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Part One
Re-thinking Urban Prosperity
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Chapter 1.1
© Denis Mironov/Shutterstock.com
Conceptualizing Urban Prosperity
The City is the Home of Prosperity
Cities are where human beings find satisfaction of basic needs and essential public goods. Where various products can be found in sufficiency and their utility enjoyed. Cities are also where ambitions, aspirations and other intangible aspects of life are realized, providing contentment and happiness and increasing the prospects of individual and collective well-being.
POLICY It is in every city’s interest to adopt organically integrated types of development and prosperity that transcend the narrow confines of an accumulation-driven model that benefits only a few to the detriment of the majority.
However, when prosperity is absent or restricted to some groups, when it is only enjoyed in some parts of the city, when it is used to pursue specific interests, or when it is a justification for financial gains for the few to the detriment of the majority, the city becomes the locus where the right to shared prosperity is claimed and fought for.
Prosperity: A Misplaced Concern in the Midst of Crises?
Never before has humankind as a whole faced cascading crises of all types as have affected it since 2008, from financial to economic to environmental to social to political. Soaring unemployment, food shortages and attendant price rises, strains on financial institutions, insecurity and political instability, among other crises, might well on their own call into question the relevance and even the viability of a report focused on prosperity. This proliferation of risks might even challenge the conventional notion of ‘Cities as the Home of Prosperity’, i.e. where, by definition, ‘successful, flourishing, or thriving conditions’ prevail.
Ill-balanced development notions and policies have meant that, instead of being the locus of opportunity and prosperity, cities all-too-often have become places of deprivation, inequality and exclusion. In too many parts of the developing world, unequal access to opportunities and resources has pushed vast numbers of people into favelas, bidonvilles, katchi abadis or campamentos, as slums are known. In Europe, new forms of social exclusion, marginalization and poverty are emerging, such as infrastructure-poor, immigrant poverty, young people at risk, and more vulnerable elderly.1
As people in the latter part of 2011 gathered in Cairo’s Tahrir Square or Madrid’s Puerta del Sol, in front of London’s St Paul’s cathedral or in New York’s Zuccotti Park, they were not only demanding more equality and inclusion; they were also expressing solidarity with fellow citizens that belong with the ‘99 per cent’ (the vast majority) as opposed to the ‘one per cent’ (those with vastly disproportionate shares of wealth and decision-making capacity). These movements highlighted the inherent risks of ill-balanced growth or development policies, and their failure to safeguard prosperity for all. Throughout history, cities as seats of power have served as stages for protests and the recent social movements are no exception. Demographic concentrations in dense urban spaces allow critical masses of protestors to congregate and air new ideas, highlighting cities’ role as sounding boards for positive social change. This points to another of the promises of a prosperous city – not just a more productive socioeconomic use of space and the built environment, but also one that safeguards the city’s role as a public forum where plans and policies can be discussed and challenged for the sake of a more prosperous society.
A focus on prosperity as conventionally understood seems, at best, an unnecessary luxury in a time of crisis. At worst prosperity can be seen as a harbinger of yet another single-minded pursuit of purely economic prosperity that might bring the global economy to the brink again.
Box 1.1.1
Crises, cities and prosperity
The financial crisis: Borrowing, borrowing, borrowing
Prominent scholars such as Joseph Stiglitz ascribe the 2008 financial crisis to rising income inequalities in countries around the world. In the face of stagnating real earnings, those households in the lower- and middle-income brackets were forced into more and more borrowing in order to maintain or improve living standards. With financiers experimenting with risky schemes at the other end of the credit chain, this situation led to a spate of defaults and, ultimately, the financial crash of 2008. The double irony of this crisis is that it originated in the efforts of a supposedly sophisticated financial system to give low-income categories a much-desired access to housing finance – and a foothold in prosperity.
The democratic crisis: ‘We are the 99 per cent!’
The recent crisis is more than just an economic one. More fundamentally, it has exposed a number of risks to social justice, fairness, participation and, ultimately, democracy. Systematic decision-making in favour of those better-off is, in itself, a form of democratic deficit, and one that has led to popular movements like New York’s Occupy Wall Street. The movement ‘calls for a society organized around the needs, desires, dreams, of the 99 per cent, not the one per cent’ The other major uprisings of 2011 – the Arab Spring in North Africa and the Middle East, and Spain’s own Indignados – were also motivated by similar demands for better and deeper democracy as essential for overall prosperity. These protests highlighted the fact that economic growth was a necessary condition for prosperity, though insufficient on its own: social and political inclusion is vital for prosperity.
The environmental crisis: The convergence of climate change and urbanization
The current pattern of urbanization both in developed and developing countries converges on one and the same model: low density-based suburbanization. Land speculation is associated with indiscriminate conversion of rural land to urban uses in the peripheries; this phenomenon combines with a growing reliance on individual motor vehicles and new-fangled middle-class lifestyles to expand urban areas way beyond formal city boundaries. A variety of economic agents can typically be found behind this trend, including real estate developers, home- and road-builders, national and international chain stores, among others, more often than not with support from banks and finance houses. Wasteful expansion of cities in endless peripheries is a major factor behind climate change. Beyond the physical threats from climate change, some cities stand to face an array of additional risks related to the provision of basic services and public goods (water supply, physical infrastructure, transport, energy, etc.), affecting industrial production, local economies, assets and livelihoods. Climate change may have ripple effects across many sectors of urban life, affecting the potential for prosperity of the more vulnerable populations: women, youth, children and ethnic minorities.2
May 1 2012 saw protests in many cities around the globe. In New York City, labour union members marched in support of the Occupy Wall Street activists campaigning against the chaos in the financial sector.
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Box 1.1.2
Ghost towns, vacant homes: wasted prosperity
What sowed the seeds of the 2008 world financial crisis was an unusual combination of sustained economic growth and low interest rates. The resulting sense of prosperity and optimism might have been legitimate (some respected economists saw a ‘new golden age’ opening up), but in the USA and elsewhere the financial sector needed higher interest rates to maintain or boost profits. Home loans to low-income (‘sub-prime’) households provided an opportunity for higher yields, and the US guarantee mechanism made securities based on sub-prime home loans an attractive proposition for US and foreign investors – good returns and no apparent risk, especially when enhanced by sophisticated derivative instruments. The whole structure unravelled when low-income borrowers defaulted en masse on their badly structured home loans: interest payments stopped on both loans and bonds, which became largely worthless, the financial sector was destabilized around the world, a credit crunch began and a global recession with it.
This happened at a time when, in both developed and emerging countries, the numbers of built houses and mortgage loans had reached historic levels, in the process expanding peri-urban areas far beyond previous limits. As a result, the bursting of the property ‘bubble’ reverberated around the world, from San Francisco to Mexico to Dublin to Madrid to Cairo and to Shanghai.
In 2007, Spain and Ireland built many more houses than any other European country.3 In Spain alone, it is estimated that some seven million units were built between 2001 and 2010, while the population grew 5.2 milli...
