cuz produces

The NYTimes reports on the ongoing crisis for cities in the current economic crisis. It seems to be the perfect storm that threatens to bring back the cities of the 1980s.

“This is the first time for at least two decades that all three major general tax sources — property, income and sales — have all declined at the same time,” said Michael A. Pagano, a co-author of the report and dean of the College of Urban Planning and Public Affairs at the University of Illinois, Chicago. “That’s the real frightening thing for cities.”

Now all we need is a new, highly addictive drug to round things out. Oh, how about crystal meth? It’s not new, but it would be highly effective at destroying our reborn cities.

So how are cities responding?

“We try to cut programs and services that impact the public the least,” said Toni Maccarone, a spokeswoman for the City of Phoenix. “Unfortunately, this time around, there’s going to be direct service cuts. That’s what makes it so hard. It’s police and fire, and parks and senior services, libraries.”

Other cities are considering selling parks and other city property. Of course, the market isn’t offering much for them any more. So basically we’re going to start seeing the privatization of public space at fire sale prices.

To me, this is all clear evidence that the federal government should be concentrating its relief efforts on cities and towns rather than Wall Street. Hopefully Obama’s urban experience will persuade him to do just that, since we know McCain would probably direct the funds to border fences and Wall Street “to protect the economy”.

The Dow may have gone plummeted to sub-10,000 levels, but I’m soaring! My folks dropped off my old Marconi frameset (the “Macaroni” as CH would call it) on Saturday and I got a chance to reassemble it and go for a ride yesterday. After a few weeks of jogging, which became much more pleasant once I learned to lower my center of gravity and could move more smoothly, it’s joyous to be on wheels again…and some pretty delightful ones at that. The Macaroni is a custom-made racing bike and doesn’t have eyelets for a rear rack or clearance for fenders, forcing me to let it be light, light, light. And that makes it all the more lively.

Can’t wait for the sun to come out and let me roll down to Orchard Beach again.

You know, I like Joe Stiglitz more and more. Though I’ve been fortunate to have a much appreciated fellowship with him, his star status and the all-too-frequent sycophantic behavior I’ve seen people indulge around him has led me to be unduly skeptical. And of course, the fact that he is an economist (albeit a liberal one) has bolstered my unwillingness to like him (as affable as he is). Perhaps it’s just jealousy. Regardless, I’ve seldom been far away from his positions, and his recent Vanity Fair piece is right in line with both my ideas and some of Harvey’s and Marcuse’s.

First, my favorite quote, which is in reference to market fundamentalists’ claims about regulation:

Over-reaction, we are told, might stifle “innovation.” Well, some innovations ought to be stifled. Those toxic mortgages were certainly innovative.

Second, a quick summary of his “easy” policies:

On energy: conservation and research into new technologies will make us less dependent on foreign oil, reduce our trade imbalance, and help the environment…. Our ethanol policy is also bad for the taxpayer, bad for the environment, bad for the world and our relations with other countries, and bad in terms of inflation…. Our tax policies need to be changed…. Skewing the tax rates in the other direction would provide better incentives where they count and would more effectively stimulate the economy, with more revenues and lower deficits…. We can have a financial system that is more stable—and even more dynamic—with stronger regulation. Self-regulation is an oxymoron…. We need a financial-products safety commission and a financial-systems stability commission. And they can’t be run by Wall Street…. Throwing the poor out of their homes because they can’t pay their mortgages is not only tragic—it is pointless…. If banks won’t renegotiate, we should have an expedited special bankruptcy procedure, akin to what we do for corporations in Chapter 11, allowing people to keep their homes and re-structure their finances.

All of these are sound. Then he goes on to support a position advocated by Harvey, myself, and others:

Spending money on needed investments—infrastructure, education, technology—will yield double dividends. It will increase incomes today while laying the foundations for future employment and economic growth. Investments in energy efficiency will pay triple dividends—yielding environmental benefits in addition to the short- and long-run economic benefits.

The federal government needs to give a hand to states and localities—their tax revenues are plummeting, and without help they will face costly cutbacks in investment and in basic human services. The poor will suffer today, and growth will suffer tomorrow. The big advantage of a program to make up for the shortfall in the revenues of states and localities is that it would provide money in the amounts needed: if the economy recovers quickly, the shortfall will be small; if the downturn is long, as I fear will be the case, the shortfall will be large.

The difference is that I would combine the two. Money should go to states and localities to support investment in social and physical infrastructure.

In regard to the argument in this recent post, Stiglitz argues that expedited bankruptcy procedures that help people refinance and keep their homes would promote equity.

If this sounds too much like coddling the irresponsible, remember that there are two sides to every mortgage—the lender and the borrower. Both enter freely into the deal. One might say that both are, accordingly, equally responsible. But one side—the lender—is supposed to be financially sophisticated. In contrast, the borrowers in the subprime market consist mainly of people who are financially unsophisticated. For many, their home is their only asset, and when they lose it, they lose their life savings. Remember, too, that we already give big homeowner subsidies, through the tax system, to affluent families. With tax deductions, the government is paying in some states almost half of all mortgage interest and real-estate taxes. But many lower-income people, whose deductions are meaningless because their tax bill is too small, get no help. It makes much more sense to convert these tax deductions into cashable tax credits, so that the fraction of housing costs borne by the government for the poor and the rich is the same

Joe’s okay by me. I hope his celebrity lends weight to these ideas in broader public discourse. If not, we’ll be having this discussion again soon enough.

JS and team (?) have entered this proposal in a competition to redesign the bicycle infrastructure of Red Hook. Lots of great ideas, including free movies from the “Beer Barge”.

The NYTimes has an article on the growth of credit-default swaps in municipal and state bonds. The “benefit” of a market in CDSs for cities and states is that it is supposed to introduce financial discipline to government financing and compel weak entities to shore up their financing. Basically, this submits legislation even more effectively to capital.

A couple of Yale business management profs are advocating a position similar to mine on the bailout. Basically they suggest that the government spend the bailout money on simply buying up all delinquent mortgages and allowing the revalorization of the properties “trickle-up” to Wall Street.

I’m a bit troubled by the suggestion as it would reward bad decisions made by homeowners, which raises the same objections as rewarding the bad decisions of Wall Street. To the extent that buyers were convinced by less-than-ethical lenders to go out on a limb, I don’t have a problem with them getting assistance. I’m a little more troubled by the large number of owners who refinanced through home equity loans to enjoy unearned consumption and those who speculated in the real estate market with the intention of flipping homes. (Anyone have figures on this?) And it certainly does nothing for renters, many of whom may have chosen not to buy due to a wise understanding of their financial situation.

The counterargument is:

Because such unfairness is a small price to pay to avoid a rapid transition to a socialist economy, the collapse of our financial system (and its related global implications) and a frightening shift of economic power toward the executive branch. Why shell out $700 billion to Wall Street dealmakers and the companies they managed into this mess? Wouldn’t it be preferable for individual homeowners to benefit directly?

Two out of the three points seem acceptable, but it still seems that something more democratic is possible. Perhaps the federal government should mandate the refinancing of ARM mortgages and distribute some sort of housing-specific taxpayer rebate equivalent? And I still think that the longer term solution lies in directing funds to municipalities to rebuild infrastructure, thereby providing jobs and increasing US competitiveness.

The NYTimes reports the (unsurprising) fact that real estate projects have begun to freeze up in NYC. What caught my eye, though, was the frank description of the City by Richard Lefrak, “patriarch of a fourth-generation real estate family that owns office buildings and apartment houses in New York and New Jersey”:

This is the company town for money.

Leo Panitch and Sam Gindin of York University (CA) have a very interesting and (necessarily) long article tracing the hundred year history of the current financial crisis.

It was this long chain of events that led to the massive funding of mortgages, the hedging and default derivatives based on this, the rating agencies AAA rating of them, and their spread onto the books of many foreign institutions. This included the world’s biggest insurance company, AIG, and the great New York investment banks, whose own traditional business of corporate and government finance around the globe was now itself heavily mortgaged to the mortgages that had been sold in poor communities in the US and then resold many times over. The global attraction and strength of American finance was seen to be rooted in its depth and breadth at home, and this meant that when the crisis hit in the sub-prime security market at the heart of the empire, it immediately had implications for the banking systems of many other countries. The scale of the American government’s intervention has certainly been a function of the consequent unraveling of the crisis throughout its integrated domestic financial system. Yet it is also important to understand this in terms of its imperial responsibilities as the state of global capital.

This is why it fell to the Fed to repeatedly pump billions of dollars via foreign central banks into inter-bank markets abroad, where banks balance their books through the overnight borrowing of dollars from other banks. And an important factor in the nationalizations of Fannie Mae and Freddie Mac was the need to redeem the expectations of foreign investors (including the Japanese and Chinese central banks) that the US government would never default on its debt obligations. It is for this reason that even those foreign leaders who have opportunistically pronounced the end of American ‘financial superpower status’ have credited the US Treasury for ‘acting not just in the US interests but also in the interests of other nations.’[3] The US was not being altruistic in doing this, since not to do it would have risked a run on the dollar. But this is precisely the point. The American state cannot act in the interests of American capitalism without also reflecting the logic of American capitalism’s integration with global capitalism both economically and politically. This is why it is always misleading to portray the American state as merely representing its ‘national interest’ while ignoring the structural role it plays in the making and reproduction of global capitalism.

Their solution?

The scale of the crisis and the popular outrage today provide a historic opening for the renewal of the kind of radical politics that advances a systemic alternative to capitalism. It would be a tragedy if a far more ambitious goal than making financial capital more prudent did not now come back on the agenda. In terms of immediate reforms and the mobilizations needed to win them – and given that we are in a situation when public debt is the only safe debt – this should start with demands for vast programs to provide for collective services and infrastructures that not only compensate for those that have atrophied but meet new definitions of basic human needs and come to terms with today’s ecological challenges.

Such reforms would soon come up against the limits posed by the reproduction of capitalism. This is why it is so important to raise not merely the regulation of finance but the transformation and democratization of the whole financial system. This would have to involve not only capital controls in relation to international finance but also controls over domestic investment, since the point of taking control over finance is to transform the uses to which it is now put. And it would also require much more than this in terms of the democratization of both the broader economy and the state.

An unsolicited thought: I know you’re all now deciding on your thesis topic and moving forward with your major intellectual project for this year. After an exciting discussion about the role of academic research in social transformation at a conference at Fordham yesterday, I thought I’d outline two potential futures for the hours and weeks of work that you will be putting into your thesis in the upcoming months. One is the typical fate and the second is, to my mind, atypical and promising.

The Typical Fate: In May, your 100+ acid-free pages are bound, moved to the basement of Avery for a few years before being shipped out to a warehouse upstate where future students’ tuition pay for its inert preservation. With luck, a stray few master’s students or doctoral students with similar interests will briefly rouse your thesis from its slumber and cannibalize some data, your bibliography, and perhaps an idea or two. Except for the (non-negligible) knowledge you carry forward from your experience, your labor and knowledge desiccates in a dark, climate-controlled warehouse.

A Living Future: The atypical thesis develops ways to merge your research interests and questions with the needs of organizations and agencies that are actively engaged in building us a better world. The research addresses questions or provides information and data that assists these organizations in understanding, strategizing, politicizing, and acting. In this way, your thesis research is infused with the blood and breath of the people shaping our world; your thesis shapes our world; you shape our world.

I encourage you to seek out organizations, NGOs, government agencies, or other groups that deal with issues in which you’re interested and discover from them what their questions are and what kind of information they need. With this in mind, you can develop a thesis question and research that does not wind up slumbering in stasis, research that walks in the world (and more practically, may very well lead you to a job).

I don’t know what you do with this, but it’s a pretty incredible, zoomable 3D rendering of Shanghai. I’m struck by the amount of open space near offices and institutions and the lack of it near residential areas.

Another conference note. David Harvey advocated in his opening talk that the $700b bailout go not to the banks and financial institutions but to municipalities. The idea is to get the money to the foundation of the crisis, which he seems to suggest lies not in financial institutions’ liquidity issues but in the inability to pay mortgages (and auto loans, credit-card loans, and student loans, to which Eric Mindich of Eton Park Capital Management claims the crisis has spread). By directing the bailout to municipalities, the money should go to building desperately needed new physical infrastructure, which would provide jobs that allow people to pay their bills and thereby revalorize mortgage securities, and to attend to properties that have been foreclosed upon. It would be a slower recovery but one that would have a direct impact on Main Street, revitalizing its commerce and repaving its surface.

So, today was one of those days that leads to reflection. As the very last panel of theis year’s TGK-Berlin conference in New York, Searching for the Just City editors summarized our book along with Tom Angotti, who presented his new book New York for Sale, and three people from the Right to the City Alliance, including two members of Picture the Homeless. It turned into a deeply engaging discussion. The panel was framed as an exploration of how we move between theory and practice. For the Just City folks it was a great opportunity to extend the trajectory of the book, which starts with the abstract concepts of justice and the Just City and moves through mid-level critiques and extensions to attempts to apply the idea in practice (or at least explore the concept through practice). Of course, we could almost have skipped our book as the preliminary drafts of Tom’s book indicate that he is much further along in integrating the two in his exploration of community planning history, strategy, and theory in New York. (As an aside, I’m very excited about his book and have already pre-ordered my copy.) And Peter Marcuse was in fine form, explaining how the two books challenged traditional notions of technicist planning and reintroduced ethics to planning. Letitia Ladon (sp?) laid out the political landscape of the homeless in NYC, getting really warmed up when she started to speak of action. Sam Millar of Picture the Homeless argued that utopian concepts lacked the relevance of grounded visions and that grassroots organizations need the legitimacy of academics in such forums as newspaper editorials. And Rene Francisco Poitevan then went on to make the book sound much better than I’m capable of imagining it is, capturing much of tension between the Just City and the Right to the City by pointing out that the pieces opened this question up. And he left us with the very interesting and vital question, “What are the limits of the Right to the City frame?”

Discussion took off well, focusing around one of Rene’s extensions of this question that asked how the Right to the City might handle the sequestering of billions of dollars in Wall Street relief. (The simple theoretical answer being, in my opinion, that for Lefebvre the city, the urban, is coextensive with capitalist society and thus the sequestering cannot escape it theoretically. The practical answer being, of course, much more complicated.) Anyway, realizing that we had the luxury of having very busy community activists on our panel and since that was where our panel was supposed to end up, I asked how our theoretical work related to their day-to-day practice. Describing scholars job (somewhat unfairly, to be honest) as “to talk”, I asked if the theoretical language we cooked up around rights and justice had any relevance to or role in the work they do. The answer: it doesn’t.

This led to a lengthy and animated discussion of what the role of the academic should be (for that was how my question was interpreted). Peter ended the panel saying that people who asked questions like, “What is the role of the academic?” should be punished by having to come back in a year with the answer. Apparently I have a new assignment.

The problem of whether theory corresponds to objective reality is not, and cannot be, completely solved in the movement of knowledge from the perceptual to the rational, mentioned above. The only way to solve this problem completely is to redirect rational knowledge to social practice, apply theory to practice and see whether it can achieve
the objectives one has in mind. -Mao, On Practice

[p.s. If anyone has details to fill in about the remainder of the discussion, please add them to the comments. Today, like other times, when I ask a question I often miss snippets of the ensuing conversation as I try to process responses.]

Carl Sagan on the “mote of dust suspended in a sunbeam” that we call home. (via Metafilter but deleted immediately after posting)

I’m really sick right now, so this’ll be brief. I was wondering before if cities couldn’t use eminent domain to take over properties that have been foreclosed on and turn them into social housing. To the extent that foreclosed properties tend to deteriorate and bring down property values and living conditions in any given neighborhood, would it not be “in the public interest” to take over those properties and provide them as affordable social housing, thereby maintaining quality of life for all?

Well, yesterday I did my first interview for my dissertation. It was highly informative and has provided with slightly new language that ties my project in with current preparations for the renewal of T4, the transportation bill. That language is one that tries to distinguish a project that serves local or regional constituencies and a project that serves the national interest. For example, is the Cross-Harbor Tunnel a project that benefits NYC by directing economic development to Long Island? or is it of national significance because it reduces overall emissions and improves traffic flow throughout the Northeast?

The interview also highlightedthe fact that the different union orientations of the ILA and ILWU might make a comparison with LA/Long Beach fruitful. It has also suggested that in the case of logistics, the economic efficiency of bringing goods by ship as close to the final market as possible (i.e., Port of NY and NJ) may also be the most environmentally sound approach, despite additional local congestion.

The interview did, however, make me realize how far I have to go. To arrange and conduct all the interviews I’m going to need is going to take some serious time. And that’s just in NYC. If I try to do LA/LB or Baltimore and Halifax, the complications are going to skyrocket. We’ll just have to see how things develop.