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A
Welcome friends, to another edition of Economic Update, a weekly program devoted to the economic dimensions of our lives, our jobs, our incomes, our debts, and those of our children. I'm your host, Richard Wolff. I've been a professor of economics all my adult life, and I'm hoping that that gave me the skill to make some useful comments on the economy we all live in and depend on. In terms of what has recently happened before Beginning today, I want to draw your attention to an important annual event. It is the conference of the year for people who are engaged in efforts to change society to make this a better place. These are folks who are concerned about ecology, concerned about poverty, concerned about a whole host of social issues that we know are important to make this world a better place. They're about half academics and half activists, and their job is to talk publicly to one another and to an engaged audience. And they do that at something called the Left Forum. It will meet this year, as it has in recent years, at the John Jay College of the City University of New York. That's in downtown Midtown Manhattan. The times of the June 1 through June 3. It will be opened on Friday, June 1, with an address from a number of people, including Jane Sanders. If you are interested in participating in having these discussions, in learning what these folks are doing, this is your chance to do that and you can find out all the details, even information about the 300 plus panels they will have by going to their website, leftforum.org I urge you to take a look. I also want to give credit before jumping in today to one of our listeners and viewers, Michael McGahy. It was his message to us asking about the Mittbestimung in Germany that led me a few weeks ago to talk briefly about it to you, and there was quite a reaction. So in addition to thanking Michael, I wanted to remind you again what it is in Germany. Mitbestimung, which roughly translates into co determination, is the law, has been the law for decades. In Germany, every enterprise with more than 2,000 workers must have an annual election where little less than half the board of directors of the company is elected by the workers to make sure that the workers have their own representatives on the decision making board of directors. In companies with less than 2000 but more than 51/3 of the board has to be elected. In this way, workers participate in the decision making apparatus in one of the most successful capitalist economies in the world. It might lead you to wonder why other countries trying to be as successful as the German haven't found that particular Part of their success worth emulating. Let me turn now to the updates of recent weeks. Perhaps the most important change in the labor mood in the United States has been the wave of strikes by public school teachers started in West Virginia, but has now spread to Kentucky, Oklahoma, Arizona, Colorado and beyond. I want to make sure everyone understands that in some of these cases, unions were important in getting these successful strikes going. But in other parts, the workers did it on their own. Without unions. They have been stunningly successful. They have organized brilliantly. They have overcome divisions among the teachers, those in rural areas versus those in urban, those who are registered Democrats and those who are registered Republicans, and so on. They did this in order to get together to do something, raise their wages and salaries to an acceptable level and get the schools that they've given their lives to, the funding necessary to educate this generation of children. They've made both those demands central to their struggles. As little as a year ago, in March 2017, Bernie Sanders and Danny Glover led a march of thousands of people into the south to support an effort to organize the the autoworkers at the Nissan factory. That effort did not succeed. The union effort was defeated. And here we are literally a year later, and the situation has changed dramatically. Unionizing efforts, strike efforts, efforts to improve not just the wages workers get, but the working conditions that allow them to serve the public have been radically improved. What a difference a short amount of time can make. And no one should miss the changing political and economic winds in our society. My next update has to do with a particular company and the lesson it teaches. The company's name is Theranos. T H E R A N O S It was a company that burst onto the public awareness a few years ago because it promised, or more exactly the CEO Elizabeth Holmes promised, that she and her scientists had developed a new, quick and efficient way of, of doing blood tests on people to discover problems that they had, diseases they needed to attend to, and so on. It would revolutionize the medical industry, she said. By 2013, Theranos was valued at $9 billion. Well, all of that came crashing down as it was determined that the promises were either incorrect, uninformed, or fraudulent. Depends a little bit on your point of view. Investors have lost $900 million that were poured into that company. The investors who thought that the hype was correct included the the Walton family, the owners of Walmart, Rupert Murdoch, the media mogul Betsy DeVos, the current secretary of Education, and others. So much for the claim that these super rich people are super smart when it comes to investments. In this case, not so much. Elizabeth Holmes has been found by the securities and Exchange Commission and others to have behaved inappropriately. She is banned from serving as a leader of a company for 10 years. She's barred and has to pay a half a million dollar fine. But given the size of the company, given the wealth of the investors, $500,000 paid by Elizabeth Holmes is trivial relative to the wealth of this gambit won for her. Likewise, the investments of the Waltons, Murdoch and DeVos are tiny fractions of their wealth and will mean nothing to them. So where is the risk in this capitalist venture gone bad? Well, as usual, the real risk, not the one you hear about. You'll hear about the risk of investing in and not getting your money back. The risk of a new scientific breakthrough that turns out not to be what it hopes and claims to be. Those are the risks you'll hear about. But here's the one you won't hear about. And it's the biggest risk of all. At its peak, Theranos had 800 employees. That's 800 families dependent on in every way on the income generated in the livelihoods of those 800 people. Currently the number of employees is 15. That's right. Out of 800, 785 have gotten fired if they bought a home and took out a mortgage based on the income they got from that company. Those are in danger if they moved their children to a new community, enrolled them in a high school that is now a central part of those teenagers lives. They'll have to move now because their folks lost the job. You know, the risk taken by a worker when he or she enrolls in a company is just as powerful as, if not more so in their lives as the risk of the entrepreneur and the risk of the investor. Unless the investor is even more stupid than these folks were, they will spread their investments. It's known as not putting all your eggs in one basket. You put a little of your wealth into this investment, a little into that one. Precisely. So if something goes bad, you're not going to be basically affected. And that's the case with the Waltons and the Murdochs and the Betsy DeVos' as it is with most well advised investors. But the worker has no such option. The worker depends on his or her income from his or her work. And if the capitalist in question, Elizabeth Holmes in Theranos, is either crooked or incompetent, the ones who lose the most, who've taken the biggest risk are those workers. And yet their risk is disregarded. They can't say that their pay should not only be pay for the work they do, but also pay for the risk they take? No. In our strange culture, we imagine risk is something only undertaken by those who have money. My next update has to do with an interesting point made by one of you in communicating to us through our websites, as we will, as always, invite you shortly to do. You asked, are we perhaps in another Gilded Age? And so let me explain, and I'm glad to do this, what the phrase Gilded Age means. It was actually first used, I believe, by the famous American author Mark Twain, who wrote a novel called the Gilded Age. And this phrase came to describe roughly the period from 1870 to World War I, roughly half a century during which some of the greatest fortunes of the wealthiest Americans came to be. You know, names like Carnegie and Rockefeller and so on. It was a time of enormous growth in American wealth coupled with unspeakable poverty across America at the same time. It was called the Gilded Age. To suggest, as Mark Twain did, that, yes, at the top, what we nowadays might call the 1%, it was glitz, it was money, it was wealth. But right below it was a mass of seething immigrants living in really broken down ghettos in our major cities. It was time of some of the bloodiest strikes and labor disputes, the Pullman strike, many of the others. It was a time of abject poverty, corrupt political machines. And so the questioner who wrote to me said, could we be in another moment that deserves the phrase Gilded Age? Very good question. And my answer is yes, exactly. Just only this thought. We need another great novelist, another person like Mark Twain, to come up with the right phrase that captures the growing gap between the 1% and the rest of us. It's very necessary. Let me interrupt for a moment by reminding you that we maintain two websites that I urge you to make use of. We fill them with materials for you. They're available 24 hours a day, seven days a week. There is absolutely no charge for using them. One of them is rdwolff with 2f's.com, and the other one is democracy at work. All one word, democracyatwork.info info. Through these websites, you can communicate to us what you like and don't about this program, what you'd like to see us cover through those websites. You can follow us on Facebook, Twitter, Instagram and YouTube, which we urge you to do as a way of partnering with everything that this program seeks to achieve. The websites are also ways for you to see the range of work we do to get more information than what we can do to Follow us on the variety of services we now provide. We have a store with interesting products that may be of interest to you. We have a blog you can follow. We have ways for you to sponsor us. Please make an effort to take a look at our websites and make use of them. That's why we maintain them literally every day. Recently in a report from CNN it was indicated that banks and non banks who are becoming more important in the mortgage business are lending less and less to wealthy and middle income Americans and more and more to those at the rich end of the spectrum. I want to mention this only to drive home the point that the so called recovery since the crash of 2008 has been very, very unequal and unfair. Something which the American people clearly seem to understand and just another piece of the evidence this shifting of money for homes with going to where the wealth is and leaving the communities of the poor and the communities of the middle. The folks who suffered most in the crash of 2008 are now being discriminated against because it's not as profitable to lend to them as to others. That's not a recovery folks, that's a deterioration of the situation of most Americans and continuing from their disproportionate suffering during the crash of 2008. I want to turn in the time that remains to me to two major events of the last week. One of them was the announcement by President Trump of what he is proposing to do to deal with the awful high prices of of drugs and medicines here in the United States. The bottom line is, after his speech was over, the prices of the stocks of companies that make drugs and medicines zoomed up. Clearly the companies and the investors in them understood what I'm about to tell you, that Mr. Trump's proposals will do next to nothing to control and limit the prices of drugs and medicines we all depend on. And why not? Well, everybody who follows this knows that there are two big ways that many people have advocated to lower drug prices. The first is allowing Medicare and Medicaid to negotiate with the drug companies to buy medicines in huge bulk and thereby get them at a lower price. Let me remind you that we Americans pay more for medicines than nearly everyone else in the world. And that leads me to the second way we can lower prices, namely by allowing Americans easily to to buy medicines from abroad. Many Americans already do that in both Canada and Mexico. If you live near those borders, you know what I'm talking about. But Mr. Trump's speech did neither of those. Not a word about buying drugs in bulk to lower the price. And not a word about allowing Americans to to buy what are often the exact same drug made by the exact same company from another country at a much lower price. These two steps would, of course, drive down the price of drugs in the United States so they look more like the drug prices in other countries instead of doing any of those things that would really make a difference. What Mr. Trump did was, was yell at countries, for example, the European countries with the following bizarre Drug prices are too low, he said. In those countries, they should be higher. And here was his those countries drive a good bargain with the medical and drug companies those countries do to get those low prices. And what that makes those companies do is jack up the prices in the United States to make the big profits that they are blocked from making in other countries. Let me Translate that bizarre Mr. Trump is saying that foreigners are better dealmakers with drug companies than Americans have been. Gee, that's an insult to Americans, isn't it? And it's a real slap on the back to the sharp dealmakers everywhere else in the world, if you doubt that. Me too. This is a way to get out of the blame by finding a foreigner to blame. It's right up there with blaming immigrants for the problem of American workers. Blaming foreigners is just one what Mr. Trump's Make America great again amounts to, and it always has. And by the way, don't be surprised. Mr. Trump's failed effort to rein in drug prices follows the equally failed effort of Mr. Obama to get that job done, which followed the equally failed effort of Mrs. Clinton, during the reign of Bill Clinton to get that job done. Somehow our leading politicians run for office, promising to do something about the bad drug prices. And then somewhere along the way, the lobbyists for those companies bring it all to nothing. No wonder the prices of the stocks went up. They knew what was going on. The other big event this last week, also of course from Mr. Trump, was the decision by Mr. Trump and his advisers to break the treaty with Iran, or to be more careful, to break a treaty signed not only by the United States and Iran, but by five other countries. Britain, France, Germany, Russia and China. So all those countries signed a treaty, and last week the American government broke the treaty. Now, they couldn't be honest and say broke, because that doesn't sound good, does it? So they say, or Mr. Trump said, we are withdrawing. I suppose that was designed to fool somebody. Breaking a treaty is a remarkable thing to do. Keep it in mind the next time you hear about other countries breaking treaties. And let's remember, the reasons given by Mr. Trump were that we didn't get enough out of this, namely the Iranian commitment to stop developing their nuclear program. For your information, if it hasn't been made clear to you, every one of the other five countries that signed on to this treaty, Germany, France, Britain, China and Russia, have declared that in their judgment, Iran has observed its side of the bargain. The United States has claimed to the contrary. They reject every single one of them. So the United States decision to withdraw is what? It's probably got very little to do with anything about the Iranians not performing their side of the bargain, since everybody else thinks they have and there's international inspection all the time to verify. Well, what else could be the reason, then? The answer is it makes Mr. Trump look like a tough guy, somebody protecting America and, and whacking the evildoers over there in another Muslim country. But I'm an economist, so I'm interested in the economic effects of what Mr. Trump has done to build up his domestic reputation with his political base. And I'm just going to give you a few. Here we go. One, how in the world are you going to strike a deal with the North Koreans when you meet with them in a month? A deal in which we promise them to give them economic assistance if they diminish their military nuclear program? They've just observed us break that deal for our own reasons. Why would they make such a deal? Why are you doing this? And especially now? Let me give you another example of an economic effect. Just a few weeks ago, the Boeing Aircraft Company signed a deal to sell $20 billion worth of super airliners to Iran. That's a lot of work for thousands of employees of the Boeing Aircraft Company. Kiss that goodbye, because the Iranians are not going to be able to buy those things. In fact, the Trump administration has already said it's canceling the alliances. Who's going to be hurt by this? The Europeans have invested heavily in Iran. So have American companies. All of those investments are threatened by all of this. Indeed, the United States is threatening to punish companies in Europe that do business in Iran as part of reimposing the sanctions now that the United States has withdrawn. Let me ask you, dear Listener, how would you feel as an American, if some foreign dispute, say, between India and China or between. I don't know. It doesn't really matter. And in the dispute between those two countries, they decided to punish by fining or otherwise hurting American companies that did business with the other side? You'd feel outraged, wouldn't you well, how do you think companies around the world feel? And if indeed this continues, all we are doing is making the Iranian oil, they're one of the greatest producers of oil and gas in the world, go elsewhere in the world, work out their payments with the Chinese, who are already their biggest customer, get further distanced from us, may indeed renew their nuclear program. Who knows? This is an enormous political and economic disaster undertaken to boost the political fortunes of a minority president who's desperate to have more support. And we ought to wonder about a society that permits such a thing. We've come to the end of the first half of Economic Update. I want to thank you for being with us. Please stay with us. After a short break, we will be here with the second half. Welcome back, friends, to the second half of Economic update. It is my pleasure in this second half to introduce to you Professor Miguel Robles Duran. He's a personal friend. He's also a colleague at the New School University, where I also teach at the New School University. He is the associate professor of urbanism and a member of the Parsons School of Design Graduate Urban Council in New York. He has a long list of activities dealing with problems of cities, problems of the ecology of cities around the world. And one of the reasons I invited him was to tap into his knowledge, his experience, to give us some understanding of what's going on in the cities around the world, and particularly in the United States. He has also been involved in a program called Cohabitation Strategies. It's an international nonprofit cooperative that studies both in Rotterdam and New York City, where it's based on the conditions of urban decline, inequality and segregation within contemporary cities. He works with David Harvey at the Graduate School of the City of New York and is really an expert in the kinds of issues around the urban crisis that many of you have asked us to bring onto this program. So it is with great pleasure that I introduce Professor Miguel Robles Duran.
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Thank you very much, Rick.
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Thank you for coming here. Thank you for coming. All right. One of the terms everybody throws around is gentrification, by which I think is generally meant the notion that middle income and poor people are being forced out of a neighborhood or a whole city or a region because wealthy people want space there for their homes, their businesses and so on, and literally outbid those with middle and lower incomes, raising the prices of apartments and houses beyond what others can pay. Tell us a little bit, is this going on around the world? What does it look like? And what's the relationship between gentrification on the one Hand and the growing gap between rich and poor that is documented all over the world.
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Yeah, I think it's very important to start with the issue that gentrification is normally talked to as something very natural. You hear all over the place, it's unstoppable. It's something that it just has to happen. That's the way the market works, et cetera. And there's nothing you can do about it because cities need to improve. There are many people that are in pro gentrification, actually, not only the business people, but there are many cities that I would say 10, 20 years ago were putting in their general plan to gentrify, and mostly European cities. But what is very important to understand is that for those of us that study this thing, for us, it's a very clear issue that gentrification is something that is designed. It's not something that just magically happens. Right. And it's very difficult to communicate this, I mean, to transmit this. What I mean when it's designed is if you look at the way that cities were growing, growing before Margaret Thatcher, you're talking about the end of the seventies, beginning of the eighties in England, cities had certain control by the very government that was determining through planning strategies, through a lot of other norms and regulations, where how was the city going to be growing? You had a housing agency, you had all kinds of agencies that somehow worked with an idea on a welfare system structure. Now, gentrification was happening then, I mean, with Haussmann In Paris in 19th century, you can see it, et cetera. But the dramatic shift is when the rules and regulations started to move into the private and the privatization where part of the neoliberal schema beginning in the 80s and the 90s. And then what we've seen recently is that everything needs to be for profit. The city from that point on begins to be looked at as a commodity, full, absolute commodity. So cities no longer for people to live in. Right. But cities seen as something you can extract as much wealth as possible. So the type of gentrification we see today is very different from the previous forms of gentrification. It is not about like you moving, you're a rich person, you move in. In that part, it's more about how can you kick out people so you can make more money and you don't necessarily need to live in there. Right. So most of the times actually the people that kick out other people don't live in there. Those places, you just want to extract as much profit from that part. And then, yes, it has happened Globally. The reason that I mentioned Margaret Thatcher is because with Margaret Thatcher and Ronald Reagan, they started this international campaign, global campaign of putting these same economic principles, principles around the world. We've been seeing this happening not only in this city, in New York City, but you can go pretty much every city, perhaps Pyongyang. Not yet. That it will happen at some point?
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Yes. So am I right to understand you that somehow before Margaret Thatcher, there was still a significant part of the development of a city that was decided by the city authorities that was at least in some way democratic? I put that in quotation marks because it was supposed to gather what the community as a whole wanted and, and plan the city's growth to meet those goals. This gets dropped and we have the market. In other words, let the prices go. And if the rich want to live there and they get bid up the price, the poor have to leave. And all of that is called gentrification with a positive notion that this is good, that the city should develop along the lines of market making, money making, instead of what was done before. Is that.
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Yes. I mean, one could argue that still gentrification, I mean, the issue that again, you put certain money or the power dedication in the neighborhood and you draw out everything that existed before in order to make things new, has been going on for some time. I mean, we also have to be careful not to romanticize too much what happened before Margaret Thatcher. The state had absolute monopoly and it also had its elitist. I mean, we must remember the state is part of the capitalist enterprise and it was before, it was after. But the conditions completely change when you basically create a campaign where you say the state. You're not a good manager, you're not a good, you know, you cannot make money. Let just business people deal with everything. And as we've learned over the last 40 years of neoliberalism, yes, they do know how to extract from everywhere.
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Right.
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And so what we're talking about in the current terms, gentrification is just like an exponential, like form of that, extreme form or representation of that. And we must be aware also that the consequences are incredibly dramatic as we are moving on into the 21st century. Right. Which are unseen, absolutely unseen, unheard of. The level of vacancies that exist in cities, the housing crisis that exists in cities, the infrastructural complete management is absolutely privatized. The services like water, we've seen the Flint crisis and so forth, all of that falls into that rubric of one newly released, indeed to cities, which has basically changed the Shift from before you had government. And now you all think about governance, which is basically a public, private type of thing, where obviously the reason for that to exist so the private can extract more wealth out of everything. Right.
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Tell us something about these effects. So if we have this shift to letting the market decide, letting the private sector somehow manage, what are the consequences? And I guess it's another way of saying, is it right to talk about cities changing because of this, or is it right to talk about cities declining in some sense? How do you navigate these loaded words?
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Yeah, it's a very interesting question. I would argue that neither one or the other. Right. The way we tend to see, or at least the way that I tend to see cities. Cities are the absolute most perfect material representation of capitalism. Right. There is capitalism specialized. Right. And so therefore, the way that you would read capitalism would be for me, very similar the way that I wrote cities. No, it's always in motion. It's always in movement. It's full of contradictions. Right. There's some things that happen here, some things that happen there. When we talk about CITIES in the 21st century, you cannot only think about cities like New York, just New York. You have to talk about regional, global aspects, between chains, chains of production, commodities exchanges and so forth. And so it's difficult to position whether they're changing. Of course they're changing, or whether are declining. I would say, yes, they're absolutely changing, but they're declining both in and not. Right. I mean, you see, let's say I'm going to talk about the city of New York. You see many parts of the city, like bettering, like, you have better public parks. We have at least some in some regions. Right. But then we have completely derelict areas that are being right now just completely demolished or bulldozed. And so you could see, see that that type of uneven development, what my friend David Harvey calls an even geographical development, is always there, Right. It's always present. Now, the effects, I think the most clear effect that any member of your audience could see, basically two, it's in the housing structure and the housing. I mean, I think there's no single American at this point that cannot agree that we have a housing crisis and we've been having a housing crisis for some time. And then the other one is the commercial space crisis. Right. So these are two very clear aspects.
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Let me draw you out. What is this housing crisis that you see as an outcome of what's been going on?
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Well, it has to do with what I said at the beginning. The issue Is that if you begin to see, or to put all the regulations and norms and policies to favor those that want to invest and extract, extract capital from real estate, what you will get is a market that is absolutely crazy to speculate. That means absolute speculation. Now, there are few people, as we know, perhaps 10% of New York City can afford these things, or in the general aspect of the United states, just the 1% that can afford to do those trades. And it's fantastic for them. But for the other members of the population, speculation is absolutely horrific. So you would find people, let's say in San Francisco that used to pay $800 of rent a month. Right. And then suddenly within four or five years, that same apartment costs five, six thousand dollars a month. And this is basically the type of effect in which we have two things that happen. One, people either move out of the city, which we begin to see, we have begun to see already for many years, or you stay homeless. I mean, you basically become homeless, or you go to your father or your mother and you live in their houses. And this is, I think, what we talk about, the crisis, and I haven't even mentioned the financial part of it, which is another incredible sort of development that is ongoing as we speak. Yeah.
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Is this because the housing, Is it also the case that the housing being built is increasingly the housing for those who have a lot of money because there's no profit or relatively little profit in building houses for middle income and lower income people? I mean, there seems to be some evidence that mortgages are going in that direction and so on. So is there a housing crisis in the sense of a fundamental disconnect between what people need in the way of housing and what they can afford?
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B
Well, it's mostly what the failures of whatever we call market cap or capitalism, whatever the failures of capitalism to provide what we need. So it's very good at providing what the bankers and the speculators need, but it has certainly not done at all well in providing what the rest of us need. The need basis in a system that is focused on profit extraction would be, let's create the housing which we can speculate easier on, and let's create the housing in which we can extract more profit from. Now, that's not to say that you cannot extract some little profit or even decent profits out of making middle class and affordable housing. Obviously you can. Perhaps not in this city, but in general you can. But you have these other things where the regulations have also shifted to subsidize the rich to continue doing this type of Thing. So for example, you took a fiscal incentive. You have programs that give the rich tax free benefits for 30 years if they develop 10% of whatever affordable housing they want to build. Now we have been all cities in the United States have been building some kind of affordable housing. But just to give you an example, a recent building in San Francisco had with I think 96 apartments, had something like 7,000 applications. One here in New York City with 36 apartments had 9,000 applications. You leave it all to chance and to lotteries, the supply basically. And I don't want to get into supply and demand stuff, but we can. Absolutely we can. That what the capitalism is interested in producing is certainly not that. So its interest is not people. Right? It's not society, it's not the well being of everyone. Its interest is just where, how, if you make luxury dwelling, you can totally exchange it much easier among your luxury friends. Living in Dubai, living in Russia, living in France, or living wherever they need to be in Buenos Aires, et cetera, it's very easy to trade these luxury commodities at this moment. But making housing that actually responds to the needs of people, where you treat it as a use value, this is very important. I need a house because I want to live in it, I use it and I want to die in it. For the speculators, it's not, it's like how fast can you flip it? And so it's completely unbalanced. Those that are supplying the housing are interested in that side, not in this other part.
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A
Yeah, I'm struck too, because in American history it's crystal clear that when you created the FHA and all of the other institutions, it was in the middle of a depression. It was a way to, to get housing for people as a means to bring a broken capitalism out of its depression. And you get the feeling that once you've brought capitalism out of the depression it brings on itself, then you don't want this anymore. You want to let the market, the profit system work until again either the system crashes or the massive people whose needs for housing are not being met simply won't tolerate it anymore. Are we moving in that direction?
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B
It's hard to say. Look, I wish I could say yes. I wish we were at the verge of some kind of complete mobilization of people in the streets because they can't afford housing. But we must understand that the economic conditions of 50 years ago, we still had somehow moving out of this gold standard system, right? I mean, we didn't have what is finance, capital in its evolution, pollution, as we have it today and certainly not globalization as we have it today. And so the conditions right now is that the majority of the owners of the new dwellings around every city in America, let's put it this way, are not local people, they're hedge funds, they're insurance companies, or they're just simply wealthy individuals that want to afford somewhere else. So as long as you have these group of people, people buying and selling between each other, there's no collapse, right? I mean, you can continue speculating on this property as much as you want. Somehow the US prints as much dollars as they need in that level of thing. It grows on trees. Now, I wish I could say, and sometimes I think that of course we cannot withstand so much oppression the people. It's just getting into a situation which is important, impossible. Over the last year, for example, in the United States, top 24 cities that had the highest rise in rent were small or middle sized cities below 500,000 people in population. About 10 years before we were talking, yes, New York City, yes, Chicago to a certain extent, or San Francisco. But this very same dynamic is now entering very hard in cities like Boise, Idaho or something like that. And that's the level of investment that is happening now. You have Goldman Sachs with new instruments on how to get even young people, young people to invest in real estate by giving them shares of a gentrification project. But gentrification of the 21st century, right?
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Let me ask you a question. If you travel around the United States, I'm thinking of Pittsburgh, I'm thinking even of Detroit. You see a vast wasteland of 50 years of deterioration. But in the middle, typically in the downtown center of the city, in the middle are a burst of hotels, luxury condominiums, restaurants, a kind of a tiny core which the local media hype as if it's the rebuilding the of and rebirth. But it's actually this tiny. Is that what you're talking about? The hedge funds that are making investments so that the people who are making business can have a nice hotel and a nice restaurant for the three days they're in the town and so forth and so on?
- [45:58]
B
Yes. I mean, this is, I think, a very beautiful way of seeing exactly what we all talk about in the distribution of wealth, right? This can be, it's so obvious in the city. The thing is, we're not taught to see that, right? But the wealth disparities are so clear there. And one thing we have to understand, Rick, is that there's never been more money in the world than there is now. Right? The US has never been in numbers, in the numbers the World bank likes to use and so on. Has never been more wealthy. I mean, actually these countries absolutely rich. I was reading some statistics and reports very recently and everything seems to be unemployment is perfect and so on. Right. And so 3% to 4%. Absolutely crazy numbers, right? I mean, but so we continuously been told, are told by the media, like, yes. I mean, cities are regenerating like Detroit or, you know, all this like the new reemergence or whatever, and we're going to do fine. The reality is that, yes, the 1% are doing fantastic. They have their hotels, they have their really nice restaurants, they're having nice shops and everything just functions well. I always tell my students, okay, let's do an exercise. Let's go out here in New York City and walk to Fifth Avenue and tell me how many of the places you see you can actually either buy something or go there and eat. Right. And of course, almost nothing, right. I mean, because the shops are $500 shoes or, I don't know, $50 dinner plates or whatever, Right. So that's the type of disparity that I'm inducing. And yes, if it continues like that, there is a trend towards creating islands and we've been seeing that more and more. Right. Even willingly creating islands similar to what we see in South America, on certain cities in Asia in which you have gates across where this is where the rich live and then you have the rest of the population that services.
- [47:50]
A
That was my next question. Sometimes I have the thought, and I'd like your reaction, that the United States used to look at other parts of the world, particularly poorer parts, Asia, Africa, Latin America and so on, and see just what you said, a vast mass of desperately poor people, not just in the rural areas, but in the favelas and the poor areas around cities and then in the middle, gated, armed with guards, the place where the rich live and play and work, and you have this frightening dichotomy between the one and the other. Is the United States now basically joining that pattern, having given up on the vast middle class it once promised its people?
- [48:47]
B
Definitely.
- [48:47]
A
Is that happening? Absolutely.
- [48:48]
B
I think it's been going on for some time. And you know, one of the things that space also does or cities also do to us is that they mask very well all the inequalities, you know, that are going on at the time. To give you an example, like you go to Dubai and you see these great buildings and which I don't think they're great, by the way. But most people do. And you don't see the labor that built them, right? So the city's very good at hiding all these processes. Now, when we have a point of view that is not so global, let's say, in our daily lives, we hardly think about other cities. I would argue that the United States always had its lump counterside with Mexico and with Guatemala. So geographically speaking, the US has been able to be so rich because it has absorbed all the wealth from other places. And thus in other places that you're talking about, you see these disparities right now. It has gotten really bad at it in the last, I don't know, 20, 30 years, or it has not been interested. So the US has not been interested anymore in creating this facade that you come to us. Everything looks fine, perfect. I remember when I was a kid, I was coming to the US like, wow, this is like first world, whatever that means. But yes, there's been a growing disinterest. And my take is the only reason this happens because the cities, especially the infrastructure. Let's talk about subway systems, roads, right? And the highways, et cetera, sewage systems, waterways, et cetera. The majority of those are not so profitable. They're not spaces to make profit out. I mean, in Capital Volume three, Marx would say that infrastructure is a place where it's just debt producing, debt creating. And at some point, the city, the federal government, the state government was taking care of that. But all of these resources have shifted into those things that are actually profitable. Right.
- [50:47]
A
So they decay these public services.
- [50:49]
B
Exactly right. I mean, we have been ongoing crisis, crisis in New York City about the metro system, the mta, Metropolitan National Authority subway system. Yes. I mean, people argue, I've seen it in the news, like, this thing has to be profitable. It's like, no, there's no way that you can make that type of infrastructure profitable. It's incredibly expensive. But the logic or the governance logic, the logic of governments is that, oh, we need to bring. Bring a manager so he can make it profitable. It is very difficult if there's no subsidy. And so all of these projects get abandoned. So on one hand you see that, and on the other hand, yes, the absolute concentration of wealth in certain centers and then the dilapidated aspects of people living in trailers or people living in the streets. And that's a pattern. And that will continue to exacerbate even more as we speak. Because one thing that worries me a lot is the coming 10, 20 years with all this issue of automation and the loss of labor, jobs and so forth. The Consequences in cities are going to be absolutely dramatic. And that is difficult to predict. What's going to be the situation? We might have beautiful cities like the one here in our back, but most of it would be empty. There's just not going to be labor. So we have all these issues that as urbanists and thinkers, we're always looking into. But certainly what you're talking about, these levels of inequality are completely represented in the landscape, general landscape of the United States.
- [52:23]
A
So it's not the exception anymore.
- [52:25]
B
Oh, no, no, no. By any means.
- [52:27]
A
A last thing before we run out of time. You study urban ecology. So let me ask you, given what's been happening to cities, particularly in the United States, but generally, what is the impact, impact on the ecological crisis that we know we face of the way cities have been developing?
- [52:45]
B
Yeah, that's a hard question to answer. Let me first state that my interest in urban ecology. I see ecology as a dynamic ecology, as a dialectical totality from a Marxist perspective, I would say as a way to understand every single aspect of the world. For me, an ecology is not the environment. So I always look at the way in which extraction of natural resources affect urbanization, affect cities. And so, yeah, we have very extreme examples what Nestle is doing to Vitel in France. You know, the famous water Vitel. I don't know if any audience member would recognize that. They sell it in a lot of shops. The little town is running out of water because Nestle is extracting all of that, but it's drying out. Same one that just got a contract for 200,000 gallons of water in Flint, right as we're speaking right now, the same one, the same company has been having the contract near Toronto to extract from their aquifers, et cetera. And so you have of course, direct consequence of natural resource extraction, which does produce dramatic consequences on this. But on the other hand, we see see cities react to the environmental issues with more capital investment, which is, I think, incredibly contradictory. In New York City or in San Francisco or in Chicago, you're talking about this phenomenon of green cities. And then the way you solve green cities is like, well, you create more lead, platinum or titanium uranium certified buildings. And that is like, oh, I'm sorry. And I always ask my friends, like, do you know which is the most environmentally friendly building in New York City? Everyone's like, no. I mean, they start to guess, well, it's the bank of America tower, right? And tell me if that is sustainable.
- [54:34]
A
Right?
- [54:34]
B
And so these are the things that we have failed to see again, because cities are so good at hiding these processes. If you put solar panels, they tell you, okay, that you're going to go, you know, everything. So that there's a student that has been using a term that she names green trification. And this is basically where we can go into later.
- [54:57]
A
We've run out of time. Miguel, thank you very, very much.
- [54:59]
B
Thank you very much.
- [55:00]
A
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