Tag Archives: economic justice

Housing Crisis Forcing Rich Cities to Get Smaller

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New Orleans        A reporter, Jed Kolko, with the New York Times seems to be connecting the dots in an interesting and important way.  In a recent article about some of the unintended consequences of geographic inequality being concentrated in certain cities, he pointed out several things.  First, that the level of economic activity concentrated in specific metropolitan areas, measured by income, is 21.7% in 2018, is actually less than the 26% level in 1969.  Now the top five sucking up the jobs and income are New York, Los Angeles, Chicago, San Francisco, and Washington.  Then the list included Philadelphia and Detroit, along with New York, LA, and Chicago.  Secondly, he notes that population is not going up with the big bucks.  The big three, LA, New York, and Chicago in fact all lost population in recent years.  The reason seems straight forward:  the shortage of available affordable housing.

Seattle may have understood this situation without realizing how deep a hole the tech and Amazon expansion had dug for their people.  A small sign was a recent vote by the City Council to ban evictions for lower income tenants throughout the winter months.   Los Angeles didn’t get the news and is suffering from the nation’s largest homeless crisis.  New York finally reformed rent control after the most of the horses, and many of the families, were long out of the barn.   Housing is strangulating cities with their own greed and short sightedness in making sure people have decent and affordable housing.

Kolko also notes that the winners, relatively speaking, grabbing an increasing income share are the metropolitan areas ranked from number eleven to number fifty.  These metros went from 26.9% in 1980 to 29.9.% in 2018.  The big losers were the small metros and rural areas whose income dropped by a fifth to only 14.6%.

In other interesting factoids that Kolko populated throughout his analysis, he notes that “Among the 10 metros with the largest economies today, not one is getting both richer and much bigger.”  In addition to the big five, you’re talking about Houston, Dallas, and Atlanta in the sun and Boston and Philly on the East Coast.  The big winners on both counts include Austin and Raleigh, Provo, Utah, Naples, Florida and even Walmart-town, also called Fayetteville, Arkansas, but the biggest whoop in that list is Austin, and, as Kolko notes, it’s only in 27th place.

He throws a “Hail Mary” pass at the notion that it makes more sense to move more development to places like Milwaukee and Cleveland and even these ne’er-do-well rurals, but that would take a government willing to actually do national economic and housing planning, and that’s not happening now and might not be on the horizon anytime soon in the future.  The growth in the cities in the north of England on the push out from London, might be a comparative glimmer of hope for some, but the moral of that story is what happens when extreme wealth and exorbitant and limited housing choices create internal migration that forces change to follow.

Business and government can’t seem to buy a clue, but props to Kolko for giving them several for free.

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Thanks to WAMF.

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Crisis of Accountability for Microfinance in India

New Orleans

Vikram Akula of SKS Microfinance

Vikram Akula of SKS Microfinance

Microfinance has many positives, but should never be confused or misnamed as a “poverty reduction” strategy.   There is simply no way to reduce poverty through debt.  Microfinance or microcredit or micro-lending or whatever the name has a value for the poor as a way to access minimal credit to create or improve livelihoods, but such livelihoods, usually in the informal sector are marginal and fraught with the same risks common to all informal work and small business for that matter.  ACORN International’s experience around the world is also very clear that there should never be any confusion about whether or not many of these loans are charitable because in fact they are often simply predatory.

I say all of this to put in some context a confusing article in today’s Times entitled “Microcredit is Imperiled in India by Defaults” by Lydia Polgreen and Vikas Bajaj.  The handwringing in the article painted the problem as a “subprime” crises because 80% of the money being lent in India comes from the state banks and in Andhra Pradesh the article says, “…almost all borrowers have stopped repaying their loans, egged on by politicians who accuse the industry of earning outsize profits on the backs of the poor.”

Indian politicians have deservedly earned a lot of skepticism and abuse for their probity and fairness, but in this case there’s a lot more to the story, and the politicians are right about this, as even some of the industry officials partially concede.

Here’s the real story in India in a nutshell.   The microfinance industry is no longer your older brother’s microfinance industry of even a decade ago with small non-profits and NGO’s and do-gooders.

Fueled by private bank money, many private finance operations have swooped into this lucrative market for lending to poor families and poor workers.  Microfinance is a major player in South Asia in India and Bangladesh particularly.   Andhra Pradesh is leading the accountability parade because the penetration of microfinance in the lending market in that state now accounts for about 12.5% of the loans outstanding.  Karnataka, where Bangalore is located is next with over 9%, Tamil Nadu, where Chennai (Madras) is the largest city has almost 5%, as does West Bengal, home of Kolkata (Calcutta).

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