Recently, I've been thinking a lot about exurban communities for the ultra-rich that have thrived even as the rest of the real estate market has collapsed. Over at the Wall Street Journal, Nancy Keates, who writes on luxury real estate for the paper, looks at the Aspen and other exurban areas inhabited by the super-wealthy.
If Aspen is the most expensive town in America, it isn't alone; a friend who is an architect in the Hamptons reports that construction for the ultra-rich has barely slowed due to the crash. Budgets? For these the ultra-rich cost doesn't matter. Instead, they set out to build structures that are modelled less on vacation homes and more on resorts. Forget Dubai, everyone knew that was a bubble: the real money goes to places that don't need to advertise.
For some time now, I've been warning that uncritically worshipping city life (or rather, the increasingly bland Starbucks blend that passes for life in global cities like New York, Los Angeles, or London) blinds us to the real changes and problems such communities face. Although some of these—like the lack of economic diversity and growing homogeneity—appear to hardly be of interest to urban boosters, the development of exurban enclaves should be.
Radical change doesn't just happen in booms, it also happens in crises and recessions. During the protracted crisis that will define this decade, we should watch the continued streamlining of upper-middle class jobs, particularly jobs in finance. The working class has long since lost the living wages they used to earn from factories. Now it's time for people like lawyers and accountants to find themselves automated out of jobs, as the New York Times reports. In Liquidated, Karen Ho points out that financial industries—the same financial industries that urban boosters rely upon for their vision of the creative city—see employees as costs to be cut. Times columnist, economist, and Princeton professor Paul Krugman is alarmed by this trend and wonders aloud if university educations are really worth it anymore in both this piece and this one.
The future won't be kind to global cities when this key group of inhabitants find themselves out of jobs. Certainly the kind of urban unrest that we saw in the 1960s and 1970s is likely, not from unemployed lawyers (though perhaps from their children who will face a bleak future) but from the massive underclass of service workers who will find themselves out of work. Many cities will also age, as baby boomers who have invested in real estate (apartment prices in New York can only go up!) will find themselves unable to sell their apartments at acceptable rates.
The exodus of financial industries to places like Greenwich (note that it's mentioned in Keates's article) will continue and perhaps even accelerate (I have reason to believe that the construction of the NYSE facility in Mahwah is a step toward bringing financial capital industries to New Jersey) with offices in cities reduced to centers for wealth managers to meet with clients. But note also that Keates points to the growth of financial industries in Aspen. Few cities can boast financial services firms managing $775 million, but Aspen can. The sort of face-to-face deals that used to take place in the boardrooms and restaurants in the city may now take place away from prying eyes in Aspen or Sagaponack. Note the inversion from the usual logic of the global city in both of these cases: rather than being located near airports, they are located far from them. As Keates points out, it keeps the tourists away. Similarly, one of the main selling points of the Hamptons is the private airport at East Hampton. While tourists are stuck in traffic for hours, the ultra-rich fly overhead, their identities unknown.
In the January cover story for the Atlantic Monthly, Chrystia Freeland looks at the growth of the ultra-rich and their increasing distance from us. Freeland reminds us of Galt's Gulch, a Rocky Mountain that Ayn Rand—that author so beloved by architects—had envisioned for the super-rich in her novel Atlas Shrugged. Freeland concludes that, historically speaking at least, Galt's Gulch is unsustainable and the super-rich will have to either violently suppress the rest of society or give up some of their wealth. This remains to be seen. The uprisings in Egypt and Libya may only be the beginning of a global protest by the disenfranchised middle class against the growing inequality in society.
Remember, it's not just Communists and Socialists who argue against such positions. For most of capitalism's history, excess concentration of wealth and the growth of monopolies were seen as obstacles to growth by capitalists themselves.
But Galt's Gulch is seeming awfully real these days and is showing little signs of going away any time soon. Watch this space for developments.