Sorry, Artists: Gentrification Is Here To Stay
Post #1765 • November 9, 2015, 5:07 PM • 3 Comments
According to Vasari, young Giotto was tending a flock of sheep in Colle di Vespignano in Mugello when Cimabue happened upon him drawing on a rock with a piece of chalk. The master whisked him off to Florence. Art has long been an urban phenomenon in the West, even going back to the Trecento.
Consequently art has long depended on the possibility of living cheaply in the city, and thus gentrification has come to be viewed as a moral disease in a way that used to be reserved for syphilis. It's especially irksome to the largely left-leaning art world because the adverse effects fall upon poor minorities and the ethnic neighborhoods that make a city interesting. This week's email blast from Art F City says of the recent Lucien Smith event:
This week the world learned that offensive, out-of-touch art events are better off unmade. Did New York really need an event celebrating two luxury condo towers breaking ground along the South Bronx waterfront? No, especially when it comes with an exhibition that includes bullet riddled cars next to burning trash cans. Let's hope Lucien Smith retires from his role as gentrifier enabler, artist and event curator.
Last month artist Carye Bye explained why she was leaving town:
Until a few years ago, it looked like Portland could be my forever home. But Portland isn't an option for me anymore, thanks to the recent explosion of people, rising rents and the loss of character—the speedy chopping down of trees and demolition of modest older homes to build more huge, boxy houses without yards.
I think we may be coming to the end of a period where being an artist was synonymous with being urban, unless we are willing to fight for it.
At the moment, artists in New York are throwing their weight behind the Small Business Jobs Survival Act, which proposes various controls on commercial leases in the city. Hyperallergic has tacitly endorsed it and it recently acquired its 24th sponsor of the 26 it needs to proceed legally. (You can, of course, follow the #SBJSA hashtag.) Informally, the activists at Arts & Labor have an Alternative Economies Working Group which has been sponsoring a series of meetups to
discuss the cultural-political landscape in New York City, the next of which will take place this Thursday.
Here in Boston, an initiative coming out of the mayor's office, Boston Creates, has entailed a series of town halls to solicit public input on its
cultural planning process. Gentrification has come up repeatedly at these events. Marty Walsh's plan to elevate the profile of the arts in Boston is going to have to tackle foremost the unfortunate facts of the cost of living here. (You can follow #bostoncreates as well.)
These well-meaning efforts and their advocates are up against a much more powerful force, however. That force is the Federal Reserve.
The Fed's go-to strategy for ending recessions has long been to lower the Federal Funds Rate. This has the effect of stimulating spending, because it makes borrowing money for big purchases (and even some little ones) more attractive. That goes for spending on real estate especially. The FFR affects the yield of 10-year Treasury bonds, which in turn indicates to the mortgage market what rates ought to look like, since mortgages are typically refinanced every ten years. The 10-year T-bond yield is something like the official forecast of interest rates for the next decade and the banks follow along. Ergo, if the FFR drops, mortgage rates drop, and borrowing money to build, develop, and otherwise gentrify is safer and cheaper.
Given that the real estate sector led the economy into the last recession, the Fed has undertaken other programs to take pressure off of it, such as the large-scale purchase of mortgage-backed securities. The Obama administration itself has gotten in on the effort to make life easier for the real estate sector. In 2011 it pressured attorneys general across the country to accept a settlement deal with banks over myriad counts of perjury and other crimes in the pursuit of post-recession foreclosures. The idea was to clear up mayhem in the housing market so that it would stop dragging down the rest of the economy.
The flip side of this is that low loan rates and confident lending cause prices to rise. If you have a house and want it, this is good news—your house grows ever more valuable. If you have a house and don't want it, this is good news—you can sell it for more than you paid for it. If you don't have a house and want one, this isn't the best news in the world because they're expensive and getting more expensive. But it's sort of good news in that if you can get a loan, the mortgage rates are some of the lowest in history.
This is all by design. Keynesian economic theory says that you want to stimulate spending to fight off recession. In other words, the Fed's recovery strategy creates the perfect conditions for gentrification. The financial incentives are in place for both buyers and sellers to turn cheaper properties into dearer ones.
The Hyperallergic article linked overhead is an interview with Jenny Dubnau of the Artist Studio Affordability Project, who says of the SBJSA,
This is a pretty good bill, although it’s not a panacea, the be-all-end-all, because the increased rent will be too much for some small businesses and artists. But in general, it would have a dampening, a cooling down impact. Commercial rent control would be the best solution, but we don’t have the political power at this point to get real commercial rent control passed.
But in fact, rent control is a terrible way of taking care of this problem. If property values are rising all the time and the law makes renting to artists and small businesses more painful to the landlord, the logical choice is to go condo or develop to handle upscale clients or otherwise find something else to do with the property. Less small-business real estate stock would get built because, from the property owner's standpoint, why bother? If you could rent your brick box to a scrap-metal sculptor for $2,000 a month or a chain store for $10,000, which are you going to do, given a ten-year minimum agreement? The details of how this plays out depend on the way the controls are implemented, but those are the broad outlines. Even the New York Times recognizes that rent controls result in effective (and actual) lotteries.
So what to do instead? It's hard to know, given that the Fed doesn't answer to the likes of you and me and we might not be interested in crashing the recovery anyway. Art as an urban phenomenon in the West had a good seven-century run. Maybe it's time to say goodbye to it.