The New Urban Crisis: Gentrification, Housing Bubbles, Growing Inequality and What We Can Do about It 
by Richard Florida.
Oneworld, 352 pp., £20, September 2017, 978 1 78607 212 2
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Richard Florida​ has been having second thoughts. In 2002 he argued in The Rise of the Creative Class that the future of advanced economies lay not in manufacturing but in high-skilled areas of the service sector: engineering, design, fashion, media, finance, medicine and law. The industrial revolution had largely originated in cities, but in the 20th century, industry started to move away from them. By the end of the 1970s factories had shifted to the edge of the city or out of it. Workers followed in a great migration to the suburbs. The cities they left behind declined; many neighbourhoods emptied out, and rates of drug addiction and violent crime rose – the first ‘urban crisis’.

The new high-skilled service economy and the people who worked in it were, Florida maintained, drawn to cities and welcomed the concentration of ideas and skills found only in urban centres. It followed that the cities that managed to attract and retain high-skilled artists, entrepreneurs and professionals – the ‘creative class’ – would flourish. That meant providing safe streets and good schools, public transport and so on – things all city-dwellers want. It also meant cultivating qualities particularly attractive to the creative class, such as cheap workspaces for artists and start-ups, good restaurants, music and exhibitions. Florida argued that the best indicator of a city’s openness to the creative class was its openness to gay culture – a city with a vibrant gay scene was almost bound to flourish in the new economy. His book became influential with city leaders and urban planners across the US and beyond.

The two dominant schools of early and mid-20th-century planning – the Garden City movement founded by Ebenezer Howard and architectural modernism – were anti-urban, associating cities with slums, disease and pollution. And their wariness of high-density living infected government policy across much of the world in the postwar decades, with city leaders encouraging the demolition of dense working-class neighbourhoods and the construction of industrial parks, suburbs, motorways and cars.

These days planners, architects, economists and environmentalists are pretty much universally pro-city. They are, the argument goes, more dynamic, productive, sustainable and politically progressive than rural and suburban forms of human settlement. A professor at the University of Toronto, Florida is the editor at large of City Lab, a lively website that posts three or four articles a day on urban trends, debates, movements and technologies. The editorial line is anti-suburb, anti-car, pro-bike, pro-coffee, pro-affordable housing, pro-Jane Jacobs.

Although Florida’s position hasn’t fundamentally altered, he has become worried that cities are increasingly implicated in inequality. It’s true that they are engines of invention, prosperity and opportunity, and that without them our economies would sink, but they are also engines of privilege and, as a result, a focus of mounting resentment. Florida began writing his book before Brexit and Trump. It seems he was prescient. The movements that produced those results were in revolt against what Trump, Farage and their supporters often refer to as the ‘metropolitan elite’.

Florida thinks that most half-successful US cities generate inequality in one way or another. But the processes he describes are best exemplified by global ‘superstar’ cities like New York, LA, Singapore, Paris and London, or those with particular strengths in academic research and the creative and tech sectors – places like San Francisco, Seattle, Boston, Oxford and Cambridge.

Not long ago informed opinion held that the internet and other communication technologies would spell the end of the city. Why would anyone put up with all the bad things in urban life – the crowds, the noise, the expense – when they could work and socialise from a wired cottage in the mountains? But that is not the way it turned out. To begin with, those who predicted the demise of the city underestimated our materiality. Wherever we live we need stuff to survive – food, clothes, heating, homes, offices, transport – and it’s cheaper to produce and consume those things in cities than elsewhere. Suburban lifestyles turned out to be expensive and time-consuming – all those hours spent in the car. Those who foretold the demise of cities also underestimated the value of face-to-face contact: there is now an impressive body of research demonstrating that physically proximate relations are deeper and more productive than virtual ones.

It also transpired, in ways few anticipated, that globalisation was good for the established global cities in particular. It had been assumed that the growth of an ever larger and more integrated transnational economy would threaten the supremacy of these places. Surely emerging cities would provide the same services more cheaply and efficiently, just as they do trainers, mobile phones and call centres? But it turns out that New York and London have unique qualities that it is very difficult for newer or second-rank cities to replicate: urban infrastructure – roads, trains, homes, offices, parks – developed over the centuries; a vast range of businesses offering pretty much any service you could want; endless employment opportunities; and softer attributes, such as norms of lawfulness, a rich architectural history and cultural life. As the world’s economy grew and became more connected, more and more of the world wanted to visit, trade and move to these cities. The market for them expanded, just like the market for Venice, African safaris and other unique or hard-to-replicate places and experiences. Whether you’re an Indian billionaire, a Chinese tourist, a graduate from a top university looking for a high-paying first job, a poor migrant or persecuted refugee, the global cities have something to offer. Their populations have grown, their economies have prospered and their universities and cultural institutions have flourished. They have absorbed people from different cultures.

So why are these cities characterised by ‘growing inequality’? First, and most innocently, the highly skilled people who work in these cities produce more value than those who don’t. Clever, productive people tend to get jobs in the superstar cities. But it’s also the case that people who work in these cities become more creative and more productive, sparking off and competing against one another. Also, as these cities become richer, they can invest more in infrastructure and other qualities that attract yet more talented people and boost productivity. It’s a vicious – or for the cities in question, a virtuous – circle. The business districts of San Francisco, New York and London are ludicrously prodigious. The Borough of Westminster produces as much wealth as all of Wales.

Second, over the last few decades those at the top of our economy have become adept at taking ever more for themselves at the expense of customers, employees, shareholders and tax collectors. Florida could have made more of this. Businesses headquartered in New York, London and other capitals have been at the centre of this development, creaming off wealth generated elsewhere.

Perhaps the most important cause of growing city-generated inequality, however, is the property market. As demand on these cities has grown, so has the demand on property. But city property is in short supply, so those who own it see their wealth soar, leaving behind those who don’t own property, or own it elsewhere. Thomas Piketty argued that we live in a world where returns from capital are greater than overall economic growth, but beneath the economic formulas is a pretty familiar phenomenon. Most of us who own a nice house in London, New York or Paris earn more from it than from our own labour. In this way cities like London and New York have become vast parasitic centres of what economists call ‘rent’. People are getting rich on the back of the work and misfortune of others.

The new urban inequality has two distinct but related aspects. First, superstar cities have moved ahead of the nations they’re found in. The trend is clear in the US, where cities like New York have become richer relative to the country as a whole. But it is most pronounced in the UK. In the 1970s and 1980s London’s GDP per head was around one and a quarter times that of the UK as a whole. Today it’s one and three-quarters. The second aspect is played out in cities themselves. Many city-dwellers have not benefited from the urban renaissance. Many find themselves trapped between three forces: a fiercely competitive labour market that pushes wages down, at least in the lower part of the market; rising housing costs as property shortages deepen; and a shrinking welfare state. The upshot is the polarisation of city economies. According to Florida, in nine out of ten US cities, the share in wealth of adults living in middle-income households has fallen.

One facet of intra-urban inequality gets a great deal of attention: gentrification. As the superstar cities have boomed, the creative and professional classes have moved into once cheap working-class areas, pricing out the locals. A lot of tosh is talked about gentrification. It displaces relatively few people and many existing residents do very well from it. Many of those who complain most loudly were or are gentrifiers themselves. But the real point, Florida argues, is that gentrification is only a particularly visible manifestation of the geographic polarisation of wealth. We are seeing a great sorting, as the wealthy increasingly hoard all the benefits of urbanisation and the poor are marginalised, restricted to run-down suburbs and neglected, dysfunctional city neighbourhoods. Advantage and disadvantage are becoming more spatially concentrated.

Florida’s answer to the ‘new urban crisis’ is essentially more urbanisation. We need to continue to promote urban economies, but we need to integrate more people into them and give them a fairer share of the wealth cities create. Florida is highly critical of privileged city-dwellers blocking more inclusive policies through an uncritical opposition to new development in the name of ‘preservation’. We need to take on the Nimbies, or as Florida prefers to call them, the New Urban Luddites. But this is only the beginning. Just as government invested heavily in deurbanisation in the postwar years, through the construction of motorways, a suburban road network and utilities, now it needs to reform tax and funding regimes to support cheap housing, trains, buses, cycling and walking – and to educate citizens for the new urban economy. ‘We must put cities and urbanism at the very centre of our agenda for economic prosperity,’ Florida writes.

The New Urban Crisis does not feel to me the seminal book that some of those quoted on the back cover claim it to be. For one thing, it ranges slightly fuzzily from a focus on the US to advanced economies in general, to the globe as a whole; from an interest in all cities to the special features of the most successful ones. And Florida almost entirely overlooks one central part of the story: culture. What we have seen over the last few decades is not just the urbanisation of wealth but of status. The new elites live in the city, not, as they once did, in the country. It’s no longer the size of your estate but the view from your penthouse or the depth of your basement that marks you out. Having a pad in New York or London is now pretty much de rigueur for any billionaire – more than half of London’s fifty billionaires are from abroad. The prestige of national institutions has sunk as that of urban ones has risen. Which billionaire would want to chair NPR or the National Trust, when you could have the Met, MoMA, the Tate or the Serpentine? Thirty years ago London’s universities were second tier. Now they vie with Oxford and Cambridge in academic ranking and, increasingly, in status. NYU is now up there with the most prestigious US universities.

The arts and media sectors – so important to cultural capital – are concentrated in a few global cities. According to Florida, New York accounts for 2.6 per cent of the US population, but 12 per cent of print and media editors, 14 per cent of movie and television producers and 28 per cent of fashion designers. London counts for a staggering 40 per cent of creative industry jobs in the UK. Even Silicon Valley has lost its allure. The digital entrepreneurs who once moved there are now flocking to LA, New York and London. In the meantime the valley is busily trying to retrofit an urban infrastructure and urban densities in the hope of attracting the hipsters back. In short, our cities have become ever more important centres not just of economic but of cultural capital. The rise of the ‘metropolitan elite’ is a real thing. It is hard to make sense of our present political difficulties without understanding that.

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