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Progress and Poverty in the New Gilded Age

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Using Henry George’s critique of inequality in the first Gilded Age as a jumping off point, Elizabeth Murphy has a very interesting essay considering how the new luxury towers for billionaires in Manhattan serve as reflections on our own problems with extreme inequality today.

In the twenty-first century American city, luxury real estate has succeeded the office tower as the symbol of economic might, and, one could argue, of a society’s guiding principle. In January of this year, a series of New York Times articles investigating veiled ownership practices in the high-rise condos bordering Central Park described slender towers topping 1,300 feet, with plans for new buildings reaching even higher. Units in the developments collectively referred to as “Billionaire’s Row” often sell for tens of millions of dollars to shell companies established to protect foreign investors.[5] For buyers, such luxury properties function as foreign bank accounts and tax havens; for developers they represent, as Martin Filler wrote in the New York Review of Books, a kind of “vertical money.”[6]

For many city-dwellers, the trend in development of luxury condos underscores the extreme inequality that has long characterized New York City’s economic landscape. “It was not that long ago that Columbus Circle was the makeshift residence of dozens of homeless people squatting at the site of the abandoned New York Coliseum,” wrote Times journalists Louise Story and Stephanie Saul.[7] These days, the former site of the Coliseum houses the mall at the base of the Time Warner Center, the first super high-rise tower to have been built along the southern edge of Central Park. Developments like the Time Warner and, more recently, One57, Nordstrom Tower, and 432 Park are not merely symbolic of a system that unequally distributes its wealth in favor of the very rich: they contribute to the foundation of that system, providing tax breaks and subsidies to developers, driving rents ever higher, and marginalizing people whose mere presence is believed to do harm to property values.

In the years following the housing and financial crises that left many without jobs or homes, “the contrast between the House of Have and the House of Want”[8] has grown all the more discernable. Walking through the streets of midtown, day or night, from Chelsea to Columbus Circle, one views the real-life circumstances of the city’s poorest residents against a backdrop of wealth. Recent data published by the Coalition for the Homeless reveals the painful irony underscoring this scene: the primary cause of homelessness is a lack of affordable housing.[9]

And in conclusion:

“People claim the land by creating sacred sites,” the mythologist Campbell explained—and in doing so, they transform natural and cultural landscapes, often irrevocably.[24] For many New York City residents, the most sacred places are perhaps the public grounds, the rare bits of land reserved for parks and green space. But as the values of a society change, so do conceptions of spaces deemed sacred.[25] Today the park’s “artificial wall” is not twice but thirty times the height of the Great Wall of China—and growing. These buildings do not merely check the imagination, they loom large with a presence that will not be short-lived.

It would be generous to assume that the design of One57, meant to resemble a cascading waterfall, took to heart Olmsted’s plans to insinuate nature. The waterfall spills, as it were, away from the park, to the south. The north-facing surfaces of One57 and its neighboring super-towers are flat, more like walls. This observation echoes one put forth by Washington architect Shalom Baranes, who describes development in terms of beautification. The towers are, he explained, like the walls of a great, “outdoor room.”[26] Indeed, like a vast parlor, the ornate walls of which signify wealth that for all but a very few is—and will always be—unattainable.[27]

The whole thing is well worth your time. Murphy goes onto to devastate the defense by Yglesias and others of the Manhattan luxury tower that tried to make the residents of its affordable housing units go through a separate entrance, noting that the tax breaks the developers received for a pittance of affordable housing was more than valuable enough for them.

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  • Ktotwf

    Even if you bracket the upcoming ecological apocalypse, this all spells dark times ahead.

    What we need first and foremost (and this is a stopgap, not the entire solution) is a political party that is on some level dedicated to preventing income inequality from undermining our society. I don’t think we really have that. Nothing I have seen suggests that, outside of the Leftiest fringe of the Dem party, politicians have come to see inequality as a problem in and of itself.

    • ThrottleJockey

      How effective is scapegoating billionaires even when its true??? It might work with, say, 20% of the electorate, but you’re better off telling people what you’re going to do for them. I’m going to give you Obamacare…I’m going to cut your taxes…I’m going to make college free…etc.

      These things may have the effect of lowering income inequality, even though “income inequality” is not the phrase used to sell it.

  • ThrottleJockey

    I remember when Al Gore was running for President (the 2nd time) and he kept talking about income inequality. I said to a friend at the time, “Instead of talking about how many more slices of the pie the billionaires are getting, he should be talking more about the size of the slice he wants to give middle class/lower class voters.”

    My relatives/friends eyes glaze over when I say that billionaires have won 95% of the income gains since the Great Recession and everyone else has had to split 5%. We need to talk more about what we’ll do for voters, and less about how the billionaires are robbing the poor and middle class blind.

    For instance I was reading this morning that Donald Trump’s tax plan would only give the average middle class family a $5K tax cut while it would give a $100,000 tax cut to upper class families. This statement was made as a negative criticism of Trump’s plan. But Do you know what the typical middle class family would do to decrease its taxes by $5K??? Hell $5K is a vacation, a new big screen TV, and a XBox too! Or, maybe, a down payment on that cool new Chevy Colorado.

    • Ktotwf

      That has largely been the tact of the Sanders’ campaign – promising a social democratic renovation of the US. It seems to have inspired exactly who you would expect, annoyed exactly who you would expect, and drawn eyerolls from Clinton and the bien pensant technocratic class.

  • NewishLawyer

    I remain somewhat unmoved by arguments like Jeremiah’s Vanishing New York. The truth is that no business or institution is going to last for perpetuity. A lot of my friends like to post “oh no this business is closing down after 80 years” when the never went in to said business in the first place. There is always going to be housing for the ultra wealthy. The real trick is how to convince developers to build housing for the middle class in cities. Developers seem convinced that only the ultra wealthy can afford to live in cities with families and all middle class people want suburban homes.

    • LeeEsq

      Not wanting parks to be surrounded by luxury high rises is a lot different than lamenting that the Lower East Side has more Chinese restaurants than delis these days. I’m a generally pro-build person but deciding that Central Park, Prospect Park, and company shouldn’t be surrounded by high rise developments and blocked off from street viewing is perfectly legitimate as a policy choice.

    • burritoboy

      I don’t think that’s the actual core of the complaints a la Vanishing New York. There always will be housing for the local wealthy, but having a comparatively new global ultra wealthy class has particularly extreme effects on certain places.

  • AMK

    The New York ultra-luxe property market is money laundering, plain and simple…..Russian and Chinese and Arab oligarchs stashing their loot as penthouses instead of diamonds or art (of course, America’s super-rich do the same thing).

    The good news is that NYC property taxes are high and trending higher. So I don’t really have as much of a problem with these people living large if they can be soaked to fund schools, early childcare, health programs, etc. The problem is not in NYC, but in much of the rest of the country where the soaking never happens.

    • Brett

      They really need to tax the hell out of those. Just slap a really high property tax on units valued at over $1 million owned by non-US citizens and legal residents, and you’d suck a lot of money out of the pockets of the Chinese and Russian money launderers.

    • twbb

      In terms of rates, NYC property taxes are notoriously low, though the sheer value of a lot of NYC property helps out in terms of absolute dollar amounts.

      • ema

        Unfortunately, the apartment’s value is not a factor. The property tax calculation is based on the rent roll of nearby rental buildings:

        The combined 89th and 90th floor penthouse at One57 set the new high-water mark for a single-family residence sale in New York. While the owner paid [$100.5 million dollars] for the penthouse, the city only taxed the unit for $17,000 in property taxes. That’s an effective property tax rate of 0.017 percent—about one one-hundredth of the average national tax rate.

  • Randy

    [N]oting that the tax breaks the developers received for a pittance of affordable housing was more than valuable enough for them.

    In monetary terms, yes, the tax breaks should be sufficient. That overlooks the fact that a big part of the attraction of this kind of development is being able to rub the world’s face in it. Making the lower orders go through a separate door is just a part of the rubbing.

  • SatanicPanic

    I don’t know if I buy it that luxury towers drive rents higher.

    • quarternine

      Indeed, they don’t. From page 26 of the San Francisco controller’s study on the likely effects of a building moratorium in the Mission: “[P]roximity to market-rate housing had a statistically significant negative effect on housing prices.” http://sfcontroller.org/Modules/ShowDocument.aspx?documentid=6742

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