The New York Times: Inequality Is a Choice By JOSEPH E. STIGLITZ

The Great Divide | October 13, 2013, 9:06 pm

It’s well known by now that income and wealth inequality in most rich countries, especially the United States, have soared in recent decades and, tragically, worsened even more since the Great Recession. But what about the rest of the world? Is the gap between countries narrowing, as rising economic powers like China and India have lifted hundreds of millions of people from poverty? And within poor and middle-income countries, is inequality getting worse or better? Are we moving toward a more fair world, or a more unjust one?

These are complex questions, and new research by a World Bank economist named Branko Milanovic, along with other scholars, points the way to some answers.

Starting in the 18th century, the industrial revolution produced giant wealth for Europe and North America. Of course, inequality within these countries was appalling — think of the textile mills of Liverpool and Manchester, England, in the 1820s, and the tenements of the Lower East Side of Manhattan and the South Side of Chicago in the 1890s — but the gap between the rich and the rest, as a global phenomenon, widened even more, right up through about World War II. To this day, inequality between countries is far greater than inequality within countries.

But starting around the fall of Communism in the late 1980s, economic globalization accelerated and the gap between nations began to shrink. The period from 1988 to 2008 “might have witnessed the first decline in global inequality between world citizens since the Industrial Revolution,” Mr. Milanovic, who was born in the former Yugoslavia and is the author of “The Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality,” wrote in a paper published last November. While the gap between some regions has markedly narrowed — namely, between Asia and the advanced economies of the West — huge gaps remain. Average global incomes, by country, have moved closer together over the last several decades, particularly on the strength of the growth of China and India. But overall equality across humanity, considered as individuals, has improved very little. (The Gini coefficient, a measurement of inequality, improved by just 1.4 points from 2002 to 2008.)

So while nations in Asia, the Middle East and Latin America, as a whole, might be catching up with the West, the poor everywhere are left behind, even in places like China where they’ve benefited somewhat from rising living standards.

From 1988 to 2008, Mr. Milanovic found, people in the world’s top 1 percent saw their incomes increase by 60 percent, while those in the bottom 5 percent had no change in their income. And while median incomes have greatly improved in recent decades, there are still enormous imbalances: 8 percent of humanity takes home 50 percent of global income; the top 1 percent alone takes home 15 percent. Income gains have been greatest among the global elite — financial and corporate executives in rich countries — and the great “emerging middle classes” of China, India, Indonesia and Brazil. Who lost out? Africans, some Latin Americans, and people in post-Communist Eastern Europe and the former Soviet Union, Mr. Milanovic found.

The United States provides a particularly grim example for the world. And because, in so many ways, America often “leads the world,” if others follow America’s example, it does not portend well for the future.

On the one hand, widening income and wealth inequality in America is part of a trend seen across the Western world. A 2011 study by the Organization for Economic Cooperation and Development found that income inequality first started to rise in the late ’70s and early ’80s in America and Britain (and also in Israel). The trend became more widespread starting in the late ’80s. Within the last decade, income inequality grew even in traditionally egalitarian countries like Germany, Sweden and Denmark. With a few exceptions — France, Japan, Spain — the top 10 percent of earners in most advanced economies raced ahead, while the bottom 10 percent fell further behind.

But the trend was not universal, or inevitable. Over these same years, countries like Chile, Mexico, Greece, Turkey and Hungary managed to reduce (in some cases very high) income inequality significantly, suggesting that inequality is a product of political and not merely macroeconomic forces. It is not true that inequality is an inevitable byproduct of globalization, the free movement of labor, capital, goods and services, and technological change that favors better-skilled and better-educated employees.

Of the advanced economies, America has some of the worst disparities in incomes and opportunities, with devastating macroeconomic consequences. The gross domestic product of the United States has more than quadrupled in the last 40 years and nearly doubled in the last 25, but as is now well known, the benefits have gone to the top — and increasingly to the very, very top.

Last year, the top 1 percent of Americans took home 22 percent of the nation’s income; the top 0.1 percent, 11 percent. Ninety-five percent of all income gains since 2009 have gone to the top 1 percent. Recently released census figures show that median income in America hasn’t budged in almost a quarter-century. The typical American man makes less than he did 45 years ago (after adjusting for inflation); men who graduated from high school but don’t have four-year college degrees make almost 40 percent less than they did four decades ago.

American inequality began its upswing 30 years ago, along with tax decreases for the rich and the easing of regulations on the financial sector. That’s no coincidence. It has worsened as we have under-invested in our infrastructure, education and health care systems, and social safety nets. Rising inequality reinforces itself by corroding our political system and our democratic governance.

And Europe seems all too eager to follow America’s bad example. The embrace of austerity, from Britain to Germany, is leading to high unemployment, falling wages and increasing inequality. Officials like Angela Merkel, the newly re-elected German chancellor, and Mario Draghi, president of the European Central Bank, argue that Europe’s problems are a result of a bloated welfare spending. But that line of thinking has only taken Europe into recession (and even depression). That things may have bottomed out — that the recession may be “officially” over — is little comfort to the 27 million out of a job in the E.U. On both sides of the Atlantic, the austerity fanatics say, march on: these are the bitter pills that we need to take to achieve prosperity. But prosperity for whom?

Excessive financialization — which helps explain Britain’s dubious status as the second-most-unequal country, after the United States, among the world’s most advanced economies — also helps explain the soaring inequality. In many countries, weak corporate governance and eroding social cohesion have led to increasing gaps between the pay of chief executives and that of ordinary workers — not yet approaching the 500-to-1 level for America’s biggest companies (as estimated by the International Labor Organization) but still greater than pre-recession levels. (Japan, which has curbed executive pay, is a notable exception.) American innovations in rent-seeking — enriching oneself not by making the size of the economic pie bigger but by manipulating the system to seize a larger slice — have gone global.

Asymmetric globalization has also exerted its toll around the globe. Mobile capital has demanded that workers make wage concessions and governments make tax concessions. The result is a race to the bottom. Wages and working conditions are being threatened. Pioneering firms like Apple, whose work relies on enormous advances in science and technology, many of them financed by government, have also shown great dexterity in avoiding taxes. They are willing to take, but not to give back.

Inequality and poverty among children are a special moral disgrace. They flout right-wing suggestions that poverty is a result of laziness and poor choices; children can’t choose their parents. In America, nearly one in four children lives in poverty; in Spain and Greece, about one in six; in Australia, Britain and Canada, more than one in 10. None of this is inevitable. Some countries have made the choice to create more equitable economies: South Korea, where a half-century ago just one in 10 people attained a college degree, today has one of the world’s highest university completion rates.

For these reasons, I see us entering a world divided not just between the haves and have-nots, but also between those countries that do nothing about it, and those that do. Some countries will be successful in creating shared prosperity — the only kind of prosperity that I believe is truly sustainable. Others will let inequality run amok. In these divided societies, the rich will hunker in gated communities, almost completely separated from the poor, whose lives will be almost unfathomable to them, and vice versa. I’ve visited societies that seem to have chosen this path. They are not places in which most of us would want to live, whether in their cloistered enclaves or their desperate shantytowns.

Source: The New York Times 

Matt Damon reads from Howard Zinn’s speech “The Problem is Civil Obedience” (November 1970)

Transcript of Matt Damon’s speech:

I start from the supposition that the world is topsy-turvy, that things are all wrong, that the wrong people are in jail and the wrong people are out of jail, that the wrong people are in power and the wrong people are out of power, that the wealth is distributed in this country and the world in such a way as not simply to require small reform but to require a drastic reallocation of wealth. I start from the supposition that we don’t have to say too much about this because all we have to do is think about the state of the world today and realize that things are all upside down.

Now if you don’t think, if you just listen to TV and read scholarly things, you actually begin to think that things are not so bad, or that just little things are wrong. But you have to get a little detached, and then come back and look at the world, and you are horrified. So we have to start from that supposition-that things are really topsy-turvy.

And our topic is topsy-turvy: civil disobedience. As soon as you say the topic is civil disobedience, you are saying our problem is civil disobedience. That is not our problem…. Our problem is civil obedience. Our problem is the numbers of people all over the world who have obeyed the dictates of the leaders of their government and have gone to war, and millions have been killed because of this obedience.

We recognize this for Nazi Germany. We know that the problem there was obedience, that the people obeyed Hitler. People obeyed; that was wrong. They should have challenged, and they should have resisted; and if we were only there, we would have showed them. Even in Stalin’s Russia we can understand that; people are obedient, all these herdlike people.

Remember those bad old days when people were exploited by feudalism? Everything was terrible in the Middle Ages-but now we have Western civilization, the rule of law. The rule of law has regularized and maximized the injustice that existed before the rule of law, that is what the rule of law has done.

When in all the nations of the world the rule of law is the darling of the leaders and the plague of the people, we ought to begin to recognize this. We have to transcend these national boundaries in our thinking. Nixon and Brezhnev have much more in common with one another than – we have with Nixon. J. Edgar Hoover has far more in common with the head of the Soviet secret police than he has with us. It’s the international dedication to law and order that binds the leaders of all countries in a comradely bond. That’s why we are always surprised when they get together — they smile, they shake hands, they smoke cigars, they really like one another no matter what they say.

What we are trying to do, I assume, is really to get back to the principles and aims and spirit of the Declaration of Independence.

This spirit is resistance to illegitimate authority and to forces that deprive people of their life and liberty and right to pursue happiness, and therefore under these conditions, it urges the right to alter or abolish their current form of government-and the stress had been on abolish.

But to establish the principles of the Declaration of Independence, we are going to need to go outside the law, to stop obeying the laws that demand killing or that allocate wealth the way it has been done, or that put people in jail for petty technical offenses and keep other people out of jail for enormous crimes.

My hope is that this kind of spirit will take place not just in this country but in other countries because they all need it. People in all countries need the spirit of disobedience to the state, which is not a metaphysical thing but a thing of force and wealth. And we need a kind of declaration of interdependence among people in all countries of the world who are striving for the same thing.

For the full essay, click here 

Child poverty in Britain is causing ‘social apartheid’

Report from leading British charity blames ‘failure of political will’ as it finds poor children have fewer life chance.

and Taytula Burke
The Observer, Saturday 24 August 2013 22.15 BST

Britain risks “sleepwalking into a world where inequality becomes so entrenched that our children grow up in a state of social apartheid”, according to a leading charity.

In a damning report to be published next week, the National Children’s Bureau finds that, in many respects, child poverty is now a bigger problem than during the 1960s, when it carried out a seminal study, Born to Fail?.

The report compares aspects of children’s lives today to data from the Born to Fail? cohort study of 11-year-olds, carried out in 1969. It finds that significantly more children are growing up in relative poverty today – 3.6 million compared with 2 million – and claims that these children suffer “devastating consequences throughout their lives”.

It adds: “Today, although there have been some improvements, overall the situation appears to be no better, and in some respects has got worse.”

The report finds that:

  • A child from a disadvantaged background is still far less likely to achieve a good level of development at four than a child from a more privileged home.
  • Children living in deprived areas are much more likely to be the victim of an unintentional injury or accident in the home.
  • Children from the poorest areas are nine times less likely than those living in affluent areas to have access to green space, places to play and to live in environments with better air quality.
  • Boys living in deprived areas are three times more likely to be obese than boys growing up in affluent areas, and girls are twice as likely.

“Our analysis shows that, despite some improvements, the inequality and disadvantage suffered by poorer children 50 years ago still persists today,” said Dr Hilary Emery, the bureau’s chief executive.

“There is a real risk that our society is sleepwalking into a world where children grow up in a state of social apartheid, with poor children destined to experience hardship and disadvantage just by accident of birth, and their more affluent peers unaware of their existence.”

The report warns that Britain could become a place in which “children’s lives are so polarised that rich and poor live in separate, parallel worlds”.

Read more: http://www.theguardian.com/society/2013/aug/24/child-poverty-social-apartheid-ncb

Residential Segregation by Income, 1970-2009

Excerpts from:

Residential Segregation by Income 1970-2009

Kendra Bischoff
Cornell University

Sean F. Reardon
Stanford University

By any of the measures we examine, segregation of families by socioeconomic status has grown significantly in the last 40 years. The proportion of families living in poor or affluent neighborhoods doubled from 15 percent to 33 percent and the proportion of families living in middle-income neighborhoods declined from 65 percent to 42 percent. By this measure, income segregation grew in every decade, with the fastest growth in the last decade.

Why Does Socioeconomic Segregation Matter?

Income segregation may accentuate the economic advantages of high-income families and exacerbate the economic disadvantages of low-income families.

It is useful to distinguish two categories of mechanisms: (1) neighborhood composition mechanisms and (2) spatial resource distribution mechanisms.

Neighborhood composition effects —sociologists and economists call them neighborhood effects — stem from the demographic composition of neighborhoods; e.g., poverty rates, average educational attainment levels, and the proportion of single-parent families.

Spatial resource distribution effects operate when segregation leads to the unequal distribution of collective resources (such as high-quality schools or public parks) and/or public hazards (such as pollution or crime) among neighborhoods.

This distinction is not sharp, but a stylized example will make it clearer.

Suppose that poor neighbors hinder children’s educational success because children observe fewer adults in their neighborhood with high educational attainment, and, by extension, fewer adults who have succeeded in school. Children in high-income neighborhoods observe just the opposite. In this case, income segregation would lead to educational inequality between high- and low-income children because it would produce large differences in children’s access to adult role models. We consider this a neighborhood compositional effect.

Suppose instead that one’s neighbors do not influence school success, but that it is largely determined by the resources in the school; e.g., high-skill teachers. If high-income communities attract those high-skill teachers—for instance, by paying higher salaries—then residential income segregation will lead to unequal school resources among communities, which will in turn lead to inequalities in educational success among high- and low-income children. We consider this a spatial resource distribution effect. In practice, the effects of segregation may include both compositional and distributional components.

Segregation is likely more consequential for children than for adults for two reasons. First, most children spend a great deal of time in their neighborhood, making that immediate context particularly salient for them, while adults generally work and socialize in a larger geographic area. Second, for children, income segregation can lead to disparities in crucial public amenities, like schools, parks, libraries, and recreation.

Conclusion

During the last four decades, the isolation of the rich has been consistently greater than the isolation of the poor. Although much of the scholarly and policy discussion about the effects of segregation and neighborhood conditions focuses on the isolation of poor families in neighborhoods of concentrated disadvantage, it is perhaps equally important to consider the implications of the substantial, and growing, isolation of high-income families.

In 2010, the 10 percent of families with the highest incomes controlled approximately 46 percent of all income in the United States (Saez 2012). The increasing geographic isolation of affluent families means that a significant proportion of society’s resources are concentrated in a smaller and smaller proportion of neighborhoods.This has consequences for low- and middle-income families: the isolation of the rich may lead to lower public and private investments in resources, services, and amenities that benefit large shares of the population, such as schools, parks, and public services.

The impacts of increasing socioeconomic segregation may be substantial. Much of the research on the impact of neighborhood context has focused on how income-segregation shapes the neighborhood contexts of children from low-income families, affects their access to high-quality schools and to adults with high levels of education, and influences their social and educational development.

But perhaps equally important is the impact of segregation on the attitudes, actions, and investments of the most-advantaged families. If socioeconomic segregation means that more advantaged families do not share social environments and public institutions (schools, public services, parks, etc) with low-income families, advantaged families may hold back their support for investments in shared resources. Such a shift in commitment may have far-reaching consequences for the rest of society. Understanding the connection between income segregation and social attitudes, and the willingness to support investment in public goods, is an important topic for future research.

The Parallels and Uncanny Similarities between USA’s and Malaysia’s Gentrification Policies

Excerpts from:
Gentrification, Displacement and New Urbanism:The Next Racial Project*
by
University of Missouri-Columbia

Wave three emerged in the 1990s and continues to the present day. In this wave, gentrification becomes a part of “New Urbanism” (Smith 2002), a development strategy that uses colorblind neoliberal free market ideologies to justify its policies. This shift separates cities and individuals from the state by eliminating state subsidies for housing and urban development. New Urbanism has two immediate consequences; first, it forces U.S. cities into an era of global city-to-city competition for capital–the creation of the “World-City” (Villanueva et al. 2000) — and, second, it forces individuals to fend for themselves in a “free market.”

This third wave of gentrification claims to reduce sprawl by bringing people back into the center city. However, the reality of the situation is that third-wave gentrification produces cities that are colonized by white people through “mixed-use zoning,” a development trend in which the colonizers target neighborhoods that have been previously occupied by economically disadvantaged people of color.

It is, in a sense, a type of social engineering, a racist project that carries out global urban apartheid under the name of colorblind neoliberal development. This implicit character allows for the persistence of property-led economic development in the name of the free-market and equal opportunity. Considered critically, this wave represents the attempted geographical extermination of particular target groups, including immigrants and marginalized minority urban dwellers that are considered disposable and not tied to the community. A United Nations report (2005) has recently stated that neoliberal development policy creates a situation of modern urban apartheid, especially in the face of increasing Gross Domestic Product.

Although there is supposed to be enforcement of rules that require low income multi-family dwellings to be in the gentrifying areas, “the best and highest use” nonetheless becomes loft apartments, small businesses, and service jobs in place of even the lightest industry that formerly employed the low income and minority populations.

Wolf-Powers (2005) argues, at least in New York City, that this trend is encouraged through neoliberal development policies create a situation called “property-led” economic development in which property owners are made the most powerful actors. In this process developers are encouraged, through colorblind neoliberal zoning and tax ordinances, to create a neighborhood full of “the best and highest uses.” When this trend begins, landlords will break zoning laws with the (correct) assumption that they will get special exception permits from the planning and zoning committee.

New Urbanist policies have generated more positive economic outcomes for cities than past gentrification policies have ever been able to accomplish by focusing on this “best and highest use.” However, the consequences of this policy on the resident (and frequently minority) populations have barely received attention, despite the cities’ receipt of reports from residents of gentrifying communities who wish to outline their own visions for the development of the neighborhoods in which they reside.

Unfortunately, as detailed by Davila (2003) and Wolf-Powers (2005), this is better characterized as a trend of paying lip service to the local community. While taking development advising reports from the community is a step forward in the urban development process, it is far from a final and all-encompassing democratic development solution. The biggest issue thus far is that the city has simply used these reports in order to justify applying colorblind neoliberal development policies to a community and offering development contracts to particularly wealthy powerful land owners and businesspeople.

The end result is for the city to take control, TELL everyone what is best, and make prescriptions based on the opinions of the planners and developers without ever fully justifying the policy or considering the destructive consequences for people that already live in the soon-to-be gentrifying neighborhood.

While the rhetoric of creating a multi-class, multi-race, and industry/service mix sounds wonderful, the end result once again becomes, not surprisingly, property owners doing as they please and breaking the developmental path that all others must follow.

Abuse It and Lose It

Affordable housing and home ownership programs and relocation assistance are often used as mitigating tools for potential displacement by private developers.

Mixed-use communities have been justified as benefiting to the poor, and proponents state that the poor have been segregated with no role models, and therefore, without motivation for change. Gentrification in these terms is a type of moral crusade to save the poor.

Residents, however, claim that plans have been falsified and they fear that the land that has been set aside for public housing will be sold to the highest bidder. Former tenants of public housing have sued housing authorities over claims of displacement, and although residents are told replacement housing will be provided, it is has not been offered on a one-to-one basis (Columbia Daily Tribune, October 12, 2005). Most areas are subsidized for 15 to 20 years (10 years in New York) and then sold off to developers, possibly resulting in further displacement of the poor, but at a slower rate.

The neighborhood of West Town, located in Chicago, has also experienced a shift in composition over the past decade. The area was primarily white before a period of white flight beginning in the 1960s, when it was transformed from a primarily white area to a predominately Latino area, incorporating other racial groups as well. As jobs have recently shifted to white collar and service sector jobs, whites are now returning to West Town and the area’s white population has increased from 27.4% in 1990 to 39.39% in 2000. Coinciding with this shift is a decrease in the Latino population from 59.0% in 1990 to 46.85% in 2000. During this period the average West Town property price has escalated 83% and the median price has doubled.The escalating property prices affect property owners who are seeking to remain in the area and results in a forced dislocation if the property taxes become unaffordable. For example, between 1995 and 1996 property taxes rose 117% in the West Town neighborhood (Natalie Voorhees Center 2001).

These efforts are often accompanied by “urban cleansing” in which the city attempts to revamp its image through the creation of “quality of life” ordinances aimed at controlling less desirable populations. Wyly and Hammel (2003) determined that “gentrified enclaves claim a prominent place in elite housing markets where municipal policy incorporates provisions to cleanse the city of certain people and behaviors (p. 9).

Keepin’ It Clean
Homelessness and Aesthetics in the New Urbanism

The actions related to gentrification have been directly related to displacement and, at times, results in homelessness. Areas that are frequently targeted in redevelopment are also areas comprised mainly of minorities and lower income residents who are often without the financial means to afford increasing rents and secure new housing if forced out of their homes. The treatment of low income residents in gentrified areas is analogous to the treatment of already homeless populations.

Redevelopment plans do not consider the outcomes for low income residents who are residing in these gentrifying areas: how will they afford new rents, how will they subsist, and if they cannot, where will they go, and how will they get there?

The main concern of the gentrifiers is with the transformation of space rather than the lives of people. Although there are regulations requiring replacement of low income housing on a one-to-one basis, as well as assistance in replacement housing for displaced residents, the truth about the enforcement on these polices is unknown. The lack of planning and enforcement of policies results in displacement for some and homelessness for others.

Lee et al. (2003) determined that high rents boost homelessness, determining that homelessness is not related to the size of the community but place-specific characteristics of the housing market. Homelessness is related to a decline in affordable units which limits the housing options of low income renters; price inflation (as well as other raced issues such as lending and discriminatory rental policies) has resulted low income minorities facing difficulties in home ownership and increased competition for rental units. Urban renewal and gentrification accelerate this competition by converting rental units from low income to mid and upper level income rental units.

The solution to rising homeless populations has not been a proactive one in which the city has attempted to assist these persons toward subsistence, but rather one of spatial extermination. The main concern of indifferent policies toward homelessness is to render the displaced invisible, without regard for their well-being and survival.

Policies targeting the survival behaviors of the homeless have been enacted nationwide. Behaviors frequently cited are sleeping, urinating or defecating, and bathing in public spaces (Mitchell 2003). It is important to note that the homeless have no alternative place to perform these activities.

These policies are related to cities’ attempts to create a sanitized space with the goal of attracting new development and tourists who are shielded from the realities of homelessness and poverty.

Gentrification projects reflect an equivalent desire towards aesthetics, creating the look of an economically stable and aesthetically pleasing community requires ridding the space of poverty stricken areas and persons. As with homeless policies, redevelopment projects have reflected a similar lack of planning.

The interest is neither in maintaining nor assisting these populations, but in the extermination of these populations through unjust redevelopment, displacement, and lack of replacement housing. Residents are left to their own devices as to how to maintain their current, though increasing unaffordable, housing or to attempt to locate affordable housing in an era of increasing rents. The goals of redevelopment have in mind the removal of poverty stricken areas and the residents that inhabit them from both the city and from sight.

Aesthetic concerns are related to globalization. The streets are being cleansed of those left behind by globalization and other economic changes (Mitchell 1997). The homeless and urban poor are seen as threats to capitalism if they remain visible because they are constant reminders of capitalism’s failures, thereby producing a need to remove evidence of poverty from sight (Amster 2003). The Disneyfication of public space creates a clean and sterile community in which the poor and homeless are unwanted.

The rise of tourism promotion of the “World City” is important in the decision for cities to begin redevelopment projects. Downtown areas are being revitalized in order to attract new business, high income residents, and tourism to boost the economy. In relation, attempts are being made to expel the unattractive elements and relieve the features of urban decay (Aguirre and Brooks 2001). Elements of the city that are not considered positive to economic growth are excluded from the benefits of development or are simply evicted, creating a disadvantage for low income minority groups and opening opportunities for the incoming middle and upper classes.

The people within a neighborhood become characterized as undeserving lazy minorities who have already been given too much public assistance (Omi and Winant 1994) and the space they inhabit becomes characterized as misused and abused (Smith 1996).

In order for this “abused” space to be able to offer a positive contribution to the city, the space must be “saved” by middle class altruists (read: gentrifiers) who will “heal” the space by improving its appearance and increasing rents.

Lose It, Then Move It or Displacement

In the past, gentrification consisted of higher income white residents replacing lower income African Americans in the city center. This trend is no longer clearly black and white and now includes a variety of ethnicities as gentrifiers. The adverse effects of gentrification, such as displacement, still fall heavily on the shoulders of minorities as in the past.

Consequences of gentrification are the involuntary or voluntary displacement of renters, homeowners and local businesses, increased real estate values, increased tax revenue, deconcentration of poverty, changing cultural fabric of the community, changing leadership and power structure of community, and an increased value put on the neighborhood by outsiders (The Brookings Institution 2001).

Residents may be displaced within the neighborhood by moving from their original residence to an apartment within the same neighborhood with a lower rent, doubling up with other families and combining households to maintain their place and afford rent, or simply paying more than the standard 30 percent of income reserved for rent (Wyly and Hammel 1999). This type of displacement is inward as the resident does not leave the neighborhood.

Displacement also occurs outwardly when the residents are pushed out of the neighborhood, they are no longer able to afford the rents, and cannot find replacement housing within the neighborhood, thus becoming urban refugees.

Eminent domain which is the governmental power to appropriate private property for public use, has been used recently to take private homes and businesses and replace them with more profitable developments, exemplifying “the best and highest use” principle noted by Smith (1996).

A central question in these practices is: what is considered public use that would entail the condemnation of these areas and who is defining this? Courts have cited a growing tax base for the community as the public use needed in order to seize these properties (Mansnerus 2001). Areas are condemned through the claim of blight and then transferred to private redevelopers.

There have been growing contestations to these practices of using eminent domain to seize private property. Law professor Marci A. Hamilton filed a petition on behalf of tenant owners of an office complex who lost their building after it was condemned as blighted. After it was condemned, the building and lot were scheduled for demolition so that a new site for the New York Times could be built. Hamilton claimed that “the purpose of transferring private property to another, more powerful and ‘connected’ private owner” was not the original intent of eminent domain law (Dunlap 2003).

This case exemplifies the lack of power that residents and small business owners have in resisting the power of redevelopment by mega-developers in their areas. Although cases have been on the rise, there has been little success by residents in retaining their private property. Residents are typically given compensation for their displacement, although typically not an equivalent sum for the value of the property.

Although there have been contestations to these actions, residents are limited in their ability to legally battle the state over the right to their property primarily because of a lack of political and legal power and the financial capacity to pursue their frustrations.

As stated before, the losers in gentrification are often minorities and the economically disadvantaged.

#TIL #AssessmentRateHike

1) Today I learned that the annual property value is linked to the annual rental value.

The amount of assessment tax or cukai pintu is made up of two variables: the annual value of the properties and the percentage tax rates decided by the local council, such as DBKL. If the estimated rental value of a property is RM2,000 a month, the annual value of a property is RM24,000. If DBKL sets the rate at 6%, the cukai pintu is RM1,440. Since assessment tax is collected twice a year, the property owner has to pay RM720 at the beginning of the year and the remaining RM720 in August [source].

The newly proposed annual property value for our house is RM73,200 which means if we were to rent it, we are supposed to get a monthly rental of RM6,100? Hahahahahaha… who would pay a rent of RM6,100/mth for a double storey linked house (even if it’s in Bangsar)?

2) Today I learned that Tengku Adnan’s wife owns a number of properties in Kuala Lumpur, including a penthouse. Like I said, multiple property owners will benefit the most from the assessment rate increment- they can spike rental rates like crazy! I’m wondering if Tengku Adnan is doing this for his own benefit.

“I was having trouble explaining the difference to my wife who owns a number of properties in Kuala Lumpur [source].

3) Today I learned that both, Tengku Adnan and his wife cannot do math.

“The annual rental value for her penthouse in the city apparently shot up from RM40,000 to RM117,000, while the assessment rates were unchanged at 6 per cent. So her bill which was about RM4,000 will now double.

“She still grumbled when she discovered she had to pay double her old bill so I told her to submit an objection,” he said [source].

6% of RM40,000 is RM2,400 NOT about RM4,000. 6% of RM117,000 is RM7,020. The increase is more than double, it’s almost triple. Maybe, they got confused because they owned so many properties.

Wait a minute… if the assessment rate for our house is unchanged at 6%, we’d have to pay RM4392 (RM73,200 x 6%)!!! WTF!!

4) Today I learned that The Mayor and FT Minister have little regard for the people (I knew that but today it was confirmed).

When the 11 Kuala Lumpur MPs turned up at the City Hall (DBKL) tower for a meeting with Federal Territories Minister Datuk Seri Tengku Adnan Tengku Mansor and Mayor Datuk Ahmad Phesal Talib, the last thing they expected was to be asked to sign an Official Secrets Act (OSA) form.

Segambut MP Lim Lip Eng stopped Tengku Adnan from starting with the meeting until an explanation was given.

“We are supposed to be discussing the planned assessment tax increment and the Kuala Lumpur City 2020 amended draft plan. Why were we asked to sign an OSA contract?

“We were there to discuss people-related issues. Don’t tell me this is under the OSA,” he said.

According to him, Tengku Adnan stated that the contract was to protect government officers during meetings [source].

Hahaha.. invoking OSA act to protect government officers from going to jail – bravo! MPs are elected representatives, they must be accountable to the people and they must act in the public interest. They are expected to relay information to the people NOT hide information from them. To threaten the MPs with incarceration if they reveal the minutes of the meeting is daft and sinister at the same time. Yup, the FT minister and the mayor sound like the real-life Dick Dastardly and Muttley, alright.

Mansuh OSA! We want a fair and transparent government!

5) Today I learned that the FT Minister and The Mayor are greedy bastards (I knew that but today they it came straight from the horse’s mouth).

Lim also stated that the next assessment collection is estimated to give City Hall an additional RM400 million, over and above the RM400 million collected this year.

Meanwhile, Tengku Adnan said City Hall intends to make the city more self-sustainable.

“The federal government is giving us sufficient funds, but we’d rather raise most of our own funds,” he said.

If the Federal Government gives enough fund, why the need to increase the assessment rate? One must remember that the money from Federal Government comes from the people as well – through corporate and personal income taxes.

So, why do they need another RM400 million from the people? To give the hardcore poor free housing? Free water? Free electricity? (NOT FREE btw… should be paraphrased to ‘PAID FOR by the people of KUALA LUMPUR’).

They never say why they want more money, and yet they ask for more money. WTF?! Corrupted greedy fuckers, go and die in a fire.

The 2012 Auditor General report on DBKL

Good citizens of Kuala Lumpur, do you know how well DBKL spends our taxpayers’ money? Below are some of Auditor-General’s report on DBKL in 2012.

DBKL awarded City Orchard Park project worth RM17.25 million to Zikhtar Associates Sdn. Bhd via direct negotiation without the approval of Ministry of Finance.

dbkl1.PNG

The City Orchard Park project failed because the contractor and the consultant are not experts in orchard development.

dbkl1a.PNG

Air Panas Neighbourhood Park failed to finish on time because the contractor was digging, processing and taking sand out of the project site for personal use. Was AG report trying to say that the contractor *gasp* stole sand from the project site? 

dbkl2.PNG

Out of the original 2,528 trees planted at the city orchard, 1,084 trees (42.9%) died, whereby the death rate of fruit trees and forest trees were 55.1% and 39.3% respectively.

dbkl8.PNG

To replace the trees, DBKL spent RM0.56 million on 386 ‘instant’ trees.

By the way, why are the trees from Syarikat Lian Mong International and Muhamad Takyudin Hj. Hashim 8-150 times more expensive than the trees from Tanam Corp Jaya Sdn. Bhd and Tetuan Lanskap Anggun?

For e.g., the nam-nam trees from Syarikat Lian Mong International Sdn. Bhd. cost RM12,000 each whereas the nam-nam trees from Tetuan Lanskap Anggun cost RM106.80 each. Another e.g., the rambutan trees from Muhamad Takyudin Hj. Hashim cost RM7,650 each whereas the rambutan trees from Tanam Corp Jaya Sdn. Bhd cost RM150 each.

dbkl7.PNG

6 work components under 2 DBKL projects worth RM25.11 juta were not done according to specification.

dbkl3.PNG

10 works under 2 DBKL projects worth RM25.11 million did not meet the quality control requirements.

dbkl4.PNG

The price DBKL paid for landscape trees was 11%-134% higher than the price list set by National Landscape Department.

dbkl5.PNG

22 work components under 5 DBKL projects worth RM43.50 million were not maintained properly.

dbkl6.PNG

From the AG report, it is evident that DBKL has failed to provide essential services at the lowest costs possible.

It is grossly unfair and downright criminal to demand money from the people when DBKL has not managed the taxpayers’ money efficiently.

AG report taken from: Laporan Maklum Balas Daripada Perbendaharaan Malaysia Ke Atas Isu-Isu Utama Dalam Laporan Ketua Audit Negara Siri 1 Mengenai Aktiviti Kementerian / Jabatan Dan Pengurusan Syarikat Kerajaan Persekutuan Bagi Tahun 2012

Latest news on City Orchard Park:
The Star Monday November 18, 2013 – City Orchard Park project yet to bear much fruit