Why I am a liberal part II: the middle class in New York

I've had this post knocking around in my head for a while, and it's gotten longer and longer with no resolution. So I'm just going to get as much of it out of the way as possible and move on. Essentially, the topic is that the middle class is being squeezed out of New York, but too often that transformation is presented in the media as either a) inexorable or b) the fault of the people moving in.

A friend of mine and Solomon's gave a speech about six months ago on the loft-ization of SoHo. In the introduction he mentioned that wherever in the city he goes to speak about urban policy, the #1 thing young white people want to talk about is gentrification and their own role in it. My theory is that this arises both from the desire to be in a position of power rather than helplessness (even if it makes them guilty) and from the basic belief that markets move blindly, as the result of innumerable private decisions. We've had many, many years of the politics of consumption to inculcate that belief (e.g., currently I am not buying Coca-Cola products because of this sort of thing), but ultimately it results in some absurd formulations. At a housewarming party I threw a month ago, one of my guests told me about two of her friends, who have made the principled decision to spend as much as possible on housing so as not to compete with people making less. (I swear I did not make that up. What's more, she looked downright confused when I said that the idea was completely ridiculous, and that even if everyone followed their lead, it would only enrich landlords more and have absolutely no effect on the underlying problem.)

Maybe the bad aftertaste of Communism has made us all leery of analyzing means of production. But we need to get over that. Ownership matters. The middle and working classes are being forced from Manhattan in particular and New York in general as a result of decisions by large-scale private enterprises (and shitty public schools), and the only force we have collectively to counter those decisions is our government; unfortunately, New York City's government has been run largely for the benefit of private developers and landowners for about, oh, a decade and a half now.

Take the example of the sale of Stuyvesant Town and Peter Cooper Village.

While state law would prevent a new owner from charging market-rate rents to existing residents as long as they remain in their current apartments, an owner could in many cases have the unit deregulated when the current tenants die or move. Over the next decade or so, the best-known bastion of middle-class housing in Manhattan could become largely unaffordable to the middle class.

“We’re losing more at one end than we’re gaining in affordable housing at the other end through the mayor’s plan,” said Victor Bach, a senior policy analyst for the Community Service Society, an organization that studies and tries to alleviate poverty in the city. “This just tips the balance even worse. It’s more difficult to make the argument that the efforts of the city in affordable housing, which deserve a lot of praise, are going to compensate for the market losses that occur through sales.”
...
City officials said they would be willing to work with any buyers who are interested in keeping Stuyvesant Town and Peter Cooper Village affordable to the middle class, and could offer incentives. For example, they might help a buyer with getting financing for a co-op conversion plan under which current tenants at certain income levels could buy their apartments at a reduced price.

The subtext is that this is an inevitable result of market forces, and while the city may be able to offer incentives to keep apartments somewhat affordable for sale, they certainly won't be able to preserve affordable rental units. (Indeed, the whole idea of affordable rental housing is more or less quaint to the Times.) No matter what the city does, there will be fewer units on the market affordable for middle-class renters.

Contrast that with Liza Sabater's analysis of the city's long complicity with MetLife in driving out middle-class residents. Read the whole thing, but this snippet is particularly instructive:

It is no secret that MetLife warehoused hundreds of apartments during the 1980s and 90's while they lobbied to get rid of rent stabilization laws. Stuyvesant Town is the perfect example of how demand for housing in New York City is inflated and enhanced by those who control inventory not those who demand it.

Markets are not free. They are always manipulated by those with the power to do so: governments on the one hand, private enterprise on the other.

Take another example: the Pinnacle Group. This one hits closer to home because I just moved into a Pinnacle building.

[D]uring the past two years, Mr. Weiner, 57, and his firm, the Pinnacle Group, have spent more than $1 billion on hundreds of apartment buildings and quietly become one of the biggest property owners in neighborhoods from Brooklyn to the Bronx.
...
Critics accuse Pinnacle of buying buildings and firing superintendents within weeks. Questions have also been raised about whether the company has violated the city’s rent-stabilization laws by sometimes raising rents higher than is legally allowed, through such measures as passing along the cost of questionable renovation expenses. In one case, the cost of installing five toilets was passed on to a tenant in a two-bathroom apartment.

The critics also say the company has been engaging in harassment to force people out of their apartments. Tenants describe being put through a Kafkaesque tangle of eviction notices slipped under doors at night, and of legal challenges made to their right to live in longtime apartments.
...
Mr. Weiner has not disputed that his company has sent out 5,000 dispossess notices to tenants in its approximately 21,000 apartments in the past 29 months. That, say adversaries, is itself cause for alarm.

“When you are trying to evict one out of four tenants, that is what lawyers call prima facie evidence,” Congressman Rangel said. “It is something that screams out for a criminal or civil or legal remedy.”

After reading that article I have little doubt that this happened to the previous tenant of my apartment, by the way, and I also have no doubt that my rent could be increased substantially in the near future. But aggressive harrassment of literally thousands of tenants can only be dealt with on the government level. My decision to take my apartment (regardless of the guilt I may feel about it now that I am a little better informed) is literally irrelevant.

For yet another example, check out Mark Winston Griffith's very smart pieces on lending scams as the nasty secret of gentrification here and here.

Let me change gears a little. There are many reasons to care about the erosion of the middle class as a broad demographic fact affecting the country as a whole, but why care so much about middle-class (or at least mixed-income) neighborhoods in New York? After all, according to this Brookings Institution report on the loss of middle-class neighborhoods in cities across the country, only 16% of the families in New York fall into the middle income categories (between 80% and 120% of Area Median Income). Why worry so much about such a small minority?

Well, as the report puts it:

If rising economic inequality has contributed to rising economic segregation, the ability of lower-income individuals’ to choose and access middle-income neighborhoods may have declined. This, in turn, may limit their access to associated amenities like jobs, decent health care, safe neighborhoods, and adequate political representation. A lack of middle-income neighborhoods may also limit opportunities for low and moderate-income homeowners to “move up” the property ladder, if the house-price differential between lower- and higher-income neighborhoods is too high.

In other words, people can't climb the socioeconomic ladder if you yank out all the middle rungs. Very, very few people if any can jump from the bottom to the top in one step. The continued existence of middle-class or mixed neighborhoods is vital to the future prospects of those who now earn much less. So add all those below 80% AMI--now we're up to more than 57% of the city.

This has already taken an hour to write so I'm going to leave it there, very likely having said nothing you didn't already know. But at least now I can stop thinking about this and go back to making fun of Pataki's combover or whatever. Maybe I'll add thoughts later if I have them.

UPDATE: Larry Littlefield offers interesting evidence that contrary to news reports, Stuyvesant Town and Peter Cooper Village are no longer true middle-class enclaves at all, but islands of the merely affluent (as opposed to superrich).