Prioritizing People or Space?

09/14/2010 02:29 pm ET | Updated May 25, 2011
  • Rabah Ghezali Associate Professor of Economics at Sciences-Po Paris

The consequences of both the recession and the subsequent foreclosure crisis have highlighted the failure of urban policies on both sides of the Atlantic. In part, this is due to insufficient funds for the tasks at hand. However, this failure also reflects the difficulty of devising policies that encompass multiple areas, such as housing, education, health, employment and security. The challenge is grave because, once unsolved urban problems snowball, neighborhoods rapidly ghettoize. And even beyond the human cost and lost potential, trying to reverse this process is slow, expensive and improbable.

The principal and most conspicuous urban problem is the so-called banishment of low-income and vulnerable populations from traditional residential areas to far-removed neighborhoods, sometimes to large complexes on the outskirts of major cities -- such as the French "banlieue," made infamous by the disturbances in recent years. This residential segregation has become finely enmeshed in the way the laws of the real estate market, entrenching a vicious circle of opportunities and postcodes with negative associations. Affluent families are effectively willing to pay a sizable premium for housing far from poorer neighborhoods. Thereafter, multiple mechanisms serve to curtail the mobility of the inhabitants, both physically and economically.

This post-code determinism is well-documented. It's especially worrying that the single greatest predictor of a student's school results is not their individual efforts, but the results of their classmates. Housing segregation becomes educational segregation, destroying the traditionally-perceived ladder of choice and social mobility and instead creating an insoluble trap for those caught in it. The most obvious manifestation is employment: where a concentration of unemployed individuals can normalize unemployment by narrowing both perceived horizons and real opportunities. Job seekers can't count on the residents of their neighborhood to help them find a job as the residents themselves are jobless.

A community with high unemployment is one with scant opportunities to find work: enterprising youths apply for hundreds of positions before opting for the rational option of despairing; without employed friends and family, they often have no route to employment. Ethnic discrimination in the labor market reinforces this process, and negative media coverage of disadvantaged areas leads employers to give applicants from these places scant consideration in turn.

There is no turning back once unemployment and related social problems reach a certain threshold. Once normalized, antisocial behavior and disturbances grow exponentially -- a phenomenon called the "epidemic theory of ghettos" in the past. Given the geographical nature of the problem, governments initially proposed policies that targeted either the causes or consequences of the segregation outlined above.

Measures to battle the consequences amounted to large-scale positive discrimination towards disadvantaged neighborhoods, opening additional means to improve housing and education as well as support local development. The intention was to give more to areas that had less. Measures aimed at tackling the causes of this problem combined stick and carrot. On the one hand, more affluent areas were sometimes obliged to provide housing for a quota of low-income families in order to improve social diversity. On the other hand, certain neighborhoods were regenerated in the express hope of attracting advantaged families.

Needless to say, ethnicity plays a important and marginalizing role. The number of lawsuits indicates that ethnic minorities face obstacles when they try to move because owners and landlords often refuse to sell or rent property to them. Unfortunately, such overt racism has a trickle-down consequence: potential buyers might not share these prejudices but they nevertheless refrain from buying in areas with a sizable ethnic minority population because of anticipated reselling problems. Given the over-representation of ethnic minorities in deprived areas, it is surprising and regrettable that policies have define diversity in economic, not ethnic, terms.

Housing segregation results in a concentration of poverty and discrimination that directly affects a minority and indirectly affects all of us. The ghettoization of disadvantaged neighborhoods suggests the need for type of discrimination policy that focuses on individuals, rather than city zones.