Concentrations of Wealth

20 September 2010


Bend Barbie: This yuppie Barbie comes with your choice of BMW convertible or Hummer H2. Included are her own Starbucks cup, credit card and country club membership. Also available for this set are Shallow Ken and Private School Skipper. You won’t be able to afford any of them. (From a online humorous piece about stereotypical Oregonians.)

Another Addendum on Non-Transient Spaces

In recent posts The Spaces in Which We Live and Addendum on Non-Transient Spaces I formulated some ideas about the relationship between financial resources and living space. Such ideas are not new. There has, in particular, been a lot of discussion of the spatial concentration of poverty in public housing projects. Recent correspondence with my sister about the above-mentioned posts has brought my attention to concentrations of wealth that deserve mention in their own right.

Bend, in Central Oregon, was formerly a cowboy town, but its character has, shall we say, changed somewhat.

My sister mentioned to me the case of the town of Celebration, Florida, which was developed by the Walt Disney Company. She had looked into the prices of the houses in this community and told me that it is extremely expensive to live there. That is no surprise, but I hadn’t really thought about it. However, once I did start thinking about it I realized that most carefully planned communities are extremely expensive, and therefore one of the factors that influences life in such communities is the filtering effect of only having wealthy people in a neighborhood.

Celebration, Florida

It seems odd to even have to say it, but being wealthy can be very pleasant. However, it needs to be said because of stereotypes perpetuated by television and the popular press which likes to portray the very wealthy as being vicious, unpleasant, and shallow. This is no more true in fact of the wealthy than it is of the poor. In fact, wealthy people are often happy and friendly. And that should not come as a surprise. Having plenty of money removes a lot of worries that ordinary folks have. If you have a lot of money you don’t have to worry about where your next meal is coming from. You don’t have to worry about whether you will make your rent this month, and you don’t have to worry about what happens to you when you get old. As a result of having far fewer worries than the poor, the rich are often pleasantly light-hearted about life. Of course, they are not without their worries. They have to worry about their stock portfolio and whether to go to Bali or Tahiti next vacation, but this doesn’t really compare to the worry of how you will deal with the pain when your tooth cracks and you don’t have the money to fix it.

Hilton Head Island: no poor folks here anymore.

One of the problems of gentrification, however well intended, is that it often has the result in fact of transforming spatial concentrations of poverty into spatial concentrations of wealth. This is often very good for a city (or, at least, for a particular neighborhood within a city), and it can be pleasant for the wealthy people who move into recently renovated historical sections of a city, but it is very traumatic for the poor who are expelled. The expulsion never needs to be formalized in a legal sense, because of the filtering effect of expensive living. Once a neighborhood is spruced up, everything gets expensive. So even if you hang on to your little piece of property and don’t go along with the program of gentrification (assuming that the city doesn’t force you out through condemnation proceedings — something the City of Portland has shown a willingness to do), the surrounding increase in property values will drive up your property taxes until you can no longer afford to live in the neighborhood. One of the most notorious cases of this was Hilton Head, South Carolina, once a home to many poor African-Americans, subsequently developed in high style, producing the wealth filter effect that eliminated all the poor people from the area.

Portland's so-called “Pearl District” is a particularly nauseating example of gentrification. I wouldn't go here except that my work takes me through the area almost every day. This area formerly consisted of warehouses and industrial buildings.

While the poor are most definitely poor, they aren’t stupid. They know that when developers start buying up properties in poor neighborhoods that the developers are essentially placing bets that this now-poor neighborhood can become the next gentrification success story. The poor know that when this happens they are likely to be forced out of the area out of financial necessity, just as they know that, even if their present neighborhood is far from perfect, it is probably better than wherever they will end up once forced out of their present situation. Ever-present inflation coupled with deteriorating wages for the working poor (when adjusted for inflation) pretty much guarantee this result.

Mitigation for gentrification is possible in places like Venice, but most places aren't like Venice. This is the exception to the rule.

Social and economic forces larger than any one individual — the “invisible hand” as it were — conspire at gentrification, i.e., the concentration of wealth and the spatial segregation of economic classes. Local governments could provide mitigation for these effects, but to do so would be very expensive, and the poor are not a constituency that many politicians today see themselves as serving. There are instances of such mitigation, however. Old houses in Venice have been renovated at the expense of the government with the residents given a guarantee that they can move back in again after the renovation. Venice is an historical treasure, a unique place with a genius loci all its own, and the Italian government knows that it must take extraordinary measures to see that it is preserved. This is one way to do it. But if it takes an architectural treasure like Venice to see that such mitigation takes place, well, most places on the map aren’t Venice and consequently they won’t be treated in this way.

There is another name for the concentration of wealth other than gentrification: capital. We can think of the growing concentrations of wealth in the industrialized world as a kind of residential capital formation. Once we think of it in these terms, we can also see the traditional (read: poor) neighborhoods uprooted and replaced by gentrification as repositories of social capital. Traditional neighborhoods, in so far as they exist at all and are not mere urban legends, are like climax ecosystems: highly articulated and complex social structures that have evolved into what they are, and can preserve their complexity only if they remain intact. If you “clearcut” a traditional neighborhood — i.e., raze it to the ground and build new buildings in the same space — then the endemic species are going disappear and be replaced by pioneer species.

Thus in the paradigmatic case of gentrification, when a traditional urban neighborhood undergoes development that forces out long term residents and is later populated by wealthy parvenus, what we have is the replacement of social capital with financial capital. In so far as the social capital of the traditional neighborhood made it possible for that neighborhood to retain its quaint traditional character, thereby making it valuable for investors, developers, and speculators, there is a sense in which social capital is transformed into financial capital. Once spent, the social capital is dissipated, and financial capital takes its place.

This is, as I said, the paradigmatic case. I don’t think that such a case is often realized in fact, but certainly there are many cases that approximate, to a greater or lesser degree, this paradigm case. In writing this I sound like a Jane Jacobs enthusiast, but that isn’t my point. The label of “gentrification” is often a stick used to beat developers just because developers are unpopular. But developers are merely a symptom of the changes taking place in large industrialized cities. The developers exist because they are serving a need. If cities were not willing to allow neighborhoods to be transformed, and if people were not willing to pay disproportionately high prices for inner-city redevelopment along the lines of gentrification, then developers and speculators simply wouldn’t exist because they wouldn’t be able to make a profit at what they are doing.

What we find in fact is that cities are quite proud of their transformed neighborhoods like Portland’s Pearl District, so much so that they often facilitate the work of developers. And once a “buzz” develops around a gentrifying neighborhood, there is often great snob-appeal in acquiring property — residential or commercial — in the newly “hot” neighborhood. Having a house or business with the “right” address can be, for such people, as important as having the “right” car and the “right” clothes.

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A street map of Portland's Pearl District.

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