The Paradox Of How To Raise The Poor From Poverty

If you follow official government propaganda on the issue of housing, then you know that it is absolutely obvious to all thinking people that the poor are poor in large part because they live in concentrated areas of poverty, isolated and remote from economic activity and successful people.  If only the poor could live amidst the wealthy and successful, then they would have access to opportunities and to good jobs, and would quickly rise up from poverty.  Or something like that.

And thus currently one of the government's biggest pushes in the anti-poverty realm is HUD's so-called AFFH (Affirmatively Furthering Fair Housing) Rule, made final about a year ago in July 2015.  Here is the text of the rule.  The idea behind the rule is that, since exclusion from wealthy areas is what keeps the poor poor, therefore wealthy towns must be forced by government coercion to accept HUD-subsidized public housing as the means to assist the poor on their way up.  The rule has most recently gotten itself into the news due to HUD's lawsuit against Westchester County, New York to force the construction of low income public housing in the wealthy hamlet of Chappaqua, part of the Town of New Castle.  (The Town of New Castle is famously home to all of Democratic presumptive presidential nominee Hillary Clinton, her husband Bill, and New York Governor Andrew Cuomo.)  Here is HUD's statement of the reason for its AFFH Rule, from its release:

The Fair Housing Act not only prohibits discrimination but, in conjunction with other statutes, directs HUD's program participants to take significant actions to overcome historic patterns of segregation, achieve truly balanced and integrated living patterns, promote fair housing choice, and foster inclusive communities that are free from discrimination.

I know what you are thinking.  You are thinking that, if the way to assist the poor to rise up is to have them live in proximity to the wealthy and successful, then it should be absolutely just as good an idea to have the rich move in among the poor as to have the poor move in among the rich.  Both lead to comparable integration of races and income levels.  Really what's the difference?  Actually, there is one significant difference, which is this: having the poor move in among the rich doesn't seem to be happening much naturally, and therefore requires government coercion and massive subsidies; whereas, having the rich move in among the poor does seem to be happening naturally, and therefore requires no government coercion and no subsidies.  If anything one would think that that difference, which is no small matter, should make the process of integration through gentrification the preferred method.   At the least, the processes by which the rich may move in among the poor should receive the encouragement and approval of government entities, and certainly should not be subject to obstruction from the government.  Right?  Oh, you are so naive.

Which brings us to the current situation on the Lower East Side of Manhattan.  As readers here know, the story of the Lower East Side waterfront of Manhattan is truly one of the most bizarre and disastrous real estate tales in the world.  A stretch of almost three miles of Manhattan waterfront real estate, running from approximately the Manhattan Bridge up to 14th Street, which in any rational universe would be some of the most valuable real estate in the world, is occupied almost entirely by low-income HUD-subsidized housing projects.  Based on comparable values from the private housing on the Lower West Side waterfront of Manhattan, the approximately 20,000 apartments in these 100 or so buildings, if in private ownership, would have an aggregate value somewhere in the range of $50 billion to $100 billion.  But because they are owned in socialist-model public ownership, the value of these buildings is exactly zero -- zero dollars and zero cents.  Nobody can sell them, and nobody can buy them.  They pay no property taxes.  The tenants' rents cover less than half of operating costs, and the buildings require millions of dollars in annual government operating subsidies to keep them from crumbling.  The buildings' residents live predominantly in poverty.  (If somehow it makes no sense to you to talk about "poverty" for people living in apartments that if appraised by standard methods would be valued at an average of maybe $3 million -- or even $5 million for the ones with water views -- then you just have no understanding of what "poverty" means in today's world!)

But the occupation of this stretch of waterfront by the projects is not 100%.  Somehow, when the government urban-renewal bulldozer bulldozed through here in the 1930s through 60s, a few sites were missed.  And now -- horror of horrors! -- some private developers have recognized the value of the real estate, have bought up some of the few privately-owned sites, and are proposing to put up big high-rises so that they can sell valuable water views to wealthy newcomers.  Indeed, one such big new high-rise is already under construction.  Would you think that the existing community of predominantly low-income people would welcome the wealthy newcomers as the way to help themselves exit from poverty?  Absolutely not!

The local Villager newspaper has the story in its current issue.  The headline is "Activists call on C.B. [Community Board] 3 to take a stand against wave of luxury high-rises."  Here is the Villager's picture of a rendering of what the stretch of waterfront immediately north of the Manhattan Bridge will look like with two new high-rises.  The green one on the right, by mega-developer Extell, is already under construction.       


Note the row of projects along the waterfront toward the right of the picture, which is only the beginning of several comparable miles and dozens of comparable buildings.  And, in case you are wondering if there are any good jobs in this area, that's the new One World Trade Center with the spire in the background on the left.  It's easy walking distance (less than one mile) away.  The Financial District, with its several hundred thousand jobs, is equally close.

So what is the reaction of the community to these new buildings?  From the Villager:

Members of the Chinatown Working Group — a coalition of grassroots organizations whose goal is to draft a master plan that would preserve housing affordability in a wide swath of Lower Manhattan — spoke out angrily at the full board meeting at P.S. 20 on May 24. They repeatedly demanded that C.B. 3 at its next monthly meeting issue a strong statement of support for the coalition’s housing preservation agenda.  “We want you to sign a pledge at your June meeting that says ‘no’ to more luxury development,” a C.W.G. member said. . . .  

Francisca Benítez, a member of C.W.G. and Chinatown & Lower East Side Artists Against Displacement, or CLAAD, made a desperate plea for action.  “Passing the C.W.G. plan is now more urgent than ever, with Extell and other skyscrapers being built on the Lower East Side waterfront,” she said. “C.B. 3 should support the community’s demand to stop Extell. . . .  

And the reaction of the Chairwoman of the Community Board?:

[C.B. 3 Chairwoman Gigi] Li later told this newspaper that the community board has been working hard to come up with a plan that would stop the proliferation of high-rise luxury development on the Lower East Side.

But don't these people realize that having wealthy and successful people move in next door is the best route to their escape from poverty?  It seems that they didn't get that memo.  Then again, it was always obvious that the idea behind HUD-subsidized projects is not to help poor people escape from poverty, but rather to keep the poor people poor.  If HUD-subsidized projects in wealthy areas helped the poor escape from poverty, then some eighty years on into the game the people in HUD projects in wealthy Manhattan would not still be poor.  But they are still poor (at least if you don't count the market value of their housing in their income).

If you listen to the thoughts of the community representatives as expressed above, their main goal is to "preserve affordability" in the neighborhood.  To put that in terms somewhat less flattering to them, what they want is to keep their multimillion dollar apartments and not have to pay for them.  Can't say I blame them.  On the other hand, no existing housing was demolished for these two new high-rises (one site was basically vacant, and the other was a supermarket). The so-called "affordable" housing in the area is already protected either by New York City rent regulations or socialist-model ownership by the Housing Authority.  So what are these people worried about?  (The obvious answer is, they're worried that someday someone will wake up and realize how ridiculous this situation is.  Sorry, the Manhattan Contrarian already did that.  And really, the situation is so ridiculous that it's only a question of time until lots of people start waking up, no matter how many supposedly ironclad city "plans" are put in place to "stop" the developers.)

As to HUD's AFFH, one might be forgiven for getting the idea that the whole thing is not really about helping the poor rise from poverty, but rather is just a way to stoke some racial and class resentments, to take some revenge against some of the wealthy and successful and, not incidentally, to give HUD an ongoing and ever-growing mission and budget.  It's not pretty.