Reflections on Money
by Kianga Daverington
September 1, 2020
This essay, written by Kianga Daverington of Daverington PLLC , was originally published in January 2020. The piece as been condensed for clarity.
Money is not a physical object like a coin, a bar of gold or a dollar bill. Money is at its core, a technology. It is a human invention designed to solve a specific set of human problems. Consider money, perhaps, in a new way. Think of money as a system for capturing time.
Time is the one thing we each have that is absolutely finite. We are born, we die, and the dash in between is all the time we have.
Think of production. We can usually produce more of some good by adding people to a task (also known as “WORK”). But we are still constrained by time. Whatever we produce is still limited by the amount of humans that can be organized to go into that production. Each of us possesses a limited amount of time available to us individually, so we need to convince or coerce others to add their time to ours if we want to achieve more than we can alone.
Out of this imperative, nations are born.
The most important quality of any particular form of money is how well it preserves the value of time over time. Can you buy the same amount of stuff or more in the future than you can buy today? If yes, congratulations - your money is accumulating time for you and future generations while you relax on the beach. If it takes more and more of a unit of money to buy the same amount of time in the future, well then I’m sorry, but that unit of money is getting weaker and weaker. It’s losing value or said another way – it’s losing purchasing power. The longer you hold it, the less it buys.
In a way, by purchasing goods and services, you are purchasing time. Every product and every service requires time to make and time to deliver - your time and/or someone else’s. The price therefore reflects the collective value of all the time put in. Money is a way we exchange time and move it around from where it is valued less to where it is valued more.
This is where prosperity comes from. It comes out of how well a society, collectively and each person, spends its time. How much time is spent creating and making? How much time is spent consuming? If we make more than we consume, we have something left over called wealth. If we consume more than we make, we are left with debt. You can’t consume what you don’t have, unless someone extends credit. Where does this “credit” come from? Basically –it’s made up.
Too much credit or debt eventually collapses and everyone is mixed up in the collapse.
If we understand that a unit of money represents a unit of time, and we understand time is limited, then a unit in a system of money with unlimited supply cannot have any value. This is the problem we are facing today with the world’s money supply. The supply of money in the world is increasing exponentially as central banks create money by giving loans to national governments, which is where our money comes from.
Our entire world financial system is a powder keg of debt.
National currencies today are known as fiat money, a currency without intrinsic value that has been given its power to be used as money by a government that says it is money by regulation. Wikipedia says, “Fiat money does not have use value, and has value only because a government maintains its value, or because parties engaging in exchange agree on its value.” Well said, Wiki.
A government’s job of maintaining the value of its national money boils down to a confidence game. On what basis do the people who use that government’s money believe it has value?
What happens to the money and those who hold it when the foundation of that belief begins to crumble?
by Jay Winik
May 29, 2018
No less than people, cities have a personality. Some cities pulse with dynamism; others feel tired. Some are clean and angular and characterized by glass and steel buildings; others are spread out. Some feel old world, or even dilapidated; others feel affluent and could come from the future.
We can start putting names to the cities: New York, where fashion meets finance; San Francisco, where hip meets technology; Los Angeles, where beauty meets Hollywood; and Chicago and St. Louis, where the upscale Midwest finds itself. And then of course, there is Washington DC, which reigns as the nation's capital. It is filled with such iconic images as the White House and the Lincoln Memorial; the mall and the tidal basin and the cherry blossoms; the capitol and the Jefferson Memorial, and the tourists crawling from all over the world.
All of these cities have distinct and diverse neighborhoods. Some, as in Baltimore or pockets of Philadelphia, feel as though time has passed them by; they are seemingly marked by tumultuous streets along with the clank of trains rolling by on worn railroad tracks and the musty smell of tenements. Others, like Austin, increasingly feel as though they were designed for young people.
Washington, DC is an interesting case. It has affluent and lovely suburbs, but more than ever we see that its young people, the millennials, are less interested in homeownership, or at the very least, of the single-family home variety, and are more enamored with population “density,” more invested in public transport, and more interested in their refurbished restaurants and upscale bars and other young people themselves.
In each of these cities, there is a story. And part of that story is increasingly that we see a resurgence of urban America. This bodes well for those enamored by city life. They are like the pioneers and settlers of the wild west, but they are instead urban entrepreneurs, reshaping and revitalizing their neighborhoods wherever they go. But as urban planners, the new sages of the cities, remind us, there are complications. Economic complications, social complications, and political complications. Complications between Blacks and Latinos and Asian Americans; complications and dislocations between the working class and the well-to-do. The list goes on.
At the heart of this is often the inscrutable rush of time and the question of gentrification.
Below, Jay Winik, one of the nation's leading historians and frank news columnist, sat down with urbanist and Library of Congress Manuscript Division historian Ryan Reft to discuss how urban history can help residents and others better understand modern day issues of economic development and gentrification.
1. How did you get into Urban History?
Ryan Reft: I grew up just outside Chicago and would go into the city for concerts and other events, so the city always seemed like a destination. Later, I attended college in the city and after graduating, I moved to NYC where I taught English and history in the public schools. Being a public school teacher in New York really made you feel like you were intertwined with the rhythms of urban life and I really enjoyed it. While teaching I enrolled in Columbia’s American Studies Masters program and was lucky enough to take Ken Jackson’s urban history seminar. At that point, I realized that I just loved cities, working in them, thinking about, and writing about them. So after a few more years of teaching I enrolled in the PhD American History program at the University of California San Diego and eventually became an urban historian.
2. What is Gentrification?
Ryan Reft: Gentrification as a term probably gets used too broadly today, but generally refers to a neighborhood or community that is experiencing increased development and improved municipal services which then is accompanied by rising rents, housing, and cost of living.
Long term residents, usually renters, who might have stuck with the neighborhood in tough times, can no longer afford to live there and move out while new people, often wealthier and whiter move in which can add to racial and class antagonisms between groups. Though the popularity of cities should be celebrated, the pace of gentrified development often leads to economic, social, and political conflicts between new arrivals, frequently white and middle or upper class, and those populations, often consisting of working class Black, Latino, and Asian Americans, that endured earlier decades of austerity economic policies and urban struggles.
3. Is this gentrification a new concept or an old one?
Ryan Reft: Let me preface my answer with the fact that I am skirting a lot of history from redlining and segregation to urban renewal to the urban crisis of the 1970s that created the conditions for the kind of intensive gentrification people experience now. Some historians trace gentrification back before the birth of the term to the early twentieth century as a rising middle class began rehabbing nineteenth century homes in neighborhoods like Boston’s Beacon Hill, Charleston’s Tradd Street, and Brooklyn’s Brooklyn Heights only to be largely thwarted by the Great Depression. In 1964, Ruth Glass coined the term gentrification. So the process has existed for decades. Glass’s idea of gentrification, as urban historian Suleiman Osman noted recently, referred to a smaller scale process as compared to what urban denizens experience today. Economic factors help to explain the difference from earlier eras.
As noted, gentrification over the past two or three decades is different from these early examples. In many large cities as historian Jason Hackworth illustrates, housing is owned by larger corporate entities, sometimes transnational in orientation. In previous decades, local actors, individuals rather than international conglomerates, owned housing. During the 1960s and 1970s, ostensibly “progressive” whites rehabbed homes in struggling, mixed race, or working class neighborhoods. This was not without conflict, but local owners have different interests than international corporations; the former, arguably more invested in the city or local community than faceless conglomerates. It was also conducted on a much smaller scale, individual houses rather than wholesale corporate development. That’s not to say it was much better in the past, but it was different.
Still, as Osman points out there is a direct connection between the smaller level “sweat equity ‘unslumming’ conducted by Jane Jacobs and her peers in the 1960s to which Glass referred to the present day’s mixed use waterfront luxury development projects championed by cities as the best way to attract a progressive ‘creative class’ to the center city.” Throw in more recent “neoliberal” business approaches such as business improvement districts, community development corporations, local development corporations, and public private partnerships that sprouted in the 1970s and you get an idea of gentrification’s modern complexities.
4. How do millennial and others factor into this development?
Ryan Reft: The 1970s and 1980s were a very tough time for urban America. However, beginning in the 1990s and accelerating to the present, cities found various ways to reduce crime, balance budgets, and improve services. Not equally everywhere mind you, some cities have fared far better than others, but overall. Millennials, as a cohort, happen to have overlapped with these developments particularly as the depiction of cities in popular culture have improved during this period; think Friends’s or Seinfeld’s cultural cache in the 1990s. The former is apparently quite popular with younger folks even if there has been a recent backlash against it.
However, if you believe many media reports, millennials find cities attractive for a number of reasons. Less invested in homeownership and witnesses to the 2008housing debacle, some millennials express ambivalence toward purchasing a home and remain comfortable with renting. Of course plenty of evidence exists arguing that it’s not lack of interest in homeownership but rather cost and debt that prevent millennials from buying a home. In any case, be it personal preference toward the “sharing economy”, the rising cost of homes in urban areas, or some combination of both (and/or other factors not mentioned here), these forces have drawn millennials to cities. This development is not confined to New York, Chicago, and Los Angeles; smaller mid-sized cities have experienced influxes as well.
The improvement of mass transit and the explosion of city bike programs (dockless and otherwise) and other modes of transportation such as scooters, have made cities more accessible for millennials and others less enamored of automotive travel. However, transit improvements can also drive gentrification. That happened in Washington D.C. where the extension of the WMATA’s Green and Yellow Lines to the traditionally African American communities of Shaw and U Street have thankfully given locals greater access to transportation but have also brought more white residents, many from higher income brackets which in turn has driven gentrification in those neighborhoods and made it more difficult for the city’s historic black community to remain in the city.
It’s also worth mentioning that the rise of Uber, Lyft, and other forms of ride sharing have mitigated the lack of mass of transit in places where public transportation is less pervasive or even non-existent. Los Angeles, for example, has spent over three decades improving its mass transit and the efforts are notable, but many Angelenoes depend more on the Ubers of the world than its newly established light rail or subway. In recent years, the city has become whiter as immigration flows have slowed and housing prices have climbed in part due to gentrification. It should also be noted that plenty of millennials have been decamping for the suburbs in recent years, so they are moving elsewhere but their impact on cities is pretty obvious.
Finally, many older Americans, like my own folks for example, have moved back into cities as well. No longer wanting to manage a large home or desiring better access to mass transit, a number of elderly individuals and couples have also embarked for the big city from the suburbs. So it’s not only young people.
5. How have cities tried to manage gentrification?
Ryan Reft: Good question. Unfortunately, at the moment, there doesn’t seem to be one all encompassing answer to this issue. I’ll give two examples.
Land banks or community land trusts though not identical are two tools that have been used. I’m over simplifying here, but generally quasi-government and/or local non-profit organizations purchase abandoned or vacant land in an urban community which prevents large scale developers from acquiring said property. The organization then arranges for the land’s development for affordable housing or community development. One of the nation’s fastest growing cities, Austin, Texas has implemented this policy with some success.
In Washington D.C., a city once known as “Chocolate City” due to its predominantly African American population and now sometimes referred to as Latte City as a result of the influx of white middle and upper class residents and the sharp decline of its black population, the city enacted Tenants Opportunity to Purchase (TOPA) in 1980. The law enables tenants in apartment complexes and sometimes single family homes, the right to negotiate for the purchase of units at the market rate in a building being converted into condos and coops (in the case of a stand alone home, the acquisition of the house, but his happens much more rarely).
While there have been TOPA successes, as Carolyn Gallaher noted in her book on the law, The Politics of Staying Put, it does enable residents to remain in their community, but TOPA fails to prevent the increasing costs of everything else in the surrounding community. So it has been an imperfect solution. Also, critics contend that an unintended consequence of TOPA is the dearth of affordable housing. For example, a tenant can sell his or her TOPA rights of purchase to a third party which can lead to numerous complications including an inflation of the price.
6. What is urban history and how can it help us to better understand the conflicts driven by gentrification?
Ryan Reft: Urban history, which over the years adopted a more regional approach in an attempt to eliminate the somewhat arbitrary lines separating the suburbs and cities, particularly as suburbs urbanize, explores the issues, policies, and people residing in American communities. By understanding how places came to be enables citizens and residents to better understand one another. If newcomers are more aware of neighborhood’s history, perhaps they will be better neighbors and more invested in local communities. Also, better understanding, one hopes, leads to better community relations and stronger communal ties.
7. Are there any books you can recommend to better understand gentrification?
Ryan Reft: Sure, though I would say it’s worth looking at works that also discuss the conditions created by redlining and the urban crisis of the 1970s and 1980s that created the foundation for the rapid gentrification we’ve discussed here. I’ll try to provide some geographic diversity as well.
Kenneth Jackson – Crabgrass Frontier: The Suburbanization of the United States
Richard Rothstein - The Color of Law: The Forgotten History of How Government Segregated America
Kevin Kruse - White Flight: Atlanta and the Making of Modern Conservatism
The Urban Crisis
Tom Sugrue – Origins of the Urban Crisis: Race and Inequality in Postwar Detroit
Kim Phillips Fein – Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics
Jason Hackworth – The Neoliberal City: Governance, Ideology, and Development in American Urbanism
Neil Smith – The New Urban Frontier: Gentrification and the Revanchist City
Mary Patillo – Black on the Block: The Politics of Race and Class in the City
Loretta Lees, Tom Slater and Elvin Wyly – Gentrification
Carolyn Gallaher – The Politics of Staying Put: Put: Condo Conversion and Tenant Right-to-Buy in Washington, DC
A really good short review essay on the subject can be found in the Journal of Urban history by George Washington University urban historian, Sulieman Osman, “Gentrification Matters” but his book The Invention of Brownstone Brooklyn: Gentrification and the Search for Authenticity in Postwar New York is also very well regarded.
There are, of course, many, many more worthwhile titles and authors, but this is at least a start with a mix of older classics and newer contributions.