Amazon, Soccer, and the Demand for Gentrification
The Latest Gimmicks from Austin’s Landlord Monopoly
By Andrew Dobbs
Of all the things I wrote in my recent piece on urbanism and progressive politics in Austin, the most controversial points were probably those where I called for demand-side solutions to Austin’s housing crisis. It is very easy for us, after 40 years of neoliberal hegemony, to envision the supply-side policies, but it’s nearly impossible to imagine what a demand-side solution might look like.
Do we mean making Austin a place where people don’t want to live? That sounds counterproductive in the extreme, to preserve your community by making it suck to live there. They scoff and move on to the next suggestion of where to upzone.
The very suggestion creates a great deal of discomfort for the local political mainstream, but an understanding of the basics of demand production helps to raise possibilities. Right now Austin has two really important opportunities to address what is essentially a two step process for generating the demand that drives gentrification and displacement.
The first step is to draw in capital and high salary class allies of the capitalist class, the sort of thing the Amazon HQ2 deal would do. At our advanced state of gentrification in Austin it would mean, very likely, the end of low income and Black and Latino Austin as we know it today.
Displacement of this sort arises from the second step, which directs settlement to areas with low current rents, raising potential rents and generating profit for landlords. This direction usually comes in the form of a longer term policy project that signals to capital that they can count on rent hikes a few years down the line. Proposals to steal the Columbus Crew Major League Soccer (MLS) team away from their community and relocate them in a new stadium to be built in Roy Guerrero Park in East Austin or McKalla Place in North Austin are a perfect example of just such a policy.
Those truly opposed to gentrification and displacement in Austin would do well to organize to force our elected officials to repudiate both projects with prejudice. This would represent the sort of demand-side focus we need to make a dent in this problem for real.
Amazon’s HQ2 and Gentrification
The first step to understanding how the Amazon deal will escalate gentrification and displacement in Austin is to remember that housing today is produced as a commodity. Commodities have at least two things that make them valuable. First is their ability to satisfy a need for their consumer, their “use-value.” The second is the fact that the commodity can be sold for money, its “exchange-value.”
Developers produce housing for its exchange-value, and this is the foundation of our housing market. If they didn’t believe that the exchange value was going to be higher than what they put in they wouldn’t produce it — it would be smarter just to hold on to the money — so this system presumes the steady increase in housing exchange-values. Capitalist housing developers will always seek a market with ever increasing costs for housing.
But again, they need buyers that can pay these exchange-value prices to satisfy their use-value needs for shelter. Both sides of the equation — the investment of capital into housing commodities and the arrival of consumers capable of paying higher and higher prices — are served when large, high-wage employers can be brought into a community.
The Amazon HQ2 deal promises to bring in $5 billion in capital and 50,000 employees averaging a six-figure salary. This capital means a drive for rapid investment expansion, and housing is one of our most lucrative commodity production opportunities — it will necessarily lead to an acceleration in the increase in exchange-values for homes. This increase will be sustained through the consumptive force of that huge new influx of high-income settlers, as well as the others that will follow behind to provide services and support to the huge new employer.
Local and state governments have been undertaking “job creation” efforts of this sort for decades, using every tool they can to bring in capital and high-income demand for the products of that investment. This benefits the business and political elite of these communities, but they bring primarily displacement and exploitation for the working class and poor.
The Soccer Stadium and Gentrification
This removal of lower income communities happens when capital directs this new investment and settlement where it can make the biggest profit — where they can create the biggest possible rent gap. Decades ago this meant the rural areas just outside of the city where there had been little demand for real estate other than for agriculture. By transforming that low rent land use into affluent and booming suburbs they made a huge amount of money.
Over the last 20 years or so, however, it has meant returning to the “inner cities” that had been abandoned after suburbanization took hold. But how did developers know where to go?
There is a collective action problem here — the first investor to go out to the pastures outside of town or to the dilapidated neighborhoods outside of downtown would be taking a huge risk. If all the other capitalists kept building in the places they always had that first investor might be left completely out of place. They would find no users to exchange their property to. And these projects typically take years to pay off. They need some sort of indication that not only is the investment a safe one now, it will be safe a number of years down the line.
The solution to this collective action problem is the same as most others: the state gets involved. They use announcements of long-term policy initiatives or substantial intermediate-term projects signal to investors that there is a public commitment to changing the economic character of an area, lowering the risk of investment there and producing an opportunity for collective action that will raise potential rents, thus bringing in subsequent investment and producing big profits.
These sorts of commitments and projects are ongoing, but really it only takes an initial round to spark gentrification or some other major land use change. In the 1950s US nuclear defense strategy led to a policy that favored moving military-industrial facilities outside of urban centers. Major contractors and then sub-contractors opened new operations in formerly rural areas just beyond the city limits, prompting the creation of suburbs.
In Austin the municipal government created a tax increment financed public improvement district— the Downtown Austin Alliance — in 1993 to formalize its policy commitment to bringing investment back to downtown. And right now low income residents in San Antonio are facing rapid displacement as developers respond to the settlement preferences reflected by the city’s redevelopment of the San Pedro Creek.
A stated preference in federal contracting, the institution of a new publicly-financed development authority, a big public works project — each was an instance of the government telling the market that it wanted investment to be put into an area it had not been before, and that the state would take the initial plunge in directing resources there so that the market wouldn’t have to.
Putting a brand new, multi-hundred million dollar stadium just on the outskirts of Montopolis or Rundberg is a powerful signal that public and private forces aim to gentrify those areas next. Aside from 17 or more soccer games each year, the facility will host concerts and other events, drawing transit lines to that area. Bars and restaurants will want to cater to stadium-goers, and pretty soon you have a full-on cultural/entertainment complex. That’s a nice thing to live near, so there will be demand for multi-family housing, and offices and everything else.
This angle has yet to be addressed at all in local conversations about the project, and in fact the debate has already shifted from whether or not Austin ought to have a soccer team in the first place to which ripe-for-gentrification area this soccer team should go to. More specifically — and more sinister — the question is now which bit of city property should be used for this purpose.
Again, the state is stepping in to facilitate the market movement to a new low rent area slated for displacement. The team’s lobbyists also represent local developers that will make a ton of money off of increased demand for these properties. There are few plots large enough at a price point they can afford in those areas, hence the backdoor public subsidy produced by selling them city land.
Areas neglected for generations will now be marked — in a few years this is going to be a hot spot, so start buying property now. This is how demand of this sort is generated, and fighting such a proposal is the precise sort of demand-side solution I refer to in “Urbanism is Not Socialist or Progressive.”
What is To Be Done?
The good news is that the ongoing struggle against heedless development has already forced the city to forego financial incentives to the HQ2 project. Municipal policy is not the only attractor for this sort of capital invasion, however, and the State of Texas is both prepared to extend benefits and already has a pro-growth, pro-capital footing that puts Austin at risk in ways sites in other states may not be.
This threat is actually a profound opportunity. Organizing to not merely keep Amazon out of town, but to compel our political leadership to outright denounce them — to demand that they stay away — would represent a total reversal of official policy. It would be a direction diametrically opposed to the Chamber/RECA/landlord monopoly position. Their power has eroded considerably thanks to the 10–1 council; previous councils extended far more corporate welfare to projects a fraction of this size. We can take advantage of this weakened state and create a new political consensus that rejects the “growth” imperative that has defined our politics forever.
As for the soccer stadium gentrification efforts usually co-opt leadership in communities of color in order to have the colonized advocating for their colonizers. Their demands for “investment” make a great deal of sense when you realize that all of these “leaders” are lawyers or business owners or “consultants” or preachers for churches that both own land and graciously accept anonymous donations from developers.
With regard to the soccer stadium we are seeing a broad-based effort to make the push for a team seem to come from the Latino community at large. In the abstract a lot of Latino folks — and Anglo and Black and Asian for that matter — think a soccer team sounds like a great idea. We need to expose the deeper plots at work here. This gives us a chance to educate our communities about the true source of gentrification and displacement, and to inoculate them against scams of this sort in the future.
Conclusion
Demand-side solutions can include many pieces besides these, of course, but they start with asking critically what it is that makes our community desirable in the first place. Is it having a bunch of rich people or big corporate employers? Is it having flashy stadiums and major league sports franchises making New York hedge fund managers richer? Or is it having a depth of community and a shared history we can call upon as we defend our neighbors from displacement?
Ultimately we cannot have any solutions to our crises as long as our housing is subject to market forces. We need to de-commidify housing, and until we do that even the partial solutions laid out here will create new challenges — the system is rigged against us. The real opportunity at hand is the chance to build a political movement that contests the hegemony of the landlord class, bringing us one step closer to real revolutionary change.
And there are thousands of families ready for that fight, for that change. After decades of a capital-oriented, supply-side idea of desirability the people who have paid the price in their own stress and misery are demanding we try something new. We might just find that the thing that really makes a community worthwhile is its ability to fight for itself, that this is the very sort of demand we ought to be working to meet. Soccer teams and corporate headquarters may follow, but the people’s will must lead.