New York: A Tale of Two Cities

“New York City is a great monument to the power of money and greed . . . a race for rent.”—Frank Lloyd Wright

In 1857, Seneca Village and several other shantytowns and villages were razed to make way for the construction of Central Park. In total, 1,600 inhabitants—mostly freed slaves and Irish immigrants—were forcibly removed from their settlements. This was no mere side effect of the park’s construction—it was one of the main motivations behind it. In the preceding thirty years, New York City had nearly quadrupled in population, and as development pushed further and further North on Manhattan island, the propertied class increasingly felt a need to “tame the wilds.”

And tame the wilds they did—again and again. Like dozens of similar cities worldwide, New York is no stranger to inequality and the displacement of populations due to increasing costs of living. But the accelerated transformation of New York City in the past fifteen years has gone far beyond what anyone would have imagined possible, leaving many to wonder where “their” New York has gone.

Speaking on the inspiration behind his classic film Metropolis—which starkly depicts a city of inequality and class struggle, where the workers live underground and the rich live in towering skyscrapers in the clouds—Fritz Lang described New York City as follows: “The buildings seemed to be a vertical sail, scintillating and very light, a luxurious backdrop, suspended in the dark sky to dazzle, distract, and hypnotize.” The center of the film’s titular city is the hulking “New Tower of Babylon.” Today, emerging out of the concrete and glass jungle of Manhattan is our own kind of Tower of Babylon, 432 Park Avenue.

This perfectly rectangular monstrosity is now the tallest building in the Western Hemisphere (if you exclude One World Trade Center’s spire) and is the tallest residential building in the world. The top penthouse has already sold for $95 million, with hundreds of other units to be bought up by millionaires and billionaires the world over, to be used as hotel rooms for their occasional jaunts to New York City, and as places to hide their excessive wealth from taxation in their native land.

Those who really want to escape the hustle and bustle of everyday life can buy a condo for $7.1 million downtown at 15 Renwick. Residents will be greeted by a 24-hour butler and a cast of actors hired to enhance the “steampunk” theme of the property. The website for 15 Renwick fittingly shows actors with hairdos remarkably similar to Marie Antoinette—of the French Revolution’s “let them eat cake” fame. Shane Ferro for Business Insider writes, “There’s never been a clearer sign that 21st-century New York is nothing but an amusement park for the world’s wealthy and their children. It has ceased to be a real place for the rest of us.”

Back Uptown at One57, another massive luxury apartment building, a penthouse was sold for a record $100.4 million. One57 was the focus of a recent debate over a program called 421-a that has been in place since the city’s “dark days” of the 1970s. 421-a provides property tax cuts to developers whose buildings have at least 20% of their units listed as “affordable.” This program led to the developers of One57 receiving a 95% property tax cut.

In 2013, 150,000 apartments enjoyed $1.06 billion in tax cuts throughout the city as a result of the program. Of those units, only 12,748 fit into their definition of “affordable.” Just what this means is up for debate; the formula used by the program uses the median income, not only of an already financially disparate city, but of three of the state’s wealthiest neighboring counties, Putnam, Rockland, and Westchester.

New York’s “Internationalism”

As a major metropolitan hub and a center of world finance, fashion, and media, New York naturally attracts tourists from all corners of the globe, eyes turned upward, taking in the sights and snapping selfies, adding to the congestion on the sidewalks and subways. But it also attracts the world’s elite, seeking to hide their money in offshore investments with dollar signs in their eyes, making it nearly impossible for most workers to afford apartments anywhere remotely near their place of work. The absurdity of the metro area’s transportation has been dealt with in a previous article.

New York Magazine covered the massive influx of foreign wealth into New York’s real estate in an extensive article titled “Stash Pad.” “According to data compiled by the firm PropertyShark, since 2008, roughly 30 percent of condo sales in large-scale Manhattan developments have been to purchasers who either listed an overseas address or bought through an entity like a limited-liability corporation, a tactic rarely employed by local homebuyers but favored by foreign investors. Similarly, the firm Corcoran Sunshine, which markets luxury buildings, estimates that 35 percent of its sales since 2013 have been to international buyers, half from Asia, with the remainder roughly evenly split among Latin America, Europe, and the rest of the world. ‘The global elite,’ says developer Michael Stern, ‘is basically looking for a safe-deposit box.’”

Another Times article explains the reason for empty Midtown streets: “In a three-block stretch of Midtown, from East 56th Street to East 59th Street, between Fifth Avenue and Park Avenue, 57 percent, or 285 of 496 apartments, including co-ops and condos, are vacant at least 10 months a year. From East 59th Street to East 63rd Street, 628 of 1,261 homes, or almost 50 percent, are vacant the majority of the time, according to data from the Census Bureau’s 2012 American Community Survey.”

Information from the New York Budget Office, requested by the New York Times, “determined that nearly one quarter of the apartments in New York City [yes, all five boroughs!] are not used as primary residences.”

The Times also covered New York’s elite real estate, focusing on the Time Warner Center: “Many of the owners represent a cross-section of American wealth: chief executives and celebrities, doctors and lawyers, technology entrepreneurs and Wall Street traders . . . But The Times also found a growing proportion of wealthy foreigners, at least 16 of whom have been the subject of government inquiries around the world, either personally or as heads of companies. The cases range from housing and environmental violations to financial fraud. Four owners have been arrested, and another four have been the subject of fines or penalties for illegal activities.”

As conditions throughout the world hint more and more at massive social explosions, these properties will not be mere “stash pads,” but sanctuaries to escape to when these events erupt.

Affordable housing and the “poor door”

What about all the workers that still manage to afford life in New York City? According to 2011 statistics, 61% of New York’s low-income households paid more than half of their income on rent alone—in 1999 it was 46%. Given the accelerating wealth polarization of the last few years, it is almost certainly even higher now.

And what workers pay more for gets smaller and smaller. The Wall Street Journal recently argued that New York City is less cramped than it was in 1970: “On average in 1970, 2.7 people lived in each housing unit. That fell to 2.4 people in 2010.” The article added the caveat that, “Unsurprisingly, people in wealthier neighborhoods tended to have more spacious existences. On the Upper East Side, residents have the luxury of 750 square feet per person, while in Corona, Queens there is just 287 square feet per resident.” The influx of wealthier residents to New York City over the last decade who can afford to live in much larger apartments has surely distorted these numbers.

Redividing one-bedroom apartments into two- to three-bedroom apartments has become the latest moneymaking scheme of slumlords throughout the city. Taking what was already a small bedroom and erecting a wall to create two smaller bedrooms has become quite common.

Donna Mossman of the Crown Heights Tenants Union was quoted by Gothamist, explaining the scheme that is undertaken by large-scale developers: “We understand that the only way these developers are going to earn any money back from these purchases, is to empty the buildings. And the first thing they start with is buyouts . . . Once the apartment is empty, they take the one bedrooms, and they turn them into two bedrooms. They take the two bedrooms, and they turn those into three bedrooms. They add an additional bathroom, washer, dryer, and dishwasher. And that's how they hike the rent up as close to that $2,500 as they can.” Windows, living rooms, and space to walk around your twin-sized bed are luxuries fewer and fewer workers can afford in New York City.

Last year in Greenpoint, Brooklyn, 58,832 people filed applications for 105 affordable housing units. Recently, more than 80,000 applied for 38 available units in Williamsburg. Speaking on the lack of affordable housing, anti-gentrification activist Imani Henry was quoted by Brokelyn: “There is nothing hip and cool happening in Brooklyn. It’s a war.”

Queens isn’t faring much better. In February, Gothamist covered the rising rent in that borough: “According to the [Elliman] report, the median rental price in northwest Queens in January was $2,905/month, up nearly 31 percent from the same month last year. Median rents on studios shot up 14.5 percent; on one bedrooms 14.4 percent; 6.1 percent on two-beds, and 46.2 percent on apartments with three or more bedrooms.”

And those luxury apartment buildings that have affordable housing units as part of their tax break deals? Many of those tenants have to enter through a separate “poor door.” A new tower in Manhattan received more than 88,000 applications for just 55 “poor door” units. Commenting on this, CNN Money said, “It’s a tale of two cities in Manhattan.”

Rent control

New York City has the oldest rent control program in the country. The modern program began in 1943, a time when a large proportion of the working population was enlisted in the military, and new layers, particularly women, were drawn into the workforce. Having seen the labor fightback of the 1930s and fearing its continuation at the end of the war, the federal Office of Price Administration froze New York City’s rents in March of 1943. The program was then put under New York state control in 1950.

These rent control laws applied to every rental unit in the city, more than two million. However, facing a housing shortage in the mid-to-late 1950s—a period characterized by suburbanization—the deregulation of rental units began. By 1996, there were less than 71,000 rent-controlled apartments, and by 2014 there were only about 27,000 left. Of all the apartments in New York City in 2011, more than 39% had no rent regulation whatsoever, a percentage that has likely grown in the last four years.

The economic power of the landlords is enormous. Hundreds of thousands of units have escaped the rent control and rent stabilization system. Rent-regulated apartments in housing cooperatives and buildings with fewer than six apartments are decontrolled upon vacancy. Other rent-regulated apartments are subjected to “luxury decontrol” and vacancy decontrol if the apartment’s rent rises to $2,500 or more a month. To achieve the desired $2,500 threshold, landlords can add 1/40th of the cost of repairs to the rent in buildings with fewer than 35 units, 1/60th in buildings with more than 35. This means that an apartment with $40,000 in repairs—including large appliances like refrigerators—can raise the monthly rent by $1000.

Bill de Blasio and co. to the rescue?

But never fear—Democratic Mayor Bill de Blasio has plans to tackle the housing problems in New York City and he knows just the person to handle it: Alicia Glen, now Deputy Mayor for Housing and Economic Development. “We need to invest in key emerging industries and affordable housing so New Yorkers have a better shot at working their way into the middle class. Alicia has the record, fresh ideas, and bold outlook to make that vision a reality,” said de Blasio in a December 2013 press conference.

What is her “record” as referred to by the mayor? Well, she was an executive for Goldman Sachs, heading their Urban Investment Group. As explained by Gothamist: “Glen’s Urban Investment Group played a large part in the Bloomberg administration’s development agenda over the past decade, helping fund much of the uneven development that has priced out many New Yorkers from neighborhoods across the city. If you’re into what Franklin Avenue has become in Crown Heights, then Glen’s the person for you.”

Currently, the New York City Housing Authority (NYCHA) requires an estimated $17 billion to repair existing housing units in projects throughout the city—many of them built in the 1930s and 40s—but it has run up a $98 million deficit this year alone. To shore up the budget for NYCHA, de Blasio and Glen certainly have a “bold outlook.”

They plan to lease unused land in housing projects to private developers. This will surely mean removing the trees and sunlight that make these projects somewhat bearable; relocating or retiring thousands of the authority’s employees; charging tenants more for parking spaces, offering remaining parking spaces on the market; and boosting the rent collection rate, which currently stands at 74%, which is this low because of rent withheld by tenants due to repairs that have gone unaddressed, sometimes for years. Also reported by NYCHA officials, 2,196 of their units are vacant, largely due to “long-term maintenance work” (read: underfunding, understaffing, and bureaucracy).

Where did New York go?

David Byrne, the former frontman of the Talking Heads, wonders where the New York he remembers went: “This real estate situation—a topic New Yorkers love to complain about over dinner—doesn’t help the future health of the city. If young, emerging talent of all types can’t find a foothold in this city, then it will be a city closer to Hong Kong or Abu Dhabi than to the rich fertile place it has historically been. Those places might have museums, but they don’t have culture. Ugh. If New York goes there—more than it already has—I’m leaving.”

The fate of the famous CBGB music venue—which launched famous groups like the Talking Heads, The Ramones, Blondie, Suicide, Television, and dozens of others—is a metaphorical anecdote for the transformation of the city. Closed in 2006, the site is now poetically occupied by a high-end “lifestyle brand,” John Varvatos.

New York City itself is a brand, embodied in Milton Glaser’s famous “I ♥NY” logo, first used in a 1977 tourism campaign. It even has a handful of jingles, one of them written by “rags to riches” multi-millionaire “entrepreneur” Jay-Z. The New York Times reports that even the 212 area code has become a niche market as individuals and businesses scramble buy them up to appear to be “authentic New Yorkers.”

The second generation of New York area codes, 718, is also selling like hotcakes as it tends to represent the trendier borough, Brooklyn. The New York Post quoted the president of the New York American Marketing Association, Randall Ringer, as saying, “Brooklyn is a great brand for authentic products, solidly middle-class with a sense of humor . . . It’s perfect for beer but not Champagne.”

The founder of Brooklyn industries, Lexy Funk, was also quoted by the New York Post: “‘I love what Brooklyn has become, but perhaps we have to work harder to stand out,’ says Funk, from her warehouse digs in DUMBO, surrounded by her company’s newest line of quirky, unique bags . . . When she started, she says, ‘The ethos of Brooklyn was street, urban, mildly dangerous.’ Now it’s ‘hip, intelligentsia’ . . . And as it develops as a commercial center, she adds, in another 15 years it will mean something different.”

There are now well over 300 trademarks with “Brooklyn” in the name. Neighborhoods are also being branded, laying the groundwork for further sky’s-the-limit real estate development. According to the aforementioned New York Magazine article, “Shortly before departing on a road show to Monte Carlo and other redoubts of European wealth a couple of months ago, one broker told me about his most adventurous strategy: buying, emptying, and renovating brownstones in Crown Heights. An Australian investment fund has done something similar in Bushwick.”

A group called “The Bushwick Collective” has been “curating” murals throughout the rapidly gentrifying neighborhood by artists from all over the world. The murals have been viewed by many as a symbol of gentrification and a warning sign that Bushwick is soon to be “Williamsburg 2.0”—a neighborhood that was transformed in the space of little more than 15 years, from being characterized by run-down industries, to being a hub for bohemian types from middle-class backgrounds, to becoming the home of the former president of Georgia, Mikheil Saakashvili.

Street artist Zexor took it upon himself to deface many of the murals that had sprung up, some of which simply read “Bushwick,” presumably to remind those in search of real estate investments just how “hip” and “cool” the neighborhood is.  As reported by Metro, “Median home prices jumped 31 percent last year in Bushwick, according to real estate company MNS, which listed the average monthly rent for a 1-bedroom apartment in Bushwick at $2,048.”

Small business owners have also been hard hit throughout the city. The Village Voice recently reported on the eviction of an entire block of small businesses in Washington Heights in Manhattan. “It’s heartbreaking,” said a family member of the owner of a small Dominican restaurant, “To see that area gentrifying like that—I totally get it; it’s money. It’s just horrible, though. We sit there through the shootings. We were there early. And now that it’s changed, it’s safer, we gotta go. What can we do?”

In Boerum Hill, Brooklyn, Jesse’s Deli saw its monthly rent rise from $4,000 to $10,000. In protest at the gentrification, the owner began charging more for satirically labels items such as “grass-fed Himalayan tuna salads” and “hand-fried chicken cutlet sandwiches.”

For a socialist housing program!

In 1682, French King Louis XIV moved the royal family and the French court to Versailles, a palace about 12 miles away from Paris. The aim was to keep government functionaries, the nobility, and their families away from the semiproletarian masses of Paris.

While New York is not the political capital of the United States, it certainly represents the cultural and economic capital of the country, if not the world. Instead of establishing a brand new redoubt for the capitalist class, the centuries-old city of New York is being transformed into one, and in the process, forcing the millions of workers that make the city run further and further away from the center of the city.

As long as the laws of capitalism—the laws of the profit-making jungle—remain intact there will be no escape from the crushing effects of the crisis on the metro area’s working class. Commutes will be longer, wages will be lower, and housing costs will continue to rise due to the inexorable effects of the market.

The enormous contradictions that had piled up in eighteenth-century France were finally resolved through a heroic revolutionary struggle. It will take a similar, more far-reaching revolutionary struggle to resolve the contradictions in New York City and throughout the country.

While Marxists wholeheartedly fight for the continuation and expansion of rent regulation and stabilization laws, such laws are not adequate to hold back the insatiable greed of the landlords and banks. One cannot control what one does not own.

New York City has the highest unionization rate in the country. The New York City Central Labor Council has enormous potential power and should organize, mobilize, and inspire the workers of the city by building a political alternative to the Republicans and Democrats, and putting forward a bold program to meet workers’ needs.

Such a program would include a moratorium on evictions; rent to be fixed at not more than 10 percent of income; the immediate municipalization of the thousands of vacant housing units throughout the city to provide homes for those in need; a massive program of public works for new and renovated housing, parks, recreation facilities, and improved transportation infrastructure, to be built by local residents with union wages and benefits. Such a program could not be limited to New York City alone. It would of necessity be linked with the struggle to transform the entire region and the country as a whole. It would receive the enthusiastic support of all those who have experienced rising rents and stagnant wages.

It is impossible to tackle the question of housing without taking capitalism head on, above all in a city like New York. The transformation of the city from a “playground for the rich” into a city of, by, and for workers, will require the nationalization of all the major industries and banks and their integration into a democratically planned economy. Only then will we be be able to begin building a society in which every worker can afford to live in a safe and aesthetically beautiful neighborhood, near their place of work, with access to transportation, parks, cultural centers, and plenty of free time to enjoy them and everything else the world has to offer.