Wednesday, May 11, 2005

Million Dollar Question: Whats in it for me?

Like most of this audience, I believe that free market capitalism is the best hope for reducing poverty and raising living standards here and around the world. Adam Smith was right: Competition really works to produce better products and services for everybody. Of course, competition produces losers as well as winners, but out of this "creative destruction" as Joseph Schumpeter called it, emerge the innovators and the entrepreneurs that will carry the economy to its next level.
But apostles of Smith and Schumpeter can't sell our ideas effectively unless we make sure that most people have an opportunity to use their talents and share the benefits—not just the fortunate and well-positioned. What about the working mom with a low-wage job, no health insurance and no child care? She rightly perceives the capitalist system as a trap from which neither she nor her children have a chance to emerge. Giving her a stake in capitalism doesn't mean paying her not to work. It means increasing her incentives to stay in the labor force and her opportunities to get more education, seek a better job or start a business of her own. Our productive capitalist system can afford health insurance, child care, education opportunities, and employee stock ownership. If it doesn't provide them, average people here and around the world may wonder, "what's in this for me?"
I'm Alice Rivlin.

Neo-McCarthyism and the Housing Opportunities for People Everywhere

Regarding the McCarthy-Suburbia connection mentioned below - check out Senator Gramm's comments during the Senate hearings of the HOPE program (Homeownership and Opportunity for People Everywhere), publicly acknowledged by Secretary Kemp - "I want you to get on with these reforms. I don't want the Soviet Union to pass us by. I don't want to be the last country on earth that is still using a system which all of mankind with one voice rejects. [...] If our current public housing program was really a model for efficiency in providing housing, we would have torn down the Berlin wall from our side to have gotten into Eastern Europe to share its full benefits. It was not the efficient model and they tore down the Berlin wall form their side to get away from it." -- Senate Hearing 104-252. The "Homeownership and Opportunities for People Everywhere" Initiatives. U.S. Government Printing Office, Washington: 1995 (page 18).

Underground Economy and Urban Renewal in Mexico

Yet again, the iron fist of the state aids the invisible hand of the market in urban renewal....,0,6639905.story

Mexico Runs on Sidewalk EconomyBy Marla DickersonTimes Staff WriterMay 9, 2005

TLALNEPANTLA, Mexico — When authorities decided to clean up this town, they didn't take any chances. Police swooped in just before midnight, armed with riot gear and backhoes. The invaders were repelled, the streets reduced to rubble.

A sneak attack to eradicate drug dealers? Gang members? Armed insurgents?

No, municipal leaders were uprooting sidewalk vendors, mostly women and senior citizens, whose makeshift taco stands and clothing stalls were clogging the city center. Ordered to relocate to make way for an urban renewal project, most wouldn't budge, leading authorities to eject nearly 1,900 of them by force.

"The mayor wants to create a tidy First World city in this place where people have nothing," said Jose Luis Vargas, the leader of a group of vendors protesting their ouster in late March. "Better to die fighting than to die of hunger."

Monday, May 09, 2005

McCarthy and Suburbia

This is a link from Charlie Hoyt, currently doing research on the Joint Committee Study and Investigation of Housing:

Choosing suburbia - "Picture Windows: How the Suburbs Happened"
Rosalyn Baxandall and Elizabeth Ewen

Reviewed by Joan Fitzgerald

"The interests of the real estate community were advanced by Senator Joseph McCarthy in the post-war period. As chair of the Joint Committee Study and Investigation of Housing charged with identifying reasons for the nation's housing shortage, McCarthy stacked the hearings to discredit the proposed Taft Ellender Wagner Act of 1945, a comprehensive bill to facilitate expansion of the nation's housing supply. The bill identified adequate housing as a right of every American. Eager to roll back New Deal programs, the Republican-controlled House and Senate quickly painted the bill as one with Communist underpinnings. McCarthy and his supporters argued that the economic recovery should be led by private sector housing development.

After an absorbing description of the hearings and the coalitions built on both sides, Banandell and Ewen conclude, "The key to McCarthy's attack was to brand public housing with the stigma of poverty and remove it from the realm of average working- and middle-class Americans. Conservatives wanted public housing to be viewed as a last source of refuge for the destitute rather than as a guaranteed right for all. If government continued to build public housing, conservatives feared that housing would be perceived as a right similar to public education and everyone would demand it. From 1941 to 1945 the conservatives and their real estate allies used the media to campaign against the 'socialist dangers' of public housing. They operated on both the federal and local level, attacking public housing as a Communist conspiracy.""

The Return of Urban Renewal

A link from the boogie down Bronx's finest planner, Jose Lopez:

"In the first phase of the federal urban renewal program, opponents of projects that would destroy communities and small business were similarly excoriated for being unconcerned with the public interest.(21) It was only later, when it became evident that benefits did not always trickle down, communities were destroyed, cleared land lay vacant for decades awaiting a developer, and “marginal” businesses that frequently laid the groundwork for the next wave of innovation were uprooted that the dangers of “great plans” became fully appreciated. By now many of these lessons have been forgotten as a new generation of architects and planners has come along seeking to imprint their visions on New York's landscape. The pendulum has swung to the other side rather than resting at a point where comprehensive planning can occur within a context of humility, flexibility, and democratic participation. "

Caracas, Venezuela

Sunday, May 08, 2005

Rent Control

A forthcoming article on rent control from the journal of public economics (you can download the paper from Svarer's research page: . I'll post more current literature/campains surrounding rent control soon.....

Rent control and unemployment duration

Michael Svarer, Michael Rosholm and Jakob Roland Munch Department of Economics, University of Aarhus, Building 320, DK-8000 Aarhus C, DenmarkbInstitute of Economics, University of Copenhagen, Denmark

In this paper we analyse how rent control affects the duration of individual unemployment. In a theoretical search model we distinguish between two effects of rent control. On one hand, rent control reduces housing mobility and hence mobility in the labour market. On the other hand, to maintain rent control benefits, unemployed individuals are more likely to accept job offers in the local labour market. Based on a rich Danish data set, we find that the probability of finding a local job increases with the rent control intensity of the housing unit, whereas the probability of finding a job outside the local labour market decreases with the rent control intensity.

Keywords: Rent control; Unemployment duration; Search model
JEL classification: C41; J61; J64; D45; L51

Laguardia and Wagner Archives

Check out the New York City Housing Authority archives (you need to click on the NYCHA collection first) - the photos are incredible, they also have oral histories but for some reason they require a password...

The Archives is the repository of the New York City Housing Authority. The first housing authority in the United States, NYCHA built and manages projects housing about 418,000 people, more than the populations of Pittsburgh, St. Louis, or Oakland and about the same size as Atlanta. The collection covers the period from the late 1920s to late 1980s. It documents the creation of New York's public housing projects and provides information about the lives of low income residents. Most major themes in the social history of 20th century New York can be studied through the collection. The 1,600-box collection contains correspondence, reports, news clips, testimony and surveys of neighborhoods and tenant populations. It also has 3,700 photographs, including many rare images of neighborhoods before they were razed to build projects, and oral histories. The New York City Housing Authority Collection has been computer-indexed.

Urban Renewal Bombay Style....

Bombay Moves to Push Out the PoorSlums Are Razed as Plans Envisage Reinvented City
By Rama LakshmiSpecial to The Washington PostSunday, May 8, 2005; A20

BOMBAY -- Mohammad Badruddin, a mason who lived in a cramped, fly-infested slum with open drains, said he was laying floor tiles in a gleaming residential high-rise recently when he heard that four bulldozers had flattened his neighborhood of tin-walled homes.

"I rushed back and saw the whole slum demolished," recalled Badruddin, 52, whose home was in the center of India's commercial capital of Bombay. "We resisted the bulldozers, and the police beat us. All my hard work was razed to rubble."

Badruddin and his 4,000 neighbors now live in makeshift plastic and bamboo tents on a burial ground nearby. To prevent their return, the government dumped heaps of putrid garbage on the slum land and posted security men to guard the area.

"They say they want to turn this city into Shanghai," Badruddin said, referring to a multibillion-dollar government development program. "I don't know what the word Shanghai means, but it is an excuse to kick poor people in the stomach."

To free up hundreds of acres of land for new building, about 90,000 shanties were flattened in the slum clearance drive this year, leaving about 300,000 people homeless.

Bombay, 7 1/2 miles wide at its broadest point and nearly 25 miles long, has been a magnet for rural migrants seeking jobs and an escape from the poverty of their villages for more than a century. Today, more than half of Bombay's estimated 16 million people live in overcrowded slums in the heart of the city, on the streets, along railway tracks and near water pipelines. Slums even hug the boundaries of the Bombay airport, hindering expansion plans that include a new terminal and taxiways.

Successive governments have legalized new slums or doled out free alternate housing hoping to secure votes from people who live in those areas. But officials now declare that the city's fragile infrastructure is collapsing under population pressure and that Bombay had no space for more migrants.

"All these years, our politicians have encouraged these encroachers of public land," said Sanjay Ubale, an official in the state government of Maharashtra, of which Bombay is the capital. He said new rural migrants made up 37 percent of the city's population increase from 1991 to 2001. "With the slum demolitions, we showed political courage for the first time and sent a strong signal that you cannot expect free space in this city anymore," Ubale said.

Even as more people stream into this teeming and diverse metropolis, the city's economic fortunes have decreased in the past eight years, Ubale said. Meanwhile, he said, southern Indian cities such as of Bangalore, Hyderabad and Madras have upstaged Bombay in wooing foreign investment.

"Real estate prices in Mumbai," as Bombay is now called, "are among the highest in the world, cost of living and doing business is very high," Ubale said. "We have added no new railway lines in 50 years and our public transport is choked. Water pipelines were laid 100 years ago. There are slums everywhere," he said. "The city is decaying and needs to urgently reinvent itself into an efficient world-class city, like Shanghai and Cleveland did."

India's Finance Ministry has earmarked funding this year for urban renewal projects in six cities, including the start of a subway and what has been called a trans-harbor project in Bombay. That project will include a multilane highway and rail connections from wealthier south Bombay to poorer sections outside the city.
"The trans-harbor link will be Mumbai's Brooklyn Bridge. It will decongest our city. And the hinterland can be developed for manufacturing and would absorb Mumbai's migrants too," said Milind Deora, a parliamentarian from South Bombay. "But ultimately we will have to find our own model for renewal. We can't just hope to copy, cut and paste Shanghai onto our city."

The state government's actions have fueled an impassioned debate about whether there is room for the poor in Bombay's Shanghai dream. Activists argue that the poor alone cannot be blamed for squatting on public land. Slums, they claim, come into existence because of a corrupt collusion among slumlords, police and politicians.

One controversial part of the renewal plan is to develop land occupied by shuttered cotton mills. The mills gave Bombay its first economic impetus in the 1800s, but were closed 20 years ago. A prolonged workers' strike in 1982 and the use of modern equipment proved fatal to the mills, affecting about 250,000 jobs. Today, 54 textile mills occupy about 6,000 acres in central Bombay. A report prepared for the government by McKinsey &Co., an international consulting firm, recommends the creation of "islands of housing and commercial excellence" by selling old mill and port land, widening roads, and building upscale homes, retail outlets, urban plazas, museums and hospitals.

Owners of the closed mills want the land for shopping malls and luxury high-rise apartments, while the city hopes to reserve a share of the land for open spaces and affordable public housing. The former mill workers are lobbying for movie studios and garment or gem cutting factories that will create jobs for their children.
"My heart breaks every time I see a mill being torn down," said Narendra Kargaonkar, 42, a second-generation mill worker who lost his job at Phoenix Mills, now the site of a bustling shopping mall, nightclub and a bowling alley. The only reminder of the old structure is the tall chimneystack protruding out of the mall. Kargaonkar now works as a door-to-door milk deliveryman, earning a fraction of his salary in 1982.

Mohammad Badruddin, the slum dweller, and Kargaonkar are among the hundreds of thousands of poorer residents who feel left out of Bombay's race to become a new global city.

"What kind of a city renewal is this?" Kargaonkar said. "There is now a discotheque where our looms once stood."
© 2005 The Washington Post Company