The economic crisis is an urban crisis

Marcus is my neighbour in the Bedford-Stuyvesant district of Brooklyn, New York.

In past decades, Bed-Stuy, as it's known to New Yorkers, became a symbol of urban decline. Drug dealing was brazenly out in the open and shootouts between rival gangs over territory and trade were common throughout the 1980s and early 1990s.

Marcus was involved in what he calls "the street-corner economy." Locked-up for a few years, he recently returned to Bed-Stuy looking for work. Yet many of New York's inner-city neighbourhoods have experienced unemployment rates hovering around 20 per cent, double that of the city's overall rate, even in times of strong economic growth.

Now as the economy falls into a recession, work is even harder to come by. "I never got jobs, ‘cause employers would look at my criminal record," Marcus says. "But now, there just isn't anybody hiring."

He's found some work guarding a boarded up house for a local property developer in return for $3 an hour under-the-table. Without much of a social safety net to cushion the impact of poverty and joblessness, Marcus is again looking to "alternative survival methods" to get by.

Punishing the poor: the reality of Giuliani's new New York

Mayor Rudolph Giuliani was praised for New York's falling crime rates during his administration's tenure of 1994 to 2001. However the factors combining to ‘clean-up' New York included a recovering economy in the mid to late 90s, bouncing back from the crushing recession experienced in the earlier half of that decade. Pair this with a decline in the so-called ‘crack wars' and a neo-conservative approach to social inequality and you have the much-heralded new New York.

Bed-Stuy is spotted with what criminal justice experts have come to call "million-dollar blocks." The blocks get their name from the fact that so many of their residents have been sent to state prison that the total cost of their annual incarceration exceeds $1 million. "Million-dollar blocks" are concentrated in the poorest neighbourhoods of the city and, given the racialization of poverty in North American urban centers, such neighbourhoods are predominantly African-American and Latino.

As Giuliani slashed welfare rates, cut access to affordable housing and pumped up police budgets, his strategy for dealing with poverty and the poor was punitive.

All this should lead policy-makers to some sobering analysis of the current economic crisis and its implications for Canada's big cities. The economic crisis is an urban crisis and governments at all levels will have a choice of directions to take for dealing with the social fallout that the crisis entails.

Urban social crisis caused by poverty

The Giuliani approach is one direction. Those concerned with social justice must establish an alternative program.

The United Nations has weighed-in on the issue with an important report released November 4, largely ignored by the media with the U.S. presidential election dominating public discourse. The report, entitled "State of the World's Cities 2008-2009: Harmonious Cities," was issued by the UN's urban affairs agency, UN-Habitat.

In sum, the report stated that we live in a historic moment: for the first time in human history, the number of the world's people living in urban areas exceeds those dwelling in the countryside. In this, the fate of cities and the fate of humanity are increasingly intertwined.

But the report also made some disturbing conclusions for North American cities. It highlighted the racialized inequality in Canadian and American urban centers and noted, "High levels of inequality can lead to negative social, economic and political consequences that have a destabilizing effect on societies ... [They] create social and political fractures that can develop into social unrest and insecurity."

Summarizing the report's findings, the head of UN-Habitat had this to say, "It is clear that social tension comes from inequality. The trickledown theory [that wealth starts with the rich] has not delivered. Inequality is not good for anybody."

The report reinforced decades of urban research. Ten years ago America's most recognized expert on urban inequality, and one-time advisor to Bill Clinton, Harvard professor William Julius Wilson concluded in his book When Work Disappears: The World of the Urban Poor, "Crime, family dissolution, welfare and low levels of social organization are fundamentally the consequence of the disappearance of work," countering conservative claims that the so-called pathologies of the poor were the cause of poverty, not the consequences of it.

A New Deal for cities in the 21st Century?

Wilson called for a public works program similar to that launched during the Great Depression and other policy measures designed to drastically reduce urban inequality. As we enter an economic downturn that may last for some years, the conclusions of experts such as Wilson and UN-Habitat deserve some reflection.

The current crisis could have been avoided. It's not simply "subprime mortgages" or "debt-swaps" at the heart of this financial mess; it's an economic model, that of neo-liberalism and its "trickle-down" assumptions. As real wages have been relatively stagnant for workers since the 1970s and while productivity has increased, big business has recorded record profits.

While workers have been left to maintain their standard of living by taking on more household debt, much of these record profits have been pumped into the ‘paper' economy of casino capitalism where the world's financiers, hedge fund operators and mutual fund magicians have looked to create new wealth by speculating on a range of financial assets.

This has led to a series of speculative bubbles, from dot-com to real estate, of which the latest crisis is merely the most recent manifestation of a reoccurring phenomenon under neo-liberalism.

This wealth could have been redistributed to working people who spend money in the ‘real' economy of goods and services and thus fuel economic growth, or to governments who could have engaged in the massive projects necessary to rebuild crumbling urban infrastructures and bring our cities into the 21st Century.

Alas, this did not happen. Government surpluses were largely squandered on corporate tax cuts. In this context, the so-called New Deal for cities takes on new meaning. The New Deal crafted by U.S. president Franklin Delano Roosevelt in the 1930s, under intense pressure from the labour movement, saved the economic system from the ravages of the worst crisis it had experienced. That New Deal entailed a redistribution of wealth to working people, massive investment in the public sector and guaranteed the rights of workers to organize for a share of the economic surplus.

Cities became central to the New Deal, undergoing modernization and renewal, and thus stabilizing capitalism through urbanization. Today, the needs of cities and those who toil in them must be pivotal in the reconstruction of our economy along more just and egalitarian lines.

As the UN report makes clear, the consequences of ignoring urban inequality are devastating. And the Giuliani approach doesn't equal less government spending, just spending on police and prisons as opposed to social services and affordable housing.

As for the people of Bed-Stuy, the periodization of this crisis to the last year is a bit of an insult. When I asked Marcus' neighbour June, a New York City transit worker facing layoffs, what she thought of these economic times, she replied, "We've been in crisis for some time now; I don't know where y'all have been."

Simon Black is a researcher at York University's City Institute and a visiting Fulbright student fellow at the City University of New York. You can find his writings at


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