My cousin is a .01%-er. My father's brother, due to a position of political power he held in the late 1970's, met and married a woman who is an heir to an American old-money family. (if i were to name them, you would know. If you listen to NPR for more than an hour, you will hear their name mentioned as a donor)
The contrast is insane, since my entire family is Appalachian coal mining stock. She NEVER visits, so the only time I see her is by visiting her at one of the many properties she has in the various 'global elite' cities.
She has an apartment which takes up 3 entire floors of a building which overlooks the East River in Manhattan (in the "50's" of the street numbers, but I won't name the street for anonymity purposes). She is almost never there, perhaps once a year. She has an equally large aparment in London. She has a mansion in Greenwich, Connetticutt. She rents out none of these properties. They are all left vacant for her to use at a whim. She isn't very educated (despite the efforts of her mother, her friends and her see little use in education. They have everything already.) and once had a major cocaine problem, along with half of her friends. I've met most of them, and attended parties at THEIR vacant-most-of-the-year apartments too.
I love my cousin, but she and her friends are parasites, sucking off of economic rent, delegating the management of their huge hoards of capital to investment bankers in their social circles. They produce nothing, but buy huge amounts of property on a whim wherever is "hip" and then leave it artfully furnished, beautiful, and vacant 11.5 months out of the year.
The old-money lifestyle is _designed_ to sit back, enjoy, and let the investment bankers handle the rest- exactly what she's doing so they're not parasites, they're living an elite's way of life. If you would get closer to her she would produce a lot of good times and memories. Just because you will travel, stay in the house and read more doesn't mean someone is going to sit down and become an inventor / iterator like you. Her view is that the whole world is working for her, and drugs are her way of coping with what she's missing. What's wrong with that? A decent amount of the elites believe that, what are you going to do- sit there and be proud of your humble life- right? Chill. There's no point of being envious and no point for me being an apologist but if it bothers you so much become one of her investment bankers.
1) I'm not envious, and somehow you take my disapproval of the elites wasting valuable space as envy. It is not. If I express disapproval at someone who dumps toxic waste in a river, do I envy them also?
2) Your comment made zero contribution to the conversation. Do you think I haven't hung out with my cousin and had a good time? I have. This changes nothing. Every person on the planet is capable of "producing good times and memories." She is also capable of taking her wealth and helping people at levels of magnitude that the rest of us can't, yet she does nothing. I don't envy, I observe and draw my conclusion that she spends zero hours a day working and 24 hours a day worrying about herself. Spending 1 hour a day running a charity would still allow her to "sit back, enjoy" and help people at the same time.
"She is also capable of taking her wealth and helping people at levels of magnitude that the rest of us can't, yet she does nothing."
This is a fact stated from a point of view of a clear philosophy - that the powerful/resourceful people have to use their power/resources for the good of humanity. All it takes for her (and alike) is not to share this philosophy and prefer let's say, a more hedonistic one. Let's enjoy the philosophical diversity, shall we? ;)
In some type of way you're longing for her money to change the world. I hope, instead, you long to change her mind, convince her that she needs to start donating. That was the point of me commenting, for you to treat this as a reminder to call her and put your perspective down. Not in casual way, she won't take you seriously. Throw a form of guilt, cause obviously that's what she needs. Value your principles man. She's your cousin and she has the potential to change herself and the world. Understand that power. I wish one of my distant cousins were like this. Her elite world view would come down to Earth at least once a month. Don't take it the wrong way.
It's not possible to criticize the ultra-rich (for any reason) without being accused of being envious, however. It is literally the first response you'll get on any forum: "You're just envious."
> The old-money lifestyle is _designed_ to sit back, enjoy, and let the investment bankers handle the rest- exactly what she's doing so they're not parasites, they're living an elite's way of life.
Just because it is the latter doesn't mean its not also the former.
It's not really envious or wrong to say that people like this contribute nothing to the world, yet by accidents of birth get to enjoy the fruits of everyone else's labour.
Bitcoin proponents: this is the world deflationary currencies lead to. All the wealth owned by a few, passed on from generation to generation. And you can even cut the investment bankers out of the loop, thanks to the risk free return on just keeping money under your mattress and the constantly falling prices.
This is the world deflationary currencies lead to--referring to the real world where inflationary currencies reign? Seeing how inflation doesn't prevent mis-allocation of resources, I don't see how this example is a good argument against deflationary currencies.
Even in a world of inflationary currencies, there are supply-limited assets like real estate in Manhattan or Paris. The phenomenon you see with respect to those assets: hoarding, little incentive to risk assets by putting them to use, young people pushed out simply for being unlucky enough to be born later, dynastic wealth, etc, are just what happens when you have assets that are tightly limited in supply and appreciate just by virtue of one's holding on to them.
The question is: why on earth would you want to make more things behave that way?
This is not an argument against crypto-currencies, by the way. One can imagine an inflationary bitcoin after all.
Hoarding real estate in Manhattan or Paris only works as long as those assets continue to appreciate in value. Assuming demand for those properties is always increasing, how would you propose to put a curb on their prices?
As far as making a currency behave this way, I would say it's entirely unprecedented to have a currency that is both deflationary and infinitely divisible. The incentive to hold on to the currency may be strong, but there will always be incentive to take risks for even greater gains. Just look at how ASICMINER shares have risen.
As long as the overall economy continues to grow, Manhattan real estate continues to appreciate.
Infinite divisibility is irrelevant. That's not the problem. The problem is that the first people on the scene (I.e. Old people) end up with all the wealth.
There's no easy way to sell one square foot or one square inch of Manhattan property. First movers will always be at a competitive advantage in nearly any endeavor.
That theory seems awfully simplistic. Or on the other hand, perhaps the whole world is deflationary, because it is a limited resource. So the the bleak future you depict is inevitable.
Or on the other hand, perhaps the whole world is deflationary, because it is a limited resource.
That's flatly untrue, however. The world is not a limited resource. That's even true of real estate. Back when Silicon Valley was becoming great it was a backwater where the Establishment assholes didn't want to live (hence cheap land). The value of things is a product of their relationships to other things, and the pool of total value increases as the configuration of things improves.
It's much more accurate for me to point at the OP's story and say "this is the world that inflationary currency leads to". Because clearly we're living under inflationary currencies, and clearly wealth inequality is a big issue.
The rich aren't stupid. They own inflation-proof assets like real estate and stocks. It's the poor who get continually squeezed on their meager cash savings and hand-to-mouth wages. It's the poor who rent instead of own, who get burned by housing inflation.
We would have a much stronger middle class if it was possible to build a nest egg simply by putting money in the bank. Instead, everyone is pushed into much riskier investments in an effort to beat inflation, where unsophisticated investors are easy prey.
Your cousin and her friends aren't parasites for delegating the management of their wealth to professionals. They'd be idiots not to get first-class lawyers, tax advisors, accountants, estate managers, and investment advisors to run their private wealth.
They don't "produce nothing". These professionals are investing their capital and the world is wealthier as a result.
They are parasites because they are spending money (that they didn't earn by producing anything) in an inefficient manner. That three floor apartment could house many people, instead it is wasting a very rare commodity in NYC: housing. I'd be much more sympathetic if she actually spent time in that apartment. She produces no wealth and destroys wealth through inefficiency - good use of the word "parasite".
Usually I'm the one who is defending the wealthy from unfair attacks online, but in this case I don't understand your argument.
I understand and I'm sympathetic to what you're saying. It's a bit counterintuitive, but I'll try to elaborate more on the points you've made:
> They are parasites because they are spending money
Parasites are people who take from the system; she's contributing by putting money into it.
> (that they didn't earn by producing anything)
The source of her money is irrelevant to the question of how she should spend it. What difference does it make how she got it? One dollar is perfectly interchangeable with another, and the fungibility of money makes it one of the most neutral substances on earth.
> in an inefficient manner.
She's buying luxury properties, probably spending a token amount to fund her lifestyle, and letting professionals manage the rest. That's may be a pretty efficient allocation of capital for her situation.
> That three floor apartment could house many people, instead it is wasting a very rare commodity in NYC: housing.
Nowhere in Manhattan are there many people getting together to split a three-story penthouse apartment. Her properties are fundamentally different from a regular one- or two-bedroom apartment. This is difficult to articulate, but living in a penthouse in Manhattan isn't a right.
> I'd be much more sympathetic if she actually spent time in that apartment.
Again, why does it matter how she's using the apartments? If she owns more than a few luxury properties and it doesn't make sense to rent them out (to who?), then she necessarily is using them in an "inefficient" manner, since she can only be at one place at a time.
> She produces no wealth and destroys wealth through inefficiency - good use of the word "parasite".
Again, when she's spending "inefficiently", she's contributing to the system.
Parasites are people who take from the system; she's contributing by putting money into it.
Unless she owns a fractional-reserve bank, she probably just moved the money around, while taking wealth from the system, which is what "spending money" means.
By your argument, a thief who spends the spoils of his crime is contributing to the system!
The source of her money is irrelevant to the question of how she should spend it.
Not in a discussion about ethics, it's not.
One dollar is perfectly interchangeable with another, and the fungibility of money makes it one of the most neutral substances on earth.
Red herring; nobody is arguing about the particular dollars she owns, but the amount of them.
She's buying luxury properties, probably spending a token amount to fund her lifestyle, and letting professionals manage the rest. That's may be a pretty efficient allocation of capital for her situation.
Efficient for whom? For her? Why is she the only one who matters?
Again, when she's spending "inefficiently", she's contributing to the system.
How is putting money in the system by itself a (positive) contribution? Should we applaud counterfeiters?
«They are parasites because they are spending money (that they didn't earn by producing anything) in an inefficient manner. That three floor apartment could house many people, instead it is wasting a very rare commodity in NYC: housing. I'd be much more sympathetic if she actually spent time in that apartment. She produces no wealth and destroys wealth through inefficiency - good use of the word "parasite".»
You know, when I tried to picture what you implied to be the right and correct resource use I come up with Bangladesh life-style - many people living in a small area, not a lot of space wasted. If I think more about it, the entire american life-style resonates in opposition with your objections. In fact, all the american-dreamers long to what she is and what she has, don't they?
The 1% buy multiple properties in many different cities. There have been articles about how the City of London has neighborhoods of empty luxury apartment developments owned by various sheikhs and russian/central asian commodities oligarchs.
In SF when you buy a house you are also competing with dozens of investors from overseas paying cash who don't have any intention of ever living there. I believe that the Vancouver real estate market was also affected by overseas investors in a similar way, making it the least affordable housing market in North America.
Multiply this speculative real estate investment by 1% of 7 billion and it could very well be a major factor in pushing up rents, especially in certain super desirable cities like Paris. There's about 1.7 million residences there. Even if only 1% of the 1% want a pied a terre there, the rest of the people trying to live there would feel the squeeze.
I have personally seen the effects of this. When I lived in on South 4th street in Williamsburg Brooklyn in 1998, my floor through apartment was $700/m. Now the same apartment is renting for $3700 a month. That particular street is still a dump! The only people I know who can afford to live in nice apartments in SoHo or Tribeca are the children of super rich people.
Nitpick: the City of London does not have neighborhoods of empty luxury apartment developments, because the City of London is the one square mile of the city where the financial industry lives. It's equivalent to the Financial District in New York. The only significant chunk of residential building is the Barbican, which is not empty, just awful.
The name of the city as a whole is simply London. You could even call it the city of London if you were being poetic. But as soon as you capitalise it, you're talking about the City of London, and that's something different.
Yes, that is confusing, arbitrary, irritating, and only justified by arcane details of history which predate the printing press by five hundred years. That's because this is England we're talking about.
I actually know the difference between City of London and London because I watched that one clever Youtube video explaining it. However, I don't really have the details internalized as I've not been to London.
I had merged this info in my head with another link that someone else had already posted, about empty buildings in London owned by offshore corporations.
I wonder if there is a need here for a Luxury AirBnB so that folks who aren't millionaires could spend time in these places that are otherwise going empty. Seems like space could be offered for less than normal rent since anything above $0 would be a gain as long as there was a decent screening process.
You're ignoring the physiological 'cost' of knowing some filthy stranger will be poking around your nice house. Also renting out a place means you cannot store anything of value in the place. For many people who can afford top end apartments in central London, those two 'costs' will be much higher than any income they might get from renting.
Also the value of having a flat like this is knowing that when business requires you to fly to London on 90 minutes notice, at least you'll have somewhere nice and familiar to crash. That is completely lost if there is a chance the someone else might be staying in your apartment when you arrive
If a few people are staying in your six-bedroom apartment when you touch down, surely you can either tolerate their presence for a day, or pay them to go away. You're right to bring up psychology, but it's more abstract: one might trust strangers not to make a mess, or the maids to clean it up, but having one's apartment listed for short-term rental is unthinkable.
There's not a lot of solid data on what degree of Vancouver's housing speculators are overseas investors or local, but there is certainly is a lot of non-resident owners.
Non-resident occupancy approaches 24% in certain neighbourhoods of downtown, and these empty neighbourhoods are becoming ghost towns, an awful business environment for local retail.
I believe that the Vancouver real estate market was also affected by overseas investors in a similar way, making it the least affordable housing market in North America.
I think the real culprit was mortgage rules that let Canadians borrow cheap money for long periods plus need for all people (not just foreigners) to engage in real estate speculation. Ever since the Canadian federal govt tightened up the mortgage rules the market has been in a slump. But everyone loves to blame the overseas investors. Also people like to cherry pick parts of Vancouver as indicative of the foreign buying trend like the West Side, British Properties and Richmond but they fail to look at East Vancouver, New Westminister and Burnaby which has decent housing as well, but is not as desirable.
Edit: I'd also like to point out that some properties are priced high, but no one is buying them. It's also a seller's perception of a hot market that drives up prices.
Where are these "neighborhoods of empty luxury apartment[s]"? It is true that the The City of London, understood as the financial district of Greater London, doesn't have many residents, but this has always been the case. It has never been a residential area. Almost all housing space there is offices.
Cheers. That one was 'By Nicholas Shaxson Published 24 February 2011', conclusion:
UK Uncut, the spontaneous protest movement opposing offshore tax avoidance by multinationals, has had an impact and now pledges to move against the banks. A big "One London" campaign to merge a divided capital into a single democratic entity may seem far off, but groups such as London Citizens are now thinking about the fairer division of London. The Tax Justice Network, and others, are helping build an intellectual edifice for understanding tax havens. Some of their goals - such as country-by-country reporting by multinationals - are already being partly met. The unions, too, and big NGOs, especially those working in international development, are engaging with the matter. An anti-haven mobilisation is under way in France; something similar may be starting in the US. The IMF, the Organisation for Economic Co-operation and Development, the EU and other agencies are now at least debating issues they ignored before. Around the world, legislators, regulators and ordinary people are starting to see the toxicity of Britain's role in protecting offshore business that drains billions out of developing countries each year.
I wonder if there's been any positive development.
Even if my pay was doubled, I wouldn't be able to afford to live in or near London. However, I can afford a comfortable lifestyle in rural Yorkshire (house, car, holidays, internet access, good food, days out etc etc) on a modest pay packet. The rent for my 17th century cottage with garden in a Yorkshire village wouldn't get me a room in a shared house in an undesirable part of London.
I don't understand the pull of the capital. It's overcrowded, noisy and dirty, even in its 'desirable' areas. The oil sheikhs and Russian oligarchs can keep it. I'd much rather live up here even if I had enough money to live in London!
Couldn't agree more, I live in Newcastle (Upon Tyne) and wonder why all my friends headed down south after uni - for "the salary" was their reasoning but none of them have savings and their salary goes into rent, commuting and maintain an expensive social life. I'd much rather be here in Newcastle and be able to afford to live and save - just wish the weather were a little better
It's great that you two feel that way. As someone who grew up in cities in the south and now lives in London, i'd rather saw my own leg off than live in rural Yorkshire. There just isn't anything there that appeals to me. Newcastle would be less scary - i'd only give up a foot to avoid living there.
This is not in any way a slight against either Yorkshire or Newcastle. Just an observation that one man's meat is another man's poison.
Rxactly. I felt the same when, as a teenager, my parents moved from Surrey to rural Lincolnshire and I had to go along for the ride.
15 years on, I now love living in such a rural area (and also married with kids!) but it's pointless if you want to easily see the latest bands, have a large and sophisticated social circle, easily meet people you do non-rural business with, enjoy the latest in fashion or food, easily travel to other places without driving, etc..
On the flip side, I can easily go off roading, take my daughters to see farm animals every week, zero traffic jams, low crime, low cost of living, etc, so it's all swings and roundabouts! (And we even have fibre Internet, oddly, so it even ticks my geek box ;-))
Agreed, if you're smart then living in the south can be financially better. However I would say that my hobbies and interests (road and mountain biking) would be a lot harder in London - I grew up in Essex so appreciate the difference in the north and south - I'm not really interested in the social side of a city so that's another plus point to the north for me but for, many, a big negative compared to London.
A friend of mine recently moved him and his start up from London to Keswick and is loving it - it's all about aligning where you live with whats important to you.
ps. Given the love of football up here (sadly) you'll be needing that foot of yours!
As someone who went to Uni in Durham and loves the countryside; (but still loved his two year stay in London), I can give you another reason: The sheer variety in cheap cultural things to do. I'm not saying Newcastle lacks decent culture, just that it's not cheap.
When living in London, I used to make frequent trips to The Globe (£7 tickets), National Theatre (£12), Sadler's Wells (£15), Museums (free) plus other great Opera's, plays, contemporary dance, etc all over the city, all for around £15 (usually a lot less) or free.
I've since moved out of London as I started missing the countryside, but don't be so quick to dismiss everyone who does not make the same choices as you do. The grime, overcrowding, noise & smoke of the city is more than compensated for by the amazing public transport and world class cultural events (again, for <£15 -- Newcastle has great cultural venues but even if they are of the same standard I could not afford to go regularly as it was more than twice as expensive)
I would never have discovered my love for Classical music, Ballet or Opera if the opportunities weren't so numerous and the tickets so cheap.
I believe you are missing a substantial scalability issue. From an article in The Telegraph "the Globe has played to 480,000 people this year". It seems to seat somewhere around 2000, so I am willing to believe that they have about 200 performances per year.
Living in the US I'm well aware of urban sprawl and the near inability to define imaginary borders. However for the sake of argument, wikipedia claims a bit over 8 million inhabitants in London.
Some long division and making the HUGE assumption that The Globe only permits admittance to locals (LOL I'm guessing its probably 90% rich tourists like myself) then the average local can only visit The Globe once every 16 years rather than your "frequent trips". If my estimate of 90% tourist statistics is correct, then the average London resident can only physically visit The Globe once every 160 years. Of course the average lifespan of a london resident probably does not approach 160 years. And there are more cultural activities than just The Globe. But lets say you want to do something every weekend... Personally I'd take the train and live somewhere else, but if you can find 160*52 = 8352 other equally cheap and worthy cultural activities then it would scale.
"I would never have discovered my love for Classical music, ... if ... the tickets so cheap."
For me it was free audio rentals at the public library. Back when they used vinyl and magnetic tape. They freely loan CDs now, there is a limit but its ridiculous like 10 loaned at a time. I used to visit my local library every week, but the local symphony only plays something like 8 different performances per year, so do the math there. In this modern era its trendy to claim people only want someone elses streaming selections rather than having a mp3 of their own and making their own selection decisions, regardless of how ridiculous that is, its also more or less free.
I live on what amounts to a very small landed estate technically in the suburbs, but somewhat rural. I visit Chicago roughly annually and soak in some culture. I'm glad I don't live there, so I can trivially afford to visit, and my tourist dollars are crowding the locals out of the very cultural activities they supposedly pay $3000/month to live nearby, while I pay about a third that to live in a vastly superior location about 100 miles away. You'd be surprised what a couple extra thousand dollars per month adds up to in the long run.
It is actually pretty easy to find another 8000 cultural activities in London. There are probably 1500 permanent art galleries, largely free for a start.
But we are getting to one of those points where more of the benefits of a city should be transferable remotely. I would like to live outside London but the developer community is a massive draw. As well as culture. Also I am a native Londoner so it is home. But the cost of property is a huge issue.
I used to go to the Globe pretty much every week (it's open air, so plays were only on in summer). One thing that I did not mention is the fact that the £7 tickets are actually "standing" -- I kindof prefer that as it means you're up right next to the stage. I always bought tickets on the day and they're pretty much never sold out (popular days/weekends could mean a fairly tight view :)
About scalability, as someone already said, there are so many venues available that pretty much whatever you wanted to do, there was always available seats for you -- just perhaps not in your first choice of venue (even after restricting your ticket price to £15 or less) Heck, as you're already in London and the public transport is free (you've got a travelcard as you have to commute to work anyway), you can go and do/watch/listen to something for free every night of the week.
Point taken about CD's in the library. But somehow even though I had the opportunity to take them out of the library before, I never made use of it. I guess I never knew I'd like classical music. But as the live performance was so cheap, I tried it and found I really liked it.
And now I live on the outskirts of London. I pay about the same in rent (bigger place) but hardly ever go into London. Mainly because I used to live about 12minutes from Waterloo and now it's more like an hour and a half (which means all trips have to be planned for weekends; as I can't really be bothered to head out after a full day's work)
Would I rather still live in London? Possibly not. But I'm definitely happy I lived there for a couple of years.
>>You'd be surprised what a couple extra thousand dollars per month adds up to in the long run
Well, like I said, there really is no change in my rent (but I now have a two bed flat and not a one bed), and I now own a car (additional expense). I've also stopped eating out, as restaurants are nowhere near as cheap as they were in London (expensive restaurants were a lot more expensive, but I've never found places that do £2.50 mains like in Tooting, for example) -- on the flip side I always enjoyed cooking, so this isn't a big deal for me. I am also living closer to work (as I work outside London now), so I guess my quality of life is better & the commute is less stressful (and the pollution is lower).
I'm just not as ready as you are to dismiss all the benefits of living in a city. But hey, we're all different. Just saying that I had a point of view very similar to yours until I was forced (SO's job change) to live in London for awhile. Now I understand the delights of living in London (but I can understand why others may not -- just wish people would give it a try :)
Fair enough, that is something I hadn't considered (nor realised how cheap it could be) - although I would counter to say that I wouldn't have discovered road biking or surfing (with a hefty wet suit mind you!) if I wasn't in the north east's easy access to both - 10 minutes on the bike and I am in the countryside.
I completely agree. I would not have discovered the joys of hiking and hillwalking if it wasn't for my four years at Durham (and "relatively" easy access to the Lake District).
Overall, my love of the countryside trumps cheap access to live plays/concerts/public transport/museums/etc; that's why I moved out.
My point is just that there are definitely reasons why people would choose to live in the city (reasons I did not fully appreciate until I lived in London)
Everyone I know in London who is < 30 (I moved here 7 years ago) has the same notion, that it is temporary.
The wages are so good here, so long as you don't blow it on a £2k pcm flat in a tendy part of town you can save a lot of money, very quickly.
Myself by having a 35-50min (depending on traffic and my exhuastion!) I find my accomodation costs are comparatively very low, despite still getting a London weighted income. This means I can not only service my modest flats mortgage easily, but am also buying a place in the middle of the mountains, so I can be a hermit.
Last time I looked outside of London, I would earn less than half what I get in London. I'm happy living in Zone 4 (where 1 is the central area), which means my rent is cheap. Going for a meal out or similar probably costs less than up north. At least comparing it to Manchester / Leeds / Lake District.
However, it is very non-terminal. I think five more years, then rent my London place, move either to subberbs and expensive commute, but house. Or hopefully, give up working for someone else all together. Not only did I meet my business partner via London network of friends, but also I built enough of a cash pile to be able to work full time on it.
None of those things would have happened if I was on £35k with £700pcm costs. I'll take £150k with £1200pcm every time.
If you don't mind me asking, how much do you earn? If you're on the median UK national income and you double it you'd very easily be able to live in a nice place in London. Your lifestyle would of course be very different, but not necessarily worse (I'd rather take good public transport than drive, for instance). Housing is the only thing that's objectively worse, unless you have kids, that is..
I work for a non-profit organisation and I'm considerably below the median income. There are jobs going, doing what I do for wages that are quite a bit higher - but they're all in London. An absolutely ideal job came up last week, but it's in Southwark. I just couldn't do it... so I stay here, where I'm reasonably settled and happy.
> The oil sheikhs and Russian oligarchs can keep it. I'd much rather live up here even if I had enough money to live in London!
And your government is making sure they do keep it, by "reducing net migration" of working people whilst granting a Tier 1 visa to anyone with one million pounds in the UK banking system. It's "pay to stay," and the offer stands at US $1.6 million.
> The rent for my 17th century cottage with garden in a Yorkshire village wouldn't get me a room in a shared house in an undesirable part of London.
Maybe I'm only confused because I've never lived in a village, but... You're paying significantly less than £700 pcm (including bills and council tax) for that?
I rent a two bed flat with two other people in a nice part of Zone 3, paying ~£500pcm for rent and council tax (together we're paying about ~£1300pcm total).
I could quite happily rent a two bedroom cottage in the lake district and pay all my bills out of that £500.
I keep banging on about how remote working will enable the spread of resort / rural living, and yet it is not quite true.
I am going to guess that you live within some commutable distance of your or your wife's family, and that one of the things you would lose moving to London would be that connection to family.
Its probably the biggest thing holding most of us from heading for a nice cheap rural life.
PS, apply for a grant from the Yorkshire Tourist board !
In other words, you can afford to "live" in London so long as you pay your salary on rent for a small, shabby flat and give up hope of settling or owning in London. You'll be the underclass who can always be moved on or moved out next year if the owners decide. http://www.guardian.co.uk/uk/2013/feb/13/london-council-relo...
Not exactly, either the above or you can live in central London if you are on government benefits - the civic planning here is pretty messed up, I appreciate the idealism of forcibly mixing socio-economic classes by mandating council housing be placed amidst regular housing in every borough, but it seems insane that it's the workers who are getting pushed further and further out. Not suggesting the unemployed should.
The 15% you are quoting is for the 'Greater Paris', i.e. Paris and its suburbs, both rich and poor. The intramuros, i.e. inside the city limits, population of Paris as described in the article is about 2 millions people, about 3% of the population. We are closer to the 'few percenters'.
Others have said, but I'll add: this is accurate for London. Greater London is a large area, the actual inner city is totally unaffordable by anyone's definition.
Even GL is largely unaffordable. House prices defy gravity, and rents are going up, at a time when Govt. is cutting housing benefit severely (which should result in net lower demand) - most London boroughs have a large outflow of socially housed tenants of various forms.
The average London property price is $785k (USD). There are a number of boroughs in London where the average is double that. And, due to the way the Govt. is blowing up the mortgage market, owning is actually cheaper than renting (so long as you have the deposit... for now; next year, Govt. will give you that as well).
13% of the population may be in Greater London. Large numbers of them are moving out; current affordability is incredibly bad.
Most young Londoners cannot afford to buy property anywhere near the center of the city any more. I employ several, and see this first hand.
In 2001 I bought a flat for (at the time quite a lot of money!) £200,000. I could just about afford it on a developer salary at the very peak of the dot-com boom. I sold it a few years later. Now that flat is worth about £700,000.
This article is accurate as far as London is concerned.
Most youg Londoners cannot afford to buy property full stop. Unlike in the rest of the country, the majority of residents rent rather than own their homes.
It's the 1% that can afford to move in. That's what's skewing the article. In Manhattan, there are very few buyers who make less than $400k/year as a couple. That's about the cutoff for the 1%.
This doom and gloom in the article is neither new, nor entirely accurate. The popular consensus (I wish I had the link handy!) in NYC is financial services employment rises and falls 1 to 1 with artistic employment. The causality is probably reversed though. The growth of one helps the other. Gentrification is nothing new.
To be clear, before I start: I'm not in the anti-immigrant, finger pointing, blame every one else camp what so ever. Call me a mental hippy, but I believe people should be able to go, in a country sense, where they like on this planet.
What I don't understand here is that there have been reports and articles about how the white working classes are being forced out of London (That would be Greater London, not central London, which one would expect to be loony priced) by immigrants, who are supposed to be either dole scroungers or taking "our British jobs" from our "British people" by working for dirty cheap, while changing London in to Londonistan. Well, if that is true, then how do they afford London?
OK, I can already pick all that apart myself, I didn't work to hard at fleshing out such insanity, but clearly there is some contradiction there, right? There are a hell of a lot of poor people, born and immigrant, who manage to live in London.
> Well, if that is true, then how do they afford London?
It's just like the jobs. The immigrants are willing to deal with conditions that the natives aren't, for many reasons. For example, I live in NYC Chinatown. There are buildings set up where they section off an entire floor into 8 foot by 8 foot rooms with a shared kitchen & bathroom. Most Americans would never live there but the immigrant Chinese are happy to because it's still an improvement over where they came from.
I used to live in Manhattan Chinatown. Are those places still around? I ask because even Chinatown is becoming increasingly expensive. I think in most of those "studios" the landlord has cashed out and sold the property for redevelopment. No way that even 20 poor immigrants can pay the rent of a single Wall street trader. Also the city was cracking down on those slumlords because most of them were rife with code violations.
Most of those places are gone except for the ones that are actually in the back of a shop or a restaurant. Due to the peculiarities of Chinatown real estate, there are now quite a few buildings redone into condos, sold only to other Chinese people (from China? Flushing? not sure) which are purchased but largely remain empty.
There are still a few that I'm aware of but you're right that luxury buildings are going up. 138 E Broadway and 55 Hester being two of the newest examples.
Up until shortly, it was also the case that if you were on state benefits (specifically housing benefit) you could afford to live in a nice neighbourhood in London as the state paid your rent for you.
Fortunately this is being capped now so that non-working people will be subject to the same issues as working people.
Not all of London's population was originally British - it's quite popular with international multi-millionaires, who don't have to deal with the same restrictive immigration rules everyone else does. Also, a lot of people who're living in London can't really afford to do so; unfortunately it's where most of the jobs are and commuting into London by rail is just as horrendously expensive as living there.
Most of the normal folks are being pushed further and further out of the city every year. Anywhere remotely central is out of reach of anyone but the very rich.
An interesting phenomenon in Paris is the fact that there are still many housing projects inside Paris proper. Which means that effectively only the middle class is getting priced out. Only the really rich or really poor get to stay.
In the meantime democratic representation is failing: Paris is a metropolis of 12 million inhabitants and only about 2.2 millions vote for the mayor. The government needs to expand the municipality like it did in 1795 and in 1860.
I live just nearby Paris (in Issy-les-moulineaux) and I do vote for a mayor, just not the mayor of Paris. I also vote for a few local representatives (département, canton and région). Representation isn't a problem, since many projects are handled by the départements or région.
> An interesting phenomenon in Paris is the fact that there are still many housing projects inside Paris proper. Which means that effectively only the middle class is getting priced out. Only the really rich or really poor get to stay.
Access to HLMs (housing projects) is very, very complicated, with waitlists of a few years and strict conditions. In practice there are way too few of them to even cover all the demand (even though construction of housing projects is required by the French law for every town of a minimum size), so the really poor will usually stay way outside in the suburbs.
> I live just nearby Paris (in Issy-les-moulineaux) and I do vote for a mayor, just not the mayor of Paris. I also vote for a few local representatives (département, canton and région). Representation isn't a problem, since many projects are handled by the départements or région.
I lived in Montrouge and in Le Kremlin-Bicêtre, so I know what I'm talking about.
Look at all the trouble they ran into when they tried to extend bike sharing outside the Paris municipality. If such an artificial barrier were eliminated and the first couple of rings of neighboring towns were to be absorbed in Paris proper such a thing would never had happened.
I don't remember any specific issues about extending the Vélib outside Paris, but perhaps I didn't pay attention too much. Can you develop ?
I don't thing centralizing things more than they are today would significantly improve the issues faced by the various neighbouring municipalities. Au contraire, I'm a proponent of decentralization.
I agree with the sentiment of excessive centralization in France. However what really is happening is that things are still centralized, only not everyone gets to vote for the mayor that makes the real decisions.
As far as the Vélib' affaire goes: it opened in July 2007 in Paris and they announced it was going to expand to the banlieue as soon as it started. However JCDecaux's main competitor Clear Channel claimed it was a new service and a new competitive tender was needed. The trial dragged on for 18 months, but eventually JCDecaux won and Vélib' was extended, but it wasn't finished before the end of 2009, two and a half years later than in Paris.
You can read more about it in the history section of the French wikipedia article.
I would not call merging towns around Paris in Paris centralization. It's more the contrary actually, as you should see this move for "Paris the town" and not "Paris the capital of France".
Actually, this should be done with other French major cities (actually minor cities as well), we have far too many towns in France and far too many layers.
So in short, this guy gets paid enough writing speculative narrative-fictions to live in Paris, but a family with decent incomes and kids can't? Maybe the kids are the difference, or their parents - unlike the writer - aren't nebulously attached to the great black fiscal hole of the financial services industry.
The story of "things used to be better" is one that apparently never gets old.
PS. Anyone who bemoans the lack of "ribald proletariat banter" without a trace of irony is putting themselves squarely in the sights of the same banter ("wanker"), IMO.
Why is Paris really expensive? Constricted supply and high demand. Why is the supply constricted? Because Paris refuse to build anything in the center. That's because the center is a historical preservation district writ large. If you build anything modern, it would "ruin" the image of Paris.
So, Paris would need to change its policy and start demolishing old buildings, and build higher density buildings. Certainly, the rich will keep buying the most desirable parts of the cities, but the inability for the poor and the middle class to live in the center will be less acute.
Actually two of the 20 districts of inner Paris (the "arrondissements"), which you describe as a "historical preservation district writ large", are more densely populated than any districts in any Western city - except for Manhattan Community Board 8 and 2 districts in Spain [1].
The 11th and the 20th arrondissement both house more than 40,000 people per km2 (104,000 per sq mile), which is denser than any district of Tokyo by the way. If that's not dense, I don't know what is.
Incidentally, the 11th is not cheap in any way: buying a flat there will set you back 9000 to 9500€ per sqm ($1200 to $1270 per sqft) [2].
Indeed. I once dated a girl who lived in Montmartre. Were you to sit on the toilet in her apartment, you'd be able to shower, cook dinner, reach over to answer the door, or make the bed, all without having to stand up.
According to Wikipedia[1], Paris is the 34th densest city in the world. 5 French cities are denser, and all of them are Paris' suburbs. Only 3 non-French European cities are denser than Paris.
Its relative. Paris would be even denser given the extreme demand in the city, and with modern technology could be say the 10th densest city and still very livable.
I'm not sure what the point would be though. You could build all the residential skyscrapers you want in La Defense and still be within 15 minutes of most of Paris proper.
This is a non-sequitor. How dense it is relative to other cities is irrelevant with regard to whether it's dense enough to meet the demand for housing in the city.
According to Wikipedia[1], Paris is the 34th densest city in the world. 5 French cities are denser, and all of them are Paris' suburbs. Only 3 non-French European cities are denser than Paris.
Then let make Paris even more dense than Paris' suburbs.
I live in Paris and I don't think that's the solution.
All forms of transportation in Paris are saturated. Adding more housing capability would make moving inside (and around) Paris even more terrible than it is today. The boulevard périphérique circling the city is one of the busiest highways in Europe [1]. The RER A train line is also one of the busiest in the world[2]. Trust me, we don't want more people in Paris.
What we need to do is decentralize, spread the population, services and work farther around the city.
The preservation district does exist, but it's certainly not a major issue. There are plenty of places that are not subject to preservation, often within a five-minute walk of preserved ones.
The real problem in Paris is the transport infrastructure. As it stands, the morning and evening commutes already saturate several subway and bus lines, non-taxi cars only have access to a subset of all available lanes (and most of the time these are one-way), and while the bicycle rental system works quite well, it does not alleviate peak usage in cold or rainy weather.
So, while it's entirely feasible (both technologically and from a historical preservation aspect) to build a 1000-person housing unit with the same footprint as the old 100-person ones, it would only take a few of these to completely saturate the local subway station and nearby streets every morning and every evening.
increasing the building density would simply enable those people who are less fortunate than many of us on HN to also live in Paris.
Moreover, I can't speak for Paris but for certain I know in NYC/Manhattan the subways are not running nearly at their capacity. IIRC, the capacity could double if they automated the systems (which they are taking a very long time to do). The same may be true of Paris.
OMG a Le Corbusier nephew. Right, let's raze all historical cities, and build stell and glass cubes. And while we're at it, let's burn a few books and paintings too...
> Right, let's raze all historical cities, and build stell and glass cubes.
If redevelopment were generally allowed in cities like Paris and New York some of ugliest, least unique buildings would tend to get replaced with something newer and possibly better. And fifty or a hundred years later some of those new buildings would themselves also be prized by preservationists.
People HATED the Eiffel Tower when it was first proposed. Some even hated it after it was built. (de Maupassant: “this tall skinny pyramid of iron ladders, this giant and disgraceful skeleton.”)
Don't be like those people.
> And while we're at it, let's burn a few books and paintings too...
The traditionalist position here makes us burn all the potential new books and paintings, because we already have enough copies of the old ones to fill the library. Better to keep a hundred copies of an old book than 99 copies of the old book and one copy of a new one, right?
The city planners did allow some unchecked redevelopment in the early 70s and 80s. Most of those buildings are still considered ugly and time hasn't made them any prettier, trust me.
I wouldn't say it's the traditionalist but the the people have, collectively, have decided that they want a specific aesthetic and most of the buildings being proposed aren't it. The Forums Les Halles was erected in the 70s, the architects thought it was pretty, a majority of the population didn't like it. It was built and, 30 years later, demolished.
Most of those buildings are still considered ugly and time hasn't made them any prettier, trust me.
Aesthetics are for the comfortable. I don't think most New Yorkers know (or care) what the exteriors of their buildings look like. I'd rather have ugly buildings and lower rent so I can save. Yes, I'm a dick because I care about my future more than whether bored rich people like the looks of the city. I live here, I work here, I don't fucking "look at" it because I don't have time and I don't really care. For aesthetics, I go to Central Park. I'd be pissed if that went away. But I don't give the square root of a fuck if someone wants to build a hideous 100-story apartment building (bringing down rents, one hopes) in the Village, as long as they do it safely.
If you want aesthetics, go out to the mountains. It's beautiful and no one is going to build a 100-story eyesore any time soon.
The thing is, new constructions tend to make rents higher, because they are usually of higher standards than what they replace. Typically, a newly build building will sell flats at 14k€/m² where as the surroundings sell for 10k, because it is newer, more comfortable and consumes less electricity for heating.
And rents go up accordingly.
Also, I think most people do care what their place looks like ; it's a combination of factors, but prettier buildings always sell for more, and inhabitants of prettier buildings tend to take better care of them.
I wouldn't want to live in (or next to) one of the terrible 60-70s condos at the limits of paris, unless rent was _at least_ 30% lower than in a more proper place.
The painful truth about it is that we're both right.
Those luxury condos aren't built by landlords wanting to bring down the rent, obviously. They're built with full intention of taking advantage of clueless yuppie transplants who haven't a clue what things should actually cost, or whose monstrous senses of suburban entitlement leave them thinking they need a 2500 SF (232 m^2) space in the city. In the short term, they actually do drive up rents. The opportunities and bargains come out in the long term.
What then happens is that the developers overbuild, and a few years later a large quantity of housing stock comes on to the market, depressing price. Look at what has happened in Florida, Nevada, and even California. It can happen again, and it's ugly but still far better than the alternative (Manhattan rent levels).
Also, most "luxury" housing is not of a quality that real rich people would accept. "Luxury" means there's a small gym and a doorman, but the quality of this housing/renovation is usually low-- which is fine given that you're just using it as a crash-pad while you work a 60+ hour job that requires living close to work. (Rent if you can; don't buy.) "Luxury apartments" are for people making upper-middle incomes in their professional jobs who need college-like pampering because of their insane work schedules, rather than genuine rich.
That said, you have to be extremely careful in playing this sort of game. Manhattan "luxury condos" are selling at 40-50 times annual rent for a variety of reasons, so you'll actually lose a lot of money if you buy one and try to rent it out. Trying to time the crashes caused by overbuilding is not something most people can afford to do. However, it is abstractly and also obviously good for society when more housing is created.
> If redevelopment were generally allowed in cities like Paris and New York some of ugliest, least unique buildings would tend to get replaced with something newer and possibly better. And fifty or a hundred years later some of those new buildings would themselves also be prized by preservationists.
This is completely unfounded. There is no guarantee that new construction would be more aesthetically pleasing and we've seen that new development has not brought down prices in New York City and that gentrification continues to get worse.
THere's no guarantee, no. But it's a pretty safe bet. Yes, buildings built in the 1880s have a certain style to them, but so do buildings built in the 1970s, 1990s, and today. By the end of the century people will undoubtedly have some nostalgia for the old-fashioned building style of 2013. Not all buildings built today will stand the test of time, but some will. More will if there are more to choose from.
Think about the original Twin Towers. By objective measure they were boring and hideous, but people liked them anyway - it grew on the populace. Like the Eiffel Tower did on Parisiens.
As for gentrification, the newest buildings will tend to have high prices, but if enough of them are allowed to come on the market eventually there will be a glut and prices will collapse. Maybe the price collapse will be more in the older buildings as upscale tenants move to the new ones.
(Getting rid of rent control would help a lot too, of course. Right now new buildings specialize in high-end in part because anyone who chose to specialize in low-end would quickly lose the flexibility to set their own rent and choose their own tenants.)
Unfortunately, the desire to keep historical buildings conflict with the need to add density. Clearly, people should make some tradeoff, but it should not be "never demolish any old buildings".
Paris doesn't really need to add density, it's already one of the densest cities in Europe. Clearly some other phenomenon is at work here.
Very tall residential buildings have surprisingly low densities for a wide variety of reasons: extra building infrastructure, high capital costs result in expensive apartments which price them out of most people's means so they end up being sold to the rich who can afford to pay twice as much anyways for more floor space, etc.
If you propose a building in London that would obstruct the view of St Pauls Cathedral for someone many miles away, that can be grounds to have your application denied:
This is transparently false - the median household income in Manhattan is somewhere around 65k. This is high, but it is not remotely the reality presented.
If people are being "priced out", it's by other peoples' willingness to pay more for rent. The masochism of people moving to New York City these days astounds me - they're willing to live in some really terrible conditions to live in New York. Similarly, when I lived in Paris I lived in a ludicrously small apartment with a bathroom in the public hallway. My willingness to pay even a small amount for even that crappy setup "priced out" the potential of combining the space with another apartment or something. What an asshole I am!
I'm an American ruby/python developer living in Paris. The cost of living in Paris is comparable to living in New York City or San Francisco. In some ways it can be cheaper. You can find affordable places to live and work all over Paris, and you can find all kinds of ways to spend or save money in any city.
I am also an American living in Paris, and while I would agree with you that you can find affordable places, as well as different ways to save money here, the fact is that rents are going up significantly each year. An area like Père Lachaise that would have cost €750/month for 30m2 4 years ago, now costs about €1000/month for the same surface area. I wouldn't say this is due to the so-called 1% (after all, combining several tiny apartments to build one big one is quite rare). I chalk it up to the bobo-fication of areas in East Paris while the west gets gobbled up by the super rich.
I ended up moving to Bagnolet, 500m from the périph (beltway). As soon as your area code changes from 75 to 93, prices often fall by half. Because of the '75 or bust' mindset here, lower earners like myself will be forced to seek a place outside of Paris. But that's not necessarily bad because in the Paris metro area, values are based more on the beginning of your postal code as much as they are on proximity. So while the 93 is associated with a ghetto communist suburb, it affords people like me the ability to take advantage of Parisian stereotypes and score a great deal.
Another American in Paris here. I would say Paris is cheaper than NYC, SF, and London. Unfortunately my salary isn't appreciating nearly as fast as my rent. And when I say rent I really mean the copropriété charges.
You can live in a nice one-room apartment in Berlin for about 390 euro a month, 15 mins away from the hip boroughs by great public transport, and 10 mins by bike. What's the price like in Paris (honest question)?
I can only speak for NYC having lived there. I paid $1100 for an apartment on Avenue C in the East Village. In Paris, for a comparable area, I'd be hard pressed to find the same space for less than €1000 per month in an area like say, Belleville. Having said that, in NYC, I was making about $60K. In Paris, I make about 30K€.
Wow. It's quite possible to make more than 60K in Berlin (in Euro's) while paying around 400-500 for an apartment. Crazy how much difference there is between cities.
As a former Parisian, now expatriated to South East Asia, what is the most striking in Paris is the ratio between salaries and housing costs. Salaries in France are not high because of the heavy taxations, which has some good effects – free education, healthcare, etc... A 50 square meters in a really not nice area of Paris (XIXe arrondissement) would cost around 1400 / 1500 euros ( USD 1800 to 2000 ). As a rule, to be able to rent this, you need at least 3 or 4 times this amount as revenue, so between 4500 and 6000 euros a month. A little statistics I like : only 3% of the french household has a monthly revenue higher than 4000 EUR. Also the renting market is really not liquid in France, because it is really hard to make someone move out in case they do not pay ( it can take as long as 2 years ). So as a consequence, the selection to find a tenant is hard ( you need people to guarantee you, and more and more often, you need also people guaranteeing your guarantee... )... Crazy...
What's obvious by this article is that large cities are in a constant state of flux. Picking a particular moment and bemoaning or applauding the current state is obviously a relatively futile exercise. Perhaps we should modify that famous weather statement "If you don't like the state of your major city just wait 10 years"
While I'd love to be able to afford to live in Paris (that place is unbelievable), so long as this 'rush back to the city' is because the rich are sick of the beaches, I'll be just as happy!
I don't want to undermine this piece too much as I think it is an important issue and what I'm about to say doesn't address all of the details. But I also believe it's an issue that will be partially solved by automated cars. As soon as it becomes palatable to live further from the city and commute; and, to a lesser extent, free up space from car parks, this problem will be dramatically reduced.
How is this any different from the endless and dehumanizing suburban sprawl pioneered by America? Frankly, you're better off taking a train from the suburbs in London than you will be self-driving cars unless they can solve the congestion problem. The thing is, a lot of people want to live in the city, because they like to, you know, live in a city, not just work there.
I guarantee there a plenty of people living in cities who would be quite happy to live elsewhere if only there were jobs there. Many of those people live in the city to avoid a long commute, not because they enjoy living in a city.
Yes, and I guarantee you there are plenty of people in suburbs that would prefer to live inside the city if it were more affordable. What is your point?
Just that what drives people to live in cities is primarily jobs, not that they prefer living in cities. I am not arguing that is universal (plenty of people do prefer to live in a city) but the main factor.
Regardless of autonomous cars, proximity and density will always be a decisive feature of cities, which is what allows humanity to thrive and innovate. The fact that only the rich people can afford to live in the center of the city is a problem, because it becomes harder to aggregate human ingenuity and innovation.
In fact, I believe autonomous cars will increases a city's ability to network, because it increases people's ability to aggregate into a single place. It will also make the city an even more desirable place to live and work, because autonomous vehicles reduce the pain of moving around in the city.
> Regardless of autonomous cars, proximity and density will always be a decisive feature of cities, which is what allows humanity to thrive and innovate.
Population density is correlated with increased rates of mental illness.
You're suggesting that dense cities drive people crazy (sorry if you aren't), but it's not clear whether it's like that, or that crazy people tend to gravitate towards center with high population densities.
It's not, and that's a good point. But it sounds more logical to me. Could you give some reasons why people with 'mental illness' would gravitate towards centers?
(mind, I'm asking this with the assumption that mental illness is much broader than just homeless schizophrenics, so to speak. I can definitely see why they might gravitate towards heavily populate areas. But they usually don't pay rent.)
Yes, homeless moving to centers where it's easier to find shelter and people to give you money while begging were my first example; of course 'the homeless' includes many subgroups like the schizophrenics who don't have the mental ability to live a 'stable' life, over the alcoholics and drug addicts whose sanity is affected by chemicals, to people who are just down on their luck (usually combination of illness, no job, no family, etc.)
But other drivers might be that certain demographics are more prone to living in cities as well as developing mental problems: immigrants who are under a lot of stress because of having to adapt to a new language and environment; people in high-pressure jobs like lawyers and people in finance; criminals; etc. (being a criminal is very stressful and most non-psychopath criminals who have been living such a lifestyle for several years or more develop stress-related physical (ulcers, ...) and mental problems because of it, potentially on top of the mental problems they had before).
Or maybe people with mental problems find it easier to be anonymous in a city, where they don't have to (or at least less) deal with the social pressures that outsiders in small communities are under.
Furthermore, while statistically there are more people with mental problems in cities, some classes of problems (like depression) happen more in more rural areas.
I'm not saying one or the other; we don't know. Every now and then there is a study in the popular press with a populist headline like 'cities cause mental problems', and it's also an idea that fits nicely with people's preconceptions about cities=bad, country life=good. The papers those articles are based on are not conclusive though, and the literature shows a much more nuanced image. I work in academia and peripherally work with social scientists who study cities and people living in studies, and they are much more uncertain about the health implications of cities. There are sometimes unexpected feedbacks in complex systems that can cause very unintuitive dynamics.
I think much more than automated cars, what will help is the Internet and new technologies making it ever easier to work from home, instead of having to "go to your job" in the city.
You need to maintain the fiction of requiring face to face contact, otherwise someone in (insert 3rd world) will simply do the job even cheaper.
Higher residential density would be survivable IF "work at home every other day" was somehow legally enforced. That would maintain the face2face fiction while also increasing density without collapse due to congestion.
The article implies that it's a big problem for commodities to go to the people willing to pay the most for them. Housing is just another commodity; is it surprising that the people who derive the most value from being in a city center (professionals in finance, law, business) end up paying the most for the privilege?
Housing is simply not just another commodity. An utterly fundamental aspect of commodities is that their production is price-elastic, and governed by supply and demand: if demand increases, prices rise, so, supply increases, prices fall again, and the market remains efficient.
The housing supply has very little price elasticity, at least in London. This is for the very simple reason that there is hardly any space to build new housing, and enormous barriers to demolishing existing housing to free up such space. So, when prices go up, as they do every year, supply does not expand accordingly.
I'm sorry, but to brush the problem off with an assertion that houses are just another commodity is simply to advertise one's ignorance of economics.
You're right: I chose the wrong word. My point was more about the allocation of housing to the people willing to pay the most. I don't see why housing ought to be special in this regard; most things money can buy are sold at market prices.
The housing supply has very little price elasticity, at least in London.
Demand is also inelastic, which leads to some counterintuitive results. Let's say that you destroy 5% of housing (a catastrophic flood). Prices will double. Dumbasses will assume that housing became more desirable. ("People really want to live here! Prices are going up rapidly!") No, it just became scarcer.
However if you conflate price and value, which most people do, that disaster (that reduces quantity by 5% but doubles prices) will be taken to cause a 90% improvement in "value". Wrong.
See also: 9/11. After the terrorist attack, prices in Manhattan actually went up as speculators bet on future supply compromise/destruction in NYC real estate. There was a brief dip in Lower Manhattan (panic selling) but the more adept speculators bought, creating the morbid 9/11 Boom in NYC real estate.
Slight margins in supply problems have huge price effects. That is the story of housing. That's why it's so infuriating when upper-middle-class people get rent control through connections. It's not that there are many of these people-- they're much less than 1%-- but that they have such a disproportionate impact.
The global elite's parasitism is just one catastrophe that is driving up prices. It doesn't take many houses to be pulled off the market to push them up by huge amounts.
That it's not surprising doesn't mean it's not a problem. And while those classes may derive the most value from being in the city center, it doesn't necessarily mean that society as whole does. Or even those individuals themselves, in the longer term.
The questions of distorted incentives and short-term decision-making are much more interesting questions! As to whether it's a problem or not, how would you argue that it is? Is there cultural value to having bohemians or artists or people other than high-income professionals clustered in city centers, value which isn't represented in their incomes? If so, wouldn't it be more efficient to provide a subsidy for their cultural output and let them choose where to live?
A city needs low- or medium-wage jobs. Teachers. Paramedics. Firemen. Policemen. Bus drivers. Public workers. If these people get pushed out of the city, a workforce shortage occurs, with obvious consequences : there are fewer such workers around, and they get paid more for less work.
If you take into account all the bonuses, perks and short hours, it's not unheard of for a bus driver to earn as much, per hour of work, as an average lawyer.
Does anyone know the property tax uplift? Basically if you're paying $1M for a property in New York City and stay their 2 weeks a year you get end up paying taxes for 52 weeks and consuming city services for 2, so that would be a ~25x the tax per service rendered. Is this noticeable to cities or in the noise?
Perhaps it is time for people with incomes lower (and very low assets/net worth) to be able to deduct their rent from their income, the same way mortgage interest is...
I don't see any point in this. By supply and demand it will just explode prices upward, probably by about the amount deducted. So the poor will have to do more paperwork to keep up yet are those least able to do so, and the rich will get richer because rents will go up. Doesn't seem to be the desired outcome.
The same thing happens with social engineering of tuition costs or health care costs or day care costs or pretty much anything centrally controlled.
Someone needs to publish a list of all these 11.5-month-vacant apartments that rich people buy and that take up so much space, so that burglars can get in when they're not there. There should be an app for that. I'm sure there are home security measures up the wazoo, but those are technical problems.
I could never hack the criminal lifestyle-- I have enough anxiety as it is-- but there are cases in which non-violent crime is a necessary social process.
If the law won't provide the 6-month-and-1-day law that these cities desperately need, then let the burglars do it. When legal measures fail-- clearly the Powers That Be have not shown an interest in doing the right thing on the housing problems-- then resort to illegal ones.
There has been actually a few actions by some local associations to squat vacant buildings in Paris. One of the most famous of these squat was Rue de la Banque, nearby the prestigious Place de la Bourse, which owes its name to the Palais Brongniart, the old Paris Stock Exchange.
The building had been bought by a bank and left vacant for years. By squatting it these three associations did a great thing and launched a national debate on housing conditions in Paris. The building was bought by the city of Paris a bit later (at a cheap price), and was converted into social housing that coincidentally opened just a few days back (on the 6th of june). [1]
There was another famous squat, though much shorter-lived. An insurance had left a building vacated avenue Matignon (nearby the Palais de l'Élysée, where the French president resides) for 3 years. The association organized a squat, and they were expulsed 3 days later. I don't know what has become of this building as of today, though it seems there hasn't been any followup.
I am 100% in favor of these actions, not so much the squatting itself as the fact that the city ends up turning useless offices into homes - there is too much office space in paris, and an awful lot of them remain empty.
Also, social housing tends to drive the middle class out of the market : since it takes up 15% of the housing space in Paris and houses people who could not be on the market otherwise, it actually contributes to forcing the middle class out of Paris. (Not saying social housing in itself is a bad thing)
SO if you combine :
- too much office space
- 15% of housing taken up by social housing
- limitations on construction because the city is a giant museum
- no extention of the city since 1860 (prices go down 20-50% when you change the postal code from 75 to 93
- ecological regulations that make buildings more costly to building every other year
You get why prices have more than doubled since 2000. Paris is going to be a city without a middle class, with only elites, upper-class and poor workers
Don't worry, that's not going to happen in London though - the Tory government made squatting in empty residential properties a crime shortly after the recession hit, and are doing the same with empty commercial ones.
I currently live in Manhattan and I've lived in London (Golders Green, Hampstead) and Paris (7th, 6th).
The reason why costs are rising is because of land use restrictions through zoning and building codes that regulate housing and commercial real estate density. In other words, politically induced scarcity benefiting wealthy landowners at the cost to those people wishing to buy housing, to rent an apartment, or to run a business is the cause for rising housing prices.
The answer is deregulating the politically induced scarcity of land use. The politically induced scarcity interferes with the market efficiency that would otherwise allow the housing to be more affordable.
This is a basic principle of microeconomics and was initially explained by David Ricardo when he explained that the Corn Laws that restricted the import of corn into Britain benefited landowners because it artificially increased the cost of corn thus making the cost of land more scarce and expensive.
David Ricardo felt so strongly about this that he joined Parliament to overturn the Corn Laws. Similarly the solution today is to deregulate the overly restrictive zoning and building code regulations that cause the scarcity.
Economist (and FT columnist) Tim Harford explains this in more detail in his book, "The Undercover Economist."
The contrast is insane, since my entire family is Appalachian coal mining stock. She NEVER visits, so the only time I see her is by visiting her at one of the many properties she has in the various 'global elite' cities.
She has an apartment which takes up 3 entire floors of a building which overlooks the East River in Manhattan (in the "50's" of the street numbers, but I won't name the street for anonymity purposes). She is almost never there, perhaps once a year. She has an equally large aparment in London. She has a mansion in Greenwich, Connetticutt. She rents out none of these properties. They are all left vacant for her to use at a whim. She isn't very educated (despite the efforts of her mother, her friends and her see little use in education. They have everything already.) and once had a major cocaine problem, along with half of her friends. I've met most of them, and attended parties at THEIR vacant-most-of-the-year apartments too.
I love my cousin, but she and her friends are parasites, sucking off of economic rent, delegating the management of their huge hoards of capital to investment bankers in their social circles. They produce nothing, but buy huge amounts of property on a whim wherever is "hip" and then leave it artfully furnished, beautiful, and vacant 11.5 months out of the year.