According to economist Dambisa Moyo in her book, Edge of Chaos: Why Democracy is Failing to Deliver Economic Growth and How to Fix It, 55% of the world’s population lives in urban areas and that number is rising. In this Bloomberg podcast, Stephanie Flanders provides some insights into the inequality brewing in urban areas while at the same time serving as a hub for attracting workers seeking higher incomes.
In the podcast, Ms.. Flanders uses Delhi, Mumbai, and other cities in India as case studies for urban population and economic growth, the problems with governance, and income and wealth inequality. I don’t have to travel to south central Asia to witness inequality. Living in Atlanta I see inequality everyday where a significant population of Blacks and Latinos take the train into Atlanta’s core to go to work. Cranes are everywhere downtown as the city continues to put up new office and residential buildings.
And just this evening, Atlanta’s city council heard over seven hours of public comment before approving a proposed project that would turn 40 acres of downtown space into a complex of residential and commercial space.
The concerns about inequality have leaked into public policy proposals, including promises in 2017 by then mayoral candidate Keisha Lance Bottoms to increase the amount of affordable housing in Atlanta. Today, Mrs. Bottoms is mayor and, to her credit, has made affordable housing the tip of her economic development spear. Late last evening Mayor Bottoms scored big in persuading Atlanta’s city council to approve the $5 billion project. One condition of project approval was for developers to set aside a required minimum affordable housing units of 20% or 200, whichever is larger.
I think even with these efforts, Atlanta is on its way to being unaffordable for middle income residents. Buckhead, Midtown, and soon downtown will be out of reach for the middle class. Even residential areas in the southwest and southeast quadrants of the city may be unaffordable for an increasing number of residents as people moving back into the city with either sufficient capital or credit have been able to take advantage of low rates and purchase homes in the West End, Westview, and Adair Park sections of the city.
What should Atlanta policymakers do? Nothing. A tax and income redistribution scheme may only provide very short term relief to the middle income populace. Higher property taxes would threaten housing values and give homeowners second thoughts about maintaining residence in Atlanta. Requiring developers to set aside affordable units for each of their projects can only go so far given the limit on the number of appropriate projects in the first place.
As Ms. Flanders points out in her podcast, municipalities in the United States may have a bit more independence and flexibility to effect affordable housing policy but eventually the market for housing, available capital, and credit markets will limit the availability of units overall and affordable housing in particular making urbanization a difficult environment for the middle class.
