Forget Gentrification – Try A Market Solution

I love Megan McArdle, the BloombergView writer who feeds my Libertarian beast. Megan wrote a comprehensive piece about the awful problems surrounding the awful-sounding, Gentrification, detailing the legal and social warlords who who summon forces against what some perceive as the holiest of grails in the forming of an egalitarian society, a housing policy that all can be happy with. It will never work, of course, and why it won’t is thoughtfully detailed by Ms. McArdle. I’d like to offer an alternative perspective.

Rather than trying to move the housing to the better neighborhoods; why don’t we work harder to move the things that make a community better, into the denser neighborhoods. Given the cost and scale of zoning, courts, property, construction and then moving people in waves, the very idea registers in my Average Joe brain as kind of, well, stupid, not because we don’t want to improve the lives of working stiffs but because the the whole relocation concept is proved time and again by the Chinese to be both impractical and unproductive. And in our society, with the glacial manner in which governments move, you have to add in, inefficient.

You can’t change hearts with legislation, much as the government-as-Bob-the-Builder crowd would like to believe. About two years ago, CNBC’s Michelle Caruso-Cabrera appeared on MSNBC’s “Morning Joe’, discussing a variety of economic news de jeur, market conditions, yada yada. They discussed inadequate food options in fast-food restaurants, the type that tend to prosper in poor neighborhoods. Joe’s sighing side-kick, Mika Brzezinski , said she was “looking forward” to legislation that would force fast-food chains to include healthier items on their menus. Just what we need—the state telling private companies what they must serve the proletariat. Gag, ack, cringe, shiver, socialism.

As they went to commercial, Ms. Caruso-Cabrera pointed out that people have freedom of choice. As they faded to the spot we could hear Ms. Brzezinski remind Ms. Caruso-Cabrera that people live in ‘food deserts’ and don’t have the options that her caring government could impose. Enter Wendell Pierce.

A few days later, actor Wendell Pierce was interviewed by CNBC’s Andrew Ross-Sorkin about his new venture. Wendell Pierce appeared with his business partner, Troy Henry of Sterling Farms, to discuss their plans to bring fresh grocery stores to downtrodden neighborhoods in and around New Orleans. Well, lookey here, a market-based solution to the gentrification issue. Don’t move the neighbors; make their lives better.

wendell pierce
Wendell Pierce image: Click for CNBC interview

I’m sure Meg McArdle could explore the economic dynamics of this much better than I can but my Average Joe brain sees this as a simple, innovative, practical and efficient way to fix a problem. If you can’t move people from a food desert, build an oasis. The local builder makes money, the community has opportunities for employment, the adjacent businesses (delivery, trades, coffee shops) all prosper as the neighborhood betters itself. Each of Mr. Pierce’s stores would employ about fifty people, who will spend money in their community. It’s kind of how free markets work.

I also think, to add the corporate POV, that larger companies, those such as Whole Foods, Krogers, Lowes, etc, could build ‘right-sized’ versions of their enterprises that fit the scale of the neighborhood. This eliminates the notion of displacing people to build a massive shopping center. This would be a much better use of venture capital, and the brains behind it, than making the next overvalued app that will be replaced in a few years anyway and fund real community projects that foster a sense of ownership, vitality and dignity. I didn’t ‘invent’ as Rocky Balboa would say, this idea; I’m just reiterating it.

Problem is, this kind of small-scale, gradual improvement doesn’t make a big enough splash in the press to satiate activists. Better to pound fists on pop-up pulpits at press conferences, held to call out those highfalutin hipsters and greedy gentry (hey, it’s National Alliteration Day). To be fair, it also doesn’t sound like enough of an ROI for VC firms who have to keep multi-million dollar war chests in hand in case some litigious couple files suit—and surely there are bigger returns to be had with the next disruptive platform.

So it’s left to the smaller operators to risk their capital and Lord bless those who do. I wish I had the cash to participate.

Sweeping cultural and legislative changes are impractical and only serve the self-serving. It’s the little things; the grocer, the hatter, the ethnic restaurant, the hardware store and the butcher, who change neighborhoods. It’s the lady who sweeps her small parcel of cracked concrete, every day. It’s not scatter-housing, reverse gentrification, dis-aggregating dense neighborhoods or any other convoluted idea. Whadya say, Meg?

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