Gentrification and its Discontents

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I see that my post on gentrification has attracted some more-in-sorrow-than-in-anger finger wagging from Alex Baca, an intern at the City Paper, who writes at Greater Greater Washington:


I've complained before that McArdle takes a rather reductionist and simplistic view towards gentrification, and her latest piece is no exception. She boils gentrification down to middle-class (and likely white) buyers moving in, displacing poor (and likely African American) residents. Note that she does not specify whether she believes her neighbors do or do not own their homes. Neighborhood change, whether it's gentrification or not, extends far beyond this assumed black/white binary -- especially in cities other than DC.

I confess, the supercilious tone of the post makes me smile a bit--how could I possibly be so simplistic and reductive when she's already complained about it?  But when I was a senior in college, I was also lucky enough to know everything, and I remember how impatient this made me with the reactionary geriatrics who couldn't see the obvious.  So I do retain a smidgen of sympathy for her plight.

But I can't say the same for her argument.  It seems a bit odd to complain that I have reduced a discussion about gentrification in DC to the specifics of gentrification in DC, rather than exploring the full symphony of themes, dilemmas and opportunities presented by "neighborhood change".  This was a blog post, after all, not an urban planning tome.  I might as well respond to Ms. Baca by complaining that her post didn't mention anything about traffic management in Lyon.

Nor am I clear on why it matters whether my neighbors own their homes--as in most places, some do and some don't.  Those who are homeowners, and don't mind moving, will get a nice boost to their home prices if gentrification continues.  On the other hand, those who are homeowners, and don't want to move, may well not enjoy all the fruits of gentrification.  "Neighborhood change" disrupts existing social and commerce networks, whether or not you own your home.   As someone who still makes regular pilgrimmages to "my" neighborhood pizza place (now relocated five blocks north of my childhood home in New York), I am sympathetic to those who resist it.

And of course, when that "change" is gentrification, it also raises property taxes beyond what some people may be able to afford.

Nonetheless, I think it's useful to respond, because she highlights a lot of the problems I find in discussing urban planning with people who think that . . . well, that acknowledging the poor track record of technocratic interventions is simplistic and reductive.



The rest of her post puts me in mind of the phenomenon that William Easterly has described in development circles:  the recycling of ideas that have failed before, always unveiled with much fanfare, but no real explanation as to why this time is different.  Frankly, it makes me understand why Easterly sometimes gets a little testy.  Given that I spent several paragraphs in that post describing how I watched gentrification unfold on my Upper West Side neighborhood, it is a bit mystifying to read this from someone who describes herself as an aspiring urban planning specialist:

Gentrification doesn't always have to equal displacement, and there's no room for lament when the real problem of the latter needs some attention. True, one person alone can't enact a city-wide inclusionary zoning policy or demand that a developer include a substantial amount of mixed-income units in their next project, but one person can at least change their attitude.

. . . Instead of taking the McArdle approach and throwing our hands in the air, exclaiming that "we have no idea how to stop this," we should be encouraging our local leaders in policy and government to be prescient and knowledgeable of neighborhoods that might see substantial economic and demographic change in the future.

Housing Complex reported yesterday that Anacostia recently received a $3 million dollar grant from the Department of Housing and Urban Development's Sustainable Communities Funding, via the District Department of Housing and Community Development. DHCD's intended use for the grant demonstrates precisely the kind of prescience needed from local authorities that can influence neighborhood change:

"This project's main goal is to anchor the existing residents of Historic Anacostia, which will not be affordable in another decade unless direct, explicit and significant actions and investments are made to ensure a continued supply of affordable housing. This will be accomplished by: 1) Bolstering homeownership, particularly historic properties, and maintaining affordable options; 2) Promoting commercial redevelopment and entrepreneurship and enhancing job readiness, with a particular focus on leveraging the area's current assets and the developments occurring nearby to create economic opportunities; 3) Expanding job opportunities to help current residents better afford housing; and 4) Enhancing resident participation."

DHCD is taking a step in the right direction with Anacostia. Time will tell whether or not the grant money shakes out fairly, but in the meantime, let's be sure to carefully delineate between gentrification and displacement--and quit lamenting.

One of her colleagues at the City Paper adds:  "The thing is, there are ways to mitigate the downsides of bringing in things gentrifiers like, such as cafes and restaurants and dog parks. It's just sort of hard to see them if you, like McArdle, don't believe in interfering with market forces."

One would think that none of these things had ever been tried before.  They all have been, including in the Upper West Side, which is why I wasted all that time writing about it.  Perhaps it is unfair of me, but it seems to me that both Ms. Baca and her colleagues are mixing up their normative and their positive arguments.  Because I say that we don't know any way to preserve economically mixed neighborhoods, they essentially accuse me of ideological bad faith.

But if anything it is they who are confusing ideology with outcomes.  Italics and good intentions cannot substitute for results.  Notice what neither of them provides:  any evidence of a program that has actually succeeded in preserving mixed income neighborhoods.  What Ms. Baca offers is a program that is supposed to do this--a program that looks very much like a bunch of other programs in other cities that were supposed to do the same thing, and failed

$3 million?  This is a drop in the bucket compared to the spending programs that New York has embarked on in an attempt to preserve its neighborhood mix; Mitchell-Lama and rent stabilization are probably the most famous of these, but they are by no means the only such programs.  There are housing projects, special tax credits for building low-income housing, others for rehabilitating rent-controlled and rent-stabilized facilities, tax credits for brownfield redevelopment and historical preservation, and one of the most ambitious Section 8 programs in the country.  The city has put a phenomenal amount of money into job retraining, and as for commercial development, it has done something more effective than DC:  it has not enacted a tangle of regulations which have made it next-to-impossible to open many sorts of commercial facilities in the city.

Has the result been stable mixed income neighborhoods resisting the gentrification in Manhattan, and increasingly, in Brooklyn?  It has not.  

Rent stabilization has produced a shrinking number of apartments that are so in demand that the landlords can afford to be very choosy about their tenants--selecting high income renters who are unlikely to miss a rent check.  Mitchell-Lama and similar programs have created a modest supply of affordable housing which frequently goes to well-connected insiders who know enough to get their names on the list. 

One could continue this litany of woes for quite a long time, and anecdotally, one of her commenters argues that the same things are happening here in DC, with affordable housing units at places like City Vista going to college grads in entry level jobs rather than anyone who could legitimately be considered in need of a housing subsidy.  

The experience of New York and other cities seems to indicate that while such laws can slow the pace of development, they do not stop it.  And arguably, they make it more extreme than it otherwise would have been.  In New York, the result of rent control* was to lower renter mobility and push up prices for all the people who were not in rent controlled apartments.  The high rental prices pushed out the middle class and made developers reluctant to build anything except luxury housing--with good reason; the city council has previously reneged on its promise not to control new units.  

Inclusionary zoning initiatives were supposed to rectify this, and indeed proved an excellent way to provide subsidized housing for senior citizens, middle class white kids working in the low-paying entry level jobs of New York's glamor industries, and a small number of actual poor people; it has also resulted in the creation of nearby swap units which, when possible, are developed for the elderly or other special populations rather than working age adults who are more likely to have cash flow or other problems.  

Some genuinely poor people have survived in the housing projects and similar programs, and a few more in the new affordable units,  but in increasingly large swathes of the city, there is little in the way of a middle class; only the wealthy, and a few poor people.  The electricians and mid-level administrators and small business owners do not qualify for subsidies, but they cannot afford to bid against the bankers for the market-rate housing--market rate housing which is limited in supply by many of the very regulations that are supposed to make housing affordable, such as rent control rules which make it hard to tear down existing multi-family units and replace them with more units, and inclusionary zoning regulations which reduce the projected returns from development.  As one paper by Benjamin Powell and Edward Stringham found:

California is often held up as a success story because so many cities have adopted these ordinances.35 Yet many advocates measure success based on the number of ordinances rather than the number of units actually built. Just as economic theory predicts that price controls do not encourage production, when one looks at the data one notices surprisingly few below-market units built. For example, in the San Francisco Bay Area, the Association of Bay Area Governments estimated the need for very low-, low-, and moderate- priced units to be 133,195 units, or 24,217 per year during the 2001- 2006 five and a half year period.36 Yet in the thirty-plus years that inclusionary zoning has been implemented in the San Francisco Bay Area, inclusionary zoning has resulted in the production of only 6836 affordable units, or 228 units per year.37

Powell and Stringham suggest that by bifurcating the market into (expensive) market rate appartments and cheap controlled units, and raising the cost of development, inclusionary zoning laws tend to undermine their own stated goals.

These are by no means the only obstacles to building more housing--height limits and landmark preservation, to name but a few, are arguably even greater obstacles.  But Ms. Baca is no doubt aware that Powell and Stringham are far from the only analysts who have found that cities with inclusionary zoning ordinances see an increase in multi-family construction, but also see higher overall housing prices due to constricted supply.

Now, correlation is not causation; perhaps cities where prices are increasing more briskly are more likely to enact inclusionary zoning.  But the historical experience should at least give us pause.  Perhaps New York simply didn't go far enough, and that if the city had enacted a citywide 30% inclusionary zoning mandate, we would now see a flowering of mixed-income neighborhoods.  On the other hand, perhaps if we enacted such a mandate, we'd see the pace of development radically altered, and gentrification would prove even more extreme, as middle class renters and buyers competed for a more limited supply of housing, driving out everyone but the extremely affluent.

As far as I know, we have no evidence that inclusionary zoning and its multitudinous kin can prevent the kind of change I discussed in my post.  It is possible to house some number of poor people among the affluent, though you will face fierce community resistance, and in my experience those people are quite likely to end up increasingly isolated from their surroundings.  It is possible to grossly distort the housing market in all the ways that New York has done, pushing up rents and driving out the middle class.  But the stable mixed-income neighborhood with something for anyone remains very much a goal, rather than an achievement, of city planners.

An article from our pages several years ago might explain why.  Jonathan Rauch watched simulated societies in a computer, and noted what happened even when the "people" of the model had only a modest preference for being around others like them:

To see what happens in this sort of artificial neighborhood, look at Figure 1, which contains a series of stills captured from a Schelling-style computer simulation created for the purposes of this article. (All the illustrations in the article are taken from animated artificial-society simulations that you can view online, at www.theatlantic.com/rauch.) You are looking down on an artificial neighborhood containing two kinds of people, blue and red, with--for simplicity's sake--no blank spaces (that is, every "house" is occupied). The board wraps around, so if a dot exits to the right, it reappears on the left, and if it exits at the top, it re-enters at the bottom. 

In the first frame blues and reds are randomly distributed. But they do not stay that way for long, because each agent, each simulated person, is ethnocentric. That is, the agent is happy only if its four nearest neighbors (one at each point of the compass) include at least a certain number of agents of its own color. In the random distribution, of course, many agents are unhappy; and in each of many iterations--in which a computer essentially does what Schelling and his son did as they moved coins around their grid--unhappy agents are allowed to switch places. Very quickly (Frame 2) the reds gravitate to their own neighborhood, and a few seconds later the segregation is complete: reds and blues live in two distinct districts (Frame 3). After that the border between the districts simply shifts a little as reds and blues jockey to move away from the boundary (Frame 4).

Because no two runs begin from the same random starting point, and because each agent's moves affect every subsequent move, no two runs are alike; but this one is typical. When I first looked at it, I thought I must be seeing a model of a community full of racists. I assumed, that is, that each agent wanted to live only among neighbors of its own color. I was wrong. In the simulation I've just described, each agent seeks only two neighbors of its own color. That is, these "people" would all be perfectly happy in an integrated neighborhood, half red, half blue. If they were real, they might well swear that they valued diversity. The realization that their individual preferences lead to a collective outcome indistinguishable from thoroughgoing racism might surprise them no less than it surprised me and, many years ago, Thomas Schelling.

In the same connection, look at Figure 2. This time the agents seek only one neighbor of their own color. Again the simulation begins with a random distribution (Frame 1). This time sorting proceeds more slowly and less starkly. But it does proceed. About a third of the way through the simulation, discernible ethnic clusters have emerged (Frame 2). As time goes on, the boundaries tend to harden (Frames 3 and 4). Most agents live in areas that are identifiably blue or red. Yet these "people" would be perfectly happy to be in the minority; they want only to avoid being completely alone. Each would no doubt regard itself as a model of tolerance and, noticing the formation of color clusters, might conclude that a lot of other agents must be racists.

This is not just true of race; it is true of a number of characteristics, especially economic class.  Which is understandable, because neighborhoods have network effects.  Having more people like you means having more services for people like you, which is very valuable.  Unfortunately, even a very mild preference for being around a few of your "own kind" seems to result in fairly homogenous neighborhoods--which explains, in this era of labor mobility, why people seem to live around others who are not only similar in income and race, but also in political views and other characteristics.  A city planner trying to fight this has a heroic task in front of them.

None of this is new, of course; it's a bog standard debate in most urban centers.   The problem can also be readily observed in situ by going to the many cities which have enacted inclusionary zoning and similar measures in response to gentrification, yet still seem to be gentrifying.  If Ms. Baca wants me to "change my attitude" about this area of city planning, she is going to need to offer a little more than a lecture.  I'm going to need some actual evidence--and so far, she's utterly failed to provide it

*  I am lumping together rent control and rent stabilization; the programs have significant differences, but for our purposes, the effects are basically similar.
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Megan McArdle is a columnist at Bloomberg View and a former senior editor at The Atlantic. Her new book is The Up Side of Down.

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