Cities Are Not Luxury Goods

Urban Abundance vs. the Scarcity Mindset

Sometime during Michael Bloomberg’s second term as New York mayor, my husband and I were riding a taxi down Broadway, approaching Madison Square. The Bloomberg administration had been classing up city streets, adding planters, painting pedestrian zones, and generally making the streetscape more pleasant and safe. Our cabbie, in his thick, outer-borough accent, provided a typically New York assessment of this beautification effort: “It’s like f***ing Martha Stewart came and cleaned up the place.” To many, the planters and pleasantness weren’t what Martha might have called “a good thing,” but evidence of what they saw their city becoming under Bloomberg: an exclusive playground for the super-rich.

Bloomberg put it bluntly:

If New York City is a business, it isn't Wal-Mart—it isn't trying to be the lowest-priced product in the market. It's a high-end product, maybe even a luxury product.

Bloomberg was arguing that people are willing to pay for quality, but everyone fixated on the premium price point. If New York City wasn’t trying to be Walmart, what about the millions there who depended on Walmart prices? Where did they fit into the mayor’s luxury city?

Cities were never meant to be luxury goods—but policies rooted in scarcity thinking turned superstar cities like New York into them anyway.

Ezra Klein and Derek Thompson cite the Bloomberg episode in their new book, Abundance. The implication of the mayor’s comment was that “if you cannot afford to live in the city, don’t.” It was the kind of oblivious comment that could only be made in a period of growth and success. Indeed, in the mid-aughts, New York was reaping the benefits of clean streets and clean finances: people like me were moving to the city after college, happily paying 40 to 50% of our salaries for the pleasure of sharing a “luxury” apartment with roommates.

It was a great time to be a Master of the Universe, less so to be a Worker of the World.

Klein and Thompson describe how people used to move to New York to make more money; but by 2000, the cost of housing had risen so much that “People now pay to live there; they aren’t paid to live there.” They argue that cities “are meant to be escalators into the middle class, not penthouses for the upper class.” But the escalator has come to a screeching halt for many: while the richest, most productive firms and people can afford to live in New York and San Francisco, the cost of housing is reducing opportunity for everyone else. This leads them to ask a simple but revealing question:

Could a firefighter serving a city afford to live in that city? If not, then not only is that firefighter going to be forced into a longer commute or an economically strained life, but his children, too, will be deprived of the awesome possibilities of the city their father works to safeguard.

The answer, in New York’s case, is clear. The starting salary for a NYC firefighter is just over $54,000, while the median rent for a one-bedroom apartment is $4,640 per month—or $55,680 annually, more than a firefighter’s entire starting salary. Even households earning the city’s median income of $79,713 are considered severely rent burdened.

New York City fails the firefighter test.

By the Bloomberg Era, New York had become so desirable it could afford to lose those who couldn’t afford to stay. Today, post-pandemic household formation means that even though New York City has fewer total residents, it still has scarce housing relative to the number of households who want to live there. The city’s official housing policy for those thinking of moving there remains: “if you cannot afford to live in the city, don’t.”

Indeed, scarcity seems like the point.

Klein and Thompson note that “In the same progressive zip codes where homeowners press signs into the soil of their front lawns bearing the message Kindness Is Everything, affordable housing can’t be found—and homelessness is endemic.” Such “lawn-sign liberalism” is not surprising. Homeowners oppose new housing even when mass homelessness is the cumulative result of decades of policy sclerosis, because they intuit that “scarcity makes the asset you own all the more valuable.”

If housing has become a luxury, it’s a luxury based on scarcity.

In high-opportunity superstar cities like New York and San Francisco, policy rooted in scarcity has held back housing production, driven out affordability, and made each city a luxury product. Klein and Thompson argue, of course, that the solution is to embrace housing abundance through land use reform, a recurrent theme in these pages. Referencing Aaron Bastani’s Fully Automated Luxury Communism, a vision of a ​​left-wing techno-utopia in which nobody has to work and the state owns the highly technological means of production, they imagine a post-scarcity world in which today’s luxuries become commonplace. Cities, they imply, could get there by harnessing abundant housing, technology, and clean energy.

It’s a seductive vision—even if communism has historically only achieved limited luxury for its nomenklatura elites amid an abundance of corpses. While I’m not sure that “Fully Automated Luxury Urbanism” is the endgame of urban abundance, visionary thinking is certainly needed.

How about a vision that starts by putting affordability within reach of most people?

Abundance is largely written for Democrats who govern America’s biggest cities, particularly those who have championed the antigrowth politics that turned cities into playgrounds for the rich and prisons for the poor. Indeed, Klein and Thompson aptly note that “Democrats cannot simultaneously claim to be the party of middle-class families while presiding over the parts of the country that they are leaving.” If superstar cities are missing a “bourgeoisie” between rich and poor, it’s because they’ve pursued policies that have driven the middle class out.

And that’s the core of it. Urban abundance is not really about fully automated luxury but about overcoming the scarcity mindset that has made basic amenities like housing luxury goods. Scarcity thinking is not only the dominant viewpoint among the billionaire Bloomberg elites but among the cab-driver proletariat, too.

What’s to be done? To reclaim the middle class, cities need to get in touch with their inner millennial (or their remaining millennial residents) and embrace basic bougieness.

Millennials embraced urban abundance—not opulence. They believed in avocado toast, transit-rich neighborhoods, and a dog-and-kid friendly microbrewery around the corner. That’s what made the $4,640 monthly rent for the “luxury” apartment worth it.

The pandemic shattered that fragile equilibrium, forcing many millennials to confront the hard limits of a city that wasn’t built to grow with them. The value proposition of the city changed. As it turned out, Mayor Bloomberg’s ideas about businesses also applied to bougie millennial parents: they too did not want “higher crime, subpar education and a lack of city services” on top of expensive housing.

Public safety, good schools, and functional city services shouldn’t be luxury goods—these should be table stakes for basic urban governance.

Cities are failing at the basics because of what Daniel Golliher considers an anti-government bias—where proceduralism supplants good governance, tying up progress in “blue tape.” Tal Roded provides a vivid example of how New York, despite good intentions, is still trapped in a scarcity mindset. In attempting to make its wildly successful, pandemic-era outdoor dining permanent, the city adopted a licensing structure so restrictive it effectively ended the program. Of the 13,000 restaurants that once participated, only 72 have received licenses to date. A joyful instance of urban abundance—and a financial lifeline for small businesses—was snuffed out by bureaucracy.

This bureaucratic scarcity mindset—what I’ve previously called the Culture of No—is the antithesis of urban abundance. We should be dismantling it, not reinforcing it. And that means embracing a different kind of vision: abundance over scarcity, progress over stasis, growth over decline, YIMBY over NIMBY, the future over the past.

Change is possible, if incremental. New York has already passed modest housing reforms. Elsewhere, Vital City recounts how mayoral leadership finally overcame “severe shortages in lifeguard staffing resulting from rigid union rules, coupled with an arcane city capital construction process.” How much more blue tape is left to cut in New York? How much abundance is held back by scarcity thinking?

The baseline of a functional city should be that it passes not only the firefighter test, but the teacher test, the barista test, and the taxi driver test. Even the Bloomberg test.

To wit, Enrique Peñalosa, the former mayor of Bogotá who transformed his city’s public transit and public spaces, famously said, “A developed country is not a place where the poor have cars. It's where the rich use public transportation.” Ironically, the New York mayor who described his city as a luxury product famously took the subway to work each day. We don’t need Fully Automated Luxury Urbanism—just good old-fashioned urban abundance: cities where housing is broadly affordable, streets are safe, schools are good, and public services work. In such a city, a plant-lined plaza or a pedestrianized street—whether manicured by Martha Stewart or not—isn’t a luxury.

It’s there for everyone.