The Fountainhead: Poor Doors

The Fountainhead: Poor Doors April 6, 2018

The Fountainhead, part 2, chapter 10

Before we move on, I want to say some more about the Enright House, whose ribbon-cutting was earlier in this chapter. Its physical description, which is a stew of metaphors about rock crystals combined with uncomfortably religious and/or sexual language, is almost impossible to picture – but its purpose is clear. Rand says that Roger Enright wanted to build

an apartment building, with each unit complete and isolated like an expensive private home…

In other words, the Enright House is a tower of condos for the rich. And once Roark has built it, the rich do indeed come (assuming that “useful, active private lives” is a reference to philanthropy):

The Enright House rented promptly. The tenants who moved in were people who wanted to live in sane comfort and cared about nothing else. They did not discuss the value of the building; they merely liked living there. They were the sort who lead useful, active private lives in public silence.

As in many other things, Rand failed to anticipate some of the excesses of capitalism. She assumed that a beautiful, expensive building would be lived in by people who’d appreciate it. As recent decades have shown, it doesn’t always work that way.

Some of the world’s most expensive cities are witnessing a trend: new residences get snapped up as fast as they’re built, but not for anyone to live in. They’re being bought by ultra-rich elites who care about the properties only as investments to flip later. In the meantime, they’re left unoccupied.

Many of the buyers are oligarchs from autocratic and corruption-plagued countries like Russia, China or Saudi Arabia. Rather than keep their money where it could be seized at the whim of the authorities, they park it in real estate in foreign nations with a stronger rule of law than their own. Expensive real estate is even better for the purpose, since it lets them squirrel away more cash. New York City and London have been particularly plagued by this trend, as have Toronto and Vancouver.

These “safe-deposit boxes in the sky” are so common, they create a bizarre spectacle: in the most expensive, exclusive neighborhoods in the world, block after block sits vacant. In ultra-luxury buildings like 432 Park in New York or the Shard in London, multimillion-dollar apartments sit empty year-round. Meanwhile, ordinary people who actually live and work in these cities can’t keep up with soaring real-estate prices and are pushed out farther and farther, to distant suburbs and increasingly onerous commutes. Local businesses go under as they unexpectedly find themselves in ghost towns.

What would Howard Roark say if all the apartments in the Enright House were bought up by foreign investors who had no intention of ever living there and who treated them as mere lines in a portfolio? Would he consider that a success? (Then again, maybe he would; it’s clear that Roark likes to design buildings for their own sake, and treats the fact that people want to live in them as, at best, a tolerable annoyance.)

It’s not just residential buildings that have this problem. In some Manhattan neighborhoods, streets full of storefronts sit vacant because it’s more profitable for landlords to wait for rents to go up, claiming the buildings as a tax writeoff in the meantime. This strategy creates a commons problem, since even if it works out for individual landlords, the empty shops are eyesores and contribute to blight and a feeling of abandonment. In the aggregate, they make a neighborhood a worse place to live.

There are ways to combat this problem. Some cities have instituted taxes on foreign investors, and Mayor Bill de Blasio has proposed a vacancy tax as an extra incentive for landlords and developers not to leave their properties empty.

Another solution is to mandate that builders add a certain number of affordable housing units to any new development, reserved for tenants who make less than the median income. This has the benefit of keeping neighborhoods active and ensuring that land isn’t bought up entirely by speculators, but it’s created a different problem.

One of the first buildings to exemplify this problem was 40 Riverside Boulevard, a 33-story New York luxury condo complex. To get a tax abatement, its developers added 55 rent-stabilized apartments. But the developers designed it so that the affordable apartments had a different entrance, and even a different street address, than the luxury units. It’s as if they considered the sight or sound of ordinary people so offensive that they had to be segregated from the wealthy residents. (Residents claim that the affordable units also lacked other amenities, including a courtyard that their side of the building couldn’t enter.)

This innovation, which was quickly dubbed a “poor door”, is a literal demonstration of increasing inequality and the hardening of class barriers. After a public outcry, New York City banned poor doors, but the idea is spreading elsewhere.

Poor doors are just a symptom of how America is becoming more economically segregated. As wealthy neighborhoods become more expensive, everyone but the wealthy is priced out; as people with means flee poor neighborhoods, only the poor remain. It leads to a vicious cycle, where the rich communities have better schools, lower crime, and more parks, libraries and other amenities, so their children grow up with all the advantages, while the poor communities suffer from chronic lack of investment.

The best way to have a thriving, vital society is when different kinds of people can mix and mingle freely. Segregating people from each other, whether by wealth or by race or by any other characteristic, leads to stagnation and prejudice. What’s more, it’s a barrier to economic mobility:

When people have access to safer neighborhoods and better schools, their educational attainment and job prospects improve, benefiting the entire population of a region, the study’s authors argue. Steady, high-paying jobs increase individual and per capita incomes, which means cash flows back into communities through home ownership, taxes and consumer spending. (source)

When people of all classes live side by side, these spillover effects create a virtuous circle of increased wealth and opportunity for everyone. The rich retreating into their own private enclaves and pulling up the drawbridges behind them isn’t just bad for the poor and the middle class. It threatens economic stagnation and a society where everyone, in the long run, is poorer.

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