June 14, 2016 | By Michael Tiboris

The Two Cities: Inequality in Global Cities

 
“Are successful cities inevitably victims of their own success?” asked Financial Times’ columnist Edward Luce to begin the urban inequality panel at this year’s Chicago Forum on Global Cities. The question is compelling because it challenges the value global cities have put on their success as centers of economic productivity in a technologically connected world. Is a pernicious form of economic inequality the inevitable consequence of becoming a globally powerful city?

It is a fact that wealth inequality in cities across the world has accelerated dramatically. While economic globalization has created great wealth, it is increasingly clear that the benefits of this growth are very unevenly distributed. Wealth has accumulated at the very top of the income scale while the wages paid for the service jobs that have replaced manufacturing jobs lost to globalization have stagnated or declined. If this growing inequality is both harmful for urban residents and an inexorable part of the global city, then this is a serious problem for the idea that global cities are a benefit for the majority of their residents.

Framing the inequality problem this way invites two potential responses. The first is that inequality in global cities is not harmful, even if it is inexorable. The second is that even if it is harmful, inequality is not inexorable. The first response is less convincing than the second, and even in that case we can see that the problems of inequality are very difficult to address. But address them cities must, or they will risk losing the dynamism that makes them attractive in the first place.

Inequality in Global Cities is Inexorable but not Harmful 

This idea, economist Edward Glaeser told the forum’s audience, begins with recognizing that some degree of inequality has historically been a sign that city is functioning well. People are attracted to urban spaces because they offer opportunities. 

“In a more globalized more complicated world, the fundamental advantages of urban density just becomes magnified because, at our heart, we are a social species, we get smart by being around other smart people, and [cities] connect us with other people.”

As gateways for immigrants and opportunity seekers, cities represent the best chance at the economic participation, education, and social services necessary for upward mobility. The city’s rich and poor have, Glaeser argued, much to gain from their interaction and so, “cities shouldn’t apologize for their poverty because cities don’t make people poor … cities attract poor people with the promise of economic opportunity.”

However, as Glaeser himself noted, this only works to the poor’s benefit if the mechanisms of social mobility still work. Whether, in other words, inexorable inequality in global cities is harmful depends on whether it is short-lived for individual people and part of a general pattern of upward social mobility. Cities may not make people poor, but bad policy and neglect can keep them that way. 

There is reason to question how well the traditional mechanisms of education, promotion, and growing equity are functioning given global cities’ historically unique development patterns. In many global cities, for instance, the technological and financial service industries in which growth has been concentrated have substantial educational barriers for entry. They also rely on a globally sourced workforce for the diminishing number of technical experts they require. Thus, a corporate headquarters moving to Chicago does not imply that Chicagoans necessarily have a better chance at employment. The highly structured promotion chains that middle-skill service and manufacturing jobs once offered have not been replaced with anything.

This puts a lot of pressure on lower-income residents to get an excellent education.  Unfortunately, education no longer functions as a reliable mechanism for social mobility. Poor quality public education and the high cost of higher education credentialing reinforce inequality rather than correct it. Cities are generally failing to invest in (especially early) educational resources for low-income students or find ways to create stable mixed-income schools.  Moreover, it is not clear that the traditional mechanisms have ever worked especially well for historically marginalized groups. The isolation of poor communities along demographic and income lines makes it more difficult for the urban poor to build equity in their homes or businesses which might raise quality of life within their communities. 

Solutions to these problems vary city to city, depending on a city’s distinctive admixture of historical, social, economic, and political features. Improving school attendance may help bring excluded populations into the fold in places like Shanghai, for example. But as Mark Hoplamazian, president and CEO of Hyatt Hotels, argued, this will not be adequate in places where low-income schools themselves are not safe, vibrant, and do not offer a viable path into higher education.    

Where inequality is persistent we need to develop entirely new mechanisms of mobility. The alternative is increasingly isolated islands of urban degradation.

“The fabric of the city gets stretched and contorted when you’ve got [very unequal communities] in relatively close proximity,” Hoplamazian warned. “We’re sitting here in a beautiful air-conditioned theater, but three and a half miles southwest of here is a very different reality … that’s very, very close by.” 

Inequality in Global Cities is Harmful but not Inexorable

The weakening of traditional social mobility mechanisms belies the conclusion that inequality in global cities should be celebrated. We ought to turn, then, to the idea that there are indeed pernicious forms of inequality in global cities but that they can be overcome by the right sorts of investment and policy. As the forum’s panel made clear, the path forward lies in developing new channels of social mobility while protecting the old ones.

Tessa Jowell, former UK Secretary for Culture, Media, and Sport, cites lack of affordable housing as the single greatest obstacle to social mobility in many global cities. London is building less than half of the affordable housing it needs simply to keep pace with the increasing urban population. Mixed-income housing, Jowell claims, should be required in all new development. As things stand now, the city is “exporting” the families who cannot afford to live there, demonstrating the way “inequality is the squandered potential that holds back growth.”

Unequal cities are, however, unequal in their own ways. Even if global cities share a tendency toward rising inequality, argued Carlos Ivan Simonsen Leal, president of Brazil’s Fundação Getulio Vargas, their background history and policy choices affect the impact this has on the middle and lower classes. The obstacles to building affordable housing in London differ markedly, he noted, from building it in São Paulo where mortgages have not historically been available. This is changing, however, and it suggests that cities do have some power to shift toward policies of inclusion.

Combating Inequality is Expensive.  So is Ignoring it.

While inequality has economic and social costs, lasting non-superficial efforts at improving inclusion are unquestionably expensive. Panelists agreed that cities can be a force for greater equity but that they likely cannot do it without national-level financial and policy support. As Glaeser neatly framed the issue: Cities must ensure the wealthy pay more taxes to fund and protect inclusion, but this may well drive them out of the city. This is a prospect about which Luce claimed cities are generally “terrified.”   

Affordable housing, meaningful education reform, and community development require extensive funding and policy changes. Half-measures have resulted largely in widening segregation. This cannot be addressed without leadership on budgetary issues, Leal and Jowell concluded, along with buy-in from employers. Global cities are not, perhaps, “inevitable” victims of their own success. But to the extent that they can do something about inequality they must, or they will find themselves paying for failure in one form or another. 

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The Chicago Council on Global Affairs is an independent, nonpartisan organization that provides insight – and influences the public discourse – on critical global issues. We convene leading global voices and conduct independent research to bring clarity and offer solutions to challenges and opportunities across the globe. The Council is committed to engaging the public and raising global awareness of issues that transcend borders and transform how people, business, and governments engage the world.

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