want to live in those moribund places?
Our system is successful in spite of the inequality--and in fact thrives because of it. Get used to it Mr. Krugman--and perhaps learn to celebrate it as we did 100 years ago. It's why millions still want to come here--but there is little clamoring to emigrate to Cuba.
2
"Our system is successful in spite of the inequality--and in fact thrives because of it."
Tell that to those who are shut out of this wonderful prosperity by the very inequality that you praise.
And stop pretending that there are no alternatives besides plutocrat utopia and North Korea.
Tell that to those who are shut out of this wonderful prosperity by the very inequality that you praise.
And stop pretending that there are no alternatives besides plutocrat utopia and North Korea.
This is a very old and very tired straw man. No one here is talking about complete communist-style income equality, so please stop pretending that this is the issue.
Another trend that has come along in tandem with the soaring income inequality is the proportion of the money captured by the financial sector. It is NOT going to genuine, productive, creative inventions and general improvement in the well-being of the society and the economy. The "inventions" that are delivering the mammoth shiploads of wealth to the top are the "invention" of more and better ways for the financial/ capital sector of the economy--credit default swaps, computer generated automated gaming of the stock market, etc.--to siphon more and more money out of the general, labor-related public benefit sectors of the economy--production of goods and services, education, infrastructure, etc.
This, and every more "creative" ways to use financial power to buy political power, moving our society farther and farther away from its democratic ideals, into an ever-more-entrenched oligarchy.
Please wake up and notice that we are not talking about the 20th century any more!
Another trend that has come along in tandem with the soaring income inequality is the proportion of the money captured by the financial sector. It is NOT going to genuine, productive, creative inventions and general improvement in the well-being of the society and the economy. The "inventions" that are delivering the mammoth shiploads of wealth to the top are the "invention" of more and better ways for the financial/ capital sector of the economy--credit default swaps, computer generated automated gaming of the stock market, etc.--to siphon more and more money out of the general, labor-related public benefit sectors of the economy--production of goods and services, education, infrastructure, etc.
This, and every more "creative" ways to use financial power to buy political power, moving our society farther and farther away from its democratic ideals, into an ever-more-entrenched oligarchy.
Please wake up and notice that we are not talking about the 20th century any more!
2
Mr. Krugman, even well-off people need to live somewhere, and I suppose that the privilege of wealth is getting to choose where that will be.
I am always puzzled when people complain about "gentrification". Is this not simply the private investment of capital in the improvement of available housing stock? Is it not a good thing when run-down tenements are replaced by modern buildings? When old houses are renovated to give them new life?
And do you believe this investment would take place if not for the well-off people wanting to live there?
This is one of those rare cases where Mr. Krugman makes absolutely no sense whatsoever and relies on the wishful-thinking fairy in constructing his opinion.
I am always puzzled when people complain about "gentrification". Is this not simply the private investment of capital in the improvement of available housing stock? Is it not a good thing when run-down tenements are replaced by modern buildings? When old houses are renovated to give them new life?
And do you believe this investment would take place if not for the well-off people wanting to live there?
This is one of those rare cases where Mr. Krugman makes absolutely no sense whatsoever and relies on the wishful-thinking fairy in constructing his opinion.
3
Brian he isn't complaining about gentrification, he's speculating on ways to build MORE housing for the wealthy in less space so middle income people can retain housing in (at least) older buildings or newer less costly buildings. He seems to be speculating that lack of land to build on, due to land use restrictions, is causing a shortage of housing and causing what is available to be sky high. Whether land use restrictions is at fault is a question to ponder.
The former occupants of tbose buildings need a place to live. You tell us where it should be.
Or are buildings more important than people?
Or are buildings more important than people?
Thank you for the thoughtful comments.
Harriet: Perhaps you are correct, but it seemed that he was objecting to wealthy people buying tenements, building something nicer and displacing the less wealthy. In any case, the NYC infrastructure can barely manage its current population (water supply, sewars, waste disposal, etc) much less a significant increase without billions in investment.
miriam: I don't think that this is the point. I do not want to dictate where people can/should/must live nor do I think the government should do this. If it is your suggestion that the former occupants should have preferential, legally mandated access to those buildings then we do not agree. I don't think the government should pass laws that discriminate on the grounds of financial status. If you think the former occupants get some sort of preferential treatment then you tell me where the "new occupants" get to live. (Or are old buildings more important than people?)
Harriet: Perhaps you are correct, but it seemed that he was objecting to wealthy people buying tenements, building something nicer and displacing the less wealthy. In any case, the NYC infrastructure can barely manage its current population (water supply, sewars, waste disposal, etc) much less a significant increase without billions in investment.
miriam: I don't think that this is the point. I do not want to dictate where people can/should/must live nor do I think the government should do this. If it is your suggestion that the former occupants should have preferential, legally mandated access to those buildings then we do not agree. I don't think the government should pass laws that discriminate on the grounds of financial status. If you think the former occupants get some sort of preferential treatment then you tell me where the "new occupants" get to live. (Or are old buildings more important than people?)
I was born a 40 minute train ride from Grand Central and later lived in several major cities. I also spent a lot of time in Manhattan over the years. Retired a few years ago and moved to a small town in Central Florida. Traffic's not too bad, parking is free, services are good, houses are cheap, and skyscrapers don't block the sun. Why would anybody want to live in Manhattan?
1
Did not the rich live downtown in the gilded age? What is old becomes new again.
1
"Let’s start by admitting that one important factor has surely been the dramatic decline in crime rates. For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened."
Really? 'Nobody really knows why that happened' is liberal speak for 'we don't want to acknowledge why that happened'. Tough-on-crime policies that lead to the drop in crime- mandatory sentencing, broken windows policing, stop and frisk, to name few- are now out of favor. Why? Because with the drop in crime they are seen as 'excessive'. And the cycle continues.
Really? 'Nobody really knows why that happened' is liberal speak for 'we don't want to acknowledge why that happened'. Tough-on-crime policies that lead to the drop in crime- mandatory sentencing, broken windows policing, stop and frisk, to name few- are now out of favor. Why? Because with the drop in crime they are seen as 'excessive'. And the cycle continues.
2
No, most of those explanations are insufficient because the crime rate dropped by about as much even in cities where those policies weren't implemented.
I still think the best explanation for the rise of crime in the 50s-80s and its subsequent fall is the parallel rise and fall of lead poisoning from paint and gasoline. We banned lead because we knew it was a neurotoxin, yet people seem reluctant to believe that it was actually having a measurable impact even at blood lead levels in the 70s that would now be viewed with horror.
I still think the best explanation for the rise of crime in the 50s-80s and its subsequent fall is the parallel rise and fall of lead poisoning from paint and gasoline. We banned lead because we knew it was a neurotoxin, yet people seem reluctant to believe that it was actually having a measurable impact even at blood lead levels in the 70s that would now be viewed with horror.
Income inequality is caused by government policy; specifically, trade policy, immigration policy and monetary policy. These policies been designed to favor Wall Street over Main Street. Free trade policy allows for the offshoring of production and employment to lower wage nations that have lower environmental regulations. This cuts labor costs and increases profits to shareholders. In turn, immigration policy floods the American labor market, which increases the supply of workers, reduces the bargaining power of domestic workers, puts downward pressure on wages, and thus increases profits by further reducing labor costs. Monetary policy in our country favors international banks and multinational corporations at the expense of small business owners who are the main drivers of domestic employment. Most Americans are completely in the dark when it comes to our monetary system, which is why it is dominated by bankers who enrich themselves off the collection of debt, both public and private. Monetary reform that favors Main Street over Wall Street is the answer to income inequality: http://bit.ly/1kgeNow
5
Couldn't a simpler solution is requiring people to live in their houses, making the hurdle for buying higher for foreign buyers (residencies, taxes), and charging more taxes on for buy to let schemes such as Airbnb? Lets get the existing stock used for housing rather than investment.
4
It's not very simple. NY already has a vast secondary market with sublets to keep rent-controlled prices. It's hard to tell whether the owners really live there without a vast inspection apparatus.
Deregulation of the complex zoning laws is probably far simpler technically, but challenging politically.
Deregulation of the complex zoning laws is probably far simpler technically, but challenging politically.
Let's be honest. NYC is no longer an American city, devoted to the needs and interests of American citizens. It is, instead, one of the new breed of cities that cater to the international investor class and their corporate buddies (corporations are people don't you know).
If one is from Hong Kong or Canada or France, and one is wealthy, then New York is a great place as everything from food to housing to political friends are waiting, but if one is poor, one is either part of the servant class, or one is a refugee, allowed to survive at the very fringe.
There is a scale to judge cites, on one end is socialistic, and at the other end is social darwinistic. NYC is quickly and cheerily marching to the Social Darwinistic tune.
Money is the spirit that runs through large cities, not compassion or understanding of the needs of the human family.
Hugh Massengill,
Eugene
If one is from Hong Kong or Canada or France, and one is wealthy, then New York is a great place as everything from food to housing to political friends are waiting, but if one is poor, one is either part of the servant class, or one is a refugee, allowed to survive at the very fringe.
There is a scale to judge cites, on one end is socialistic, and at the other end is social darwinistic. NYC is quickly and cheerily marching to the Social Darwinistic tune.
Money is the spirit that runs through large cities, not compassion or understanding of the needs of the human family.
Hugh Massengill,
Eugene
4
A few facts for Paul Krugman to consider:
1) the wealthy elite in NYC are overwhelmingly, if not exclusively, democrats,
2) "And the truth is that nobody really knows why [the decrease in crime rate has] happened." But we have a good idea as to why it did, and the "broken windows" approach to policing is part of it,
3) "the crime rate is down" but violent crime is up under de Blasio.
4) "central cities began getting richer, more educated, and, yes, whiter" which proves that liberal democrats are the ones punishing minorities in the cities.
1) the wealthy elite in NYC are overwhelmingly, if not exclusively, democrats,
2) "And the truth is that nobody really knows why [the decrease in crime rate has] happened." But we have a good idea as to why it did, and the "broken windows" approach to policing is part of it,
3) "the crime rate is down" but violent crime is up under de Blasio.
4) "central cities began getting richer, more educated, and, yes, whiter" which proves that liberal democrats are the ones punishing minorities in the cities.
2
Did you know that the New York metropolitan area cost of living is far above the national average? Here on Long Island it's about a whopping 50 percent above average making NYC even more.
When the subject arises with friends, I lightheartedly tell them, well, that's New York where everybody has their hands in each others pockets. That's the trouble with everyone living so close to each other.
When the subject arises with friends, I lightheartedly tell them, well, that's New York where everybody has their hands in each others pockets. That's the trouble with everyone living so close to each other.
3
The problem is that private developers want to build more and more expensive housing to attract that small elite of high-earners. Even though the vast working majority make between $30,000 and $45,000 per year, no one wants to build for them. Liberal elites want to build public housing for the poorest of the poor, but ignore the working classes upon whom the cities depend. As a result, the working classes are forced into surrounding communities and long commutes to work. Their property taxes then support those bedroom communities and not the cities.
2
"My personal view is that New York is a great place to live, but I wouldn’t want to visit there — the tourists jamming midtown have no idea how relatively gracious life can be on the Upper West Side. But never mind"
Paul Krugman, 2/16/2015, NY Times
Paul Krugman, 2/16/2015, NY Times
6
The real force behind gentrification of neighborhoods is not just the landlords and the wealthy looking for a place. It's the real estate broker industry that appeals to the real estate owners during negotiations for selling for the landowner in which the maximum price for the property is suggested to please the landowner and additionally to maximize the agents commission. The Real estate agent is what drives up the price of a property. The easiest way to drive out minorities or the poor is to raise the price. It's very hard to prove discrimination that way. Maybe you can prove greed, but not discrimination. Unfortunately, greed is not illegal, and don't they know it?
"Let’s start by admitting that one important factor has surely been the dramatic decline in crime rates. For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened"
It's not a mystery - look in your pocket - its called a cell phone. If cell phone usage and crime statistics were graphed year over year the curves would be mirror images of each other.
It's not a mystery - look in your pocket - its called a cell phone. If cell phone usage and crime statistics were graphed year over year the curves would be mirror images of each other.
Completely agree with Mr. Krugman that increasing the housing supply is the best way to fight rising housing costs. On the topic of gentrification, no one has a right to live in a particular location. Permanent affordable housing where you want it is not an entitlement. I'm not even 35 yet and I've moved several times to get better deals on rent. I didn't rage against the increased housing costs or demand new regulation (like the disastrous rent control policies) to "fix it". I recognized that there were others willing to pay more for my apartment than I was, and I moved.
I recently stumbled across "NY77: The Coolest Year in Hell" on YouTube. It brought back very good and very bad memories. I'm a native born NYC resident raised in the East Village, it was the summer after my freshman year in college, "The Summer of Sam," the summer of the blackout and the riots which followed., The City was going broke while Disco, Punk Rock and Rap/Hip-Hop and Graffiti Art exploded onto the scene. There is one very telling scene, I do not remember which pioneer of Hip-hop was recalling a trip he made to CBGB, and looking at a friend and saying, "we gotta get out of here and back to the safety of the Bronx," which Howard Cosell proclaimed was burning on National television.
Back then I had a studio apt for $180, today that rents for $2,900 today, with little upgrade, same for a 2 bedroom apt that went for $520 then and is now $4,200.
I love a cleaner, safer NYC, it just seems to me that there is are few safeguards for those who stayed in NYC through the dark years and kept the embers of survival alive. The ones who secured a Rent Stabilized apartment at that time and stabilized the communities are openly despised and often ridiculed in this comment sections as freeloaders. Without us NYC would never have risen from the ashes of 1977, NYC would look like Detroit. Today's NYC bears little resemblance to 1977, in most ways that's good but I resent being scorned for having had the tenacity to keep the City alive by newcomers who don't believe we are deserving.
Back then I had a studio apt for $180, today that rents for $2,900 today, with little upgrade, same for a 2 bedroom apt that went for $520 then and is now $4,200.
I love a cleaner, safer NYC, it just seems to me that there is are few safeguards for those who stayed in NYC through the dark years and kept the embers of survival alive. The ones who secured a Rent Stabilized apartment at that time and stabilized the communities are openly despised and often ridiculed in this comment sections as freeloaders. Without us NYC would never have risen from the ashes of 1977, NYC would look like Detroit. Today's NYC bears little resemblance to 1977, in most ways that's good but I resent being scorned for having had the tenacity to keep the City alive by newcomers who don't believe we are deserving.
4
If you start trying to integrate gentrified areas you will only make the rich people leave. They don't want to live near poor people, and they have the wealth and resources to be able to move when they want to, where they want to.
"If you start trying to integrate gentrified areas you will only make the rich people leave." Is that supposed to be a bad thing?
I rarely feel in a position to offer some economics lessons to Dr. Krugman, but his thoughts today omit the law of supply and demand. If we agree with his reasonable premise that more people want to live in city centers because of work requirements, then it seems also reasonable to agree that the demand for living space will increase accordingly. The reverse is easily seen in those unfortunate city centers in decline where living space is there for the taking. Other factors may apply, Dr. Krugman, but supply and demand trumps anything else for housing and rental prices.
14
Actually, if you read to the end of this (terribly, terribly long and dense) piece, you would find that Krugman suggests there's a need to increase supply in order to bring down the price.
Now, I have a suspicion that this is an example of a naive faith in "the law of supply and demand", and you need to look at the details to see if that's actually going to work-- much in the same way that increasing the minimum wage doesn't seem to reduce the amount of jobs, despite what a knee-jerk invocation of s-and-d would have you believe.
Now, I have a suspicion that this is an example of a naive faith in "the law of supply and demand", and you need to look at the details to see if that's actually going to work-- much in the same way that increasing the minimum wage doesn't seem to reduce the amount of jobs, despite what a knee-jerk invocation of s-and-d would have you believe.
1
Mr. K may have better things to do than disagree with you, but I don't. He actually does recognize that demand is raising real estate costs in inner cities, which is why he noted that there is room - including vertical room - to increase supply. The problem with gentrification is that as neighborhoods get "better," i.e., safer, more amenities, better transportation, better schools, free-market pressures increase demand faster than builders can increase supply, and real estate prices go up. One of the ironies of "urban renewal" is that when run-down neighborhoods get better, their existing residents get run out. As far as I know, no one has figured out how to change that.
Even under proposals (such as New York Mayor Bill DeBlasio's) to require builders to set aside a portion of their new construction for "affordable" residences (i.e., below market rates), some people eligible for such affordable residences do not want to live in a neighborhood where they feel like outsiders, e.g., by having to enter their buildings through a "poor door."
Even under proposals (such as New York Mayor Bill DeBlasio's) to require builders to set aside a portion of their new construction for "affordable" residences (i.e., below market rates), some people eligible for such affordable residences do not want to live in a neighborhood where they feel like outsiders, e.g., by having to enter their buildings through a "poor door."
1
Cities have always had sections that were more desirable and areas that were not so nice. As the cities' population rose, so did the areas of the well to do, often expanding into areas considered less attractive. Nowadays, with the population rising, more folks with wealth want to live in the nicer sections and that may be much of Manhattan, rather than just the Lights of 14th Street. It is a natural aspect of life and doubtful if anything will alter it.
"Let’s start by admitting that one important factor has surely been the dramatic decline in crime rates. For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened."
Sure we do. No one has any money except the 1%, and they have bodyguards!
Sure we do. No one has any money except the 1%, and they have bodyguards!
The United States is now a third world country: the despots have material wealth and the rest have opioids. The despots have security and the rest have open carry laws so that they can shoot each other on sight. The despots own politicians and the rest own the streets. Instead of fair play or a New Deal, we have poor policing and more children in poverty than any other industrialized country in the world. Once, the U.S. could a been a contender. Now?
4
Mr. Krugman, which specific "land use restrictions" are you talking about and exactly how many housing units for how many people are they blocking?
We could sell Morningside Park to developers along with 50% of Riverside Park and 20% of Central Park. Or we could boldly construct condo towers near Battery Park where the flood protection proved so awesome during Hurricaine Sandy. And the median along Park Avenue... it's wasted space north of Grand Central!
I'm sure there are some outdated land use restrictions in the Big Apple, but we have barely attempted in the latest space-optimizing architectural design practices that are thriving in other great cities. We don't need more land, we need better application of urban housing design.
We could sell Morningside Park to developers along with 50% of Riverside Park and 20% of Central Park. Or we could boldly construct condo towers near Battery Park where the flood protection proved so awesome during Hurricaine Sandy. And the median along Park Avenue... it's wasted space north of Grand Central!
I'm sure there are some outdated land use restrictions in the Big Apple, but we have barely attempted in the latest space-optimizing architectural design practices that are thriving in other great cities. We don't need more land, we need better application of urban housing design.
3
A major launching pad came in the 1989s with the Reagan-appointed Greenspan Commission. Out of that commission came the recommendations from the newly-appointed Fed Chairman, Alan Greenspan. Last year, the former chairman boasted to Charlie Rose (during his book tour with the talk shows) of his libertarian roots as an economist. You can call it the economic theories of natural selection: the rickle-down theory from the conservative/academic theorist, Arthur Laffer (author of the fraudulent Laffer [bell] Curve).
The economic benefits of this now-thrice-failed theory loomed large in the business schools which, in turn, taught dreamy-eyed future executives how to legally cook the books, the ins and outs of mergers and acquisitions (including hostile takeovers), negotiating for executive compensation packages (with their dreams of private jets, mansions in the Hamptons ...).
This new game of "Lives of the Rich & Famous" created a fog bank obliterating any view of the Moral High Ground. Newly mega-rich CEOs wrote books on their roads to success and fame. And they got the middle class to lap it up like strolling tourists genuflecting at The Hollywood Walk of Fame.
Then the tech bubble exploded with salary-bloated CEOs getting caught with their hands in the Wall Street cookie jar of scratch-my-back-I'll-scratch-yous."
The HR industry has done the bidding of corporate America for more than 20 years, alll for the sake of executive compensation. That's gentrification for you.
The economic benefits of this now-thrice-failed theory loomed large in the business schools which, in turn, taught dreamy-eyed future executives how to legally cook the books, the ins and outs of mergers and acquisitions (including hostile takeovers), negotiating for executive compensation packages (with their dreams of private jets, mansions in the Hamptons ...).
This new game of "Lives of the Rich & Famous" created a fog bank obliterating any view of the Moral High Ground. Newly mega-rich CEOs wrote books on their roads to success and fame. And they got the middle class to lap it up like strolling tourists genuflecting at The Hollywood Walk of Fame.
Then the tech bubble exploded with salary-bloated CEOs getting caught with their hands in the Wall Street cookie jar of scratch-my-back-I'll-scratch-yous."
The HR industry has done the bidding of corporate America for more than 20 years, alll for the sake of executive compensation. That's gentrification for you.
4
Actually there is PLENTY of housing which has been pointed out by previous excellently researched pieces by the NY Times itself. These are the largely abandoned but tax break heavy luxury residences for the plutocrats around the world who want the convenience of a place to stay in NYC even if it stays empty most of the time. Due to absurd property tax rates and the usual loopholes for the rich this is utterly affordable for them as their wealth increases at all other's expense. A lot of revenue could be raised by taxing these largely abandoned luxury condo's at the same rate as ordinary people.
4
Could it be that a cause of demand for housing in New York, Boston, Chicago, San Francisco and other desirable large cities is regulation itself?
For example, historic preservation districts provide the closest thing to a guarantee that the physical character of a place will be stable and not prone to cataclysmic change. This has value not only for buyers and renters within a district, but for all who fall within its gravitational field, who use and enjoy the amenities and human interactions that constitute so much of urban dynamism. Without these rocks of stability, stemming from the Historic Preservation Act of 1966, the geographical advantages that the areas possessed would not be there to be discovered.
This does have consequences. I give you Venice, a place so treasured that only the wealthy can afford to live there, and mass tourism displaces other traditional urban activities. But who would call for less protection for Venice, to allow tall towers for cheaper housing and hotels that would displace the buildings and environments that make Venice attractive in the first place?
Man has destroyed so many places in an unregulated world that we flock to the remaining bastions that had the foresight to preserve themselves. You know the places. It is where you go on vacation, or want to live, or just to have a cup of coffee. Unless we care more about the places we live now, improve them and defend them, the "inequality of place" will only become greater.
For example, historic preservation districts provide the closest thing to a guarantee that the physical character of a place will be stable and not prone to cataclysmic change. This has value not only for buyers and renters within a district, but for all who fall within its gravitational field, who use and enjoy the amenities and human interactions that constitute so much of urban dynamism. Without these rocks of stability, stemming from the Historic Preservation Act of 1966, the geographical advantages that the areas possessed would not be there to be discovered.
This does have consequences. I give you Venice, a place so treasured that only the wealthy can afford to live there, and mass tourism displaces other traditional urban activities. But who would call for less protection for Venice, to allow tall towers for cheaper housing and hotels that would displace the buildings and environments that make Venice attractive in the first place?
Man has destroyed so many places in an unregulated world that we flock to the remaining bastions that had the foresight to preserve themselves. You know the places. It is where you go on vacation, or want to live, or just to have a cup of coffee. Unless we care more about the places we live now, improve them and defend them, the "inequality of place" will only become greater.
2
People need to stop thinking of regulation/deregulation as some sort of ideological position. Regulation is a technical solution to a public policy problem, and when done well can fix the problem, and when done poorly, can fail to the fix the problem while creating new problems. I speak policy wonk enough to know that when Krugman says "deregulation" he almost certainly means "get rid of bad regulations while keeping good ones", not "let's let housing developers avoid those annoying fire safety regulations and tear down beloved landmarks"
1
Hey Paul,
Isnt the crime trend also national as well? Does gentrification occur in other big cities like Chicago, LA and SF?
Isnt the crime trend also national as well? Does gentrification occur in other big cities like Chicago, LA and SF?
1
Not just big cities, Paul, but small and intermediate cities too. My town has built hundreds (a lot for here) of downtown condos and some of the old neighborhoods are drawing the young. Some gentrification, some more middle class. Does this generation (X) not care to commute? It seems that if they can't work from home they want to live near work (who can blame them?).
I'd like to point out that this not just an American phenomenon, it's happening all over the globe. Eventually the poor, working, and middle class will have enough(if they haven't already) and there will be bigger problems than just housing if we leave dealing gentrification up to the politicians and real estate developers.
But on the United States, we are particularly not suited to handle the plethora of issues that gentrification brings about: infrastructure/urban planning not designed for mass transit in the suburbs, homelessness, an increased homogenization of the cultural center of our nation...
It's not all lost by a long shot, but we must recognize that this is our problem and we created it. I can't help but point out that this is the capitalism at it's finest, forgetting that people need houses to live in in order to make a huge profit on location. So in order to combat this we need solid public policy that proactively limits the damage while at the same time we must reinvest and re-imagine the suburbs in order to make them more interconnected with our cities.
But on the United States, we are particularly not suited to handle the plethora of issues that gentrification brings about: infrastructure/urban planning not designed for mass transit in the suburbs, homelessness, an increased homogenization of the cultural center of our nation...
It's not all lost by a long shot, but we must recognize that this is our problem and we created it. I can't help but point out that this is the capitalism at it's finest, forgetting that people need houses to live in in order to make a huge profit on location. So in order to combat this we need solid public policy that proactively limits the damage while at the same time we must reinvest and re-imagine the suburbs in order to make them more interconnected with our cities.
39
"There’s still room to build, even in New York, especially upward" but those darn "land use restrictions are in the way". If we could just put an end to these onerous regulations (and "you don’t have to be a conservative to believe that we have too much regulation" in that area), "Rising demand for urban living by the elite could be met largely by increasing supply."
With each passing year, Krugman seeks to move the bounds of liberalism further to the right. Land use restrictions, the only leverage cities have to protect the working class from the harsh consequences of a brutal housing market, are the problem in Krugman's opinion.
Without the partial ameliorating effect of land use restrictions that enforce the provision of a number of "below market rate units", NYC will turn in to an alternate dystopian vision: the people who prepare and serve Krugman's gourmet meals and wash his clothes, along with teachers, low level city employees and most health care workers will have to commute to and from work up to two or more hours each way.
A golden age for the elite - increased commute times and decreased family time and quality of life for the rest of us. It is truly amazing what the conscience of a "liberal" produces these days.
With each passing year, Krugman seeks to move the bounds of liberalism further to the right. Land use restrictions, the only leverage cities have to protect the working class from the harsh consequences of a brutal housing market, are the problem in Krugman's opinion.
Without the partial ameliorating effect of land use restrictions that enforce the provision of a number of "below market rate units", NYC will turn in to an alternate dystopian vision: the people who prepare and serve Krugman's gourmet meals and wash his clothes, along with teachers, low level city employees and most health care workers will have to commute to and from work up to two or more hours each way.
A golden age for the elite - increased commute times and decreased family time and quality of life for the rest of us. It is truly amazing what the conscience of a "liberal" produces these days.
1
More housing? The housing that is being built across America, particularly in "highly prized urban areas and ocean-front, beach-front, view property" is only for top 1% global financial elite investors who want to hide/protect their obscene profit from local taxation. It's a good thing that when we get the right political leadership we can seize the properties and turn them into affordable housing so there will be room for up-and-coming performers and the people who work for the arrogant financial elite.
2
The continuation and utter corruption of the 421-a program by state and city officials under the guise of Affordable Living is the biggest scandal and the NYTimes' failure to investigate it is a disgrace. For every Affordable Living unit created more are lost through Mayor DeBlasio' and his administration's failure to enforce the law that dictates developer qualification to receive this taxpayer largess or to protect the tenants who live in 421-a housing.
I live in a 421-a building where the developer is now into his 11th year of receiving millions of dollars of tax exemptions and he NEVER QUALIFIED. All the units in my building are rent stabilized yet the very same developer tell tenants that the building is deregulated as he raises the rents 30-40%. The developer cites the "luxury" quality of this new construction yet my floors are so uneven that my kitchen cabinets won't close!!! Mold, harassment, and intimidation are unnervingly common.
City and state officials, eager for campaign contributions, have been notified and they do absolutely nothing. Housing Court is equally complicit in perpetuating this crime through decisions unworthy of judicial authority. Since the NYTimes does little more than publish the press releases of state and city officials (see 8/25/15 421-a article) please read Pro Publica's ongoing series on 421-a corruption. The Feds should get involved and protect the NY taxpayer.
I live in a 421-a building where the developer is now into his 11th year of receiving millions of dollars of tax exemptions and he NEVER QUALIFIED. All the units in my building are rent stabilized yet the very same developer tell tenants that the building is deregulated as he raises the rents 30-40%. The developer cites the "luxury" quality of this new construction yet my floors are so uneven that my kitchen cabinets won't close!!! Mold, harassment, and intimidation are unnervingly common.
City and state officials, eager for campaign contributions, have been notified and they do absolutely nothing. Housing Court is equally complicit in perpetuating this crime through decisions unworthy of judicial authority. Since the NYTimes does little more than publish the press releases of state and city officials (see 8/25/15 421-a article) please read Pro Publica's ongoing series on 421-a corruption. The Feds should get involved and protect the NY taxpayer.
3
Not one word about Chinese buyers? We see them here in the north east as well, especially in towns with super excellent public schools and a sizable Asian population. Many of these buyers don't speak English but are willing to uproot their families back home to settle in America-- for investment, education and immigration, not necessarily in that order. http://www.nytimes.com/video/business/100000004006931/house-hunting-chin...®ion=video-grid&version=video-grid-headline&contentCollection=Times+Video&contentPlacement=3&module=recent-videos&action=click&pgType=Multimedia&eventName=video-grid-click
2
As an economist you should be attuned to the damage that market manipulation has caused in the New York market. Rent control, rent stabilization, the mandate to build low-income units and perhaps air b-n-b have created a situation where the 2-income professionals described here are being shut out of the market.
New York is not Aspen. We have public transportation and many lower cost alternatives in the suburbs and outer-boroughs. Let the markets work. People who make less money may have longer commutes. They will still be able to enjoy everything that the metropolitan area has to offer.
New York is not Aspen. We have public transportation and many lower cost alternatives in the suburbs and outer-boroughs. Let the markets work. People who make less money may have longer commutes. They will still be able to enjoy everything that the metropolitan area has to offer.
1
"... land-use restrictions are the most likely culprit. Yes, this is an issue on which you don’t have to be a conservative to believe that we have too much regulation."
No, no, no. Developing land indiscriminately and gobbling up open, green spaces in the name of development for the wealthy is anathema to the progressive. More requirements that developers include moderate income housing in their plans would satisfy the progressive soul.
No, no, no. Developing land indiscriminately and gobbling up open, green spaces in the name of development for the wealthy is anathema to the progressive. More requirements that developers include moderate income housing in their plans would satisfy the progressive soul.
2
Every trend in America is disheartening. Somehow, things have to change so that ours becomes once again a society and economy of shared prosperity.
1
The end of rent control was the beginning of the end for affordable housing in NYC. It doesn't take a wealth of analysis to come to that conclusion.
3
Thank you for starting to cover this topic. Please note that the rich now have fewer interactions with the poor or even the middle, which makes it easier to live in a [crowded] city. Eventually we will have autoparking of cars. We no longer have to see tellers to deposit cash. We don't see any people when we buy gas or groceries. Soon we won't have to deal with waitstaff (at least not the mortal kind). We don't even have as many 'human resources' at work, since we can automate quite a bit of middle management and below. We are automating as much work as possible, with machines that never have sick children or dentist appointments. That prevents us from ever seeing and smelling the hoi polloi, darling. Ah, the Golden Age again!
3
Paul Krugman, when you mentioned that no one really knows the reason for the decline in crime since the 1970s, an article that I read in medical journal (some while ago) over the link between leaded gas and crime came to mind. Food for thought.
Newburgh, New York, is an example of a city that's been affected by gentrification in NYC, though not in a positive way, yet. When I visited there and spoke with some residents on the street about what it's like to live there, they told me that people displaced by prices in their old neighborhoods had moved there, as well as a criminal element that was moved out of those gentrified (NYC) neighborhoods by police. For old and new residents of Newburgh, the influx of crime has been troublesome.
Newburgh, New York, is an example of a city that's been affected by gentrification in NYC, though not in a positive way, yet. When I visited there and spoke with some residents on the street about what it's like to live there, they told me that people displaced by prices in their old neighborhoods had moved there, as well as a criminal element that was moved out of those gentrified (NYC) neighborhoods by police. For old and new residents of Newburgh, the influx of crime has been troublesome.
4
You are fortunate, Dr. K., to be able to afford to live in New York City! The supply of housing on that small island is not infinite. And the prices of even micro-mini apartments are high. Who wants to live in a little box? As a born and bred New Yorker who lived in Gramercy Park, Upper East Side, West Side , until we were literally forced to move out of the city by two criminals living next door who threatened us with death, set fire to our apt - this on the 33rd Floor of an apartment house on east 82nd Street! - I can knock NYC as much as I like! Imagine a blackout (something wrong with the electric grid of Manahatta)! Imagine some poison being injected into the water supply of that big metropolis! Imagine billionaires having to use helicopters (or big drones) to pluck them from the high eyries where they live in the most expensive of expensive condos because the elevators aren't working! Having known many mayors and having lived under the administrations of LaGuardia, O'Dwyer, Lindsay, Impellitteri, Wagner, Beame and Koch, I no longer am interested in mayors of the Big Apple. Except for Bloomberg, whom I wish would run for President in 11 months on an independent ticket, or be tapped by QEII for UK's Governor of Bermuda, his home away from home. The island of Manhattan is chock full o' nuts and inequality - not so the OB (Other Boroughs). New York City is no longer Strawberry Fields forever. Enjoy your new abode!
3
My hero, Prof. K., seems to have written an incomplete column. He left out:
The cities started downhill in the 50's when America decided, because of the threat of possible atomic war, to push all resources into the suburbs. Even the highways were built only as far as a ring around the cities, so vehicles could travel, unimpeded, around the presumed atomic wastelands they would become.
Manufacturing also left. The NYC 70's the Prof remembers saw the population of those under the median income drop by 700,000. The desolation was real in formerly working class neighborhoods. Increased crime was inevitable under the circumstances.
But, curiously, at the same time, the above median income population grew by 200,000. These were the young, single, people out to get a start in finance, advertising, etc. As soon as they started having families, the plan was to get out of the city.
As Atomic War become less inevitable, and the mass of unemployed moved out, cities began reestablishing themselves as "the place to be."
Everything the Prof. says may be true, but only as the secondary outcome of the play-out of the Cold War.
I look forward to his articles on the eventual slow disintegration of our Suburbs.
The cities started downhill in the 50's when America decided, because of the threat of possible atomic war, to push all resources into the suburbs. Even the highways were built only as far as a ring around the cities, so vehicles could travel, unimpeded, around the presumed atomic wastelands they would become.
Manufacturing also left. The NYC 70's the Prof remembers saw the population of those under the median income drop by 700,000. The desolation was real in formerly working class neighborhoods. Increased crime was inevitable under the circumstances.
But, curiously, at the same time, the above median income population grew by 200,000. These were the young, single, people out to get a start in finance, advertising, etc. As soon as they started having families, the plan was to get out of the city.
As Atomic War become less inevitable, and the mass of unemployed moved out, cities began reestablishing themselves as "the place to be."
Everything the Prof. says may be true, but only as the secondary outcome of the play-out of the Cold War.
I look forward to his articles on the eventual slow disintegration of our Suburbs.
2
There is only one solution for gentrification. If you build multiple housing in NYC with any sort of govt assistance 20% of the rentable space must be devoted to affordable housing, Yes these apartments can be smaller and on lower floors and have a separate address and entrance and no doorman, it is living space not amenities for the rich which meed to be shared.
Under Mayor Bloomberg the idea was to keep everyone except the 10% out of Manhattan below 96th street. Bridge tolls would keep people from driving into Manhattan and high rents would keep them from living there. I got my first job in Manhattan in 1959 but I did not need to live there because I lived in Jackson Heights, a 20 minute subway ride to midtown Manhattan and there were good apartments to rent which a young married couple coule afford. Manhattan was always out of reach or not worth the sacrifices, e.g., no more car and private schools a possibility.
After the immediate post WW2 housing shortage for some reason no one built affordable housing in Manhattan. Returning vets moved to the suburbs. Manhattan was once a major manufacturing center for many products and mainly for clothing and fashion products. Those working class jobs left Manhattan as did the people who worked them and fewer for higher paying jobs replaced them held by people who could afford Manhattan rents or had the money to buy apartments on the East Side and later on the West Side.
Under Mayor Bloomberg the idea was to keep everyone except the 10% out of Manhattan below 96th street. Bridge tolls would keep people from driving into Manhattan and high rents would keep them from living there. I got my first job in Manhattan in 1959 but I did not need to live there because I lived in Jackson Heights, a 20 minute subway ride to midtown Manhattan and there were good apartments to rent which a young married couple coule afford. Manhattan was always out of reach or not worth the sacrifices, e.g., no more car and private schools a possibility.
After the immediate post WW2 housing shortage for some reason no one built affordable housing in Manhattan. Returning vets moved to the suburbs. Manhattan was once a major manufacturing center for many products and mainly for clothing and fashion products. Those working class jobs left Manhattan as did the people who worked them and fewer for higher paying jobs replaced them held by people who could afford Manhattan rents or had the money to buy apartments on the East Side and later on the West Side.
This is always going to be a hard issue... the fact that new construction is 80% - 90% luxury apartments for 10% of the population, and the so called affordable housing construction is 10% - 20% to serve 90% of the population shows how out of balance the whole scheme is. Would love for the market to better reflect the population and what it can really afford. With the 90% vying for the tiny amount of so called affordable housing, the demand drives those prices into the unaffordable range anyway. How about a luxury "ghetto" for the 10% and stop selling our cities out to international wealthy buyers who will rarely/never inhabit them.
2
In Vancouver, Canada, like many other major cities, the inequality of housing opportunity has been fed by investors. Over 25% of Vancouver condos, a large part of the inner city's real estate offerings, have been purchased but left vacant. This adds to the rising cost of housing, and does nothing for the community around it. Vacant apartments don't need restaurants, bakeries, or dry cleaners. Entire areas, once thriving and diverse, have become ghost towns. One of the solutions to this, and other causes of inequality in NYC housing -- the emergence of posh micro-aparments. Not much of an answer for real people.
2
Mario Cuomo, rhetorically rebutting Ronald Reagan in his famous "Tale of Two Cities" speech, 1984:
"But the hard truth is that not everyone is sharing in this city's splendor and glory. A shining city is perhaps all the President sees from the portico of the White House and the veranda of his ranch, where everyone seems to be doing well. But there's another city; there's another part to the shining city, the part where some people can't pay their mortgages, and most young people can't afford one; where students can't afford the education they need, and middle-class parents watch the dreams they hold for their children evaporate.
In this part of the city there are more poor than ever, more families in trouble, more and more people who need help but can't find it. Even worse: There are elderly people who tremble in the basements of the houses there. And there are people who sleep in the city streets, in the gutter, where the glitter doesn't show. There are ghettos where thousands of young people, without a job or an education, give their lives away to drug dealers every day. There is despair, Mr. President, in the faces that you don't see, in the places that you don't visit in your shining city."
Cuomo was using Reagan's analogy of America as "a shining city on a hill" to highlight that Reagan's dreamy splendor was just a tiny part of the whole, and that the people who were left out are our moral charge too. What kind of nation are we today, thirty years afterwards?
"But the hard truth is that not everyone is sharing in this city's splendor and glory. A shining city is perhaps all the President sees from the portico of the White House and the veranda of his ranch, where everyone seems to be doing well. But there's another city; there's another part to the shining city, the part where some people can't pay their mortgages, and most young people can't afford one; where students can't afford the education they need, and middle-class parents watch the dreams they hold for their children evaporate.
In this part of the city there are more poor than ever, more families in trouble, more and more people who need help but can't find it. Even worse: There are elderly people who tremble in the basements of the houses there. And there are people who sleep in the city streets, in the gutter, where the glitter doesn't show. There are ghettos where thousands of young people, without a job or an education, give their lives away to drug dealers every day. There is despair, Mr. President, in the faces that you don't see, in the places that you don't visit in your shining city."
Cuomo was using Reagan's analogy of America as "a shining city on a hill" to highlight that Reagan's dreamy splendor was just a tiny part of the whole, and that the people who were left out are our moral charge too. What kind of nation are we today, thirty years afterwards?
114
Some believe that the most important factor in the decline in crime rates has been Roe v. Wade. According to Freakonmics, Roe v. Wade led to fewer unwanted children being born and the early 1990's, where the first wave of these children reaching the age when serious criminal activity normally begins (late teen years), was the beginning in the decline in urban crime.
http://freakonomics.com/books/freakonomics/chapter-excerpts/chapter-4/
http://freakonomics.com/books/freakonomics/chapter-excerpts/chapter-4/
3
Blaming elitism on zoning is only partially correct. When the wealthy took over Manhattan, they displaced many of the petty criminals and strong-armed law enforcement guided by those elites did the rest. There simply aren't many poor people who live in Manhattan and the thugs stick out - you mostly see them on the subway. The wealthy simply moved their environment from houses far too big for anyone to actually use in suburbia to smaller, elite, urban locations.
Zoning is not really the culprit, though. It helps maintain our home vales and the character of a community. While some of these things may be used to exclude, they also help many middle-class Americans maintain their home values and quality of their communities. The bigger question is where did affordable housing go? Manhattan used to have an effective rent-control regime that allowed longtime citizens to remain in the city in spite of rapidly escalating rents, but developers have figured out how to circumvent it. We should be doing a piece on the impact of destroying this safeguard. It seems that our relentless, almost messianic belief in free enterprise has blinded us to its problems (which were widely recognized by early economists).
Zoning is not really the culprit, though. It helps maintain our home vales and the character of a community. While some of these things may be used to exclude, they also help many middle-class Americans maintain their home values and quality of their communities. The bigger question is where did affordable housing go? Manhattan used to have an effective rent-control regime that allowed longtime citizens to remain in the city in spite of rapidly escalating rents, but developers have figured out how to circumvent it. We should be doing a piece on the impact of destroying this safeguard. It seems that our relentless, almost messianic belief in free enterprise has blinded us to its problems (which were widely recognized by early economists).
3
The restrictions you refer to are in most cases meant balance population and the infrastructure that supports it. Remove or revamp those restrictions without a corresponding investment/ expansion of the infrastructure and the transit and environmental systems will be overwhelmed.
3
What we are witnessing is the universal, almost tribal, instinct of self-segregation. Perhaps we need more than just land use policies, but strict housing diversity policies--both by ethnicity and income--as they do in Singapore. The result of building our economically homogeneous gated-communities is reflected in the xenophobic policies of the super-rich like Donald Trump in making America itself into a massive gated community with the rich and the poor huddled in their own separate and unequal ghettos with the latter fearing deportation or gentrification.
3
While this hasn't happened as described here in Detroit yet, you can see it coming.
The well off, for the time being, are content to drive downtown for the weekend from the outer 'burbs where they reside. Up until 2 years ago, they never set foot in Detroit, except for the occasional ball game or opera... now they're practically tripping over each other for that "urban experience".
The only new housing currently being built is in the core downtown, and it's almost exclusively priced for the upper middle class and up, very little low income new housing is even talked about...even though Detroit's core population, the people who were too poor to move out during the recession, hovers around a 50% poverty rate.
In Detroit, It'll be interesting to see if this is just a "fad" for the rich, or they'll actually make it their home.
The well off, for the time being, are content to drive downtown for the weekend from the outer 'burbs where they reside. Up until 2 years ago, they never set foot in Detroit, except for the occasional ball game or opera... now they're practically tripping over each other for that "urban experience".
The only new housing currently being built is in the core downtown, and it's almost exclusively priced for the upper middle class and up, very little low income new housing is even talked about...even though Detroit's core population, the people who were too poor to move out during the recession, hovers around a 50% poverty rate.
In Detroit, It'll be interesting to see if this is just a "fad" for the rich, or they'll actually make it their home.
1
A primary reason upper income people move into renovated areas in the city is because they can afford to send their kids to private school. Middle class people flee to the suburbs where the schools are much better. If we want to address gentrification of urban areas, then we have to fix the schools first. These renovated areas are built to attract higher income residents because that's where the market is, because of the school situation.
1
The rental market in NYC has surely been distorted by government's actions.
Rent control should keep prices low, no? As long as one never moves.
The effect of telling property owners that they are not allowed to charge market rates effectively eliminates the possibility that the property will be further improved.
The solution has become the problem.
Rent control should keep prices low, no? As long as one never moves.
The effect of telling property owners that they are not allowed to charge market rates effectively eliminates the possibility that the property will be further improved.
The solution has become the problem.
3
According to the article in the following link, there are currently 27000 rent controlled apartments in NYC, and rents in these units have been rising faster than rents in the over one million rent stabilized units.
The one million rent stabilized apartments represent 47% of the NYC's rental units.
Additionally, it has become much easier for landlords to raise rents and have vacant units "decontrolled."
http://citylimits.org/2015/03/09/nycs-endangered-species-a-rent-controll...
The one million rent stabilized apartments represent 47% of the NYC's rental units.
Additionally, it has become much easier for landlords to raise rents and have vacant units "decontrolled."
http://citylimits.org/2015/03/09/nycs-endangered-species-a-rent-controll...
One change that would dramatically improve this problem would be to increase transportation options in the United States. For example, in Massachusetts, in addition to having cities such as Cambridge and Boston that are undergoing gentrification, we have cities like Worcester and Lowell that are relatively inexpensive, but are not practical places to live because traffic congestion makes commuting into Boston by car impractical and because the public transportation from these communities to Cambridge and Boston is slow, infrequent, and unreliable. In most European cities, there would be frequent and fast train transportation from locations like Worcester and Lowell into cities like Boston and Cambridge--perhaps as little as a half hour commute during which the commuter can do productive work instead of concentrating on a very difficult and frustrating car commute.
7
SF Bay Area: ditto.
Mr. Krugman: "But why is this happening….. this is an issue over which local governments have a lot of influence."
Middle-class (retired teacher of 33 years), debt-free, Social Security/State Pension; trying for an apartment in NYC.
FICO score 762.
Within 3 weeks I was three times unqualified for renting an apartment.
The last time by Insurent:
I got a Chase cashier's check of $2859 to pay for their insurance so that they would insure that I would pay the rent for an apartment;
And a cashier's check for $12,000 for them to hold for the year in case I didn't pay the rent.
But still, and even with that, at the very last second Insurent reneged and I didn't get the insurance so didn't get the apartment.
And my FICO score has just been reduced to 711.
Middle-class: Punished for trying, punished by losing?
Middle-class (retired teacher of 33 years), debt-free, Social Security/State Pension; trying for an apartment in NYC.
FICO score 762.
Within 3 weeks I was three times unqualified for renting an apartment.
The last time by Insurent:
I got a Chase cashier's check of $2859 to pay for their insurance so that they would insure that I would pay the rent for an apartment;
And a cashier's check for $12,000 for them to hold for the year in case I didn't pay the rent.
But still, and even with that, at the very last second Insurent reneged and I didn't get the insurance so didn't get the apartment.
And my FICO score has just been reduced to 711.
Middle-class: Punished for trying, punished by losing?
11
There's a misconception that your credit score is meant to gauge how likely you are to repay your debts. It's really to gauge how much money can be made entrapping you in various debt products. You're debt free, to them, especially your credit card companies, you're a "deadbeat" because they don't make any money off you.
You're putting up cash, How can they make any money off you? And now look at what you've done, had 3 "inquiries," so they knock your score down, because you need to be punished if you seek where you can get a better deal. But if you pay a credit card off every month, It's deemed that you don't know how to "handle credit" by paying over time, and pay interest. By turning you down they put a pox on you further.
In this day and age it's rigged so you have to generating a fee every time you do anything with your money. Debit cards are charged a swipe fee to the merchant and that's passed onto the consumer. Credit cards get hit with the same fee and then there's interest on the back end. There's just no place in today's economy for someone who pays as they go. True very few can, and certainly don't try carrying any large amount of cash, because then you just must be up to no good, most likely - drugs! Is that because using cash cuts out the bank's fees?! I know I always get a cash discount on large purchases just for asking.
whisper spritely - Good-luck to you and hang in there!
You're putting up cash, How can they make any money off you? And now look at what you've done, had 3 "inquiries," so they knock your score down, because you need to be punished if you seek where you can get a better deal. But if you pay a credit card off every month, It's deemed that you don't know how to "handle credit" by paying over time, and pay interest. By turning you down they put a pox on you further.
In this day and age it's rigged so you have to generating a fee every time you do anything with your money. Debit cards are charged a swipe fee to the merchant and that's passed onto the consumer. Credit cards get hit with the same fee and then there's interest on the back end. There's just no place in today's economy for someone who pays as they go. True very few can, and certainly don't try carrying any large amount of cash, because then you just must be up to no good, most likely - drugs! Is that because using cash cuts out the bank's fees?! I know I always get a cash discount on large purchases just for asking.
whisper spritely - Good-luck to you and hang in there!
1
This is very simple. We now have enough people in the USA who are rich so we don't need people who are not. We have enough so that Disney in FL just raised prices to 105.00/day per person. When I went right after it opened, it was 3.50/day per person. Get it? Disney lines average an hour or more. Why would they want poor people there when they have enough rich people for whom a 5000.00 vacation for a family of 4 for a week is way too cheap?
New York City (Manhattan) housing will continue to go up in price as long as there are enough people to pay for it, period. Why would poor people think they have any rights to anything? They are the "little people" who pay taxes and have to work for a living. Imagine that! As for where these people will get their help from, no worries. If you don't have a place big enough to include servant quarters, you don't need help, so why complain? Buy another place for the help if you really need them. This is not a concern to those who can afford it, so why should the rest of us worry? If you can't afford to live in NYC, move. You are not entitled to live there. What do you think this is, a free country? Grow up.
New York City (Manhattan) housing will continue to go up in price as long as there are enough people to pay for it, period. Why would poor people think they have any rights to anything? They are the "little people" who pay taxes and have to work for a living. Imagine that! As for where these people will get their help from, no worries. If you don't have a place big enough to include servant quarters, you don't need help, so why complain? Buy another place for the help if you really need them. This is not a concern to those who can afford it, so why should the rest of us worry? If you can't afford to live in NYC, move. You are not entitled to live there. What do you think this is, a free country? Grow up.
3
Dr. Krugman pointed out another, obvious cause of soaring rents in a 2000 opinion piece for this paper: rent regulation.
"In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand."
But today he apparently declines to point out this elephant in the room. 51 percent of NYC housing is rent regulated -- and this percentage does not include buildings with rentals provided by NYCHA. In core Manhattan, according to the Furman Center at NYU, the median delta between a rent regulated and non rent regulated apartment approaches $1500. There is virtually no means testing for this entitlement, which is mistakenly believed to be paid for by "greedy" landlords, but which is also partially paid for by market rate renters and the tax paying populace in its entirety through necessarily lower tax collections on the income of rent regulated apartments.
But let's talk about increasing housing density instead, even if such building transforms livable communities into sunless canyons. Though not in Your neighborhood, of course.
"In 1992 a poll of the American Economic Association found 93 percent of its members agreeing that ''a ceiling on rents reduces the quality and quantity of housing.'' Almost every freshman-level textbook contains a case study on rent control, using its known adverse side effects to illustrate the principles of supply and demand."
But today he apparently declines to point out this elephant in the room. 51 percent of NYC housing is rent regulated -- and this percentage does not include buildings with rentals provided by NYCHA. In core Manhattan, according to the Furman Center at NYU, the median delta between a rent regulated and non rent regulated apartment approaches $1500. There is virtually no means testing for this entitlement, which is mistakenly believed to be paid for by "greedy" landlords, but which is also partially paid for by market rate renters and the tax paying populace in its entirety through necessarily lower tax collections on the income of rent regulated apartments.
But let's talk about increasing housing density instead, even if such building transforms livable communities into sunless canyons. Though not in Your neighborhood, of course.
6
I am often asked how Rob Ford could have gotten elected mayor of Toronto. The answer is that too many Toronto residents simply cannot afford to live there.Canada's two most successful cities Toronto and Vancouver are priced outside the Canadian economy. It is precisely those whose income is insufficient to allow them access to the city's inner core or even its immediate periphery that make urban planning and the inclusion of low cost housing impossible.
When a new luxury development was built on Toronto's waterfront with buildings dedicated to those who would service the local economy all hell broke loose among Toronto residents who could only afford the outer fringes of Toronto.
Some how we have been led to believe that people who earn 35K should be able to live where people making 60k can't.
The new economy is manifestly unfair to those who benefited the most from the post WW2 economy.
The majority of the world's population is now urban and it is the urban enclaves where the middle means a life of quiet desperation.
When a new luxury development was built on Toronto's waterfront with buildings dedicated to those who would service the local economy all hell broke loose among Toronto residents who could only afford the outer fringes of Toronto.
Some how we have been led to believe that people who earn 35K should be able to live where people making 60k can't.
The new economy is manifestly unfair to those who benefited the most from the post WW2 economy.
The majority of the world's population is now urban and it is the urban enclaves where the middle means a life of quiet desperation.
2
Can't believe What I just read! Mr. Krugman with due respect, this is a piece of misinformation coming out of total lack of understanding of what's happening on the ground. Too much regulation? Land use restriction? Just open your eyes and ears and walk around the streets of NYC and one would see the forest of cranes and non stop building of ugly and unaffordable housing in the way of giant towers, blocking light, casting shadow on a piece of overcrowded land. As you have said, there is room to build, up. Indeed if you totally ignore the quality of life issues and affordability for the 90%. I finally realize after all the years reading your colum that it has always come from the ivory tower. I don't know where you live, maybe it's a good idea to take a break from your laptop and hop on the subway, go somewhere, connect with real people and listen to what they have to say. Enlightenment might strike. The people are rising, just listen.
8
That is what I like. Thank you.
For all of his liberal views, Krugman is a part of the Liberal Establishment. He is part, a critical part, of a system that allows leftward economic change to a certain point and No Farther. The establishment can tolerate a certain amount of challenge, of demonstrations, of new kinds of economic development, of protests against the 1% or 10% or foreign policy or police/government repression, even riots. But when African American, white American, Hispanic/Latino American people all come together to fight the liberal establishment--all people pushed off their land and out of their city neighborhoods--the Establishment lowers the boom. Radical leaders, even reformers, get killed and marshal law ensues.
Scratch an NYT liberal like Krugman, and you will reveal a fascist underneath. Sad, tragic, but true.
For all of his liberal views, Krugman is a part of the Liberal Establishment. He is part, a critical part, of a system that allows leftward economic change to a certain point and No Farther. The establishment can tolerate a certain amount of challenge, of demonstrations, of new kinds of economic development, of protests against the 1% or 10% or foreign policy or police/government repression, even riots. But when African American, white American, Hispanic/Latino American people all come together to fight the liberal establishment--all people pushed off their land and out of their city neighborhoods--the Establishment lowers the boom. Radical leaders, even reformers, get killed and marshal law ensues.
Scratch an NYT liberal like Krugman, and you will reveal a fascist underneath. Sad, tragic, but true.
There has been a lot of tightening of the mortgage qualifying process since the collapse. The wealthy have been able to take advantage of low interest rates and have been buying up foreclosures as investments, turning us into a country of renters. We now seem to have a lot of land owner like kingdoms where the renters are at the mercy of rising rents and have less and less disposable income.
In reality, the tightening of mortgage qualifications is quite odd, since studies have now shown that it was not really the quality of buyers that caused the housing bubble and collapse. It is no longer being called a subprime crisis. There was simply too much borrowed compared to the real value of the property (hot air) combined with ARM's that could not be refinanced when they reset, as the hot air escaped the balloon. The appraisal & foreclosure process are in need of fixing.
In fact, people in programs to help them attain loans, such as CRA loans were not only 1/2 as likely to default, but make up only 6.5% of all subprimes. So why are so many still blaming programs to help the poor for the collapse?
Based on evidence, which showed fewer, not more, defaults, we should be expanding programs to help people get back into homes. The government needs to get more involved, cut out the middleman, ensure the survival of fixed rate mortgages, and stop the creation of kingdoms. Many people spend 1/2 their incomes + on rent, yet can't qualify for a mortgage for far less per month.
In reality, the tightening of mortgage qualifications is quite odd, since studies have now shown that it was not really the quality of buyers that caused the housing bubble and collapse. It is no longer being called a subprime crisis. There was simply too much borrowed compared to the real value of the property (hot air) combined with ARM's that could not be refinanced when they reset, as the hot air escaped the balloon. The appraisal & foreclosure process are in need of fixing.
In fact, people in programs to help them attain loans, such as CRA loans were not only 1/2 as likely to default, but make up only 6.5% of all subprimes. So why are so many still blaming programs to help the poor for the collapse?
Based on evidence, which showed fewer, not more, defaults, we should be expanding programs to help people get back into homes. The government needs to get more involved, cut out the middleman, ensure the survival of fixed rate mortgages, and stop the creation of kingdoms. Many people spend 1/2 their incomes + on rent, yet can't qualify for a mortgage for far less per month.
3
Since the collapse, the economy has been way too good for the rentier class to even imagine that govt. will step into change things for the most of us. Facts be damned.
So allowing higher buildings to be built will allow the less than super rich to afford to live in NYC? This would be the class of very rich and perhaps dipping down into some of the plain vanilla rich? And this is a policy to combat inequality? NOT!
1
Dr. Krugman calls for less regulations on urban land use.
He is mistaken.
Land regulation are the barrier between orderly development and chaotic sprawl, and it is no accident that the most beautiful cities in the world - Paris comes to mind -are the one with the most regulations.
He is mistaken.
Land regulation are the barrier between orderly development and chaotic sprawl, and it is no accident that the most beautiful cities in the world - Paris comes to mind -are the one with the most regulations.
4
I think you misconstrue his point and in the process take a large leap. I hear Dr. Krugman suggesting that land use restrictions should be revisited, not necessarily abandoned.
International cities like NY and San Francisco are seeing a lot of international buyers which drives a lot more demand into those markets and raises prices. Living in San Fran and south to San Jose is incredibly expensive so people locate across the Bay. Teachers and firefighters have a hard time affording housing on their pay scale.
Business people want to live in the city because the are close to centers of learning and business which are two critical inputs to innovation. Generally speaking cities are growing and the country is becoming less populated and that trend has been going on for decades.
Paul is correct if this is to be solved NY must build up and bring more supply to market.
Business people want to live in the city because the are close to centers of learning and business which are two critical inputs to innovation. Generally speaking cities are growing and the country is becoming less populated and that trend has been going on for decades.
Paul is correct if this is to be solved NY must build up and bring more supply to market.
Here in rural upstate NY, there is a different problem. Within my memory, this region had a vital economy based on agriculture, mostly dairy. That economy has disappeared. There is still a dairy industry, but it involves many fewer people. Chobani is one of the few industries that keep farms operating. There was just a feature on local news about how small farmers have trouble finding markets for their milk. Our population is declining and our towns decaying.
Because there are no jobs, young people leave to build their lives and make economic contributions elsewhere. The crime rate here is going up along with the rate of drug abuse. There is a downward spiral. Property values are stagnant or declining.
In theory, the cheapness of resources should attract business, jobs and more people. Maybe that cheapness will do the trick, eventually, but eventually, we will all be dead.
The solution to the gentrification of cities like NY, San Francisco and Boston has to involve more than just affordable housing and reducing the burden of zoning restrictions. It has to be comprehensive enough to improve the quality of life in thousands of small cities and towns. I feel sorry for those who are being driven out of their homes by rising prices, but I'm equally sorry for the people I know who are being driven out of our community by the lack of opportunity.
Because there are no jobs, young people leave to build their lives and make economic contributions elsewhere. The crime rate here is going up along with the rate of drug abuse. There is a downward spiral. Property values are stagnant or declining.
In theory, the cheapness of resources should attract business, jobs and more people. Maybe that cheapness will do the trick, eventually, but eventually, we will all be dead.
The solution to the gentrification of cities like NY, San Francisco and Boston has to involve more than just affordable housing and reducing the burden of zoning restrictions. It has to be comprehensive enough to improve the quality of life in thousands of small cities and towns. I feel sorry for those who are being driven out of their homes by rising prices, but I'm equally sorry for the people I know who are being driven out of our community by the lack of opportunity.
117
I've lived in the East Village for 56 years, and I have seen the disappearance of the true flavor and character of Manhattan. What was once a vibrant collection of ethnic pockets is now Manhattanmall. The same old, same old chain stores, banks, drug stores one after another. Gone are most of the unique and varied specialty shops, restaurants, bakeries, butchers, fish mongers and delicatessens. Many of those the original "gentrifiers" i.e. The Union Sq Cafe.
There's more than just an improving quality of life and the shift of executive lifestyle driving today's insane prices. There's been a feeding frenzy of "investors" who gobble-up anything they believe will increase in value because they want to be in NYC Real Estate. Many from overseas, some with nefarious intent from hiding tax money, Iran laundering money, or a Russian oligarch hiding funds in an acrimonious divorce. Some just opportunistic, I read of a modest Bar owner in Ireland explaining that he had just bought a new apartment on Wall St. sight unseen, "because it was on Wall St." Many times these buyers willingly overpay, which not only elevates the going prices, but takes another dwelling off the market, which in many instances remains unused for most of the year. So there is no economic activity generated by an occupied dwelling either. This is different than other US Cities.
Improving the quality of life is one thing, Sacrificing the culture, flavor and feel of the City shouldn't be part of the process.
.
There's more than just an improving quality of life and the shift of executive lifestyle driving today's insane prices. There's been a feeding frenzy of "investors" who gobble-up anything they believe will increase in value because they want to be in NYC Real Estate. Many from overseas, some with nefarious intent from hiding tax money, Iran laundering money, or a Russian oligarch hiding funds in an acrimonious divorce. Some just opportunistic, I read of a modest Bar owner in Ireland explaining that he had just bought a new apartment on Wall St. sight unseen, "because it was on Wall St." Many times these buyers willingly overpay, which not only elevates the going prices, but takes another dwelling off the market, which in many instances remains unused for most of the year. So there is no economic activity generated by an occupied dwelling either. This is different than other US Cities.
Improving the quality of life is one thing, Sacrificing the culture, flavor and feel of the City shouldn't be part of the process.
.
115
When I started working in Manhattan in 1974, I commuted from my parents' apartment in White Plains. The city then was in the midst of its fiscal problems, so it had many other problems: graffiti, poverty, urban decay (the far East Village streets' pavements were often non-existent). When I started law school in 1975, the strip of Broadway south of Eighth Street had "good bones" and low-end merchandisers. SoHo was just beginning and had cheap artists' lofts.
When I left law school and took an apartment in the West Village, it was still an affordable neighborhood. The AIDS epidemic and co-op conversions changed everything.
Manhattan went from a chrysalis of creative ferment (see Gefter, "Wagstaff: Before and After Maplethorpe, a Biography") into a sanitized, gentrified place with many empty trophy apartments belonging to shell corporations whose owners flit from city to city. We may have museums, but without affordable housing it is becoming a creative corpse.
When I left law school and took an apartment in the West Village, it was still an affordable neighborhood. The AIDS epidemic and co-op conversions changed everything.
Manhattan went from a chrysalis of creative ferment (see Gefter, "Wagstaff: Before and After Maplethorpe, a Biography") into a sanitized, gentrified place with many empty trophy apartments belonging to shell corporations whose owners flit from city to city. We may have museums, but without affordable housing it is becoming a creative corpse.
1
How about the hipsters who are so focused on their artisanal life styles at the expense of cultivating their relationships with neighbors and community. This is the generation with young children who should be concerned with the health of this city and the array of its public services before they are co-opted by the tax revenues being given away to major developers in return for nothing. Hopefully they wake up from their self-absorption of their celebrations of artisanal sausages and pickles and cultivate some social awareness.
1
Mist we allow foreigners to by residential property? I see no benefit to this.
Doc you forgot the two main factors that are driving up prices. Perhaps the two most important: foreign investment and the wealthy speculating. Holding a NY apartment for 3-5 years is right now just about the best return on your money you could ever dream of so the fat cats are doing just that.
You should know this since you are now apparently one of those elites. Congrats on your new digs.
You should know this since you are now apparently one of those elites. Congrats on your new digs.
2
NYC has plenty of space and does not need to build upward -- it could, with sensible planning, find ways to create spaces of no more than four levels all over and these spaces could with good planning accommodate a vast number of persons whose incomes range right into the poverty incomes. We are still in an era of terrible planning. Ultimately we should see what is drawing the rich and create better versions of the same for everyone else. It can be done. You can live well for vastly less than the wealthy are willing to pay.
2
Why is crime down from the 70's? If you remember the 70's, you also remember that landlords were abandoning their buildings in droves due, primarily because of the existing rent control laws at the time, which made it impossible for the landlords to raise rents to keep up with the high inflation of that decade.
Abandoned buildings meant no repairs, no services, and no tax revenue for the city.
Over time, the neighborhoods decayed, which had the dual effect of causing crime rates to skyrocket, and tenants abandoning these buildings in droves.
The end result was that the city demolished entire neighborhoods, particularly in the Bronx.
About 10 years ago, I returned to the Bronx neighborhood around 174th Street and 3rd Avenue, an area I was very familiar with during the 60's and 70's, and it resembled a ghost town.
Where once there existed numerous walk up tenement buildings, at the time of my last visit the tenement buildings were gone, and the only remaining rentals units in the area were the Projects.
Abandoned buildings meant no repairs, no services, and no tax revenue for the city.
Over time, the neighborhoods decayed, which had the dual effect of causing crime rates to skyrocket, and tenants abandoning these buildings in droves.
The end result was that the city demolished entire neighborhoods, particularly in the Bronx.
About 10 years ago, I returned to the Bronx neighborhood around 174th Street and 3rd Avenue, an area I was very familiar with during the 60's and 70's, and it resembled a ghost town.
Where once there existed numerous walk up tenement buildings, at the time of my last visit the tenement buildings were gone, and the only remaining rentals units in the area were the Projects.
3
There is no sign of planning and thinking in the public space around all those new high rise buildings that tangle up pedestrians with the traffic to and from the Lincoln Tunnel, midtown. There should be a whole separate level for pedestrians there.
During Mayor de Blasio's inauguration, some spokesmen described New York City as a plantation, a place where wealth and income inequality was the result of overlords exploiting a trapped underclass. This is an angry depiction of a static society.
Paul Krugman's opinion piece is helpful in soberly pointing out that for a proper understanding of the financial stratification of New York a dynamic, not static, model must be used. He points out that the upper strata of wealth and income continue to grow because high-income Americans want to come to New York for its work opportunities and amenities. He should also add that the upper strata also grow from the influx of many affluent people from around the world who are attracted to New York for its amenities and as a refuge.
What he does not mention is the extreme income and wealth inequality profile of New York is also a consequence of the inflows into the City at the lower financial strata. New York continues to be a destination for struggling immigrants, many seeking a refuge, and a destination for aspiring young seeking their fame and fortune.
Adding to the extreme financial inequality statistics of New York is a net outflow of middle income household who can no longer afford the City.
The important point is that for New York in particular, its income inequality statistic are less a matter of social injustice but of the dynamics of inflows at the upper and lower strata and outflows in the middle.
Paul Krugman's opinion piece is helpful in soberly pointing out that for a proper understanding of the financial stratification of New York a dynamic, not static, model must be used. He points out that the upper strata of wealth and income continue to grow because high-income Americans want to come to New York for its work opportunities and amenities. He should also add that the upper strata also grow from the influx of many affluent people from around the world who are attracted to New York for its amenities and as a refuge.
What he does not mention is the extreme income and wealth inequality profile of New York is also a consequence of the inflows into the City at the lower financial strata. New York continues to be a destination for struggling immigrants, many seeking a refuge, and a destination for aspiring young seeking their fame and fortune.
Adding to the extreme financial inequality statistics of New York is a net outflow of middle income household who can no longer afford the City.
The important point is that for New York in particular, its income inequality statistic are less a matter of social injustice but of the dynamics of inflows at the upper and lower strata and outflows in the middle.
The income inequality discourse about New York is distorted, in part, simply by the definition of New York City. If instead of it being defined by the City’s political boundaries, it is defined in terms of the New York metropolitan region encompassing the much larger area from which large numbers of commuters live (many middle class), a more meaningful picture emerges. The income and wealth distribution of this larger region levels considerably compare that of to just the City. For the purposes of a sound analysis, the Hudson River is not a relevant boundary and places like Bayonne and Jersey City, NJ, are now very much part of the New York profile.
Using a more meaningful definition of New York City to include the present and reasonably potential commuting areas to the City leads to an enhanced set of prescription for the difficulties faced by New York’s middle and lower income and wealth strata. In particular, it leads to the recommendation for transportation infrastructure spending (and possibly subsidized commuter fares) to expand the supply of affordable housing options for “New Yorkers”. Places like Newark and Paterson, NJ, ultimately may become part of the solution for New York City.
In summary, a geographically expanded definition of New York City gives a more accurate picture of the income and wealth inequality problems “New Yorkers” face and leads to additional constructive solutions for their solution.
Using a more meaningful definition of New York City to include the present and reasonably potential commuting areas to the City leads to an enhanced set of prescription for the difficulties faced by New York’s middle and lower income and wealth strata. In particular, it leads to the recommendation for transportation infrastructure spending (and possibly subsidized commuter fares) to expand the supply of affordable housing options for “New Yorkers”. Places like Newark and Paterson, NJ, ultimately may become part of the solution for New York City.
In summary, a geographically expanded definition of New York City gives a more accurate picture of the income and wealth inequality problems “New Yorkers” face and leads to additional constructive solutions for their solution.
Oh, my, and all this time I thought New York City was so wonderful. Guess not. Maybe the New York Times can lead an effort to more fair and equitable housing in New York City. Of course, this would actually require work on your part.
1
Over the last ten years, State and City governments have proven that upzoning to add residential density does not reduce the cost of housing in New York City. Anyone who is in doubt can ask the people of Williamsburg or Prospect Heights.
Given the current global demand for New York real estate, trying to address the housing crisis by creating more density is like trying to put out a fire with gasoline. Equitable, sustainable solutions are complex and elusive. I would encourage Mr. Krugman to focus on the economic details of "value recapture" approaches where a portion of new density is traded for affordable housing (as in the Mayor's mandatory inclusionary housing proposal), and see if he believes the history of theses types of deals really suggests a viable solution for preserving a diverse city.
Given the current global demand for New York real estate, trying to address the housing crisis by creating more density is like trying to put out a fire with gasoline. Equitable, sustainable solutions are complex and elusive. I would encourage Mr. Krugman to focus on the economic details of "value recapture" approaches where a portion of new density is traded for affordable housing (as in the Mayor's mandatory inclusionary housing proposal), and see if he believes the history of theses types of deals really suggests a viable solution for preserving a diverse city.
This is another area where we see the effects of rich people having too much money and others too little. Wage-earners are forced to live in sub-standard housing or commute long distances. Money flowing into high-end housing tends to lead to destructive bubbles. Unrestrained free markets naturally lead to this kind of thing - they do not reach a state of equilibrium with equitable distribution of income and even adequate standard of living for all.
There might be a simple solution to this, which is to restore highly progressive income-tax rates. At any rate it should be obvious that the experiment of drastic tax cutting since 1964 has had no benefits.
There might be a simple solution to this, which is to restore highly progressive income-tax rates. At any rate it should be obvious that the experiment of drastic tax cutting since 1964 has had no benefits.
14
Unfortunately, your solution is to penalize success. I think most would agree that if one works more years to get to a higher income it makes sense, and if one works more hours than other they can make more. So how can you penalize the top 1%, 5%, 10%, when data shows they have put more years into education/developing their business and on average work more hours? You may disagree with the magnitude of such differences but these are driven by an evolving economy that is knowledge based. High progressive tax rates are the wrong answer, we should be rewarding success not penalizing it.
Please do not go back to 1964 to prove your point on taxation. Low taxes for the wealthy really go back to the Reagan Revolution in the 1980s, and which have continued since, under both parties.
Building more is not the only answer. If a large part of the concentration of the affluent in cities is convenience, improvements is public transportation would expand the supply of convenient and desirable locations beyond the city centers to satellite cities like Newark, Stamford, and Bridgeport, for example, which may not be experiencing the urban renaissance that larger cities are.
This would have the auxiliary benefit of helping the less than affluent, but that smacks of socialism in half of the political class these days, and improvement in public transit is as anathema to Republicans as is our 'Socialist' President.
This would have the auxiliary benefit of helping the less than affluent, but that smacks of socialism in half of the political class these days, and improvement in public transit is as anathema to Republicans as is our 'Socialist' President.
1
At the rate new apartments are being built in my neighborhood, the subway infrastructure will soon be crushed.
3
Given Dr. Krugman is new to living in New York City, he will soon realize two very powerful constituencies stand in the way of more supply, and therefore, lower cost housing. One, the fervently anti-development City Council and borough presidents, supported by their NIMBY constituents, who view every new development skeptically (de Blasio, to his credit, is does not appear to subscribe to this view). And, two, the rent control lobby which keeps roughly 50% of the rental stock in New York off the market. Without fighting both of these entrenched interests, housing prices will continue to go up, and fast, and the outer boroughs will continue to be rapidly gentrified.
4
Not sure we want to start tearing down NYC and building Houston, which is partially what you seem to suggest. On this issue we part ways.
1
I live in western New York, and housing rents are going up here, just elsewhere.
Our entire economy is shifting from capitalism based on growth to capitalism based on rents. We are seeing the return of a rentier class of wealthy property owners, whose profits derive from real estate rent rather than land rent. Aside from that small difference, we're heading back to the 18th century.
Read Thomas Piketty's "Capital in the 21st Century". It is eye-opening!
Our entire economy is shifting from capitalism based on growth to capitalism based on rents. We are seeing the return of a rentier class of wealthy property owners, whose profits derive from real estate rent rather than land rent. Aside from that small difference, we're heading back to the 18th century.
Read Thomas Piketty's "Capital in the 21st Century". It is eye-opening!
7
There actually are people who don't live in New York. A lot of them, out here in "flyover" land. Smaller cities and suburbs are still quite popular and attractive. Please don't generalize to the entire country what you see out your door.
3
Huh?
The piece is about NYC. Period. And that's a bit of an oxymoron that small cities and suburbs are still popular. If they were popular, they wouldn't be small.
The piece is about NYC. Period. And that's a bit of an oxymoron that small cities and suburbs are still popular. If they were popular, they wouldn't be small.
I believe in capitalism. I also believe that naked capitalism, when unchecked by the common will, exacts far too steep a price.
Today, according to Thomas Piketty, wealth concentrations are approaching those last seen during the Gilded Age. Yes, our GDP is growing, but the benefits are increasingly concentrated in the hands of those who need only look out for number 1.
Rather than legislate Rube Goldberg rent control/rent stabilization policies, it would behoove our craven politicians to resume taxing wealth and out-sized incomes.
Capitalism is most vibrant when it searches out opportunities so as to take advantage. What's happening in NYC and other cities is real estate arbitrage at its most classic.
Remember, capitalism values money over people, and when money is willing to flow into formerly less attractive areas those who have lived there will be priced out. As Sidney Schanberg wrote in the NYT on March 9, 1985:
"Donald Trump, the developer, is in the newspapers almost every day for one thing or another. If he isn't building a skyscraper castle or a football team, he is trying to harass some tenants out of one of his properties.
It's strange for a young man who so craves achievement, recognition, respectability and acceptance to mix into his master-builder activities the petty act of abusing tenants. Yet, though hard to explain, there seems little doubt that it has happened."
Sure, we can close the barn door. But the horse is running for President.
Today, according to Thomas Piketty, wealth concentrations are approaching those last seen during the Gilded Age. Yes, our GDP is growing, but the benefits are increasingly concentrated in the hands of those who need only look out for number 1.
Rather than legislate Rube Goldberg rent control/rent stabilization policies, it would behoove our craven politicians to resume taxing wealth and out-sized incomes.
Capitalism is most vibrant when it searches out opportunities so as to take advantage. What's happening in NYC and other cities is real estate arbitrage at its most classic.
Remember, capitalism values money over people, and when money is willing to flow into formerly less attractive areas those who have lived there will be priced out. As Sidney Schanberg wrote in the NYT on March 9, 1985:
"Donald Trump, the developer, is in the newspapers almost every day for one thing or another. If he isn't building a skyscraper castle or a football team, he is trying to harass some tenants out of one of his properties.
It's strange for a young man who so craves achievement, recognition, respectability and acceptance to mix into his master-builder activities the petty act of abusing tenants. Yet, though hard to explain, there seems little doubt that it has happened."
Sure, we can close the barn door. But the horse is running for President.
7
How do you define out-sized incomes and wealth? If someone puts in a decade more of education for example and work 80-100 hrs/week as compared to someone who has a high school/college education and works 40 hrs/week, isn't that individual able to command a higher income and amass more wealth? Such is the nature of an economy based on knowledge and achievement. At some point your position comes off as selfish, you want to take the fruits of someone else's labor even if you weren't willing to put in the same sacrifices and you choose to make an arbitrary assessment as to outsized incomes/wealth. Why shouldnt an individual who works hard be able to capitalize on their skills to whatever income/end that is, such is the beauty of our nation. You may argue against accumulated wealth but that allows families to do more for their family's future, again who are you or anyone else to argue that its more right to redistribute the fruits of ones labor rather than save for one's children/grandchildren/etc
1
The housing crisis in the San Francisco Bay Area is being driven as much by wealthy singles as by couples. They want to live where the action is, urban areas, even as they often work elsewhere. Their employers support their lifestyles by providing their own private mass transit - the infamous Google buses - for long reverse commutes to what were once suburban bedroom communities but are now home to sprawling corporate campuses. Combine that with a successful effort to lure tech businesses back to downtown areas with favorable tax policies and you get a perfect storm to drive housing prices through the roof. SF is not NYC, so we still have lots more cars than effective mass transit, but housing prices here are equally crazy and the effects on more modest wage earners are equally devastating.
8
How about just get rid of rent control. Open up the supply!
5
It is true that executives want a shorter commute. Packing enormous towers in smaller and smaller building spaces is not likely to help the 90%'s looking for housing, because the cost of building makes these spaces beyond expensive and the demand is high. Poor infrastructure (mass transit for the Victorian Age), roads that are beyond clogged and crumbling bridges all contribute significantly to the problems of city housing. There are probably solutions for housing in the very near "suburbs" ( such as the "outer boroughs like Queens and the Bronx) but when it can take two hours to drive 25 miles, or more than 90 minutes with two trains that cost way more than cheap gasoline, it is unlikely that an executive will choose that option. I'd like to see what would happen if the city taxed private real estate developers in order to rebuild mass transit for all, rather than the generous handouts that they receive for a little public space with a few flowers and a few extra school classrooms. Mass exodus?
2
A good article in the online Atlantic Monthly titled: "Why the Economic Fates of America’s Cities Diverged", goes a little further into the issue of inequality of cities in the USA, with a different view of regulation. It is an interesting read.
Don't forget, the "gentry" generally live on income from ownership of capital under capitalism.
2
Oh, Dr. Krugman! Seems like you already are losing your ability to see things from other than the upper-floor vantage point of the elite.
Certainly we can build ever-upward in New York and other cities-- if that's what's wanted and desirable. The average citizen is never consulted. It's been happening for decades, but for whom and what are those towers? Overwhelmingly, for more luxury condos and offices. Yes, land-use policies are a very central issue. Do you remember the large sections of Manhattan that a generation or two ago were largely residential but are now mind-numbingly commercial? Recent mayors have pushed for ever-expanding, ever-denser, ever-taller commercial zoning. So luxury residential developers have set their sights on humanly-scaled row-house and small-apartment-house blocks. Even our historic districts are not truly safe.
What's missing in New York and America in general is any collective sense of what we want our cities to be. There is no sense of the commonwealth. Nothing resembling the planning for the good of all that characterizes a city like Helsinki, for example.
What becomes of elite, vertical, "safe" New York in a major attack on the power grid that cuts off electricity for weeks or months? Is anyone even contemplating that distinct possibility? Will the rich be lucky enough to happen to be at their country homes should that occur?
Certainly we can build ever-upward in New York and other cities-- if that's what's wanted and desirable. The average citizen is never consulted. It's been happening for decades, but for whom and what are those towers? Overwhelmingly, for more luxury condos and offices. Yes, land-use policies are a very central issue. Do you remember the large sections of Manhattan that a generation or two ago were largely residential but are now mind-numbingly commercial? Recent mayors have pushed for ever-expanding, ever-denser, ever-taller commercial zoning. So luxury residential developers have set their sights on humanly-scaled row-house and small-apartment-house blocks. Even our historic districts are not truly safe.
What's missing in New York and America in general is any collective sense of what we want our cities to be. There is no sense of the commonwealth. Nothing resembling the planning for the good of all that characterizes a city like Helsinki, for example.
What becomes of elite, vertical, "safe" New York in a major attack on the power grid that cuts off electricity for weeks or months? Is anyone even contemplating that distinct possibility? Will the rich be lucky enough to happen to be at their country homes should that occur?
4
As a lifelong resident of a large college town, I am always skeptical of plans that begin and end with affordable housing. When I was a child, Cornell's proximate Collegetown was a neighborhood of large, old houses where students paid a bit more than necessary, the northern town of Lansing was still rural territory, and the North Campus Initiative was still a blueprint.
A couple decades later: Collegetown is a dense condo block with nosebleed rents, North Campus is crammed with new dorms that barely dent the housing shortage, and Lansing is an expansive suburb. As for the students living in houses older than any living President, they pay far more than they would have twenty years ago.
The explanation is simple: once you densify a neighborhood, you raise rents there. By doing so, you greenlight proximate neighborhoods to raise their rents, and it spreads. Housing, especially in a college town, is inelastic: if you are a college student without wealthy parents and your rent goes up 25% in one year, are you going to take out more loans or are you going to give up on earning an Ivy League tuition?
In the end, the problem is not that there is insufficient housing, it is that people can't afford it. If pay had risen with inflation over the last 30 years, we wouldn't have this problem. If companies didn't outsource and invert, we would have a workforce and a tax base. The problem is not housing, it is income: plenty to go around, but not enough for you and me.
A couple decades later: Collegetown is a dense condo block with nosebleed rents, North Campus is crammed with new dorms that barely dent the housing shortage, and Lansing is an expansive suburb. As for the students living in houses older than any living President, they pay far more than they would have twenty years ago.
The explanation is simple: once you densify a neighborhood, you raise rents there. By doing so, you greenlight proximate neighborhoods to raise their rents, and it spreads. Housing, especially in a college town, is inelastic: if you are a college student without wealthy parents and your rent goes up 25% in one year, are you going to take out more loans or are you going to give up on earning an Ivy League tuition?
In the end, the problem is not that there is insufficient housing, it is that people can't afford it. If pay had risen with inflation over the last 30 years, we wouldn't have this problem. If companies didn't outsource and invert, we would have a workforce and a tax base. The problem is not housing, it is income: plenty to go around, but not enough for you and me.
186
I owed one of these lovely old houses in Collegetown for 30 years. I never made a penny on it, because I charged reasonable rents, but had to pay exorbitant property and school taxes. When I complained about my taxes, documenting my rental income, Mr. Franklin explained to me that the fault laid on my side, by charging too low rents.
I finally sold the building 3 years ago to a commercial operator. He doubled the rents, packed twice the number of students in the building, and is making a profit, after taxes.
Ithaca has one of the highest property and school taxes in the Nation and that is a very substantial part of the reason why rents are sky high.
The ironic part is that not a single one of the residents I had in 30 years, ever send a child to public schools. They were educated in some other school district, and moved out of town prior to having children of their own. And yet they had to pay sky high school taxes through their rents.
I finally sold the building 3 years ago to a commercial operator. He doubled the rents, packed twice the number of students in the building, and is making a profit, after taxes.
Ithaca has one of the highest property and school taxes in the Nation and that is a very substantial part of the reason why rents are sky high.
The ironic part is that not a single one of the residents I had in 30 years, ever send a child to public schools. They were educated in some other school district, and moved out of town prior to having children of their own. And yet they had to pay sky high school taxes through their rents.
1
Enjoy it while it lasts. There are many reasons for the urban renaissance, but I suspect there is a large subsidy driving the behavior. The infrastructure and security apparatus are likely mispriced and the rich know it. And so we can pipe in services and police out street crime for the time being. I find it interesting to consider technical changes that will make it less likely people will want to live in concentration. The risks will outweigh the subsidies sooner or later.
3
I think people are more willing to tolerate income disparity when they feel they have earned their privileged status over the person behind the counter serving them. After all, they may have also "payed their dues" as a service person. But the nature of a hi-tech economy in which all 'progress' is based upon increasing wealth inequality is that the smaller, stingier, self-assured nouveau riche is more likely to hard-wire in the disparity and have little time for thinking.
Wherever I travel, I hear the same stories: Vancouver, BC, San Francisco, London, Hong Kong, Boston. The wealthy/super wealthy are bidding up the price of housing, squeezing out the middle/working classes.
These are due to any number of factors well worthy of Dr. Krugman's analysis. A couple to consider are that we are well into the creation of a new global reality where the super-rich have been creating a globalized economy unto themselves. They live in a world of affluence, acquiring housing in chic places, avoiding local taxes as much as possible, yet demanding all the trappings of wealth: museums, libraries, art galleries, theater, music (what better place than NYC?). They owe allegiance to no country, yet they expect that fire, police, medical military services will be there to protect them wherever they go. To be paid by others, of course.
All of the benefits they expect in these places must be provided by workers -- restaurant employees, fire fighters, cops, plumbers, dry cleaners, electricians, nurses, sanitation workers, taxi drivers, etc. -- who can no longer afford to live near where they work because the costs of housing have been driven up by the wealthy. Their children are the ones who join the military, who must fight and die to protect the stateless wealthy. Their kids get state-supported education, whose resources are dwindling due to the lowering of the tax base.
Here is the brave new world that Reagan and Thatcher wrought.
These are due to any number of factors well worthy of Dr. Krugman's analysis. A couple to consider are that we are well into the creation of a new global reality where the super-rich have been creating a globalized economy unto themselves. They live in a world of affluence, acquiring housing in chic places, avoiding local taxes as much as possible, yet demanding all the trappings of wealth: museums, libraries, art galleries, theater, music (what better place than NYC?). They owe allegiance to no country, yet they expect that fire, police, medical military services will be there to protect them wherever they go. To be paid by others, of course.
All of the benefits they expect in these places must be provided by workers -- restaurant employees, fire fighters, cops, plumbers, dry cleaners, electricians, nurses, sanitation workers, taxi drivers, etc. -- who can no longer afford to live near where they work because the costs of housing have been driven up by the wealthy. Their children are the ones who join the military, who must fight and die to protect the stateless wealthy. Their kids get state-supported education, whose resources are dwindling due to the lowering of the tax base.
Here is the brave new world that Reagan and Thatcher wrought.
343
Dochoch, Good points. Yes, the influence of the super wealthy around the world. And now the TPP trade agreements, giving corporations even more power? We have to relate both. Could Mr. Krugman do it? Would he want to?
2
New York City is simply following the global millionaire model best emulated by Middle Eastern millionaire meccas like Doha, Qatar and Abu Dhabi and Dubai of the United Arab Emirates.
In those Middle Eastern cities, the tallest and most gleaming mirrored skyscrapers rise in record fashion to produce a stunning vision of modern opulence and wealth, but behind the landscape are armies of migrant workers doing 99% of the work under extreme working conditions who often incur large debts just for the opportunity to work abroad and who are bused in daily from deplorable worker cities and de facto internment camps located hours away from their indentured servitude.
New York won't ever quite reach the level of economic and social exploitation demonstrated by our Middle Eastern billionaire and millionaire friends because America has not completely disregarded humanity....yet.
Mayor Michael Bloomberg said on his weekly radio program in 2013, shortly before leaving office: “If we could get every billionaire around the world to move here, it would be a godsend.”
Bloomberg's trickle-down billionaire strategy has been fully implemented and wealthy foreigner billionaires have helped move working class residents out of New York City and out of sight.
And many of these billionaire nonresidents pay no city income taxes and often receive hefty property tax breaks and abatements to add 0.1% insult to 99.9% injury.
http://goo.gl/BqV7uX
Remember the billionaire creed: "it's never enough !"
In those Middle Eastern cities, the tallest and most gleaming mirrored skyscrapers rise in record fashion to produce a stunning vision of modern opulence and wealth, but behind the landscape are armies of migrant workers doing 99% of the work under extreme working conditions who often incur large debts just for the opportunity to work abroad and who are bused in daily from deplorable worker cities and de facto internment camps located hours away from their indentured servitude.
New York won't ever quite reach the level of economic and social exploitation demonstrated by our Middle Eastern billionaire and millionaire friends because America has not completely disregarded humanity....yet.
Mayor Michael Bloomberg said on his weekly radio program in 2013, shortly before leaving office: “If we could get every billionaire around the world to move here, it would be a godsend.”
Bloomberg's trickle-down billionaire strategy has been fully implemented and wealthy foreigner billionaires have helped move working class residents out of New York City and out of sight.
And many of these billionaire nonresidents pay no city income taxes and often receive hefty property tax breaks and abatements to add 0.1% insult to 99.9% injury.
http://goo.gl/BqV7uX
Remember the billionaire creed: "it's never enough !"
376
Can you say "favela"?
2
You forgot the one about "Greed is good." And since we're coming into the Christmas season there's this from Dickens via Scrooge: "Are there no prisons?" asked Scrooge. "Plenty of prisons," said the gentleman, laying down the pen again. "And the Union workhouses?" demanded Scrooge. "Are they still in operation?" "They are. Still," returned the gentleman, "I wish I could say they were not." "The Treadmill and the Poor Law are in full vigour, then?" said Scrooge. "Both very busy, sir." ":Oh! I was afraid, from what you said at first, that something had occurred to stop them in their useful course," said Scrooge. "I'm very glad to hear it."
2
Socrates,
We have left the opera, theatre and excitement of downtown for life in small town. We were ready, but of course neither my wife nor myself ever knew life in the suburbs.
We have left the opera, theatre and excitement of downtown for life in small town. We were ready, but of course neither my wife nor myself ever knew life in the suburbs.
2
While the elite concentrate in the urban centers, their lifestyle improves while the infrastructure in the rest of the country crumbles. This is what happens when the rich isolate themselves from the rest of us: They inhabit an alternate universe of unimaginable wealth and opulence that everyone else pays for with the reality of reduced options.
2
Is there any significant difference between providing low cost housing for the rich people's service workers in these gentrifying cities, and providing slave quarters on an old plantation?
If NYC or SFO is being overrun by the wealthy, so be it. Perhaps Yogi Berra's famous comment about restaurants will come to apply to cities - those places are so crowded with the rich that no rich person goes there any more. For there are no ordinary people left there to do the needed work.
If NYC or SFO is being overrun by the wealthy, so be it. Perhaps Yogi Berra's famous comment about restaurants will come to apply to cities - those places are so crowded with the rich that no rich person goes there any more. For there are no ordinary people left there to do the needed work.
1
Cities, like New York, set the table for the country, like it or not. They reflect how things are going socially, economically, criminally, politically and creatively for the entire country. We understand that the rich are getting richer exponentially and the rest of us are either standing still, or falling backwards. These things are true throughout history regardless of place. It describes Rome, during the Empire, Florence during Renaissance, and London and Paris most of the time. These cities are world cities intellectually and that’s what makes them the glass through which to understand what is happening to the world. Too many of the ultra-rich have reached the point where human beings no longer matter to them. We know the dicta: the poor are the poor because they want to be. How can one make a reasonable argument to someone who makes more in one day then the poor working two jobs make in a year? Falling in between is what we used to call the middle-class. That is the large group of folks who liked to imitate the superrich in attitude towards the poor. Well, that middleclass is now disappearing little by little and the poor’s numbers are growing. And it is most apparent in the city!
73
These things were true throughout history. But Rome and Florence of past centuries---that was before the rise of democratic ideals, individual rights, the middle class, mass education and voting. So the current rise in political power of the richest, and the fall of the m. class is a reversal of many generations and is out of keeping with modern principles. Just look at the higher tax rates of past decades for the rich, and the smaller gaps between CEO and average worker pay.
1
I'm surprised to see Paul Krugman embrace the myth that gentrification is the result of limited supply and overregulation. Th fact is that unfetterd dvlopment doesn't lead to more working class housing. Given the chance, developers will not build modest, affordable homes --they'll build high-end homes. The regulations, if anything, need strengthning.
2
I think there are other distortions in the housing market, not least of which is big-city real estate substituting for other investment by non-resident wealthy folks. Much of the nicest housing stock is empty, and the otherwise wealthy who would live there full time have to go someplace else.
For many decades, the urban core section of Cincinnati - Over the Rhine, north of Central Parkway, was a festering sore of poverty, crime and drugs. Until, that is, someone decided that money could be made off of the area. So Washington Park was rehabbed, many of the buildings were rehabbed, little restaurants and shops were opened and affluent young urban folk moved in en masse.
But a funny thing happened. The original residents of OTR, many of them poor people of color, whom the city didn't care about were moved out to other festering sores.
The Drop-In Center provided a lifeline to the homeless, whom the city also ignored, (except to attempt to pass various laws that made being homeless a criminal offense) - until the city realized that the Center was on a prime piece of real estate that could be turned into a new theater. So the Drop-In Center was relocated to a corner on the West End near the railway yards - out of sight, out of mind, and nowhere near essential services for the homeless.
We are truly living in an age of coveting - what's yours is mine for the taking.
But a funny thing happened. The original residents of OTR, many of them poor people of color, whom the city didn't care about were moved out to other festering sores.
The Drop-In Center provided a lifeline to the homeless, whom the city also ignored, (except to attempt to pass various laws that made being homeless a criminal offense) - until the city realized that the Center was on a prime piece of real estate that could be turned into a new theater. So the Drop-In Center was relocated to a corner on the West End near the railway yards - out of sight, out of mind, and nowhere near essential services for the homeless.
We are truly living in an age of coveting - what's yours is mine for the taking.
2
Here's an idea. De-regulate land use, but regulate foreign buyers who want to buy luxury condos to hide money. They are raising prices while driving out real residents. We should charge them a separate property tax that is higher than for local residents who are truly invested in the area instead of finding creative ways to stash money. The City should use the money to fund parks, cultural events, free daycare and and improve school systems...while also saving a lot of it by paying down debt and building a cushion for an eventual bust. And in a property bust (which usually follows all bubbles), the City can relax the foreign property tax.
2
Regarding the crime rate, see Kevin Drum at Mother Jones on Lead - the Real Criminal Element. Taking lead out of gasoline tracks with a drop in violent crime, with a lag of about 20 years. Lead has critical effects on developing nervous systems in children that matches up with lower IQ, poor impulse control, and violent behavior. Lead in the air from car exhausts was a big problem in cities. Get the lead out, and things start to improve over time. Studies have seen this around the world as other countries have taken lead out of gasoline.
2
This problem can not be solved on a microeconomic level with affordable housing etc. as it comes from the top: the cheap money that has been provided to banks over the last 7 years was of course ending up with the 1%. Big hedgefonds buying up city real estate and brownstones in bulk because high rent is the best place besides stocks where they can still get a great return for their investments.
The good news is that this bubble is also going to burst...it usually happens when the people providing the services to their masters can't afford to live anymore in the area they serve and that even includes police officers, fire men and hospital personel.
The good news is that this bubble is also going to burst...it usually happens when the people providing the services to their masters can't afford to live anymore in the area they serve and that even includes police officers, fire men and hospital personel.
1
It's not just a supply problem — developers are paying really high prices for land and can't afford to build anything less than high-end houses to recoup their investment.
As the top few percent get richer and want to invest their wealth safely, one attractive option is real estate. Sales in the top 1% of the housing market have skyrocketed, and the rest of the market is flat. This drives up property values and leaves ordinary people priced out of the market. The house across the street from us was just bought for $1M and the new owners are putting another $1M into renovations. The value of our house will undoubtedly climb — nice for us — but we could never afford to buy in our neighborhood now, we were just lucky to be able to move in 25 years ago. Our daughter is scrambling to find something affordable and won't manage it without help from us. There is no hope at all for people who are in the bottom 60-70%.
Another awful consequence of income inequality: it skews the entire housing market. The only solution is to mandate that developers offer a significant percentage of new housing to low-income owners, and that's just a band aid.
As the top few percent get richer and want to invest their wealth safely, one attractive option is real estate. Sales in the top 1% of the housing market have skyrocketed, and the rest of the market is flat. This drives up property values and leaves ordinary people priced out of the market. The house across the street from us was just bought for $1M and the new owners are putting another $1M into renovations. The value of our house will undoubtedly climb — nice for us — but we could never afford to buy in our neighborhood now, we were just lucky to be able to move in 25 years ago. Our daughter is scrambling to find something affordable and won't manage it without help from us. There is no hope at all for people who are in the bottom 60-70%.
Another awful consequence of income inequality: it skews the entire housing market. The only solution is to mandate that developers offer a significant percentage of new housing to low-income owners, and that's just a band aid.
1
Ah, those pesky land use restrictions - you know the ones that ensure that demands on infrastructure are manageable, that neighborhoods are not destroyed, that parks are left alone, that historic buildings are left intact.
I'm part of the 10% who have worked very hard and sacrificed time and family to be there. My wife and I have both had to relocate for each other's work. We haven't been able to enjoy the luxury of living in the same community where we work for years.
Based on that sacrifice, we do have options on where to live. But we have not been able to stay in a neighborhood for years at a time.
With privilege comes sacrifice - something you don't acknowledge from your own ivory tower.
I'm part of the 10% who have worked very hard and sacrificed time and family to be there. My wife and I have both had to relocate for each other's work. We haven't been able to enjoy the luxury of living in the same community where we work for years.
Based on that sacrifice, we do have options on where to live. But we have not been able to stay in a neighborhood for years at a time.
With privilege comes sacrifice - something you don't acknowledge from your own ivory tower.
Have you noticed that our cities are becoming modern versions of Medieval castles? Everyone wants to live inside the castle walls, nobody wants to live outside. Seattle, San Francisco, Manhattan have enough water around them to qualify as moats. The bridges aren't drawbridges though.
1
There is no simple answer. On Long Island there have always been areas we could call the "playgrounds" of the rich. While there were always summer homes that could be served by nearby lower socioeconomic groups, the prices of all housing has risen to heights that have caused the workers to move further and further away from their potential jobs. While the owners of the properties are happy to see millions of dollars attached to their homes, they are also finding it more difficult to staff them or even get reasonably priced pool boys and lawn maintenance companies. At some point the charwomen will be making $250K because he less expensive ones can't afford to live in the neighborhood.
New York City is a world port. Affluent people from all over the world have poured their cash into a piece of the NY rock. Some of these people were highly educated others had the ability to save substantial money whether through hard work, inheritance, etc. These people wanted a safe haven for their investment. They cannot manufacture more Manhattan; when it is bought it is bought.
14
I don't see how Mayor de Blasio thinks that real estate developers are going to bail him out on his affordable housing goals. These guys, to use Donald Trump's term, are "killers", and they will outsmart him on every fine print detail. Just look at Stuyvesant Town/Peter Cooper Village. Sold (out) to hedge funder Stephen Schwarzman, who the NY Times reported pays only a 4.3% tax on profits. 20 and out! After that all the apartments are market rate. No more teachers, police, nurses or middle class tenants there. Schwarzman ain't stupid or altruistic when it comes to business.
The City should stop wasting so much money promoting itself -- a million dollars advertising a Rent Stabilization Board decision and TV commercials selling Zero Vision during the World Series -- and put up some money in partnership with HUD, the State, foundations and community housing organizations to build housing. He might not want to hear it, but during the Bloomberg Administration the City, in partnership with the People's Mutual Housing Association, built four buildings -- one on my block two on the next and one around the corner each with 30 to 40 apartments that are ALL LOW INCOME. Even today there's a City owned empty lot on my block, full of rats!
80/20 or 30/70 fine, but if de Blasio were smart that's what he would do: put up some City money and do the hard work to get Federal, State and foundation funds and work with community housing groups to build housing
The City should stop wasting so much money promoting itself -- a million dollars advertising a Rent Stabilization Board decision and TV commercials selling Zero Vision during the World Series -- and put up some money in partnership with HUD, the State, foundations and community housing organizations to build housing. He might not want to hear it, but during the Bloomberg Administration the City, in partnership with the People's Mutual Housing Association, built four buildings -- one on my block two on the next and one around the corner each with 30 to 40 apartments that are ALL LOW INCOME. Even today there's a City owned empty lot on my block, full of rats!
80/20 or 30/70 fine, but if de Blasio were smart that's what he would do: put up some City money and do the hard work to get Federal, State and foundation funds and work with community housing groups to build housing
1
Unfortunately DeBlasio has demonstrated that he is NOT very smart.
2
The solution to the lack of housing, especially in NYC, is not to build higher -- which destroys the very neighborhoods that attracted people to the city in the first place -- but to build more and better mass transit so that more areas are within (middle class) commuting distance of the center. A subway building spree like that we had 100 years ago could double the effective land area of NY. Fast commuter trains, like in Europe or Japan, could extend the half-hour commute well into the suburbs; if some of them allowed smaller lot sizes, the row house scale urban area that so many people desire today could grow exponentially. And all the more so in other cities that start with less mass transit.
192
Too bad that fast efficient trains are not politically fashionable in America, as they are abroad. What's happening lately with our stuck transportation bills in congress?
1
Public policy and tax policy favor the very rich overwhelmingly. 10 year tax exemptions for luxury development. Real estate transactions exempt from reporting meant to curb money laundering. Visas for sale for a $500,000 + real estate purchase. These policies have resulted in a flood of trillions of dollars in hot money pouring in to the New York City real estate market from China, Russia, The Middle East, Africa and Europe. What better place to park your millions? Rich girls everywhere want to live in NYC or at least visit often. It's the perfect investment because our city, state and federal policies have paved the way for those able to afford it, regardless of where the money comes from.
Welcome to New York professor. I left, you can have it.
Welcome to New York professor. I left, you can have it.
1
I was pleased that Dr. Krugman, who seldom lacks for opinions, admitted that nobody really knows why the crime rates have fallen so much. I have read several articles over the past few years that amplify on this. There are many hypotheses, but the data just doesn't fit. Obviously this is an important problem, but it is difficult to know what to fix if you don't know the true cause. Dr. Krugman shows a refreshing intellectual honesty and discipline.
1
Every city which is being run by a Democratic administration, has housing problems for people with low incomes. The Democrats' will build housing projects to contain those people, while the wealthy (mostly white) residents of the other sections of the city can roam about freely.
1
Yes, this began precisely upon de Blasio's inauguration, and not in the 20+ prior years of Republican administrations.
2
In Manhattan at least, there are two historical precedents for making land available for denser development. One is the oft-told story of the creation of the Park Avenue we take for granted that happened in two stages: the first was the effective banning of steam locomotives below 42nd Street, a ban that eliminated railroad traffic permanently. The second stage was the creation of the tunnel from 42nd to 97th street occasioned by the electrification of rail operation.
The other historical example led to the creation of the present West End Avenue from 71st to 107th Street. That was a change of the zoning law around 1916 allowing, among other things, taller buildings. That change increased the value of land under existing private houses and most of them were demolished and replaced with apartment buildings.
Both historical examples have present-day parallels: the ongoing creation of Hudson Yards bears some resemblance to the early twentieth century creation of the Park Avenue we take for granted and the now nearly finished Riverside South to, in some measure, zoning law change.
Perhaps a revival of Henry George's single tax on land combined with wholesale revision of zoning law in, almost entirely--not much more can be done in Manhattan except with 1950's/60's slum clearance/urban renewal sites--the outer boroughs should be pursued vigorously. So what if current homeowners and developers are handsomely rewarded. Isn't that how capitalism works?
The other historical example led to the creation of the present West End Avenue from 71st to 107th Street. That was a change of the zoning law around 1916 allowing, among other things, taller buildings. That change increased the value of land under existing private houses and most of them were demolished and replaced with apartment buildings.
Both historical examples have present-day parallels: the ongoing creation of Hudson Yards bears some resemblance to the early twentieth century creation of the Park Avenue we take for granted and the now nearly finished Riverside South to, in some measure, zoning law change.
Perhaps a revival of Henry George's single tax on land combined with wholesale revision of zoning law in, almost entirely--not much more can be done in Manhattan except with 1950's/60's slum clearance/urban renewal sites--the outer boroughs should be pursued vigorously. So what if current homeowners and developers are handsomely rewarded. Isn't that how capitalism works?
Worth noting that in a globalized economy, global money is affecting prices in places that are deemed significant to world culture. Hence, the perfume bottle cities are being flooded with cash from all over. New York, Paris, Hong Kong, etc.
Hidden money is soaking up NYC real estate to the detriment of the city AND the country. That is a problem that needs to be addressed in legislation. What is our national security worth when the nation itself is for sale by the square foot?
Hidden money is soaking up NYC real estate to the detriment of the city AND the country. That is a problem that needs to be addressed in legislation. What is our national security worth when the nation itself is for sale by the square foot?
1
As someone who moved from tony Princeton to Manhattan fairly recently, Professor Krugman is an exemplar of the phenomenon he decries. As someone who has lived here since the '70s, my perspective is both longer and rather different. Once, I came out to find bullet holes in my car; when I stopped a cop and showed him, he said "yup, those are bullet holes," and drove away. Now my neighborhood, rezoned by Bloomberg as a gift to his real estate mogul buddies, has been "gentrified." Here's what that means: small buildings torn down to be replaced by behemoths that throw our narrow streets into deep shadows for most of the day; local shops, many passed down for generations, pushed out by skyrocketing rents, to be replaced by sterile chains and upscale boutiques, the local hospital replaced by one of those behemoth condo buildings; even our local supermarket closed last month, unable to pay the rent. We live in a permanent construction zone, with all the noise, dirt, and danger that entails (last year a woman walking on the sidewalk was killed by flying construction debris). Coherent neighborhoods need to be at a human scale (see Jane Jacobs). They need light, air, and open space to thrive. Rezoning to pack in ever more bodies is a doomed strategy--on a small island, the ever-increasing numbers who want to be here can never be accommodated. We will fight tooth and nail to stop greedy developers, with the connivance of bought-and-paid-for politicians, from destroying all we love.
209
Krugman could move back to Jersey, true.
Keep up the fight, and remember that the greedy rich are rarely happy.
People have probably been fighting "tooth and nail" against progress since we fist moved out of caves.
1
Crime is one factor that you passed over a little too fast. Safety is a major issue for residents living in large cities. That is a big issue right now in Chicago for residents of parts of that town. Until residents feel safe from policing and crime, that should be the first priority of a city administration. If the city is too corrupt, the federal government should step in with reforms.
1
I have two charts which show pretty much the same thing. Each has two curves, and the x-axis is time running from 1946 to the present. One graphs wages vs productivity. The other, the return on capital vs the return on labor.
The charts are similar. In both the two curves move in lockstep from 1946 - 1973. Wages went up with productivity and the return on labor matched the return on capital. Starting in 1973 and increasing in about 1981, the curves diverged, Productivity grew faster than wages the the return on capital ran way from the return on labor.
If you wade thru Piketty's book you will see that what is happening is that high inequality is the usual state of capitalism. WWI and WWII destroyed a lot of capital an after WWII we had an outbreak of sanity with policies that discouraged high inequality.
But as many have pointed out, the Rich use their money to buy power and their power to get more money producing a viscous circle. So since 1973 our country is reverting back to the usual state of capitalism.
Piketty is pessimistic about our chances of stopping this, but others (e.g. Joe Stiglitz) believe if we emulate the polices of post WWII, much higher taxes on the Rich, support for unions, persistent deficit spending, strong regulation of speculation, etc,. we can again achieve prosperity.
The charts are similar. In both the two curves move in lockstep from 1946 - 1973. Wages went up with productivity and the return on labor matched the return on capital. Starting in 1973 and increasing in about 1981, the curves diverged, Productivity grew faster than wages the the return on capital ran way from the return on labor.
If you wade thru Piketty's book you will see that what is happening is that high inequality is the usual state of capitalism. WWI and WWII destroyed a lot of capital an after WWII we had an outbreak of sanity with policies that discouraged high inequality.
But as many have pointed out, the Rich use their money to buy power and their power to get more money producing a viscous circle. So since 1973 our country is reverting back to the usual state of capitalism.
Piketty is pessimistic about our chances of stopping this, but others (e.g. Joe Stiglitz) believe if we emulate the polices of post WWII, much higher taxes on the Rich, support for unions, persistent deficit spending, strong regulation of speculation, etc,. we can again achieve prosperity.
14
As the upward pressure on rents and mortgages continues in the more desirable areas more and more middle and working class Americans will find themselves living hand to mouth, in undesirable conditions and this will be called progress. We will also be told that it's our fault for not selecting more lucrative careers, not having rich parents, or living in the wrong part of the country since there are jobs everywhere. The people who say this are either unaware of the fact that salaries in less expensive parts of the country are correspondingly lower or that it's a real waste of time and money to have to travel more than 90 minutes to get to work. Given how America works, this shortage of affordable housing will be ignored until it's too late, many more people live in slums, their cars, or on the street, and someone important has a son or daughter who dies of exposure due to a lack of decent affordable housing. It's the American way. Look at what happened to sentencing people for drug abuse or selling small quantities: when it was African Americans severe punishment was seen as warranted but now that it's also white Americans more realistic solutions are on the table. Housing will be the same.
4
What we are witnessing is the universal, almost tribal, instinct of self-segregation. Perhaps we need more than just land use policies, but strict housing diversity policies--both by ethnicity and income--as they do in Singapore. The result of building our economically homogeneous gated-communities is reflected in the xenophobic policies of the super-rich like Donald Trump in making America itself into a massive gated community with the rich and the poor huddled in their own separate and unequal ghettos with the latter fearing deportation or gentrification.
2
but not as bad as Cambridge?
'The Cambridge News in the UK. “Nearly one in four of Cambridge’s ‘prime’ newly-built houses are being sold overseas. The new figures from property agents Savills have been branded ’shocking’ by the city council’s housing chief.
Other figures show the number of sales of homes worth more than £1 million has more than tripled in Cambridge over the past five years; nearly 30 per cent of buyers with Savills last year were investors, compared to just 9 per cent in 2012,
“This detailed data shows the extent to which government policies to promote home ownership as the only tenure worth having, whilst stopping us building social housing for affordable rents, is creating a vicious circle in Cambridge,’ said Cllr Kevin Price, the city council’s executive councillor for housing. ‘It’s shocking that 70 per cent of the new-build homes in some areas of the city are going to buy-to-let investors, and that almost a quarter of sales are now to overseas investors. We need the government to help us tackle this. Since investors’ pockets are deep it is not likely that this housing bubble will burst and prices fall, but that they will continue to compete and price residents out of the market.’”
'The Cambridge News in the UK. “Nearly one in four of Cambridge’s ‘prime’ newly-built houses are being sold overseas. The new figures from property agents Savills have been branded ’shocking’ by the city council’s housing chief.
Other figures show the number of sales of homes worth more than £1 million has more than tripled in Cambridge over the past five years; nearly 30 per cent of buyers with Savills last year were investors, compared to just 9 per cent in 2012,
“This detailed data shows the extent to which government policies to promote home ownership as the only tenure worth having, whilst stopping us building social housing for affordable rents, is creating a vicious circle in Cambridge,’ said Cllr Kevin Price, the city council’s executive councillor for housing. ‘It’s shocking that 70 per cent of the new-build homes in some areas of the city are going to buy-to-let investors, and that almost a quarter of sales are now to overseas investors. We need the government to help us tackle this. Since investors’ pockets are deep it is not likely that this housing bubble will burst and prices fall, but that they will continue to compete and price residents out of the market.’”
Some of the policies and agenda that you have helped create and promoted has helped to make that inequality Mr. Krugman
2
Care to share any specifics with us? For instance what policies and agenda's did Professor Krugman promote that created the inequity he pointed out in his essay?
You can find a studio in Seattle if you look hard and fast for just over $800. The average rent is over $1,800. Houses sell for a median $521,400. Lower prices than NY, but up over 10% from last yeara, expected to rise 6% in 2016, and high enough to join the problem common to attractive cities nationwide.
At least the minimum wage in Seattle will be $15 an hour. But if you get it, and work a 40 hour week, between withholdings and rent you don't have much left.
Most of the people I work with are half my age and younger. They're pushed into long commutes and creative living arrangements to make their salaries work. The young families mostly can't afford the inner city and do for economic reasons what my generation and parents' generation did for cultural or social reasons: flee to the suburbs and public transportation.
My concern isn't just the raw cost of housing for my coworkers, but the fact that in the U.S. they're left with not much, expected to save for their kids educations, raising them, their own retirements, medical costs... and float a consumer society that rises and sinks on the expenditures of the middle class.
It isn't working anymore and Conservatives promise that the safety nets will go away.
The high cost of housing isn't the only issue. Shrinking income and wealthy inequality are, too, compounded by flagging concern about any of it.
At least the minimum wage in Seattle will be $15 an hour. But if you get it, and work a 40 hour week, between withholdings and rent you don't have much left.
Most of the people I work with are half my age and younger. They're pushed into long commutes and creative living arrangements to make their salaries work. The young families mostly can't afford the inner city and do for economic reasons what my generation and parents' generation did for cultural or social reasons: flee to the suburbs and public transportation.
My concern isn't just the raw cost of housing for my coworkers, but the fact that in the U.S. they're left with not much, expected to save for their kids educations, raising them, their own retirements, medical costs... and float a consumer society that rises and sinks on the expenditures of the middle class.
It isn't working anymore and Conservatives promise that the safety nets will go away.
The high cost of housing isn't the only issue. Shrinking income and wealthy inequality are, too, compounded by flagging concern about any of it.
38
"Today our urban cores are providing ever more amenities, but largely to a very affluent minority. . . . is there any way to spread the benefits of our urban renaissance more widely?"
The most expensive homes are empty much of the time. The owners are so affluent that they have several. They have the same model car in each, which is why they have three or four of the same. Their "shoppers" buy for them multiples of their clothes to keep the same in each home, so they need not pack.
Our affluent are now so rich that they live in a different world. It isn't just the rents.
The most expensive homes are empty much of the time. The owners are so affluent that they have several. They have the same model car in each, which is why they have three or four of the same. Their "shoppers" buy for them multiples of their clothes to keep the same in each home, so they need not pack.
Our affluent are now so rich that they live in a different world. It isn't just the rents.
68
"The most expensive homes are empty much of the time. The owners are so affluent that they have several."
Reminds me of a spray-painted protest sign we saw repeatedly while traveling in Spain last year:
GENTE SIN CASA, CASAS SIN GENTE
Reminds me of a spray-painted protest sign we saw repeatedly while traveling in Spain last year:
GENTE SIN CASA, CASAS SIN GENTE
My town seems to be gentrifying, and one mechanism that drives lower-income residents out is increasing our property taxes (the increases also go on to impact rents as landlords try to recoup their costs). Not all of that is through increased valuation -- some of it through rate increases. But in any event, while building more housing could spread the burden over a larger group, my sense is that so long as new residents who can shoulder higher taxes want to spend more money on, say, schools (that's usually the reason for asking for a debt-override), taxes will continue to to go up. And price out even people who are long-time residents and who have paid off their mortgages. In fact, my town has a program for seniors on low incomes with little in savings to protect them from the property tax pressure to move, but such an approach doesn't help potential new purchasers of homes -- that group will be higher-income than before and the town will gentrify, albeit maybe more slowly.
11
The issue of affordable housing in our big cities is an arcane mix of legal, financial and political considerations. It takes getting into the details, and lots of homework to understand. From what I read, I believe Mayor De Blasio is making a good faith effort.
I also know from my own experience, that developers usually have more room for affordable housing in new projects than they will concede, and always threaten they will not build at all if the affordable housing requirements are too stringent.
But it is not just the developers. Local boards and community groups have their own interest in preserving the status quo.
Proponents of more affordable housing at more affordable rents in New York City (and elsewhere) need celebrity allies like Paul Krugman, and from the entertainment world, to keep the spotlight on the issues, and the pressure on the mayor for more units and greater affordability than he presently proposes. In other words, he needs political support from the rich and famous to help him break through the roadblocks and do more.
NYTimes.com: http://tinyurl.com/h534gf9
CityLimits.org: http://citylimits.org/?p=246624
CityLImits.org: http://citylimits.org/?p=248579
I also know from my own experience, that developers usually have more room for affordable housing in new projects than they will concede, and always threaten they will not build at all if the affordable housing requirements are too stringent.
But it is not just the developers. Local boards and community groups have their own interest in preserving the status quo.
Proponents of more affordable housing at more affordable rents in New York City (and elsewhere) need celebrity allies like Paul Krugman, and from the entertainment world, to keep the spotlight on the issues, and the pressure on the mayor for more units and greater affordability than he presently proposes. In other words, he needs political support from the rich and famous to help him break through the roadblocks and do more.
NYTimes.com: http://tinyurl.com/h534gf9
CityLimits.org: http://citylimits.org/?p=246624
CityLImits.org: http://citylimits.org/?p=248579
18
Where these is money to pay for demand, there will be supply. If there is no supply, it is because the latent demand has no money to pay for it.
Our economy does work to supply demand with ready money. If there is any lack of supply, it reflects a lack of money in hand for those who would like to be the demand. Money is not going begging. People are, and that is a problem of our economy, not our housing supply or regulations.
Our economy does work to supply demand with ready money. If there is any lack of supply, it reflects a lack of money in hand for those who would like to be the demand. Money is not going begging. People are, and that is a problem of our economy, not our housing supply or regulations.
7
While convincing the mayor would be a positive, doing so will only provide so much boost to more affordable development. The problem is that there is a fallacy among the hoi polloi that the lack of affordable housing is purely a function of greedy landlords. To their reasoning, all that's needed is to get rid of the greed. Solving the affordability crisis through development will require things like turning 3-story neighborhoods and 10-story neighborhoods and 10-story into 20- or 30-story. Even if a mayor were to be convinced that that would be necessary, he would run into opposition replying "na-na-na-na I don't hear you, just get rid of the greed!"
That said, "celebrity allies" would be similarly useful to convince the public, even if the public might take longer than any individual to be convinced.
That said, "celebrity allies" would be similarly useful to convince the public, even if the public might take longer than any individual to be convinced.
Scott,
We live in a market economy and greed is always a factor. But how much is too much? Most developers don't want to make just a profit, they want to make a KILLING! They feel they are entitled to GET RICH on every deal. I report this from direct experience.
We live in a market economy and greed is always a factor. But how much is too much? Most developers don't want to make just a profit, they want to make a KILLING! They feel they are entitled to GET RICH on every deal. I report this from direct experience.
2
Robert Reich's "And Inequality for All" does a good job of tracking the increase in housing costs nationwide in the early 2000's, and the reason for the bubble. Housing costs basically doubled across the country, and placed the prospect of owning a home far beyond the range of most young people. So it isn't just that housing costs have risen "much faster" than the costs of construction - it's that they have risen astronomically, without connection to the bricks and mortar aspect. Few won, and many lost.
The only way for those whose salaries have not kept pace with this inflation who want to live somewhere close to their work or in a desirable setting is to rent, or have a partner with income to match which allows for saving enough of a down payment over years to eventually afford something that's often lacking in several of the key features that attract people to the areas Krugman talks about.
Even here in Atlanta rents rose a hefty 15% in many apartment complexes recently in what was an unassuming moderately priced neighborhood wedged between the two desirable sections of the City. That's how it starts - build a gleaming new building a few blocks away and charge $3-4K per rent for the well to do, then the places that were charging less than half of that start to creep up exponentially, as people realize what a "deal" it is to live there.
Unless there's political will for rent control in the country, the money talks and enriches only the already wealthy.
The only way for those whose salaries have not kept pace with this inflation who want to live somewhere close to their work or in a desirable setting is to rent, or have a partner with income to match which allows for saving enough of a down payment over years to eventually afford something that's often lacking in several of the key features that attract people to the areas Krugman talks about.
Even here in Atlanta rents rose a hefty 15% in many apartment complexes recently in what was an unassuming moderately priced neighborhood wedged between the two desirable sections of the City. That's how it starts - build a gleaming new building a few blocks away and charge $3-4K per rent for the well to do, then the places that were charging less than half of that start to creep up exponentially, as people realize what a "deal" it is to live there.
Unless there's political will for rent control in the country, the money talks and enriches only the already wealthy.
40
A. it's more complex than that and B. you are incorrect.
During the housing bubble, rents did not rise remotely as fast as home values. Why? because a lot of people who would have ordinarily rented, went out and purchased homes (that they could not really afford). There was a lot of slack in the rental market (long since gone taut).
The problem with bubbles, like the one forming NOW as we speak, is that for those who own housing in desirable areas, it is like winning the Lotto. Your "investment" goes up and up, unrelated to any work you do on the property. You feel smart and justified for your purchase. And if you are fortunate enough to SELL during such a bubble (or inherit property you can sell), it is an incredible windfall of money.
Of course, for everyone else, it is is a disaster -- like young families who desperately need housing. Or anyone moving in from a less costly part of the country. But for the right people -- often already affluent -- it is an incredible benefit, and they LOVE LOVE LOVE it.
That's why even the catastrophe of just a couple of years ago has had NO EFFECT WHATSOEVER on "irrational exuberance". Because it's just so fabulous when your $400,000 condo is suddenly worth $2.5 million.
During the housing bubble, rents did not rise remotely as fast as home values. Why? because a lot of people who would have ordinarily rented, went out and purchased homes (that they could not really afford). There was a lot of slack in the rental market (long since gone taut).
The problem with bubbles, like the one forming NOW as we speak, is that for those who own housing in desirable areas, it is like winning the Lotto. Your "investment" goes up and up, unrelated to any work you do on the property. You feel smart and justified for your purchase. And if you are fortunate enough to SELL during such a bubble (or inherit property you can sell), it is an incredible windfall of money.
Of course, for everyone else, it is is a disaster -- like young families who desperately need housing. Or anyone moving in from a less costly part of the country. But for the right people -- often already affluent -- it is an incredible benefit, and they LOVE LOVE LOVE it.
That's why even the catastrophe of just a couple of years ago has had NO EFFECT WHATSOEVER on "irrational exuberance". Because it's just so fabulous when your $400,000 condo is suddenly worth $2.5 million.
1
Krugman gets this one absolutely right. I'm surprised that several commentors are still offering up the notion of rent control as a solution. Price controls always cause more problems than they solve by distorting the market. The soaring rental rates are a direct reflection of increased demand – artificially mandating lower rents are a disincentive for building more units; currently controlled properties can't generate adequate income to support upkeep and buildings fall into disrepair; and shortages of housing are exacerbated.
We have seen examples of this time and time again - can't we learn?
We have seen examples of this time and time again - can't we learn?
Paul Krugman is wrong on two counts. First, increasing the supply of housing does not generally drive prices down in gentrifying areas. Only when there is real oversupply will prices budge downward, and even then, the adjustment just means that high prices drop slightly, not that housing becomes affordable for the majority. Second, gentrification is not due to excessive regulation but to a lack of regulation. Displacement happens when rents are not controlled and current tenants are priced out of the market (yes, rent control creates its own problems, but it does slow down gentrification) and when developers convert affordable units into high-end ones or tear down older buildings to erect new ones. The new housing can be affordable only if it subsidized or if developers are forced to include low-cost units in their projects. That, too, is regulation.
Gentrification is very hard to avoid in a market economy. But it can be managed somewhat by government intervention. In addition, governments can ensure that non-gentrifying neighborhoods, too, offer a good quality of life to their residents so that people pushed out of their old neighborhood still have a decent place to live.
Gentrification is very hard to avoid in a market economy. But it can be managed somewhat by government intervention. In addition, governments can ensure that non-gentrifying neighborhoods, too, offer a good quality of life to their residents so that people pushed out of their old neighborhood still have a decent place to live.
57
Your theory is interesting, but I think it is wrong. In NYC, different rules apply. Your theory might be true in other cities, but in NYC, you have a vast influx of very rich people from OTHER COUNTRIES who are distorting the market. What is a very costly apartment to almost anyone in the US, is relatively affordable to (say) a multi-millionaire industrialist from Hong Kong, whose wife wants a pied a terre in the most fashionable part of town so she can go shopping. Or a Russian billionaire oligarch.
No American with a job (even a very lux job) can really compete with kind of vast money that is being parked in NYC....and even worse, parked in buildings that are empty most of the year.
So the solution is glaringly obvious. Impose huge taxes on unoccupied residences. Eliminate (or heavily tax) foreigners from buying real estate -- other nations do this. Put limits on builders, so they don't just have to produce a few low income units, but must build equal amounts of low income BUILDINGS.
And eliminate all rent controls and rent stabilization. It had a good intent, 75 years ago, but today it is pure nonsense and hopelessly abused. Most people receiving subsidies do not deserve them, or are single elderly folks hogging large apartments while middle class families have nowhere to live. Or actually have retired to Florida, but keep their cheap rent-controlled apartment in NYC for "visits".
Oh -- and get rid of AirBnB. It's destroying the rental market.
No American with a job (even a very lux job) can really compete with kind of vast money that is being parked in NYC....and even worse, parked in buildings that are empty most of the year.
So the solution is glaringly obvious. Impose huge taxes on unoccupied residences. Eliminate (or heavily tax) foreigners from buying real estate -- other nations do this. Put limits on builders, so they don't just have to produce a few low income units, but must build equal amounts of low income BUILDINGS.
And eliminate all rent controls and rent stabilization. It had a good intent, 75 years ago, but today it is pure nonsense and hopelessly abused. Most people receiving subsidies do not deserve them, or are single elderly folks hogging large apartments while middle class families have nowhere to live. Or actually have retired to Florida, but keep their cheap rent-controlled apartment in NYC for "visits".
Oh -- and get rid of AirBnB. It's destroying the rental market.
Your response seems a little confused here. First you say that increasing the supply of housing won't lower prices but then immediately follow by saying that an oversupply will drive down prices. How exactly do you get an oversupply without increasing supply? The only other way I guess would be to reduce demand, which means pushing people out of cities?
You also seem confused about what gentrification is and what the issue in this article is. As Krugman notes, gentrification (more people wanting to live in urban places) is a good thing. The problem is that if the supply of available housing is restricted by regulation, the increased demand from the new arrivals will increase the price of housing. You mention that "rent control creates its own problems" but actually the problem with rent control is that it doesn't solve the problem of supply, i.e. it's not actually a solution to this issue.
Enfranchising more neighborhoods with better amenities and access as you say, will provide more options for people to live, just as building more units in existing centers would. The key is more supply of suitable and desirable places to live.
You also seem confused about what gentrification is and what the issue in this article is. As Krugman notes, gentrification (more people wanting to live in urban places) is a good thing. The problem is that if the supply of available housing is restricted by regulation, the increased demand from the new arrivals will increase the price of housing. You mention that "rent control creates its own problems" but actually the problem with rent control is that it doesn't solve the problem of supply, i.e. it's not actually a solution to this issue.
Enfranchising more neighborhoods with better amenities and access as you say, will provide more options for people to live, just as building more units in existing centers would. The key is more supply of suitable and desirable places to live.
Where ever will they get their maids, chauffeurs and nannies? Many of the service people that I have come across in Rhode Island where I live, have decamped from New York. They cannot afford to live there and the remaining "affordable' neighborhoods" have Jonathan Kozol style rat infested schools. They are sensibly refusing to bring up their children in the not so plummy remaining and dangerous Sowetos allowed them.
Where can these people commute from then- Westchester county?
Where can these people commute from then- Westchester county?
18
Maids' quarters. Live in work. It is increasing. Conditions are generally rather abusive too, as to hours and working conditions and family.
8
First off -- Dr. Krugman clearly says "the top 10% in income". That starts at a whopping...$150,000 a year. I don't think many New Yorkers at that level have live-in servants, or private chauffeurs.
To remotely have those things, you'd have to be in the top 0.5%, or over $500,000 in income. And while that is rich, it is not the kind of staggering rich you may imagine. I'm not even sure at THAT level you could have a private chauffeur on staff, 24/7, to drive you around. That's because of just how unbelievably costly housing is in NYC: that $500K executive would have to spend well over $1 million just to have a nice (but not lavish) 2 bedroom condo or co-op apartment.
So once again, you are talking about the 0.01% -- the top of the top, billionaires. And while they might lead nauseatingly luxurious lifestyles, while the rest of us sweat -- there are just not that many of them.
Lastly: you think the maids and nannies have left to go live in Rhode Island? That's laughable. What about upstate NY? the outer boroughs? New Jersey?
To remotely have those things, you'd have to be in the top 0.5%, or over $500,000 in income. And while that is rich, it is not the kind of staggering rich you may imagine. I'm not even sure at THAT level you could have a private chauffeur on staff, 24/7, to drive you around. That's because of just how unbelievably costly housing is in NYC: that $500K executive would have to spend well over $1 million just to have a nice (but not lavish) 2 bedroom condo or co-op apartment.
So once again, you are talking about the 0.01% -- the top of the top, billionaires. And while they might lead nauseatingly luxurious lifestyles, while the rest of us sweat -- there are just not that many of them.
Lastly: you think the maids and nannies have left to go live in Rhode Island? That's laughable. What about upstate NY? the outer boroughs? New Jersey?
2
Sharon, we are automating at an amazing clip. Robot nannies (nurses are here, nannies can't be far behind), Google cars that drive themselves. Who needs a maid when you've got the latest roomba deluxe? People are becoming supremely unnecessary.
1
I wonder about whether the new affluent urban dwellers appreciate the risks that they are taking, no longer risks from crime but rather from infrastructure failures. Urban infrastructures (from transport to water to power to food) that support city living are in trouble. Concentrating people in these environments, albeit wealthy people who can pay for what they need and want, will complicate disasters to come. The supply chains that deliver necessary stuff are now pushed to their limits (owing to years of neglect), if compromised then we will see some real bad outcomes, quickly.
13
Now that will be interesting to watch. All those wealthy people trying to deal with a disaster and very few middle class people who are the ones who would be their saviors unable to access the city.
1
If we didn't learn anything from Hurricane Sandy, more fools us.
1
Unlimited building is a straight up recipe for urban sprawl, even if the sprawl is straight up.
Rent controls (with options to purchase) is probably the only way to allow people of moderate or low income ( ahem, like artists, performers, craftsmen & small business people), to stay in the city, providing the very richness of life that everyone desperately needs and craves.
The idea of making the city a realistic affordable alternative for newcomers of modest means, simply defies credulity - unless one is willing to tackle head on the concept of market rents.
The notion of average people being crowding out of the city, and current discussions of immigration in the US & Europe, as well as the climate change conference in Paris, brings to mind not so much "Escape from New York" as "Soylent Green".
There's just too many people, and we are too wasteful with the space and resources we have.
We are part of a larger global ecosystem, and our pattern of unlimited consumption, terre-forming our own planet to serve only the perceived needs of our small brained not very bright human species, while decimating the web of life around us and upon which we inevitably depend, brings to mind a snake eating its own tail.
And welcome to the city Prof Krugman, see you on the subway!
Rent controls (with options to purchase) is probably the only way to allow people of moderate or low income ( ahem, like artists, performers, craftsmen & small business people), to stay in the city, providing the very richness of life that everyone desperately needs and craves.
The idea of making the city a realistic affordable alternative for newcomers of modest means, simply defies credulity - unless one is willing to tackle head on the concept of market rents.
The notion of average people being crowding out of the city, and current discussions of immigration in the US & Europe, as well as the climate change conference in Paris, brings to mind not so much "Escape from New York" as "Soylent Green".
There's just too many people, and we are too wasteful with the space and resources we have.
We are part of a larger global ecosystem, and our pattern of unlimited consumption, terre-forming our own planet to serve only the perceived needs of our small brained not very bright human species, while decimating the web of life around us and upon which we inevitably depend, brings to mind a snake eating its own tail.
And welcome to the city Prof Krugman, see you on the subway!
11
The explanation is about quality time available for personal activities. You missed a big plus about high rise living. No yard work!
8
The people who move into gentrified city cores do not do yard work. Gardeners do.
3
Contrary to what your esteemed colleague Edward Glaeser is telling you, it is not necessary to build dramatically "upwards" to cope with the affordable housing crisis in NYC. Turns out, it is possible to have a human-scaled city AND to build additional housing! Who knew? Certainly not Mr. Glaeser whose anti-regulatory biases are well known and whose work ignores the possibility that zoning and regulation can actually work in the public interest to cope with widespread market failure and unpriced externalities in real estate production. Also, and sorry to be so direct about it, but white male economists should not unite together so cavalierly and unthoughtfully, it makes the discipline look insular and lost in arid model-making that does not translate well into the real world.
16
How much of the reason that building doesn't keep up with demand in NYC is rent regulation? Huge numbers of apartments in the city are basically tenantments which should have been demolished long ago and replaced with bigger better and yes, taller buildings. But laws which give renters lifetime leases and sometimes the ability to pass them to futures generations make this far too expensive so only luxury apartments get built. I wish Dr Krugman would speak to this issue.
15
A subset of the elite are those who have or inherited extremely low cost subsidized apartments. I often read here such people BRAGGING about their good fortune (but also insisting it continue for all eternity). It must be incredibly sweet to get to rent a huge Pre War apartment, and pay 1970 rents on it! Of course, it is a very few people. Amazingly, many of them are quite well to do, and they pass these apartments along to their heirs. So they almost never return to the "pool" of available rentals.
I have read that 50% of all apartments in NYC are either rent controlled or rent-stabilized -- that is a LOT of apartments. DO THE MATH.
I have read that 50% of all apartments in NYC are either rent controlled or rent-stabilized -- that is a LOT of apartments. DO THE MATH.
1
All the wealth in the hands of a few, who control all the money in the really nice areas while the other 99% live and work for their masters. You could use many South American countries as an example. It's the same here is what you're saying. You don't have to be Marx to figure it out; they'll always be rich getting richer and poor getting poorer until the poor are pushed too far and revolt.
This repeats and always will and nothing can stop it; there will always be a Darth Vader and an empire, always be a rebel force fighting for a control of a little bigger piece of the pie.
You say you just moved to New York? And that you now realize that the rich have created playgrounds for themselves in big cities all over the US? Playgrounds that we are kept out of. (You can't even afford a Broadway show ticket.)
Until people stand up for themselves they deserve what they get. Let them struggle daily so they can live in the city. If you're not in New York then you're nothing is their mantra. Meanwhile the rich have bought how much empty Manhattan real estate that they never live in? ("Get the Connecticut house ready, we'll be there for March.")
This repeats and always will and nothing can stop it; there will always be a Darth Vader and an empire, always be a rebel force fighting for a control of a little bigger piece of the pie.
You say you just moved to New York? And that you now realize that the rich have created playgrounds for themselves in big cities all over the US? Playgrounds that we are kept out of. (You can't even afford a Broadway show ticket.)
Until people stand up for themselves they deserve what they get. Let them struggle daily so they can live in the city. If you're not in New York then you're nothing is their mantra. Meanwhile the rich have bought how much empty Manhattan real estate that they never live in? ("Get the Connecticut house ready, we'll be there for March.")
26
That is the Chinese you're thinking of, buying real estate from NYC to Vancouver to hide their money and establish a safe residence for when China's house of cards comes tumbling down.
2
I personally hope that more elitists move to NYC because it removes them from other areas. There is the northeast elite like Krugman, and then the rest of the country until you get to LA and SF, where the surrealistic also live. I find them repugnant, self centered, and phonies. My retort to Krugman is, nobody cares about these self centered rich and we don't even want to hear about them.
8
The Oil States' Elite are so much better than the Northeast and California Elite?
21
Jim, honey, the article wasn't a lament for the elitists, but an examination of the lack of affordable housing for the non-elites. Reading comprehension not being taught so much in Houston schools? Texas has a boat-load (or should we say oil-tanker load) of energy and financial industry elitists. Take a gander. They're there. They're the ones with the $5K hand-tooled cowboy boots and custom suits.
38
James, So, if you don't want to hear about NYC, why do you read the New York Times?
7
You want more building in NYC?
Better to make preparations for the eventual move to higher ground that will be necessary.
Better to make preparations for the eventual move to higher ground that will be necessary.
20
Actually there will be docks on the third floor. Back to the Catskills.
2
The nationwide drop in crime rates experienced since the mid-90's to present does indeed have an explanation.
With the Supreme Court rulings of the 60's and 70's that struck down laws limiting Americans access to effective contraception and abortion services, a generation of children born to individuals with no means to care for them and no idea how to raise them, never came to be born. Fewer children born into abusive, neglectful, poverty-stricken circumstances 20 and 30 years ago means lower violent crime rates today.
In terms of their social effect, these are the most far reaching and beneficial judicial decisions since the Court ordered the end of segregation in the US. Interesting(baffling) that one of our major parties has made it a platform plank to reverse this trend.
With the Supreme Court rulings of the 60's and 70's that struck down laws limiting Americans access to effective contraception and abortion services, a generation of children born to individuals with no means to care for them and no idea how to raise them, never came to be born. Fewer children born into abusive, neglectful, poverty-stricken circumstances 20 and 30 years ago means lower violent crime rates today.
In terms of their social effect, these are the most far reaching and beneficial judicial decisions since the Court ordered the end of segregation in the US. Interesting(baffling) that one of our major parties has made it a platform plank to reverse this trend.
48
Freakonomic but true. No one should be forced to raise a child they don't want. Children are not punishment from god, but a natural consequence of a natural drive, on the part of TWO people, not just the mother. Contraception should be dumped in the water supply so that you have to go purchase the antidote to have children.
Wow! How amazing to find such a comment! You may also have statistics. Please publish a link. The truth of this rings like a bell, but many will not take it seriously.
One very clear difference between 2015 and even 15 years ago is that there is comparably government-subsidized housing for working-class people being built. (All of the luxury housing gets tax subsidies from the state and federal governments.)
I'm actually a bit shocked that you haven't mentioned this, but it's a crucial missing element to the housing crisis many middle class, working-class and poor people are facing. The list to get an affordable apartment in NYC, to take one example, steadily grows, yet the supply can hardly keep pace. And these "affordable" apartments are still out of reach for many families, leading, as a recent article I read, to what amounts to racial and ethnic cleansing of neighborhoods in Brooklyn, Manhattan, etc.
As affluent whites in particular move in, poorer people of all races, including poorer whites, are forced out. Yet there's no real government policy response to this; in NYC even the "liberal" mayor is beholden to the real estate industry, and the federal government is in the thrall of neoliberalism, so the "market" and private forces are given free rein.
As a result our unaffordable housing and homeless crises are tragedies we could easily address, but the missing link of government-subsidized housing that will not ultimately to turned into yet another commodity to be owned and sold by rich people, has to be part of the mix.
I'm actually a bit shocked that you haven't mentioned this, but it's a crucial missing element to the housing crisis many middle class, working-class and poor people are facing. The list to get an affordable apartment in NYC, to take one example, steadily grows, yet the supply can hardly keep pace. And these "affordable" apartments are still out of reach for many families, leading, as a recent article I read, to what amounts to racial and ethnic cleansing of neighborhoods in Brooklyn, Manhattan, etc.
As affluent whites in particular move in, poorer people of all races, including poorer whites, are forced out. Yet there's no real government policy response to this; in NYC even the "liberal" mayor is beholden to the real estate industry, and the federal government is in the thrall of neoliberalism, so the "market" and private forces are given free rein.
As a result our unaffordable housing and homeless crises are tragedies we could easily address, but the missing link of government-subsidized housing that will not ultimately to turned into yet another commodity to be owned and sold by rich people, has to be part of the mix.
21
Gentrification of US cities has been going on for at least 25 years much of it driven by urban regeneration projects like the inner harbor in Baltimore and the South Street development in NYC. And it's definitely the 10% not the 1% although the latter do tend to push up prices down the chain. Freeing up more land for development wouldn't do any harm but the increase in supply of homes is going to be fairly marginal and probably wouldn't make a huge difference to the real estate market. Economics usually trumps (oops) in the end.
6
Though it is commonly thought that living in the suburbs would be better for the poor than living in the "ghetto," that is often not the case. The poor and nearly poor often suffer real loss in moving away from the communities where they grew-up; places where they were close to friends, family, and long time neighbors. Additionally, the burbs are difficult for folks who do not have or cannot afford to drive cars. Public transportation is less available so getting and keeping a job is hard as is buying groceries or getting to doctors. Buses may not run at all on Sundays so getting to church is difficult.
Back in the 1960s black leaders sometimes referred to what was then called "urban renewal" as "n***** removal" for the way that it drove out black residents rather than improving the neighborhood for them. Urban areas are expensive; the well-to-do may enjoy their enclaves of privilege at the city core, but with diversity comes richness and vitality no city can thrive without. While most of us will never afford to live downtown (just fine with me), we must have affordable housing conveniently located so that folks at all income levels can interact and thrive individually and as community.
Back in the 1960s black leaders sometimes referred to what was then called "urban renewal" as "n***** removal" for the way that it drove out black residents rather than improving the neighborhood for them. Urban areas are expensive; the well-to-do may enjoy their enclaves of privilege at the city core, but with diversity comes richness and vitality no city can thrive without. While most of us will never afford to live downtown (just fine with me), we must have affordable housing conveniently located so that folks at all income levels can interact and thrive individually and as community.
65
The problem with your theory is that if you can't manage to drive a car, because of age or disability, you also won't be able to walk for 10 blocks, or stand in the cold for an hour waiting for a city bus -- or climb up steep bus stairs. Or down wet, icy stairs into a subway.
"The suburbs" are not all the same. An older inner ring suburb or "trolly car" suburb is not the same as a semi-rural suburb that is all bedroom community with no social services or amenities. Some suburbs are much cheaper than the urban "hipster" areas -- but in other cities, downtown is a rotting core of poverty and the only decent housing IS in the suburbs.
No two cities are the same. Don't assume what is the norm in Chicago is true in NYC or LA -- or Dayton, Ohio -- or Bangor, Maine -- or Augusta, Georgia.
"The suburbs" are not all the same. An older inner ring suburb or "trolly car" suburb is not the same as a semi-rural suburb that is all bedroom community with no social services or amenities. Some suburbs are much cheaper than the urban "hipster" areas -- but in other cities, downtown is a rotting core of poverty and the only decent housing IS in the suburbs.
No two cities are the same. Don't assume what is the norm in Chicago is true in NYC or LA -- or Dayton, Ohio -- or Bangor, Maine -- or Augusta, Georgia.
1
'...The poor and nearly poor often suffer real loss in moving away from the communities where they grew-up...'
But the middle class, the people who pay the bills, do not?
But the middle class, the people who pay the bills, do not?
1
and as there are graphs about how much damage austerity does to an economy where is the graph about the damage of rising housing costs?
Supposedly housing costs are the biggest expense in everybodies life and it used to be -(in the seventies?) that the average American spent 1/3 of her or his total income for housing.
How much is it now?
And as a lot of economists (still) measure the success of economies in GDP growth - how does it look like if you compare it with the growth in housing costs-
Is it true that compared to the 70th the average New Yorker -(or Californian) now spends 20 to 30 percent more of her or his total income for 'housing'?
And how could a graph look like if this fact is compared to countries where governments -(or housing policies) made sure that the citizen still enjoy housing for about 30 percent of their total income.
Supposedly housing costs are the biggest expense in everybodies life and it used to be -(in the seventies?) that the average American spent 1/3 of her or his total income for housing.
How much is it now?
And as a lot of economists (still) measure the success of economies in GDP growth - how does it look like if you compare it with the growth in housing costs-
Is it true that compared to the 70th the average New Yorker -(or Californian) now spends 20 to 30 percent more of her or his total income for 'housing'?
And how could a graph look like if this fact is compared to countries where governments -(or housing policies) made sure that the citizen still enjoy housing for about 30 percent of their total income.
18
Decline in crime, and " the truth is that nobody really knows why that happened."
Get real Professor Krugman. We got rid of high crime Dinkins, and elected Giuliani who cleaned the streets of predators.
Get real Professor Krugman. We got rid of high crime Dinkins, and elected Giuliani who cleaned the streets of predators.
19
@whome
NYC
Er...the decline in crime has been nationwide. If Giuliani was elected mayor of every city in the US he must have been a remarkable fellow.
NYC
Er...the decline in crime has been nationwide. If Giuliani was elected mayor of every city in the US he must have been a remarkable fellow.
34
Maybe it's you who should "get real." Cities that too the opposite approach also experienced drop in the crime rates.
12
Except that crime dropped decisively throughout the country -- without that scourge of the homeless, sworn enemy of squeegee men and official NYC censor of museum paintings, Rudy Guiliani, . It's also amusing to recall Rudy's appointment of his campaign driver, Bernard Kerik (and subsequent felon), to the position of police commissioner. So much for tough on crime....
Explanations from the drop in crime have included everything from abortion to reduced lead in gasoline. In a word, nobody really knows, but either is more plausible explanation than claiming that Rudy did it.
Somebody ought to get real, but it's not Krugman.
Explanations from the drop in crime have included everything from abortion to reduced lead in gasoline. In a word, nobody really knows, but either is more plausible explanation than claiming that Rudy did it.
Somebody ought to get real, but it's not Krugman.
1
Mr. Krugman surely knows that gentrification is only a problem in a select few large cities in the United States. For every city gentrifying there is another city dying, many of them secondary or post industrial cities. By focusing analsyis on cities like New York, Boston and San Francisco - we risk overlooking the possibilities for revitalizing nearby gateway cities like Newark, NJ or Springfield, MA. I'd like to hear more about those cities - where income inequality is less of a problem because the majority of the people have very low incomes. Rather than wasting resources building more housing in major cities - doesn't Mr. Krugman know of a way to engage businesses and use existing infrastructure and housing in these second tier cities?
123
PJ, You miss the point that cities need service workers to function. And these workers need housing. Unless we all expect to give up every service element of our economy, we need to figure out how to cost effectively provide housing for the service workers in our major cities.
You cannot practically commute to Boston to work from Springfield.
You cannot practically commute to Boston to work from Springfield.
2
The NYS governor has the right idea in giving tax incentives to business that creates employment in upstate declining cities.
3
There is a way - the market itself solves this problem: When the core cities become so expensive, neighbouring formerly depressed areas start to become desirable. Here in Berkeley CA and neighbouring Oakland / Alameda, there has been a resurgence of urban vitality as San Francisco becomes more and more expensive. Long-shuttered storefronts get opened up, more and varied restaurants start up, and trash-strewn, empty lots are sprouting new apartment buildings. The media never stops lamenting about prices in San Francisco - a city that was expensive 20 years ago when I moved out - but 10 minutes away across the bridge, rents are still a fraction, and opportunities are boundless.
Who would have guessed a couple of decades ago that parts of Brooklyn would be more desireable than Manhattan? The rental prices reflect that, and are an indication of where people choose to live and what they value.
Who would have guessed a couple of decades ago that parts of Brooklyn would be more desireable than Manhattan? The rental prices reflect that, and are an indication of where people choose to live and what they value.
3
My I propose that Paul Krugman and Edward Glaeser join forces to educate people on this issue. Obviously, both professors are on opposite sides of the political field, but both agree that the "rent is too darn high" and both point out that excessive land-use regulations are to blame.
6
Right - rent controls merely reduce the City's Real Estate tax, the only income that is truly available to the city without restrictions. The housing shortage that will never go away is due to land use restrictions.
i am not familiar with NYC regulations but i am in other areas and i see not over regulation of land use but the wrong regulations and overlapping and inconsistencies. Also over zealous boards that are quite independent can be quite onerous. For example conservation commissions.
6
Every article in the NYT focuses on the problem of keeping the family making 30k a year in Manhattan. But what about the middle class family who is trying desperately to get by on 60k a year? The middle class is just as frozen out of urban centers as the poor are, but we have no advocates. We are the paralegals, nurses, teachers and other lower level professionals who work in the cities because our jobs force us to, but we cannot afford to live there.
We're "wealthy" enough not to be eligible for the so-called "affordable" housing that gets proposed from time to time, we're "wealthy" enough to pay full freight in taxes to subsidize the poor who are eligible (who pay no taxes at all) for such housing - but we are far too poor to afford market rents. The fast food worker can live outside of Manhattan and still work in fast food - there is a McDonalds in literally every suburb in the country. But the lower level clerk at the downtown lawfirm? There's only a few places he can work, most of them in urban centers. Where are his advocates?
The truth is, nobody cares about housing for the striving middle class. Interest group/race-based politics keeps the focus of affordable housing on the very poor. Those who simply work hard and strive to improve their lot in life are just lost in the shuffle. Why? Because there is no racial component to middle class striving, we do not have a grievance against the world that can be assuaged by writing an opinion piece.
We're "wealthy" enough not to be eligible for the so-called "affordable" housing that gets proposed from time to time, we're "wealthy" enough to pay full freight in taxes to subsidize the poor who are eligible (who pay no taxes at all) for such housing - but we are far too poor to afford market rents. The fast food worker can live outside of Manhattan and still work in fast food - there is a McDonalds in literally every suburb in the country. But the lower level clerk at the downtown lawfirm? There's only a few places he can work, most of them in urban centers. Where are his advocates?
The truth is, nobody cares about housing for the striving middle class. Interest group/race-based politics keeps the focus of affordable housing on the very poor. Those who simply work hard and strive to improve their lot in life are just lost in the shuffle. Why? Because there is no racial component to middle class striving, we do not have a grievance against the world that can be assuaged by writing an opinion piece.
262
Affordable housing means housing for working people -- nurses, bus drivers, teachers, bank tellers, etc. Krugman did not say ONE WORD to exclude working people. He is talking about the MAJORITY of people.
1
A city that cannot house its own teachers is doomed. Wait a few years for teacher shortages in New York.
1
...and that in a nutshell is why Trump and his fellow travelers are so popular.
2
Of course living in New York City for me would impossible for me today as I have no savings, earn a small amount from independent work, with the remainder of my income from Social Security. However, rents and the cost of housing are rising everywhere. In Vermont for example, rents in Burlington, the largest city, are close to about $1500 for a two-bedroom apartment, in Huntington where I live, about $1500 for a one-bedroom. And the demand for this rental housing is very high. Given that the average income in Vermont is $53,162 that would mean that to afford those kinds of rent a person would have to earn $72K per year or $20K over the average income for a Vermonter if one is to follow the formula of rent being one-fourth of one's income. Hardly anyone I know uses that formula. Currently the average income of residents of New York City is a bit more, somewhere between $58K and $68K. Average rent for a one-bedroom apartment in New York City is $3250. While the top 10% of earners in New York can afford this, I think, the vast majority cannot. Short of revolution, what can be done? Very little, alas. Income inequality is the name of the game, and pity the poor and middle class.
29
What you are paying for is Vermont property tax. It is very high, and the landlords have no choice but to pass it through to the tenants.
7
Jordan, who told you not to save anything for retirement??? If you are on SS, you are at least 65, or a baby boomer. You had countless opportunities to BUY a home over the past 3 decades. If you had, you'd be "locked in" with a fixed rate mortgage and a payment that would be mostly the same year after year. Indeed, by 65, it is more likely you'd have a PAID UP house, that you could live in -- or sell (and keep the profits, tax free) -- or rent out, while you live somewhere more affordable.
It is folly for seniors (let alone a senior on a fixed income with no savings!) to think they can live in a pricey area where younger working people drive them out by bidding up housing costs (and food, taxes, entertainment, etc.).
There are about a zillion other places you could be living, that would be far more affordable -- and a lot of those in warm climates much kinder to an aging body. Think about it. Think hard.
It is folly for seniors (let alone a senior on a fixed income with no savings!) to think they can live in a pricey area where younger working people drive them out by bidding up housing costs (and food, taxes, entertainment, etc.).
There are about a zillion other places you could be living, that would be far more affordable -- and a lot of those in warm climates much kinder to an aging body. Think about it. Think hard.
2
"land use restrictions are in the way."
Those land use restrictions are what keep those neighborhoods from becoming a builder free-for-all and maintain a semblance of neighborhood character for the people that live there.
Even our liberal mayor Mr. DeBlasio is having trouble trying to cram his ideas of much higher and denser buildings into neighborhoods around the city, even though we all realize we have an affordability problem.
Really Mr. Krugman, please stick to Economics and not city planning. We don't need another do-gooder that will destroy our quality of life in the name of progress and equality, when what you are proposing brings neither.
Those land use restrictions are what keep those neighborhoods from becoming a builder free-for-all and maintain a semblance of neighborhood character for the people that live there.
Even our liberal mayor Mr. DeBlasio is having trouble trying to cram his ideas of much higher and denser buildings into neighborhoods around the city, even though we all realize we have an affordability problem.
Really Mr. Krugman, please stick to Economics and not city planning. We don't need another do-gooder that will destroy our quality of life in the name of progress and equality, when what you are proposing brings neither.
14
The atttiude expressed here seems to be: "I'm doing great and I don't care about those who aren't."
5
So you're fine with super high rents. What do you mean by "quality of life"? What do you mean by "semblance of neighborhood character"? I suspect you don't want to mix with whom you consider to be lower class? And even that is probably a euphemism. This article begins with a description of how the city is becoming richer and whiter. You admit to an affordability problem. What's your solution? Sounds like you just want everyone to move out and leave the city for you and your friends to enjoy. (BANANA) Build Absolutely Nothing Anywhere Near Anyone
There is a building boom in New York City, and for years it has included ultra-luxe units, with larger apartments that house fewer people, massive amounts of amenity and unused (huge lobbies) space. I don't recall seeing any building, in fact, erected for 'normal' people. That is, buildings such as Mitchell Lama of yore. Until builders are compelled to build for people making less than 250k a year, the housing situation will get worse for all of us. Stop blaming gentrification for displacing the poor. Start blaming rapacious greed of real estate developers. Then let's do something to fix the situation.
90
Developers are going off the charts everywhere. Destroying neighborhoods and neighbors. Getting big tax breaks to add to the profits and once the tax breaks end the developers move on to conquer YOUR neighborhood and leaving their last conquest to rot. They remind me of spoiled kids who leave a trail of broken and abandoned toys behind them.
1
"Until builders are compelled to build for people making less than 250k a year, the housing situation will get worse for all of us."
I wonder how many sub-250k a year folks adorn the good Professor's NYC building. I don't know, but could guess.
And, therein, lies your problem..
I wonder how many sub-250k a year folks adorn the good Professor's NYC building. I don't know, but could guess.
And, therein, lies your problem..
I was raised in the South Bronx a few blocks away from the Yankee Stadium, went to college at Columbia on the edge of Harlem, and have lived most of the following years in San Francisco with short stays of a few years in Boston, Minneapolis and Winnipeg. I watched the Bronx burn down, and gentrification transform San Francisco and Bushwick.
Throughout I have been both active management of low income housing in California and consulting and management in low income real estate (and a successful software startup).
The main lesson I take from these six decades of urban experience is that income inequality is the main driver of housing scarcity. The only presidential candidate who has a clue is Bernie Sanders.
To see great ideas go to YouTube and watch Comedy Party Platform (2 min 9 sec). Send a buck to Bernie, invite me to speak to your group, and order your free copy of the Platform via alibris.com. Thanks.
Throughout I have been both active management of low income housing in California and consulting and management in low income real estate (and a successful software startup).
The main lesson I take from these six decades of urban experience is that income inequality is the main driver of housing scarcity. The only presidential candidate who has a clue is Bernie Sanders.
To see great ideas go to YouTube and watch Comedy Party Platform (2 min 9 sec). Send a buck to Bernie, invite me to speak to your group, and order your free copy of the Platform via alibris.com. Thanks.
27
Not just housing policy, but urban planning that addresses transportation issues for all who conmute. Unplanned development generates inefficiencies and eyesores. But, of course, the developers and anti regulatory hard liners will rail against it .
7
This goes on even here in Iowa. I use the phrase "is it need or greed". They don`t see the big picture, they see big profits and use tax breaks to add to the profits. Like a homewrecker enticing your spouse away, once the glow of conquest wears off you can find the enticed spouse abandoned in some seedy motel, used and abused.
We are in a punitive feedback loop. Cultural dead zones are getting worse, pushing culture vultures to fewer places, driving up the local supply and demand. This is similar to the wildlife devastation brought on by habitat destruction : ironically it's easier than ever to see orangutans since their habitat is shrinking.
The solution is to make " more new yorks ". Before the ny chauvinists giggle, we need to figure out how to make more nice places to live in a great urban world. Too bad that most of America does not want that.
The solution is to make " more new yorks ". Before the ny chauvinists giggle, we need to figure out how to make more nice places to live in a great urban world. Too bad that most of America does not want that.
18
And don't forget the rich folks from other countries. It is crazy, all the land speculation on our coasts, as outlined in NYT itself. For example; China had a big bubble, ruining many middle class Chinese, and investment risky. For them, regulations make buildings safer, mortgages secure. The schools are better here, and the women less discriminated against, daughters free to excel. Why wouldn't people want to invest here, maybe move their families here for safety, if they live in Putin's Soviet Union? If you have a certain amount of money, even getting residency is relatively easy. College students in deluxe penthouse apartments. And with so much income, bidding wars are a snap.
10
In the wake of the financial crisis, can we really say "the crime rate is down"? I'll grant you that street crime is lower but in the words of Woody Guthrie:
"Yes, as through this world I've wandered
I've seen lots of funny men
Some will rob you with a six-gun
And some with a fountain pen"
Then again, if the Kochs and their ilk succeed there will be no such thing as "white collar crime" anymore. That ought to send real estate prices, particularly in Florida and Texas, but also Manhattan, through the roof. "Mens rea for me-a, but not for thee-a..."
"Yes, as through this world I've wandered
I've seen lots of funny men
Some will rob you with a six-gun
And some with a fountain pen"
Then again, if the Kochs and their ilk succeed there will be no such thing as "white collar crime" anymore. That ought to send real estate prices, particularly in Florida and Texas, but also Manhattan, through the roof. "Mens rea for me-a, but not for thee-a..."
25
I promise you this might be the craziest idea you read today................
I vividly recall driving on the Cross Bronx expressway westbound under an apartment building to get to the George Washington Bridge ( you know, Christie's bridge ). Why not build between buildings over city streets? It's really not too far fetched, after all, they do build Subways under the avenues, don't they?
Addressing the specifically noted problem of Towns regulating out new residents; that's a job for the next government up the ladder to outlaw discrimination in housing by local governments because you know, and I know, that's just what it is. It's suburban gentrification and discrimination.
I vividly recall driving on the Cross Bronx expressway westbound under an apartment building to get to the George Washington Bridge ( you know, Christie's bridge ). Why not build between buildings over city streets? It's really not too far fetched, after all, they do build Subways under the avenues, don't they?
Addressing the specifically noted problem of Towns regulating out new residents; that's a job for the next government up the ladder to outlaw discrimination in housing by local governments because you know, and I know, that's just what it is. It's suburban gentrification and discrimination.
2
This problem isn't limited to New York, San Francisco and other major cities. In Boulder, Colorado, housing is incredibly pricey. Cops, teachers and others in vital jobs that pay middle-class wages work there, but can't afford to live there. They endure long commutes from elsewhere (on days like today, in really bad weather). In Colorado's luxurious mountain resorts, things are even worse. The people who work as housekeepers, waiters, ski lift operators and other crucial cogs in the local economy often dwell in desperate circumstances. Twenty people rent a place together. Workers sleep in unheated, abandoned mining shacks in the woods. Then they report for work every day and have their noses rubbed in "how the other half (of one percent) lives." Class resentment is inevitable. Maybe class warfare, too?
40
We are returning to the days of the Gilded Age as described by Mark Twain. He described the Gilded Age as, "The period that is glittering on the surface but corrupt underneath". It was a time of corporate greed and speculation and unfettered capitalism. Unfortunately that does sound like today.
178
Damn the people, full speed ahead to greed and avarice. I see this as a spoiled group that has decided they are great opera singers and expect all of us to buy their over priced tickets. Unfortunately they can only sing one note, ME ME ME!
And, unfortunately, it sounds like my beloved Dr. Krugman has enlisted as one of their spokesmen.
Will the proverbial 1% stop their self-aggrandising hogging up of everything in the USA and elsewhere when they realise they need the tithes from the remaining 99% to pay their dividends?
15
This requires long term planning and much infrastructure improvement, which the wealthy will resist, since it will obviously call for higher taxes. Check mate, as usual, in our system of inequality.
20
Blithely suggesting that NY can create more housing simply by building up ignores the importance of views and natural sunlight. There is a limit to how many skyscrapers are desirable in a city and each new one has terrible consequences to those whose views and access to natural light are obscured, creating a sudden and unfair drop in their value.
Not only do offices and apartments suffer from this infringement, but also the walkways where pedestrians take in the pleasures of city living. There needs to be some way to protect citizens rights to the sky. Does it belong only to the people who secure the rights to the tallest skyscraper?
Not only do offices and apartments suffer from this infringement, but also the walkways where pedestrians take in the pleasures of city living. There needs to be some way to protect citizens rights to the sky. Does it belong only to the people who secure the rights to the tallest skyscraper?
13
Mr. Krugman might want to do some research on property taxes for one & two family houses in NYC compared to multi-family housing (i.e. apartment buildings). For NYC'ers with large amounts of cash upfront to purchase (and renovate when necessary) without a mortgage, there's options to live extremely cheaply over the long term. Due to rent regulations, landlords cannot raise rents enough to cover the cost of doing renovations, resulting in renting being a losers game in higher living costs and poorer quality housing. And the cash poor have no other option but to rent. The end result is one person's no-mortgage swank single family home with five bedrooms costs $3,000/year in property taxes, while another person's mouldy one-bedroom apartment with perpetual leaking pipes costs $3,000 per month in rent. It's not just income inequality, it's also cash/capital inequality in the NYC housing game.
16
Since the conglomerates that build housing projects control the politicians in every big city, most new housing will be built that guarantees the builders the maximum rent they can charge without creating enough opposition among those who can't afford them as to bring the house down around them. Long gone is that $95 a month studio apartment in the West Village of the 50's more like 20 times that figure. How many big city residents have had their incomes go up 20 times?
7
Reasons to live in a city:
1/ More entertainment (theater, sports)
2/ Easier for both husband and wife to find a job in the same location
3/ There will be good schools, somewhere
4/ There is a good pool of high-end buildings
1/ More entertainment (theater, sports)
2/ Easier for both husband and wife to find a job in the same location
3/ There will be good schools, somewhere
4/ There is a good pool of high-end buildings
3
Those are reasons for the wealthy, but not necessarily for the average person who can't afford $250 theatre tickets.
Also many cities exist with terrible public schools, because the very rich can send THEIR precious spawn to private academies.
Also many cities exist with terrible public schools, because the very rich can send THEIR precious spawn to private academies.
2
@Concerned Citizen
Make you a deal:
I won't complain about the outrageously high property taxes I pay to fund those schools if you won't complain about my decision to not have my kids attend them.
Make you a deal:
I won't complain about the outrageously high property taxes I pay to fund those schools if you won't complain about my decision to not have my kids attend them.
1
The biggest problem with local ordinance boards is they are usually shills of the previously mentioned elites. They get the restrictions removed when they want to and have the barriers thrown up when the boys from out of town arrive to give some real competition. As usual, it is a rigged game and those in the lower strata get the shaft and the elite get the mine.
9
So once all those ten-percenters have filled apartments in urban areas, where will the remaining ninty-percenters who tend to cities live? The nurses, the sanitation workers, the grocery store clerks, and the police and fire-fighters may realize that there is so little for them in urban areas that the rich are left to fend for themselves...
One can dream.
One can dream.
9
Indeed. And what a dreary city without citizens invested in the actual health of the city and the public services provided by NYC whether they be public transportation, schools, firemen, policemen, cultural institutions, hospitals, senior centers, parks, sanitation, criminal system, etc. Bloomberg and Deblasio's urban vision is populated by Russian and Chinese oligarchs parking their corrupt gains in NYC real estate while never living here combined with high end food courts and shopping malls for the ultra wealthy. This is the beginning of the end.
Why can't we cap rental income? What would happen if it was illegal to increase rent. It looks like landlords are the ones profiting the most in the city and they have an inshrined and unquestionable right to make as much money possible. What if that was not the case. Why do we protect their profits above the well being of an entire society?
4
Possibly because someone has to innovate or do the work?
1
Berlin Germany has capped rents under the concept of tenants' civil rights. But Americans get the concept of capitalism and lawful profits confused with unfettered greed. One only has to listen to Trump to realize that being a compelling and innovative thinker is not required to be rich.
I'm extremely liberal by American standards (which these days just means I'm not a fascist), but I think capping rental income is a terrible idea and would benefit nobody. Unless you cap all of the costs associated with maintaining a building, it simply means that landlords would have no incentive, and ultimately not even the ability, to maintain their properties and would allow them to fall into disrepair. And, capping rents means that nobody would ever have any incentive to leave an apartment even if they could afford something more expensive, which would make it almost impossible for people who don't already have an apartment to find one. This is pretty much what happened in any American city that tried rent control.
I believe that there are many cases where government intervention is warranted. This may or may not be one, but if it is, capping rents is not the way to do it.
I believe that there are many cases where government intervention is warranted. This may or may not be one, but if it is, capping rents is not the way to do it.
2
Paul, I'm sure that zoning changes that allow developers to build taller buildings will add to supply, but that's inside-the-box thinking.
The biggest challenge to finding "affordable" housing today isn't so much the price of the housing as much as it is the size of ordinary Americans' incomes. This is where the $15 minimum wage (offset by some sort of adjustment in corporate taxation on domestic business activity, to sweeten the pill for employers) would make a huge difference - inasmuch as it would impel wages upward across the board (and not just for hamburger flippers). The more blue and white collar workers make, the more they will be able to pay for housing; the less they make, the more that government will be called on to subsidize housing.
Secondly, the current home mortgage deduction provision compels renters to subsidize others' purchase of homes, condos, and co-ops, which, when coupled to today's low interest rates, naturally leads to inflated real estate values. Now, I well understand why President Obama made the decision to not allow real estate to implode after the WFC - but the fact is that his decision equally prevented housing prices from naturally resetting, as they did in the aftermath of '87 Wall Street crash. At current, this deduction discriminates against renters - but could be easily amended to allow every American a reasonable deduction for the cost of housing, a deduction that would naturally make the cost of housing "more affordable".
The biggest challenge to finding "affordable" housing today isn't so much the price of the housing as much as it is the size of ordinary Americans' incomes. This is where the $15 minimum wage (offset by some sort of adjustment in corporate taxation on domestic business activity, to sweeten the pill for employers) would make a huge difference - inasmuch as it would impel wages upward across the board (and not just for hamburger flippers). The more blue and white collar workers make, the more they will be able to pay for housing; the less they make, the more that government will be called on to subsidize housing.
Secondly, the current home mortgage deduction provision compels renters to subsidize others' purchase of homes, condos, and co-ops, which, when coupled to today's low interest rates, naturally leads to inflated real estate values. Now, I well understand why President Obama made the decision to not allow real estate to implode after the WFC - but the fact is that his decision equally prevented housing prices from naturally resetting, as they did in the aftermath of '87 Wall Street crash. At current, this deduction discriminates against renters - but could be easily amended to allow every American a reasonable deduction for the cost of housing, a deduction that would naturally make the cost of housing "more affordable".
10
Mr. Kaufman overlooks a key driver in the price of urban real estate: foreign investment, commonly by Russian, Chinese or Middle Eastern millionaires and billionaires. And it seems that in NY, at least, the more you build, the more they buy.
17
Having recently moved back into central Tokyo, I think I have to argue for the virtues of effective government planning. Tokyo is a city that works pretty well, but the politics are minimal compared to the bureaucratic effects. It's also really important that the bureaucrats are able to think and plan on the long term, not towards the next election.
Actually, I think the best metric of how well the non-political process works is to look at the political failure of decentralization. The LDP has been trying to pander to their favorite voters for decades by promising various initiatives to revitalize rural Japan and encourage people and businesses to relocate outside of Tokyo.
I feel like adding "details available upon request", but this isn't that sort of venue. However, I'll summarize it by saying I've only lived in the relatively rural parts of Japan for a year, and found it quite inconvenient and even unpleasant. Most of my decades here have been in highly urban parts of Kanto, but I've only seen small differences in the policies of the cities. No experience of NYC, though some of my Japanese friends have spent time there.
Actually, I think the best metric of how well the non-political process works is to look at the political failure of decentralization. The LDP has been trying to pander to their favorite voters for decades by promising various initiatives to revitalize rural Japan and encourage people and businesses to relocate outside of Tokyo.
I feel like adding "details available upon request", but this isn't that sort of venue. However, I'll summarize it by saying I've only lived in the relatively rural parts of Japan for a year, and found it quite inconvenient and even unpleasant. Most of my decades here have been in highly urban parts of Kanto, but I've only seen small differences in the policies of the cities. No experience of NYC, though some of my Japanese friends have spent time there.
We moved to Long Island City about 13 years ago when it was just starting to bloom. Last May we left. The rent went up just under 20% in one year. Now I understand the leases are for 9 months so the can raise it even quicker. I assume this is legal, but it certainly is exploitive. We make decent salaries, but not enough to pay that kind of rent and save for retirement. And what about the poor people? Will they end up in the suburbs because it's their only option?
15
I'm not sure solving the "land use" problem will have much impact - at least in the most popular cities. It is a big world out there and the 1% are very mobile. They can live anywhere they want and increasingly want to live or just own property in big western cities like London, New York, etc. 1% of the world is 70 million and many want multiple homes. It will be very hard to keep prices down with that much demand and so little space.
lff
lff
5
Before someone else catches my stupidity I had better correct that 70 million figure - it certainly does not reflect what anyone would conceive of as the fabled "1%!" In fact Dr. Krugman's viewpoint is far more realistic when one considers what the number of true "1%ers" is.
lff
lff
1
At the very least the U.S. should raise the price of its woefully cheap business immigration visa program and earmark those fees for affordable housing, education or retraining of its citizens. A non-resident tax on such owners could also help fund such programs. Like Vancouver in Canada, American real estate is fast becoming a safety deposit box for the often times ill-gotten wealth of foreigners. These owners displace and distort housing prices and are drain on services without contributing to community. Wes should not be giving are way the benefits of American ownership away virtually free and with no responsibility.
15
Oh. My. Goodness. The old Paul Krugman that won a Nobel prize for his work in *microeconomics* (far more important than macroeconomics), still lives! Hallelujah! Welcome back.
One important point to be made about New York: every new housing unit built for wealthy residents, that doesn't involve tearing down units for the middle class or poor, frees up an existing unit for middle class or poor people to move into. This is the most cost-effective way to produce affordable housing for people who aren't wealthy. Middle-class people get to move into housing that was good enough for the rich 40 years ago. And modest-income people get to move into housing that was good enough for the middle-class 40 years ago. (It won't provide housing for the unemployed in the middle of Manhattan, of course, but that idea was always a mistake. The world's most valuable real estate should be for people who have to work in that area.)
One important point to be made about New York: every new housing unit built for wealthy residents, that doesn't involve tearing down units for the middle class or poor, frees up an existing unit for middle class or poor people to move into. This is the most cost-effective way to produce affordable housing for people who aren't wealthy. Middle-class people get to move into housing that was good enough for the rich 40 years ago. And modest-income people get to move into housing that was good enough for the middle-class 40 years ago. (It won't provide housing for the unemployed in the middle of Manhattan, of course, but that idea was always a mistake. The world's most valuable real estate should be for people who have to work in that area.)
2
I would argue that what is needed is more socialism. Here in Vienna, where zoning, land use and building is tightly regulated (for example: if your neighbor wants to add another story to her house, you can fight it if it would decrease the sunlight to your yard), the city government helps out lower income people with housing.
So for example, we live in a private condominium building, but one of my offices is down the street in a mixed use building with subsidized flats and offices. You have to apply to get one of the flats, flat size is limited based upon family size, and the flats are only available up to a certain income level. Some flats are rental only, but most are long term rent to own. Neither the flats nor the offices are fancy, but they are very efficiently laid out, and you are free to upgrade as much as you like.
This method of subsidy is a great way to build stable neighborhoods with a long term goal of more home-owners. It is also a way that people of limited means can get into the housing market and start building equity. There is an added bonus that the government is building flats, which also helps to stimulate the economy.
The only down-side, from the US point of view, is that the society has to be willing to have a functioning government and help its less fortunate members. So it is probably a non-starter nationally, but maybe possible in cities like New York.
So for example, we live in a private condominium building, but one of my offices is down the street in a mixed use building with subsidized flats and offices. You have to apply to get one of the flats, flat size is limited based upon family size, and the flats are only available up to a certain income level. Some flats are rental only, but most are long term rent to own. Neither the flats nor the offices are fancy, but they are very efficiently laid out, and you are free to upgrade as much as you like.
This method of subsidy is a great way to build stable neighborhoods with a long term goal of more home-owners. It is also a way that people of limited means can get into the housing market and start building equity. There is an added bonus that the government is building flats, which also helps to stimulate the economy.
The only down-side, from the US point of view, is that the society has to be willing to have a functioning government and help its less fortunate members. So it is probably a non-starter nationally, but maybe possible in cities like New York.
38
Nice idea for homogeneous Austria with a population of near nothing. No, my friend, the downside, as you call it, is that we have no easy way to differentiate between those truly in temporary need versus enabling an underclass of government subsidized grifters who NEVER aspire to anything. If you truly have a 'neighborhood', you help each other. But when you have some people paying full boat and others paying little or nothing of their own money for the same thing, you have envy and unhappiness right under the surface.
3
@Doug: Too fast with my first response.
Population near nothing?
US most populous cities:
https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population
Austrian most populous cities:
https://en.wikipedia.org/wiki/List_of_cities_and_towns_in_Austria
If Vienna were in the US we'd be the 5th largest city. Again, check your ignorance at the door.
So combine that with:
"50 percent of the Viennese have a migration background, i.e. they were born abroad or have at least one parent who was born abroad."
https://www.wien.gv.at/english/social/integration/basic-work/facts-figur...
We have 900,000 first or second generation immigrants in a city of 1.8 million. Homogeneous? Please. When I walk to work I'll hear on average 7 different languages in 400 meters. 3 of them before I even get out the door!
Population near nothing?
US most populous cities:
https://en.wikipedia.org/wiki/List_of_United_States_cities_by_population
Austrian most populous cities:
https://en.wikipedia.org/wiki/List_of_cities_and_towns_in_Austria
If Vienna were in the US we'd be the 5th largest city. Again, check your ignorance at the door.
So combine that with:
"50 percent of the Viennese have a migration background, i.e. they were born abroad or have at least one parent who was born abroad."
https://www.wien.gv.at/english/social/integration/basic-work/facts-figur...
We have 900,000 first or second generation immigrants in a city of 1.8 million. Homogeneous? Please. When I walk to work I'll hear on average 7 different languages in 400 meters. 3 of them before I even get out the door!
1
Yes, the demand for housing comes from those who can afford to live near the center of cities where they work, because they want shorter commutes. But why "the dramatic decline in crime rates"? "And the truth is that nobody really knows why that happened." I beg to differ. Rich people are replacing those who are not rich, and the wealthy do not get prosecuted for their crimes at the same rate as the poor for their crimes, so it appears that the crime rates are declining. Also, the crimes of the rich (e.g., insider trading and tax evasion) are not obvious, while the crimes of the poor (especially violent crime) are.
13
The decrease in crime has been national in scope, in virtually all cities and neighborhoods. So gentrification is an inadequate explanation for the reduction in crime. Poor people didn't simply disappear, and they actually have become less prone to commit violent and property crimes.
1
Yes. We need only to remember 2008.
2
I've probably read 1000 articles in recent years in the Times decrying inequality, and every last one of them has ended up directly calling for or implying the need for higher taxes. This one goes as far as to suggest that special efforts must be made to help people live in areas they shouldn't be living in, in the first place. Undoubtedly, Prof. Krugman will soon be wanting me to pay for this too. I have yet to read a single article in the Times decrying how far-from-rich people in this country are being bilked out of the opportunity to put away money for the education of their children, the purchase of housing and their own retirements by the need to support Obamacare, Medicare, Medicaid and our other bloated health and welfare programs. I am a person of moderate means, and I am planning to vote for the first Presidential candidate who promises to help me and other moderate-income people less so that we can support
ourselves.
ourselves.
7
This kind of comment drives me up a wall, Mr. Stanton complains about all taxes, but only mentions health care so I will stick to that. I see two explanations for his attitude.
A) He is ignorant of the facts, the data, and is too intellectually lazy to look them up.
or
B) He is so ideologically driven, so irrationally opposed to taxes that he would rather pay $12,000 a year for a private insurance policy that severely restricts the doctors he can see, and is filled with tint print that nobody can understand and will bite him in the back if he gets seriously ill, than pay $6,000 a year more in taxes for an improved Medicare for All without these restrictions.
In case A) applies, here are the basic data and references for Mr. Stanton to get more facts:
All other industrialized countries have some form of universal government run health care, mostly single payor. They get better care as measured by all 16 of the bottom line public health statistics, and they do it at 40% of the cost per person on avergae. If our system were as efficient, we would save over $1.5 TRILLION each year.
www.pnhp.org & www.oecd.org, especially
http://www.oecd.org/els/health-systems/oecd-health-statistics-2014-frequ...
So if he were thinking straight, he would be in favor of paying more in taxes, not less.
A) He is ignorant of the facts, the data, and is too intellectually lazy to look them up.
or
B) He is so ideologically driven, so irrationally opposed to taxes that he would rather pay $12,000 a year for a private insurance policy that severely restricts the doctors he can see, and is filled with tint print that nobody can understand and will bite him in the back if he gets seriously ill, than pay $6,000 a year more in taxes for an improved Medicare for All without these restrictions.
In case A) applies, here are the basic data and references for Mr. Stanton to get more facts:
All other industrialized countries have some form of universal government run health care, mostly single payor. They get better care as measured by all 16 of the bottom line public health statistics, and they do it at 40% of the cost per person on avergae. If our system were as efficient, we would save over $1.5 TRILLION each year.
www.pnhp.org & www.oecd.org, especially
http://www.oecd.org/els/health-systems/oecd-health-statistics-2014-frequ...
So if he were thinking straight, he would be in favor of paying more in taxes, not less.
16
You may have read a thousand articles, but did you understand any of them? The main thrust is that incomes have stagnated. Thus even though GDP has grown, the vast majority of people (including you and other moderate income people) have not benefited from economic growth to the extent that you could actually do the saving that you purport to want to do. And that's not because you are taxed too much. In fact, tax rates have gone down significantly over the last 35 years. Of course, the largest cuts have benefited the richest people, but little of that windfall has trickles down to the rest of us.
But what puzzles me is that you are writing this generalized rant in response to a specific column, which is actually calling for less regulation in regards to housing policy. The article says nothing about tax rates, but does name the liberal mayor of New York as a supporter of upzoning (the process of changing zoning laws to allow denser development to relieve the housing crunch in cities where land is scarce). So it seems that you did not read or understand Dr. Krugman's article. Or perhaps you simply had a reflexively hostile reaction to anything a liberal writes, and revert to your talking points rather than engage the issue that is brought up.
But what puzzles me is that you are writing this generalized rant in response to a specific column, which is actually calling for less regulation in regards to housing policy. The article says nothing about tax rates, but does name the liberal mayor of New York as a supporter of upzoning (the process of changing zoning laws to allow denser development to relieve the housing crunch in cities where land is scarce). So it seems that you did not read or understand Dr. Krugman's article. Or perhaps you simply had a reflexively hostile reaction to anything a liberal writes, and revert to your talking points rather than engage the issue that is brought up.
10
@Len
A commenter on another site captured my sentiments exactly, saying:
"So the question is, if the US went with a Universal Health Care System, who will be the honest broker that manages and directs it?'
In a perfect world, our government would be up to the task. I, & I suspect many others, would gladly pay more in taxes in support of fellow Americans.
Alas, our government's track record of cronyism, inefficiency, fraud, bloat, waste & general ineffectiveness in more than one Federal program keeps me & those others firmly opposed. And spare me the "but Medicare works!" line as this would be a different animal completely.
A commenter on another site captured my sentiments exactly, saying:
"So the question is, if the US went with a Universal Health Care System, who will be the honest broker that manages and directs it?'
In a perfect world, our government would be up to the task. I, & I suspect many others, would gladly pay more in taxes in support of fellow Americans.
Alas, our government's track record of cronyism, inefficiency, fraud, bloat, waste & general ineffectiveness in more than one Federal program keeps me & those others firmly opposed. And spare me the "but Medicare works!" line as this would be a different animal completely.
I don't think you can do it with more housing. For one, the high rent areas in cities are already the densest parts of the city. There, each new unit of housing is priced the same or higher than the last one.
I think we just have to make it more palatable to be poorer. The low rent areas need to be safer, with better schools, good public transportation, clean streets and nice parks. Moving everyone into Manhattan is not the answer.
I think we just have to make it more palatable to be poorer. The low rent areas need to be safer, with better schools, good public transportation, clean streets and nice parks. Moving everyone into Manhattan is not the answer.
3
This is actually a common fallacy. Newer housing tends to be more valuable because of modern amenities, so the price of the housing is higher than older housing stock. But what newer housing in sufficient quantity does is reduce the demand for older housing by the wealthy. This older housing then becomes available to people with more moderate means.
1
A novel idea would be to combine the world's most successful anti-poverty program, Brasil's Bolsa Familia, with targets in housing and education--apply it in the US, simultaneously ending poverty and one of its root causes.
Brasil's was the most advanced restructuring of a country's workforce witnessed in modern times, including China's restructuring.
Adapt Bolsa Familia to the US environment, and housing can become a gateway benefit to ending jobless and homelessness--as the fight for higher wages continues. Hillary overlooks wage raises can be means tested and phased-in, dampening any disruptive effects (shocks); the federal minimum need not be policy, it is ideally suited to be a program using research data to determine and assess adjustments as the Fed does with credit. (We know the key metrics.)
Brasil's was the most advanced restructuring of a country's workforce witnessed in modern times, including China's restructuring.
Adapt Bolsa Familia to the US environment, and housing can become a gateway benefit to ending jobless and homelessness--as the fight for higher wages continues. Hillary overlooks wage raises can be means tested and phased-in, dampening any disruptive effects (shocks); the federal minimum need not be policy, it is ideally suited to be a program using research data to determine and assess adjustments as the Fed does with credit. (We know the key metrics.)
5
Increasing financial inequality and access to quality housing options in NYC reflects that of the country as a whole. With all due respect, Dr. K., those of us so fortunate as to have abundant financial resources do realize and understand what is happening, because our family members and friends are suffering. We do what we can to help, but are torn between providing them more money today and trying to increase our nest egg to provide for them farther down the road. And we do resent this inequality, because they are working very hard, but employers are simply not paying enough for that work. What has happened to most American workers over the past several decades has been a travesty, particularly with respect to young people, many of whom have become angry at the unfairness of it all. Fixing this is not optional, but imperative, and urgently so.
104
You can attribute a lot of what has happened, to the Romney's of this world!
2
Why not just admit openly that America has been taken over by the captains of aggressive capitalism, squeezing out the great majority of citizens?
While affluent cities are owned by the elite, the rest of the country suffers in its violent gun culture left to fight over the scraps.
Greed may represent an enormous victory for the rich, soulless as it may be, but it leaves little behind for the increasingly angry citizens to survive on.
While affluent cities are owned by the elite, the rest of the country suffers in its violent gun culture left to fight over the scraps.
Greed may represent an enormous victory for the rich, soulless as it may be, but it leaves little behind for the increasingly angry citizens to survive on.
398
michael - Citigroup's 2005 memo to clients about the plutonomy, shared by Brad Delong's Typepad, described things didn't it:
http://delong.typepad.com/plutonomy-1.pdf
From afar, the primary reason the wealthiest seem to flock to cities is to access public services/amenities that they purchase through politicians locally, while cutting back/denying those very same benefits state-wide/nation-wide through legislative gerrymandering assisted by Citizens United unlimited campaign funding.
The why and the how of these things getting done is packaged as political theatre to generate ratings points instead of politics dealing with issues.
If you think things look bad from France, you should see them from the inside, over here :(
http://delong.typepad.com/plutonomy-1.pdf
From afar, the primary reason the wealthiest seem to flock to cities is to access public services/amenities that they purchase through politicians locally, while cutting back/denying those very same benefits state-wide/nation-wide through legislative gerrymandering assisted by Citizens United unlimited campaign funding.
The why and the how of these things getting done is packaged as political theatre to generate ratings points instead of politics dealing with issues.
If you think things look bad from France, you should see them from the inside, over here :(
10
R. Law....thank you for the reply....yes the memo says it all, albeit with cleaned up language.
The point is that 50% of the world is on the left side of the bell shaped curve and, unless they inherit, are out of luck.
Trillions of dollars are held by the wealthy that they will never spend and that could benefit millions of people...but the wealth gene forbids giving up any of the I'll gotten gains.
The point is that 50% of the world is on the left side of the bell shaped curve and, unless they inherit, are out of luck.
Trillions of dollars are held by the wealthy that they will never spend and that could benefit millions of people...but the wealth gene forbids giving up any of the I'll gotten gains.
4
Thanks for the citigroup memo. Well worth the time to read.
5
"....New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened."
Excuse me! Someone knows why that happened.
Criminals find commuting no more congenial than the Masters of the Universe and it's the majority of the criminal class that has been priced out of downtown Manhattan.
Supply and demand, anyone?
There is more money to be make pushing drugs in the slums than mugging Tissot purchasers outside of Tiffany's.
More importantly, where can you fence a thirty thousand dollar timepiece in the ghetto?
'Any more problems in microeconomics with which you need assistance?
Excuse me! Someone knows why that happened.
Criminals find commuting no more congenial than the Masters of the Universe and it's the majority of the criminal class that has been priced out of downtown Manhattan.
Supply and demand, anyone?
There is more money to be make pushing drugs in the slums than mugging Tissot purchasers outside of Tiffany's.
More importantly, where can you fence a thirty thousand dollar timepiece in the ghetto?
'Any more problems in microeconomics with which you need assistance?
35
The decrease in crime has been national in scope, in virtually all cities and neighborhoods. So now even the "ghetto" is far safer than it was forty years ago. Your explanation is inadequate to fit the available evidence.
1
Except that crime is way down in poor areas too. Please feel free to consult me for further correction.
1
I've probably read 1000 articles in recent years in the Times decrying inequality, and every last one of them has ended up directly calling for or implying the need for higher taxes. This one goes as far as to suggest that special efforts must be made to help people live in areas they shouldn't be living in, in the first place. Undoubtedly, Prof. Krugman will soon be wanting me to pay for this too. I have yet to read a single article in the Times decrying how far-from-rich people in this country are being bilked out of the opportunity to put away money for the education of their children, the purchase of housing and their own retirements by the need to support Obamacare, Medicare, Medicaid and our other bloated health and welfare programs. I am a person of moderate means, and I am planning to vote for the first Presidential candidate who promises to help me and other moderate-income people less so that I can support myself.
17
Good luck with getting what you wish for. That government will be about taking from the poor, but giving more to the rich, leaving you less well-off than ever. Why do you think corporations all moved to 401K's. Cheaper, increases stock values as people continually pour a flood of cash every month into mutuals which buy those stocks, and the company is off the hook - allowing them to increase executive perks, payouts and pork.
10
Cheers to omeone who would enjoy more inequality and the dystopia nouveau.
6
How far do you want government (local, state, federal) to go in helping you "less." How about doing away with highway funding. How about funding for our police and fire fighters. Or maybe funding for parks and libraries. You seem to focus on healthcare in your statement. There is always the possibility that one of the Tea Party candidates will be elected in 2016 along with a like-minded senate and house, and Obamacare will be repealed. That would take us back to 40 million or so without health insurance. How is that for helping "less?" I suspect you, like many others, simply do not want to support any programs that help others. Although it would be great if everyone could fully support themselves, including buying their own healthcare, it just doesn't work that way in the real world. There will always be a large number of people who, for various reasons, need the support of others. Ever hear of the "common good?"
10
Public Housing lotteries appear to have benefits, including more well diversified communities, and range of occupants. It will allow neighborhoods to continue their broadening of a stable middle class in education, and income.
In contrast, however, wealth tends to isolate itself away from commoners.
This reduces the element of being in touch with other people, and sharing conversations.
In contrast, however, wealth tends to isolate itself away from commoners.
This reduces the element of being in touch with other people, and sharing conversations.
7
As a young Architectural student at the City University in New York during the beginning of the 70's I had instructors who were only interested in designing buildings and those who where interested in how we make our cities work for all. The ones who focused on designing buildings had long tenure while the ones who were concerned with their City did not.
As a result, today, we have an army of package designers (architects, and planners) for pro forma real estate developers happy to build the next monument to our stupidity rather then people driven by what it is to be human and build a better world. And make no mistake, when you scratch beneath the surface of almost every community large or small you find the politics is ruled by real estate interests out to make a buck.
As a result, today, we have an army of package designers (architects, and planners) for pro forma real estate developers happy to build the next monument to our stupidity rather then people driven by what it is to be human and build a better world. And make no mistake, when you scratch beneath the surface of almost every community large or small you find the politics is ruled by real estate interests out to make a buck.
207
but on the other hand -
Too much money already has ruined so many wonderful places in the world - that the place where most of the worst offenders are speculating from (NYC) deserves to become one of these soul-less Rich Mens Ghettos too!
Or let's go all the way - let's change it into the Capitol of the Hunger Games - perhaps then the majority of people are realizing what they are doing to themselves?
Too much money already has ruined so many wonderful places in the world - that the place where most of the worst offenders are speculating from (NYC) deserves to become one of these soul-less Rich Mens Ghettos too!
Or let's go all the way - let's change it into the Capitol of the Hunger Games - perhaps then the majority of people are realizing what they are doing to themselves?
3
Let's at least stop letting developers get public subsidies -- usually justified by the poverty statistics of nearby neighborhoods -- for building high-end housing. The policy assumption by govt at all levels is that such development (maybe with a bit of retail attached) will translate into economic benefit for the residents of the nearby high-poverty community. But in reality it's just a rental cash cow for developers who, by the way, are major funding sources for the elected officials who are present for the photo-op at the groundbreaking. That cash income becomes fuel for the next wave of development until the high-poverty community is pushed out altogether. Let's at least not have our taxes subsidize this.
28
>
“A house may be large or small; as long as the surrounding houses are equally small it satisfies all social demands for a dwelling. But let a palace arise beside the little house, and it shrinks from a house to a hut.”
Marx
Inequality can only be understood in a relativistic framework. The conservative cliche/canard that the poor have TV's, iPhones etc.... is unsound, philosophically.
That all said, a super majority of the American people want capitalism, and inequality is a fundamental feature of it. As the Greeks liked to say be careful for what you wish for. "Capitalism", says Marx, "is destroyed in its foundations, if we assume that its compelling motive is enjoyment instead of the accumulation of wealth”
“A house may be large or small; as long as the surrounding houses are equally small it satisfies all social demands for a dwelling. But let a palace arise beside the little house, and it shrinks from a house to a hut.”
Marx
Inequality can only be understood in a relativistic framework. The conservative cliche/canard that the poor have TV's, iPhones etc.... is unsound, philosophically.
That all said, a super majority of the American people want capitalism, and inequality is a fundamental feature of it. As the Greeks liked to say be careful for what you wish for. "Capitalism", says Marx, "is destroyed in its foundations, if we assume that its compelling motive is enjoyment instead of the accumulation of wealth”
15
As it is not only the age of gentrification but also the age of speculation there has to be a housing policy where speculation is nearly made impossible -
(like in a European Country which never had a suicidal housing bubble)
And it is true - that people in the US don't realize (yet?) that housing policy might be the most crucial factor which decides about the Standard of Living in a society.
An economy where most citizen have to spend more than 30 percent of their income for 'housing' is a failed economy and you can watch the destructive progressing inequality not only in NYC but in every desireable place in the US and in whole California.
Stop speculation wit housing - or reduce it to a civilzed level and there will hope again.
(like in a European Country which never had a suicidal housing bubble)
And it is true - that people in the US don't realize (yet?) that housing policy might be the most crucial factor which decides about the Standard of Living in a society.
An economy where most citizen have to spend more than 30 percent of their income for 'housing' is a failed economy and you can watch the destructive progressing inequality not only in NYC but in every desireable place in the US and in whole California.
Stop speculation wit housing - or reduce it to a civilzed level and there will hope again.
7
Making more housing for a city with the resources to accommodate the growth. For instance, New York has access to plenty of water, unlike San Francisco.
3
Land-use restrictions? What you need is public transport with commute times of 30 minutes or less from dirt-cheap housing areas to the city center.
10
I agree. Good luck changing those zoning regs.
I live at the other end of the spectrum from NYC with the same problem. What in my youth was a sleepy provincial farm town 75 miles north of New York has become an enclave for the wealthy, many of them New Yorkers investing in rustic real estate used for weekends. Whatever blue collar and middle class is left inherited what they have; they certainly couldn't afford to buy their way in. Our zoning regulations prohibit denser housing that would encourage middle class and blue-collar citizens to move in. Efforts to change those regulations are met with stiff resistance by natives and well-heeled new-comers as well. ("Affordable housing" is a hot-button term that those of us wishing to promote it avoid. The provincialism of the past lingers.)
Enrollment in the public schools is down since the people who send their kids to public schools can't afford to live here. Per student costs are rising to the point it may soon become cheaper to send children to the region's many exclusive, expensive private schools. Millionaires also don't volunteer for the fire dept or ambulance.
The income disparity has to be halted and the only way I can see that happening is through the tax code. I am not optimistic.
I live at the other end of the spectrum from NYC with the same problem. What in my youth was a sleepy provincial farm town 75 miles north of New York has become an enclave for the wealthy, many of them New Yorkers investing in rustic real estate used for weekends. Whatever blue collar and middle class is left inherited what they have; they certainly couldn't afford to buy their way in. Our zoning regulations prohibit denser housing that would encourage middle class and blue-collar citizens to move in. Efforts to change those regulations are met with stiff resistance by natives and well-heeled new-comers as well. ("Affordable housing" is a hot-button term that those of us wishing to promote it avoid. The provincialism of the past lingers.)
Enrollment in the public schools is down since the people who send their kids to public schools can't afford to live here. Per student costs are rising to the point it may soon become cheaper to send children to the region's many exclusive, expensive private schools. Millionaires also don't volunteer for the fire dept or ambulance.
The income disparity has to be halted and the only way I can see that happening is through the tax code. I am not optimistic.
75
I remember the 1970s very well – well enough to recall that I couldn’t afford to move into Manhattan from Queens until 1985. We complain about the paucity of affordable housing every five years as if each time we’d discovered something astonishingly new; but the truth is that this has been the case for all of my adult life.
What’s not new are the causes.
NY State still controls the rent of millions of apartments in the city. Over many years, the gap between the controlled rent and the market-value rent of the same apartment increases outrageously, so much that tenants never leave – you can be making millions a year and still be paying $800 a month for an apartment that might be worth thousands. So people who may have houses in the Quogues keep those cheap apartments forever, freezing out lower-earners, and the low apartment availability adds immensely to generally very high rents.
Get rid of ALL controls. Let those cheap apartments rise in rent -- all those millionaires will book because they’re not the most attractive of apartments, they’re no longer cheap and the millionaires can afford better. But that will free them up for people starting out, the rents will settle relatively low in order to fill the spaces in a now competitive market because there are so many of them, and the increased general availability will keep ALL rents more manageable.
You really want to increase affordable housing in NYC? Try an American solution … for a change.
What’s not new are the causes.
NY State still controls the rent of millions of apartments in the city. Over many years, the gap between the controlled rent and the market-value rent of the same apartment increases outrageously, so much that tenants never leave – you can be making millions a year and still be paying $800 a month for an apartment that might be worth thousands. So people who may have houses in the Quogues keep those cheap apartments forever, freezing out lower-earners, and the low apartment availability adds immensely to generally very high rents.
Get rid of ALL controls. Let those cheap apartments rise in rent -- all those millionaires will book because they’re not the most attractive of apartments, they’re no longer cheap and the millionaires can afford better. But that will free them up for people starting out, the rents will settle relatively low in order to fill the spaces in a now competitive market because there are so many of them, and the increased general availability will keep ALL rents more manageable.
You really want to increase affordable housing in NYC? Try an American solution … for a change.
16
Richard
While I might agree with you on the idea of getting rid of all rent controls, the reality as I see it is that the owners of these buildings would probably tear them down and build new ones, rather than keep them intact. And yes I know several people who live in rent controlled apartments or rent stabilized apartments and have lived there for many years. They illegally sublet their apartments for substantially more than they pay themselves and they are happy.
How about this: make all of the housing in New York City affordable and create a gulag for the 10% and higher in which to live, outside of the city. It would be a gated community to keep away the poor and have every amenity available. Wealthy real estate tycoons could create this housing in the gulag and charge say a minimum of $5K per month for a studio, $7K for a one-bedroom and so on.
While I might agree with you on the idea of getting rid of all rent controls, the reality as I see it is that the owners of these buildings would probably tear them down and build new ones, rather than keep them intact. And yes I know several people who live in rent controlled apartments or rent stabilized apartments and have lived there for many years. They illegally sublet their apartments for substantially more than they pay themselves and they are happy.
How about this: make all of the housing in New York City affordable and create a gulag for the 10% and higher in which to live, outside of the city. It would be a gated community to keep away the poor and have every amenity available. Wealthy real estate tycoons could create this housing in the gulag and charge say a minimum of $5K per month for a studio, $7K for a one-bedroom and so on.
2
Jordan:
In a NYC with no rent controls, the owners of buildings containing millions of older apartments could tear down those buildings and build newer ones and you' STILL see dramatic drops in average rents. The demand for NYC apartments isn't so great that you could add millions in supply in a relatively short period of time and NOT see such.
In a NYC with no rent controls, the owners of buildings containing millions of older apartments could tear down those buildings and build newer ones and you' STILL see dramatic drops in average rents. The demand for NYC apartments isn't so great that you could add millions in supply in a relatively short period of time and NOT see such.
1
I'm sorry but boo hoo for the poor upper income people now doing what they used to do as "homework" now do it in an office. They are still being paid well to do it. This is harsh contrast to the bottom half, half of all workers who because they make less than the median income which is what it now takes to live in the City are work even more hours and are paid poorly for work that if it weren't being done would quickly the entire city to a standstill. The labor market is even more rigged than the real estate market and the bottom half no matter what improvement in productivity they make are doubly shafted. On top of that, the upper half still gets a vacation an holidays off!
The two are inextricably intertwined. Everyone knows that once you have a place to live nailed down, everything else falls into place. When the median income is the minimum it takes to make that happen, by definition, half of all people are condemned to hardship and at risk of homelessness.
Not one unit more of higher end housing should be built until the balance in housing has been restored. More than two decades of only higher end housing being built while affordable units have been converted. A few lucky few have one won in a lottery.
A decent home available only from winning a lottery? The ticket price being perfect credit? Nobody who has lived under hardship so high they live at the risk of homelessness has perfect credit. The housing and labor markets made sure of that.
The two are inextricably intertwined. Everyone knows that once you have a place to live nailed down, everything else falls into place. When the median income is the minimum it takes to make that happen, by definition, half of all people are condemned to hardship and at risk of homelessness.
Not one unit more of higher end housing should be built until the balance in housing has been restored. More than two decades of only higher end housing being built while affordable units have been converted. A few lucky few have one won in a lottery.
A decent home available only from winning a lottery? The ticket price being perfect credit? Nobody who has lived under hardship so high they live at the risk of homelessness has perfect credit. The housing and labor markets made sure of that.
234
"Not one unit more of higher end housing should be built until the balance in housing has been restored." Sorry, that won't help. The rich will just have to move in to lower grade housing and drive up the prices. Only when the rich have higher grade alternatives, will they stop moving into lesser abodes. Then maybe the next lower income folks can afford them. And if a surplus of higher end housing is built, maybe everyone can afford a nice place. Supply and demand!
1
Good points Blue but his point was affordable housing, not boo-hoo for the well paid. As for paid days off even low income jobs should have that, and do, in Spain, France, Italy and elsewhere, where the guy in the restaurant who does the dishes gets paid time off, including vacations, like everyone else. He's got about 800 words per column and income inequality pervades all aspects of society, so he can do only one issue at a time.
2
Amen
2
You might also add that affluent people tend to have far fewer children today than in 1955. A typical "urban elite" couple with no kids doesn't need millionaire salaries to enjoy the high life of downtown NYC, Chicago, San Francisco or even London and Paris.
It all changes when you have kids. If you live downtown you cannot let your children go anywhere - you need a nanny, or a driver, or both. Often the schools in city centers are far apart and inconvenient, and they are more cramped than suburban schools. Often they also attract poor lower-class kids from the "un-gentrified" parts of town, and they score poorly in the rankings. That often means being forced to look for expensive private schools.
Then there's the issue of the size of the apartment: having two kids running around a typical Manhattan condo will drive you crazy. You need to start looking for more space. I know the story: when my second child was born we looked for 4-bedroom apartments in downtown Chicago with space for two cars, but the prices were just astronomical. At the end we settled for a large suburban home with a huge garden, served by excellent schools - all for less than half what we would have paid in downtown.
Bottom line: Gentrification is for either the ultra-rich with kids (they can afford it) or for the less affluent urban elites without kids. The upper middle classes with kids will stay in the suburbs.
It all changes when you have kids. If you live downtown you cannot let your children go anywhere - you need a nanny, or a driver, or both. Often the schools in city centers are far apart and inconvenient, and they are more cramped than suburban schools. Often they also attract poor lower-class kids from the "un-gentrified" parts of town, and they score poorly in the rankings. That often means being forced to look for expensive private schools.
Then there's the issue of the size of the apartment: having two kids running around a typical Manhattan condo will drive you crazy. You need to start looking for more space. I know the story: when my second child was born we looked for 4-bedroom apartments in downtown Chicago with space for two cars, but the prices were just astronomical. At the end we settled for a large suburban home with a huge garden, served by excellent schools - all for less than half what we would have paid in downtown.
Bottom line: Gentrification is for either the ultra-rich with kids (they can afford it) or for the less affluent urban elites without kids. The upper middle classes with kids will stay in the suburbs.
8
Sounds like those coddled elites like to whine about what they don't have for their delicate brood.
2
the factors left out by Paul are ,1. better security in bigger cities because of better policing and elite residents 2. exclusive white areas 3. better amenities 4. proximity to power centers like the UN, proximity to business centers, wall-street,banks and related financial services.5. Better transportation services like nearness to airports, availability of choices in international flights , 6. anonymity which the rich relish.7. chances of contacting celebrities 8 and such other first class facilities like clean water, better utility services , better schools, museums, universities hospitals , cultural entertainment programs which make modern life pleasurable experience .
no wonder , to have such magnificent conveniences atone's finger tips the rich will flock into ousting out the others .
no wonder , to have such magnificent conveniences atone's finger tips the rich will flock into ousting out the others .
8
The decline in street crime is not all that surprising. Low complexity crimes such as "street crimes" tend to be opportunistic and therefore disproportionately committed against people in the criminal's own community. Furthermore many street crimes are born in poverty and despair. In the 70's a lot of street crime was grounded in drug (most commonly Heroin and Crack Cocaine) abuse, for example. The, generally young, people who used to carry out such crimes 30 years ago have not been replaced (some argue because of falling birth rates) or have been displaced into the suburbs.
That being said, as a fraud investigator I strongly suspect the sociopath per square mile figure in New York and most other Western cities hasn't changed terribly much. It's just that the anti-social behaviour is now far better remunerated and is less thoroughly policed by the authorities. When I look at the sub-prime scandals, the market rigging, the insider trading, HFS shenanigans, and so on, crimes with ultimately far larger and more damaging ""footprints", I sometimes wonder if we were better off with the muggers.
That being said, as a fraud investigator I strongly suspect the sociopath per square mile figure in New York and most other Western cities hasn't changed terribly much. It's just that the anti-social behaviour is now far better remunerated and is less thoroughly policed by the authorities. When I look at the sub-prime scandals, the market rigging, the insider trading, HFS shenanigans, and so on, crimes with ultimately far larger and more damaging ""footprints", I sometimes wonder if we were better off with the muggers.
642
As the old saying goes, "much easier to steal and you can steal much, much more at the point of a pen than the point of a gun."
7
"The, generally young, people who used to carry out such crimes 30 years ago have not been replaced (some argue because of falling birth rates) or have been displaced into the suburbs."
No, the drug related criminals have been dispersed throughout the state. Check the rising drug crime statistics in smaller cities like Binghamton, Syracuse, Elmira, and Rochester. It started with the police under Dinkins handing out bus tickets instead of appearance tickets and continues under every NYC mayor since.
Meanwhile, Manhattan thrives while Upstate cities continue to rot.
No, the drug related criminals have been dispersed throughout the state. Check the rising drug crime statistics in smaller cities like Binghamton, Syracuse, Elmira, and Rochester. It started with the police under Dinkins handing out bus tickets instead of appearance tickets and continues under every NYC mayor since.
Meanwhile, Manhattan thrives while Upstate cities continue to rot.
2
I think you bring up an excellent point. Street crime may have plummeted, but what about white collar crime? The muggings may have merely relocated from the street to the boardroom.
1
Paul, municipal laws creating protective bubbles for the affluent have been around for a very long time and where cities are smaller and don’t have the star-power of NYC or Boston, the wealthy burbs are still very much alive and strong. Town governments set minimum lot sizes, house sizes, commercial restrictions which keep mill rates high and continue increasing inordinate amounts of tax revenues to public schools that already are the crème-de-la crème of the state leaving many other municipal services once provided by local government for residents to purchase privately (i.e. garbage collection). It’s not easy to change these walls since the majority of the residents living within these bubbles are registered Republicans aka affluent. The power of the ballot box has been around for a long time now. Not much seems to change except to the lawful extent that money buys political power and sets the rules of the game. Howard Zinn knew what he was writing about.
16
One problem I have with the astute Mr Krugman's article here is: "too much regulation" not. There is little enough regulation to protect the not rich and entitled and if not regulated, the buildings will grow ever more obscenely high.
Interesting to know, though, that he has moved to New York where so many of us have been pushed out. He is entitled to do that.
Interesting to know, though, that he has moved to New York where so many of us have been pushed out. He is entitled to do that.
11
Remember Gemma,
A neighborhood is about the people who live in it, not the buildings that occupy it. If the price of affordability is taller buildings... so be it.
A neighborhood is about the people who live in it, not the buildings that occupy it. If the price of affordability is taller buildings... so be it.
Cities exist for a couple of reasons. One is social. Human beings are social animals, and like living in close proximity. The other is economic. A great deal of innovation is catalyzed by people working near each other. There are chance encounters in the elevator, at the coffee shop, at the copying machine, where ideas are casually exchanged, and some of these ideas have economic value. The U.S. has done a good job of leveraging the power of universities to increase economic growth, but I suspect more can be done to make cities work better as engines of wealth creation. I don't think anything can or should be done to discourage the affluent from living in cities. If we want to make it more possible for the less affluent to live or at least work in cities, I think Professor Krugman is right in that cities must be built up. I also think that public transportation has to be plentiful and convenient in order to allow the non-rich to commute into cities for jobs.
145
Paul, you need to travel to Mumbai or Kolkata or Bangkok or Rio or San Paolo..see how urban communities live and thrive in less than ideal conditions.
4
I almost never disagree with the good Dr. Krugman, but I don't think this is a fixable problem, and for a reason Dr. Krugman *nearly* addresses. He says: "In general, this high-income elite gets what it wants ..." Unfortunately, what they want is to NOT live around poor people. Hence my glum outlook.
360
I don't know about that. Isn't income segregation is much more prevalent in the suburbs, than in NYC? In Manhattan the land area is limited, so you can't spread out. There are rich neighborhoods but the middle and lower incomes, not necessarily slums, live close by or are more intersperse. At least compared with the class segregated homogeneous suburbs. There, many never see any poor or low income people.
Mr. Krugman posits, "For those of us who remember the 1970s, New York in 2015 is so safe it’s surreal. And the truth is that nobody really knows why that happened."
Then he goes on to describe how high-level professionals have shucked the suburbs for the quick commute of the inner city. The answer is simple: In Jimmy Carter's words, life is unfair.
I'll be very interested in that tantalizing tidbit at the end, where he suggests that he'll offer solutions to the age-old problem of how cities can subsidize affordable housing without breaking the bank. Despite his posturing, Mayor De Blasio's proposals for several thousand units -- barely a drop in NYC's very large bucket -- remain very far from any viable solution.
Then he goes on to describe how high-level professionals have shucked the suburbs for the quick commute of the inner city. The answer is simple: In Jimmy Carter's words, life is unfair.
I'll be very interested in that tantalizing tidbit at the end, where he suggests that he'll offer solutions to the age-old problem of how cities can subsidize affordable housing without breaking the bank. Despite his posturing, Mayor De Blasio's proposals for several thousand units -- barely a drop in NYC's very large bucket -- remain very far from any viable solution.
12
Life is unfair is what the reds said when whacking rich whites in soviet days but aside from its smug might makes right nihilism it is not valid causal analysis.
6
Actually long before Carter JFK said "Life is unfair."
He was talking about the draft and what was to become the Vietnam War.
He was talking about the draft and what was to become the Vietnam War.
Life is unfair is what the whites said when whacking reds in American days, but aside from its smug might makes right nihilism it is not valid causal analysis. Well said!
1
In the spirit of the Paris Climate meeting, I further the virtues of city living. It is the most energy efficient, least carbon footprint way to live. Think about it. Generally speaking, only one or two walls of an apartment are exposed to the heat and coolness sapping influence of the outdoors reducing heating and cooling energy needs. Efficient mass transit is everywhere.
We need to build new cities adjacent to existing mass transit just as many had imagined. The great housing boom is over and society has learned it's lesson not to build McMansions in exurbs that means low efficiency energy use and long car commutes. Apartment living is where it's at. What the heck! Nobody goes out much anymore. Everyone is connected to their boob tube or computer. Might as well just live in an apartment then. If you want to see the country, then you can travel on those rare outings.
We need apartments, more apartments, and even more apartments along bus and train routes. We need a glut of apartments. Everybody has to live somewhere and that 90 percent of everyone else would do fine in an apartment. I know I would. I'm into low energy use.
Stop expanding roadways. That only encourages the use of motor vehicles.
The Paris authorities had a brilliant idea to be adopted the world over; they made mass transit FREE yesterday and today during the Climate talks to reduce traffic congestion.
I'm tellin' you, if you ride a train or Subway or Bus, you will fall in love with the relaxed ride.
We need to build new cities adjacent to existing mass transit just as many had imagined. The great housing boom is over and society has learned it's lesson not to build McMansions in exurbs that means low efficiency energy use and long car commutes. Apartment living is where it's at. What the heck! Nobody goes out much anymore. Everyone is connected to their boob tube or computer. Might as well just live in an apartment then. If you want to see the country, then you can travel on those rare outings.
We need apartments, more apartments, and even more apartments along bus and train routes. We need a glut of apartments. Everybody has to live somewhere and that 90 percent of everyone else would do fine in an apartment. I know I would. I'm into low energy use.
Stop expanding roadways. That only encourages the use of motor vehicles.
The Paris authorities had a brilliant idea to be adopted the world over; they made mass transit FREE yesterday and today during the Climate talks to reduce traffic congestion.
I'm tellin' you, if you ride a train or Subway or Bus, you will fall in love with the relaxed ride.
62
What has occurred to me quite often of late is that many of the people basically traveling past each other to their jobs are interchangeable, meaning that, were they and their respective employers to arrange it, they could actually avoid the long commute by working much closer to home. I'm talking about people like teachers, nurses, retail workers, etc., who are effectively doing the same job, with the same qualifications and compensation. In other words, they could save a lot of time by working for the closest employer, trading places with like others who would also like a shorter commute. It wouldn't be easy, but it would definitely be worth considering.
Not sure about the apartments. I've lived in several, and have always had problems with the few (passive-aggressive?) residents who seem to enjoy making life more difficult for others. I would guess that the percentage of persons who would be willing to tolerate their childish behavior over the long term would be much less than 90%.
Not sure about the apartments. I've lived in several, and have always had problems with the few (passive-aggressive?) residents who seem to enjoy making life more difficult for others. I would guess that the percentage of persons who would be willing to tolerate their childish behavior over the long term would be much less than 90%.
8
Let's not be too quick to see good public transportation as a way to reduce traffic, though. Paris' public transportation is indeed excellent--reliable, very reasonably priced compared to London (with a recent drop in price for its commuter rails, too), safe, clean and fast. BUT an extraordinary number of people who both live and work in the city are still pathologically attached to their cars and drive to work every day even when the commute on the metro would be shorter. Moreover, France still allows diesel-fueled cars. The 2 car free days have nice, yes, but hardly life changing.
Mr. Krugman, glad you can afford a Manhattan apt along with the elites.
You say we can’t do much about the soaring inequality of incomes? Why not? In NYC, just think of the once thriving garment center, before they sent many thousands of jobs to Asia. And higher taxes on NY’s super rich to fund hiring more workers to provide needed services, improve subway transit, repair our old bridges/tunnels---and then raise their pay? What about pensions?
What about the foreign super rich who buy up condos but don’t live in them, and don’t pay taxes???
Nationally, just compare to the past, before inequality began to rise more than in other democracies. Working /middle class families at least had decent security. There was a myriad of differences vs today.
Jobs were still here for Americans, the most crucial factor.
CEO/ worker salary ratios were much smaller.
Employees got regular cost of living raises, guaranteed pensions, and benefits. Shareholders weren't the main thing.
Health insurance/drug prices hadn’t soared beyond access of millions.
City College was free.
Unions bargained wages, benefiting all workers.
Yes affordable NYC housing is a factor, but Krugman doesn’t mention these other crucial factors---the main domestic issues of the 2016 election. What do the Democrats have to say, Mr. Krugman—Clinton and Sanders?
This column is a distraction. Ok, the NY elites live here. Where are the countervailing powers, to give average citizens some influence?
You say we can’t do much about the soaring inequality of incomes? Why not? In NYC, just think of the once thriving garment center, before they sent many thousands of jobs to Asia. And higher taxes on NY’s super rich to fund hiring more workers to provide needed services, improve subway transit, repair our old bridges/tunnels---and then raise their pay? What about pensions?
What about the foreign super rich who buy up condos but don’t live in them, and don’t pay taxes???
Nationally, just compare to the past, before inequality began to rise more than in other democracies. Working /middle class families at least had decent security. There was a myriad of differences vs today.
Jobs were still here for Americans, the most crucial factor.
CEO/ worker salary ratios were much smaller.
Employees got regular cost of living raises, guaranteed pensions, and benefits. Shareholders weren't the main thing.
Health insurance/drug prices hadn’t soared beyond access of millions.
City College was free.
Unions bargained wages, benefiting all workers.
Yes affordable NYC housing is a factor, but Krugman doesn’t mention these other crucial factors---the main domestic issues of the 2016 election. What do the Democrats have to say, Mr. Krugman—Clinton and Sanders?
This column is a distraction. Ok, the NY elites live here. Where are the countervailing powers, to give average citizens some influence?
318
You're so right about the rich not paying their fair share of taxes, and this is especially true on the newly designated Billionaire's Row (57th street), where buildings like One57 are granted a 95% property tax abatement due to the 421a program, which almost everyone agrees doesn't work and which costs the city $1.1b/year. This giveaway is so extreme that the NY Post was recently able to compare a typical $1m condo vs. a recently sold $100m condo at One57, and discover that the nominal property tax of the former was actually higher than the latter. That means the $1m condo had a RATE of property tax >100X higher than the $100m condo.
Further, a joint Hunter College/Picture-the-Homeless study found that there are enough vacant apts to house the sheltered population 3X over. One of the chief reasons they cited for these continuing vacancies even in the face of much larger costs to house the homeless, is the lack of meaningful property taxes.
Governor Al Smith eliminated the building tax but kept and increased the land tax on properties from 1920-1931, and this resulted in a NYC building boom 4X the national rate. A Land Value Tax today would do the same thing and provide affordable housing for everyone while ending hoarding by billionaires who don't even live here.
Krugman needs to do more economic homework on this issue.
Further, a joint Hunter College/Picture-the-Homeless study found that there are enough vacant apts to house the sheltered population 3X over. One of the chief reasons they cited for these continuing vacancies even in the face of much larger costs to house the homeless, is the lack of meaningful property taxes.
Governor Al Smith eliminated the building tax but kept and increased the land tax on properties from 1920-1931, and this resulted in a NYC building boom 4X the national rate. A Land Value Tax today would do the same thing and provide affordable housing for everyone while ending hoarding by billionaires who don't even live here.
Krugman needs to do more economic homework on this issue.
8
true.
The whole economic system is stacked against the majority of Americans. . . By design.
Is it really a forgone conclusion that we have to accept or embrace this madness.
For the time, we certainly have accepted that we will be a greed based culture, one that says that if you aren't a CEO, you are unworthy.
The whole economic system is stacked against the majority of Americans. . . By design.
Is it really a forgone conclusion that we have to accept or embrace this madness.
For the time, we certainly have accepted that we will be a greed based culture, one that says that if you aren't a CEO, you are unworthy.
2
Scott....Yes thanks for your interesting factual post..... 95% tax abatement!?
And on 57th Street, the new tall towers are dwarfing what was a magnificent skyline view, especially from Central Park. The tax situation is distorted and so is the skyline.
The next topic should be NY State political corruption?
And on 57th Street, the new tall towers are dwarfing what was a magnificent skyline view, especially from Central Park. The tax situation is distorted and so is the skyline.
The next topic should be NY State political corruption?
1
While Mayor de Blasio "understands" that the less well off are being driven out by high rents, and housing policy is a subject that Prof. Krugman says he "has to return to another day," the people affected certainly aren't twiddling their thumbs, waiting for the elites to do something or say something on their behalf.
The Movement for Justice in El Barrio, a grassroots coalition, has been fighting against gentrification and the expulsive forces of global capitalism for years now. And the mayor's plan to build luxury housing in East Harlem would force people out of neighborhoods they've called home for generations.
His proposed 200,000 "affordable" housing units -- amounting to about a quarter of proposed luxury construction in high density areas -- will not affordable by them.
"Affordable" as defined by the mayor is an income between $46,620 and $62,150 for a family of three. Yet, the median income for a family of three in East Harlem is only $33,600. Since families and small businesses would be driven out by his plan, they're demanding that existing housing and small businesses be left intact.
They've presented a 10-point plan to "prevent El Barrio from becoming a gold mine for large corporations and a paradise for the rich."
So far, their proposal has fallen on deaf official ears. But the protests will continue. The civil rights song "We Shall Not Be Moved" is both a blast from the past, and a blast of fresh air overcoming the stench of an oligarchy gone wild.
The Movement for Justice in El Barrio, a grassroots coalition, has been fighting against gentrification and the expulsive forces of global capitalism for years now. And the mayor's plan to build luxury housing in East Harlem would force people out of neighborhoods they've called home for generations.
His proposed 200,000 "affordable" housing units -- amounting to about a quarter of proposed luxury construction in high density areas -- will not affordable by them.
"Affordable" as defined by the mayor is an income between $46,620 and $62,150 for a family of three. Yet, the median income for a family of three in East Harlem is only $33,600. Since families and small businesses would be driven out by his plan, they're demanding that existing housing and small businesses be left intact.
They've presented a 10-point plan to "prevent El Barrio from becoming a gold mine for large corporations and a paradise for the rich."
So far, their proposal has fallen on deaf official ears. But the protests will continue. The civil rights song "We Shall Not Be Moved" is both a blast from the past, and a blast of fresh air overcoming the stench of an oligarchy gone wild.
253
Karen,
Same thing in LA with Mayor Eric Garcetti working on affordable housing. There are almost 50K homeless in LA and their numbers are rising. The median income in LA doesn't support the going rents anymore than it does in NY or anywhere else.
People need to organize everywhere and make their voices heard or else they will drown.
Same thing in LA with Mayor Eric Garcetti working on affordable housing. There are almost 50K homeless in LA and their numbers are rising. The median income in LA doesn't support the going rents anymore than it does in NY or anywhere else.
People need to organize everywhere and make their voices heard or else they will drown.
102
More information on the Movement for Justice in El Barrio and its fight against neoliberalism:
http://www.newyorkencuentros.org/en/about-encuentros
http://www.newyorkencuentros.org/en/about-encuentros
20
Karen Garcia is right. And what Mr. Krugman so sure that abolishing land use restrictions will result in more affordable housing rather than more 5 bedroom, 5 bath, river views for hedge funders?
Near Gramercy Park on quiet tree lined residential street a heritage hospital was recently closed and replaced with an 55 story behemoth that spans the block from street corner to street corner, tripling the population of this tiny side street to a farcical measure. The traffic congestion and pedestrian congestion and noise pollution were not a factor to the corrupt community board and local politicians who were easily swayed to give this monstrosity a variance to build 3 times as high as the local zoning would have allowed.
This time Professor Krugman's knowledge and attention to reality apes that of Donald Trump. In this matter Paul Krugman sounds writes like a tourist.
Near Gramercy Park on quiet tree lined residential street a heritage hospital was recently closed and replaced with an 55 story behemoth that spans the block from street corner to street corner, tripling the population of this tiny side street to a farcical measure. The traffic congestion and pedestrian congestion and noise pollution were not a factor to the corrupt community board and local politicians who were easily swayed to give this monstrosity a variance to build 3 times as high as the local zoning would have allowed.
This time Professor Krugman's knowledge and attention to reality apes that of Donald Trump. In this matter Paul Krugman sounds writes like a tourist.
17
The rents soar without much ado
For poor folk twenty three skidoo,
Condos, pieds à terres,
Are no longer rare,
Affordable housing is through.
Oh how all the landlords do fatten
On rising rents vultures batten,
Old neighborhoods crumble,
It's out with the humble,
They're being erased from Manhattan!
For poor folk twenty three skidoo,
Condos, pieds à terres,
Are no longer rare,
Affordable housing is through.
Oh how all the landlords do fatten
On rising rents vultures batten,
Old neighborhoods crumble,
It's out with the humble,
They're being erased from Manhattan!
51
Doesn't help that rich Chinese are buying top end real estate in the USA.
127
Is there any way to restrict buying of apartments as investments, rather than for living in?
7
At least four small businesses on South Michigan Avenue Chicago, put out of business by plans, still unclear, of a Chinese owner of a vintage Chicago building.
1
and we allow this land and housing purchase by an enemy, why?
I guess my view is different than the professor's and it doesn't include good news any time soon.
Homelessness has been rising, not only in Southern California and New York City, but everywhere else, it seems. While some of it is most likely attributable to the lack of full-time, well-paying jobs, some of it is also due to the high demand for affordable housing since the housing bubble and the very short supply for rentals. Two and three generations of family members sharing the same household, post Great-Recession and multiple families sharing small rental housing because of the high cost are more norm than not.
While the press reports improvement in unemployment, it is not reflected in the well-being of a labor force that is participating in an improved economy. What Prof. Krugman describes about his experience and others who are doing well in this economy is dissonant from the experience of millions of millenials and their parents (minorities and whites) who still suffer the brunt of a recovery that hasn't reached them.
It is going to take a lot of work to redress the mess that has been in the making since the 90's. Cities and their mayors will be an important part of the solution, but the leadership, by way of economic policy will come from a new president and Congress installed by resolute voters.
---
Poor & White in OC: http://wp.me/p2KJ3H-1Nf
Wages & the jobless recovery: http://wp.me/p2KJ3H-1M8
The Precariat in the new civil rights era: http://wp.me/p2KJ3H-1KO
Homelessness has been rising, not only in Southern California and New York City, but everywhere else, it seems. While some of it is most likely attributable to the lack of full-time, well-paying jobs, some of it is also due to the high demand for affordable housing since the housing bubble and the very short supply for rentals. Two and three generations of family members sharing the same household, post Great-Recession and multiple families sharing small rental housing because of the high cost are more norm than not.
While the press reports improvement in unemployment, it is not reflected in the well-being of a labor force that is participating in an improved economy. What Prof. Krugman describes about his experience and others who are doing well in this economy is dissonant from the experience of millions of millenials and their parents (minorities and whites) who still suffer the brunt of a recovery that hasn't reached them.
It is going to take a lot of work to redress the mess that has been in the making since the 90's. Cities and their mayors will be an important part of the solution, but the leadership, by way of economic policy will come from a new president and Congress installed by resolute voters.
---
Poor & White in OC: http://wp.me/p2KJ3H-1Nf
Wages & the jobless recovery: http://wp.me/p2KJ3H-1M8
The Precariat in the new civil rights era: http://wp.me/p2KJ3H-1KO
83
Very good Rima but I think in another way; with 25 percent of those below 25, many of which are unemployed, living with family, that is actually a very good thing after many decades of family breakups. Long ago, families dissolved early and young people left home under pressure. Many decades ago the family was unified and the extended family lived together as a very normal regular way of life. The kids were home until their wedding day, the grandfolks lived with their adult children. Then came Television.
1
YBN,
You have got to be kidding... This is regression and not progress. We have fewer live births since the start of the Great Recession as young people don't want to start families when they are unable to provide for themselves. There are also far more suicides because people feel so helpless and hopeless. There are more homeless, everywhere, and they are families - not just single parents and kids.
I'll be the last one to be against families getting closer. but what you see as a positive is really the consequence of adverse events. Right thing happening for the wrong reasons.
The warped views presented by the media on the quality of the recovery, the purported job gains without qualifiers as to their quality, and the almost total silence on the plight of the precariat are nauseating.
Writing about what matters to most Americans, those who will vote for Bernie and those who (sadly) will vote for Trump, means lifting the cover on the deficiencies in Hillary Clinton's candidacy and what she has to offer. So, instead, we get silence in the hopes voters won't notice. But they are noticing.
This is one of the most tone-deaf op-eds Krugman's ever written.
---
My weekly news roundup includes a piece on a group of Republicans who are organizing for Bernie Sanders: http://www.rimaregas.com/2015/11/berniesanders-news-week-ending-in-1129/
You have got to be kidding... This is regression and not progress. We have fewer live births since the start of the Great Recession as young people don't want to start families when they are unable to provide for themselves. There are also far more suicides because people feel so helpless and hopeless. There are more homeless, everywhere, and they are families - not just single parents and kids.
I'll be the last one to be against families getting closer. but what you see as a positive is really the consequence of adverse events. Right thing happening for the wrong reasons.
The warped views presented by the media on the quality of the recovery, the purported job gains without qualifiers as to their quality, and the almost total silence on the plight of the precariat are nauseating.
Writing about what matters to most Americans, those who will vote for Bernie and those who (sadly) will vote for Trump, means lifting the cover on the deficiencies in Hillary Clinton's candidacy and what she has to offer. So, instead, we get silence in the hopes voters won't notice. But they are noticing.
This is one of the most tone-deaf op-eds Krugman's ever written.
---
My weekly news roundup includes a piece on a group of Republicans who are organizing for Bernie Sanders: http://www.rimaregas.com/2015/11/berniesanders-news-week-ending-in-1129/
12
(1) legalize marijuana, to depoliticize the marketplace.
(2) return to the gold standard, to depoliticize the central banks.
(3) enact a flat tax, to depoliticize the tax code.
(4) shorten life spans, to depoliticize the biosphere.
(2) return to the gold standard, to depoliticize the central banks.
(3) enact a flat tax, to depoliticize the tax code.
(4) shorten life spans, to depoliticize the biosphere.
But wondering why comment wasn't printed........