Massive Wealth Divide Lets Rich Trample Poor [Picture, Video]

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Photo Credit: Prolineserver / Wikimedia Commons

Paul Krugman has to admit inMonday’s column, New York City is a great place to live, if you can afford it. Great food, great culture—but you have to be able to afford the housing and more and more people can’t. And it’s not just New York where the wealthy are pouring in. “Urban America reached an inflection point around 15 years ago,” he writes. “After decades of decline, central cities began getting richer, more educated, and, yes, whiter. Today our urban cores are providing ever more amenities, but largely to a very affluent minority.”

There are a couple of drivers for this phenomenon, Krugman figures: lower crime rates and rising inequality. Increasingly, high earners want to live closer to work and to the attractions of urban life. That is a major change: 

To get a sense of how it used to be, let me quote from a classic 1955 Fortune article titled “How Top Executives Live.” According to that article, the typical executive “gets up early — about 7 a.m.. — eats a large breakfast, and rushes to his office by train or auto. It is not unusual for him, after spending from 9 a.m. until 6 p.m. in his office, to hurry home, eat dinner, and crawl into bed with a briefcase full of homework.” Well, by the standards of today’s business elite, that’s actually a very relaxed lifestyle.

And as several recent papers have argued, the modern high earner, with his or her long hours — and, more often than not, a working partner rather than a stay-at-home wife — is willing to pay a lot more than the executives of yore for a central location that cuts commuting time. Hence gentrification. And this is a process that feeds on itself: as more high earners move into urban centers, these centers begin offering amenities: — restaurants, shopping, entertainment — that make them even more attractive.

We’re not just talking about the superrich here, or even the 1 percent. At a guess, we might be talking about the top 10 percent. And for these people, it’s a happy story. But what about all the source