New Yorkers' High Rents Pay For The Global Crisis

Along with London, New York is where the world has built physical monuments to its failures to prevent the 2008 financial crisis — or to bounce back from it. The vast concentration of wealth that is the direct result of those failures is distorting where and how New Yorkers live now.

There's not much New York, by itself, can do to fix this problem. But the city sure can lessen the effect on the city's quality of life — or, at the least, not make the problem worse. New York — under both former Mayor Michael R. Bloomberg and, now, Mayor Bill de Blasio — has failed on both counts.

Who is buying apartments in New York's super-super-luxury skyscrapers? As The Times's series this week makes clear, it's less and less traditional rich people — sports stars, celebrities, even C.E.O.s and bankers. Instead, it's the world's superwealthiest — many of whom got that way by exploiting the vast economic imbalances that helped cause the 2008 crisis and continue to retard recovery.

If you made your money in a not-quite-ethical way, in a country with no predictable rule of law, it's no mystery why you want to stash a big chunk of it in a condo here. Even losing 20 percent of your investment in a downturn is better than losing all of it to expropriation, and maybe your head, too.

Meanwhile, the zero-percent interest rates that Western governments have maintained since 2008 have pushed stock markets, bond markets, art markets and real-estate markets to record highs — and created such uncertainty about what will happen when rates go up that lots of rich folk feel safe putting their money only in something physical, like a building.

When only multibillionaires can buy on Central Park South, multimillionaires move to other parts of Manhattan, mere millionaires move to Brooklyn, and everyone else — from doctors to home-healthcare aides — struggle to pay the rent.

What can the city do?

• Lobby Washington to make real-estate investments subject to the same money-laundering and other anti-corruption protections that apply to other types of American investments. All high-end real-estate developers and salespeople should know their end customers — and, like bankers who launder money, be held accountable when those customers turn out to be crooks.
• End all special tax breaks for condo buildings. That isn't low-hanging fruit. That is fruit that's been lying on the floor rotting for years.
• Zone to protect public spaces such as Central Park from the shadows of high-rises. The city's job is to favor a public asset that everyone uses over a private asset.
• Use tax and zoning policy to favor rental housing. Give market-rate rental buildings a tax break to build some “affordable” housing. Market-rate rentals may be expensive, but they are for New Yorkers, not for global transients.
• Consider a special tax on unoccupied apartments, but only in the context of cutting taxes for rental buildings so that overall tax collections remain the same.

New York is a global city — which is a good thing. But we can't let Western governments' failure to fix global problems irrevocably distort the city.

This piece originally appeared in The New York Times

This piece originally appeared in The New York Times