The New Deal plus Reaganomics equals too many luxury hotels.

Just saw that Bergamont Station is being plowed under to make way for, you guessed it, another luxury hotel. As if Santa Monica has a desperate need for another luxury hotel. It’s nothing but luxury hotels. But the thing about luxury hotels is that they provide enormous tax revenue for a city, and so the more the GOP cuts the federal budget of funds that would eventually (mostly via the state) make their way down to cities to pay for services, the more cities are reliant on big businesses like luxury hotels to provide local tax revenue. And the more city services and urban planning a city engages in, the more it needs the revenue of things like luxury hotels. Quality of life is expensive, and quality of life in a place like Santa Monica is very expensive. People who live there expect the city to provide very nice things. Which means a city like Santa Monica needs to come up with lots of tax revenue. To the City of Santa Monica, Bergamont Station was a big hole that didn’t make bring in much tax revenue. Fill that hole with a luxury hotel and revenue comes pouring in. So some of the worst offenders of tearing down small businesses and replacing them with mega developments are often progressive cities like Santa Monica that provide a wide array of city and social services. I watched Glendale do the same thing, tearing down all these little mom and pop places and replacing them with the then highly profitable shopping malls. What happens now that shopping malls are closing down I do not know. Nor do I know what will happen when there are not enough tourists and business groups to fill luxury hotels. But in the meantime mom and pop businesses and creative spaces like Bergamont Station are seized by eminent domain and leveled to make way for rich people spending lots of money. The city can pay its bills, provide social services, fix streets, build libraries and put on summer concert series. We’ve come to accept all this as necessary. A lot of people get hurt. More people get helped. The needs of the many outweigh the needs of the one. It’s all quite logical and very Vulcan. It’s a very mid-20th century sort of thinking that goes back to the New Deal, actually, the same sort of thinking that condemned whole neighborhoods and replaced them with shiny identical apartment towers with affordable rents. That is the justification for tearing down Bergamont Station, anyway. Leveling a popular art colony and cultural hang and replacing it with a hotel that can help Santa Monica pay its bills. But that need to tear it down, the reason that Santa Monica needs to tear beautiful spaces like Bergamont Station down and build a hotel is due to late 20th century Republican fiscal policy. Tax cutting Reaganomics. Cut taxes, cut the budget, reduce pay outs to state and local governments and voila, Santa Monica needs to find a revenue stream, quick. Every city in America, big and small, is facing the same problem. Combine New Deal social policy and Reaganomics fiscal policy and instead of affordable apartments you wind up with way too many luxury hotels none of us can afford to stay in. I wonder what Robert Moses would say. He might think Boss Tweed was running things again. He might be right.

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Reaganomics

(originally written in 2009 or so)

The 1970’s were economically tough in America, very tough. But the downturn afflicted all classes, to no one’s benefit. There was no deliberate siphoning of wealth from the middle class to the wealthy. That is the difference between Nixon and Reagan…and something Steve Forbes, of course, is loathe to admit.  With the election of 1980 there begins a dramatic rise in the income of the very wealthy…but more importantly, the middle class began to divide…and the upper middle class began also to benefit tremendously from New Right economics while the rest of the middle class began to drop to working class wage levels. The top twenty percent, before the latest recession, had 85% of all the wealth in the country.  And 90% of all the liquid money. There is far too much focus on the top one of two percent….you cannot have a functioning economy with a handful of rich and everyone else broke.  But you can have an economy with one fifth rich and the rest struggling. Which is what we have now. And which we did not have before Reagan. Why? Because it was an impossibility before. There was literally no way for one fifth of the population to acquire four fifths of the wealth. That had to be legislated into effect, which is what happened in the first half of the first Reagan Administration. And you can see the effect in the charts…whereas rich, middle class and poor alike had all seen their income suffer in the seventies, from 1982 onward there is a dramatic change. The wealthy become increasingly wealthy, and the rest of us have very little income growth at all. And in fact when you account for inflation and the fact that we are paying for so much of our own benefits today, we are often making less than we were before 1980. I’m not denying that there would have been wage deterioration anyway…but I am saying that it would not have been to the degree it is now. The income structure that exists now is the result of Reaganomics. Without Reaganomics, the upper 20% of the United States would not be as separated from the rest of us as they are now.

What we have now was the creation of the Reagan Revolution, though the degree was something the Reagan adminstration never imagined. They thought all our wages would rise along with the wealthy (the essence of trickle down economics)…but at the same time they allowed upper management to begin shipping production–i.e., our jobs–overseas (mainly through tax benefits–which are still in effect). Thus began the great divide between the classes, something that seems by now impossible to stop. It will stop, I think. The Reagan Generation, those children of the FDR generation, who rejected everything their parents believed about income equality and egalitarianism as an American virtue, is dying out now. There are less and less of them. And the young voters today, the vast majority of them raised in cash strapped environments, are voting to the left pretty regularly. So eventually a big shakeout will occur, a counter to the Reagan Revolution, and much of what created such disparity will be legislated back out again. We’ll never be as rich as we were in the 1960’s, because the world has recovered from the two successive world wars and all the economies trapped in communist regimes have now rejoined the rest of the world. But it will be a lot better than it has been now. I think the Reagan Republicans somehow had the idea that money was unlimited, and that if the rich could make more money then everybody else could make more money too (again, that is trickle down economics). There was no limit to how much money you can make. Kind of like the way Republicans thought about the economy in the 1920’s. But there is a limit. Wealth is not infinite. It’s even less infinite when you begin to allow the upper class–that top 20%–to make a lot of their wealth from business in foreign countries and not allowing the rest of us to do the same. We can’t tap into that income, nor can we get any of it back via higher taxes on the rich. We’re just cut off, completely. So when it began to dawn on the Right that there model did not allow for rising profits for the whole nation, they just flat out didn’t give a damn. Which is pretty much their position now. The rich are rich because they deserve to be rich, and we are not because we are not rich. That wasn’t part of the Reagan creed. That evolved since then, crystallizing in the George W. Bush years. It is the greed unleashed by Reaganomics being hardened into privilege. The top twenty percent are the aristocracy, and we are the dirty masses. And that, more than any other factor, is why everything is so messed up now. Until that divide is smashed and the wealth disparity ended through some sort of redistribution (e.g. tax increases on the wealthy, limits on upper management pay, the replacement of benefits once provided by employers), the rich will only get richer and the rest of us poorer. What a dismal future that will be.