Foster Associates designed a ‘signature building’ (the ‘Leaf’) as part of a commercial redevelopment proposal in the London suburb of Ealing in 2007. Brought in presumably to lend a certain ‘caché’ to the otherwise uninspiring and vastly overdeveloped project near the Ealing Broadway Station, the proposal was slammed by English Heritage and CABE as well as local residents and community groups. In response, the developers, Glenkerrin, made a few changes, lowering the height of the main Foster designed tower from a massive 40 floors (just below the Heathrow flight path!) to 27 floors and resubmitted it.
Foster has made a name for himself by designing iconic buildings like the ‘Gherkin’ office block in central London and no doubt the developers thought the local residents would be naïve enough to value having a well known architect gracing their neighbourhood, even if it was the wrong building in the wrong place. Despite Ealing Council approving the revised scheme, it was called in by the government and after a public inquiry, the inspector recommended rejection and this advice was accepted by the Secretary of State, a rare example of central government reflecting local community interests against those of its own council.
But Foster is probably too busy to notice his rejection by the suburban upstarts in Ealing. According to today’s television programme by Kevin McCloud (Slumming it - India’, Channel 4), he is one of a number of leading international architects lending their names to the redevelopment of one of the largest slums in Asia, Dharavi in Mumbai. Dharavi is a massive slum, housing well over 600,000 mostly poor people living at extremely high densities, but generating livelihoods for so many it is helping keep Mumbai’s economy afloat and certainly does most of the city’s dirty business, like recycling its wastes. Yet, as in Ealing, developers are anxious to get their hands on the land in order to redevelop Dharavi and turn it into shopping malls and offices with high-rise apartments for some of the existing residents.
Foster will be part of this ‘makeover’, helping to impose commercially profitable versions of urban life for an affluent minority at the expense of the poor majority. If he has been advised that this is really in the interests of the poor, or even the long term interests of Mumbai, then perhaps he should select some new advisers. If he is doing this in full knowledge of the social, cultural and economic impacts such an approach will have on the poor, then it suggests he has wilfully turned his back on what is really needed and has, indeed, sold his soul. Call me a NIMBY, but it’s not the sort of icon I would want in my backyard.
Friday, 15 January 2010
Monday, 28 September 2009
Social housing makes a comeback in UK
A survey of 21,000 social housing tenants in the UK has shown that just 12% want to exercise their legal right to buy, down from 32% a decade ago. In addition, 8 out of 10 tenants are satisfied with their social landlord and believe that their status is better than owning a home or renting privately.
Huw Morris, editor of the weekly journal 'Planning' concludes that "a sizeable proportion of the population, it is clear, has no wish to own a home". This suggests that the politically inspired drive to create a 'property owning democracy' has finally run out of steam amid a recognition that other tenure options have benefits.
The challenge is now for all those involved in housing supply - government, parastatals, designers and developers, to create homes and neighbourhoods that people want to live in and can afford - an exciting outcome from the housing crisis!
Huw Morris, editor of the weekly journal 'Planning' concludes that "a sizeable proportion of the population, it is clear, has no wish to own a home". This suggests that the politically inspired drive to create a 'property owning democracy' has finally run out of steam amid a recognition that other tenure options have benefits.
The challenge is now for all those involved in housing supply - government, parastatals, designers and developers, to create homes and neighbourhoods that people want to live in and can afford - an exciting outcome from the housing crisis!
Sunday, 20 September 2009
Attention-seeking architecture
Off to Manchester to see some projects by the innovative developers Urban Splash. They have made their mark by redeveloping old areas or buildings and putting creative packages of funding together. Despite the recession, they are keeping busy.
Manchester Piccadilly station is all one expects of the city that is home to wealthy Premiership football teams - all glass, steel and marble, with cappucinos and brioches readily available. However, once outside the station and beyond the inner circle of magnificent Victorian offices and warehouses, the scene gives way to a collection of brash new structures which seem to have no sense of context, but which shout at each other as though to claim that they are bigger and better than their neighbours. The fact that these new buildings are not trying to be good neighbours to each other, but competing for attention across derelict sites, suggests a society in which individualism has run riot and any sense of community has been long forgotten.
It is not all bad news. There are areas where public space has woven a thread of continuity between buildings and the regeneration of sections of the canal, replete with brilliantly painted narrowboats, moored under vast steel viaducts or bridges, offers a pleasant route for people to walk to work and relax in canalside restaurants and bars.
One of Urban Splash's new schemes also combines the best of the old with the best of the new. Their Chimney Pots scheme takes an area of Victorian terraces identical to those in Coronation Street that the Council wanted demolished because it had sunk into a state of total social and physical decay and turned it into an enclave for which people camped out three nights in order to make sure they were able to buy one.
The ingenuity of the project is that it retained the overall street pattern and frontages of the old terraces, but inverted the interior so the bedrooms are are on the ground floor and the living rooms are upstairs (see http://www.urbansplash.co.uk/chimneypotpark/ for details). The master-stroke was to then put car parking between the backs of the houses and build over these to create individual and communal garden terraces at first floor level. The design combines personal and communal living within individual dwellings for the grand sum of £99,000 each, making it easy to see why people camped for three nights in order to by first in the queue to get one.
The other project visited left a far less favourable impression. Designed by the prestigious architectural practice of Will Alsop, the Chips project in New Islington is a nine storey slab surrounded on three sides by water. http://www.urbansplash.co.uk/documents/brochure/US_RESI_GUIDE_100019.pdf
The ground floor is intended for commercial use and the upper floors for housing, to be sold on the open market. At the time of our visit, the commercial areas were unlet and only a small proportion of the apartments had been sold. It is not difficult to see why.
The scheme is approached across a derelict wasteland where a hospital once stood. The roofless shells of the original Victorian buildings lie waiting for eventual restoration and conversion, against which the new building is alien in scale and brash in appearance. Approaching the entrance, one notices that the entire building appears to be clad in some form of fibre board fixed with screws covered with plastic caps and separated by a recessed layer of aluminium foil which looks identical to the bacofoil used in cooking. Not only does this look trashy, but it has already been pierced by curious fingers or incompetent workers, so has lost its insulating qualities before the building has even been fully occupied.
The interiors also leave a lot to be desired. Exposed concrete ceilings may make a fashionable design statement in architectural magazines, but they don't provide the most attractive thing to see when you wake up in the morning. Nails sticking out of these on the balconies of some units also suggest that this is more a means of saving cash than achieving cachet. Finally, the internal layouts leave a lot to be desired with main doors opening directly onto bedrooms and corridors weaving around kitchens rather than leading to them. As for the narrow, glass fronted balconies, I would certainly not want children anywhere near them. But of course, the housing is probably not designed for children, but to impress other architects. This no doubt explains why the Chips project (named because it resembled three fat chips laid one above the other) has been nominated for the World Architecture Festival Awards! A case of chips with sauce?
Manchester Piccadilly station is all one expects of the city that is home to wealthy Premiership football teams - all glass, steel and marble, with cappucinos and brioches readily available. However, once outside the station and beyond the inner circle of magnificent Victorian offices and warehouses, the scene gives way to a collection of brash new structures which seem to have no sense of context, but which shout at each other as though to claim that they are bigger and better than their neighbours. The fact that these new buildings are not trying to be good neighbours to each other, but competing for attention across derelict sites, suggests a society in which individualism has run riot and any sense of community has been long forgotten.
It is not all bad news. There are areas where public space has woven a thread of continuity between buildings and the regeneration of sections of the canal, replete with brilliantly painted narrowboats, moored under vast steel viaducts or bridges, offers a pleasant route for people to walk to work and relax in canalside restaurants and bars.
One of Urban Splash's new schemes also combines the best of the old with the best of the new. Their Chimney Pots scheme takes an area of Victorian terraces identical to those in Coronation Street that the Council wanted demolished because it had sunk into a state of total social and physical decay and turned it into an enclave for which people camped out three nights in order to make sure they were able to buy one.
The ingenuity of the project is that it retained the overall street pattern and frontages of the old terraces, but inverted the interior so the bedrooms are are on the ground floor and the living rooms are upstairs (see http://www.urbansplash.co.uk/chimneypotpark/ for details). The master-stroke was to then put car parking between the backs of the houses and build over these to create individual and communal garden terraces at first floor level. The design combines personal and communal living within individual dwellings for the grand sum of £99,000 each, making it easy to see why people camped for three nights in order to by first in the queue to get one.
The other project visited left a far less favourable impression. Designed by the prestigious architectural practice of Will Alsop, the Chips project in New Islington is a nine storey slab surrounded on three sides by water. http://www.urbansplash.co.uk/documents/brochure/US_RESI_GUIDE_100019.pdf
The ground floor is intended for commercial use and the upper floors for housing, to be sold on the open market. At the time of our visit, the commercial areas were unlet and only a small proportion of the apartments had been sold. It is not difficult to see why.
The scheme is approached across a derelict wasteland where a hospital once stood. The roofless shells of the original Victorian buildings lie waiting for eventual restoration and conversion, against which the new building is alien in scale and brash in appearance. Approaching the entrance, one notices that the entire building appears to be clad in some form of fibre board fixed with screws covered with plastic caps and separated by a recessed layer of aluminium foil which looks identical to the bacofoil used in cooking. Not only does this look trashy, but it has already been pierced by curious fingers or incompetent workers, so has lost its insulating qualities before the building has even been fully occupied.
The interiors also leave a lot to be desired. Exposed concrete ceilings may make a fashionable design statement in architectural magazines, but they don't provide the most attractive thing to see when you wake up in the morning. Nails sticking out of these on the balconies of some units also suggest that this is more a means of saving cash than achieving cachet. Finally, the internal layouts leave a lot to be desired with main doors opening directly onto bedrooms and corridors weaving around kitchens rather than leading to them. As for the narrow, glass fronted balconies, I would certainly not want children anywhere near them. But of course, the housing is probably not designed for children, but to impress other architects. This no doubt explains why the Chips project (named because it resembled three fat chips laid one above the other) has been nominated for the World Architecture Festival Awards! A case of chips with sauce?
Tuesday, 12 May 2009
Are lower house prices bad news?
BBC Radio 4's flagship 'Today' programme today discussed the UK economy and indicated that there were signs that the fall in house prices may have ceased and are possibly increasing 'at last'. It seems to be widely assumed that a fall in house prices is a bad thing, mainly because of the risk that some people will fall into negative equity as the value of theiur properties becomes less than the size of their mortgages.
In this sense, housing is possibly unique. If I want to buy something desirable, say a new car, a reduction in prices can be considered a good thing - I pay less and more people can afford the item. In fact, a reduction in prices is widely considered desirable for the development of affluence and the reduction fo poverty.
The reason that housing is considered different is down to two main reasons.First, tax and other financial incentives have encouraged more people to become home owners than tenants, so that approximately 70% of all households currently own their homes in the UK. As a majority has been created, home owners inwevitably represent a powerful voice seeking to protect the value of their assets, creating the impression that a reduction in asset values is bad. Yet for the young or less well off wanting to get on the ladder and join the party, a reduction is prices would be highly attractive. What we are witnessing is the media reflecting the interests of the majority, not the most deserving minority assuming, of course, that home ownership is desirable for all in the first place.
The other reason that makes housing different from other assets is that the price is not related to whether they are new or old. With any other commodity or necessity of life, (perhaps except wine!) new ones tend to be more valuable than old ones. With homes, older ones may actually be considered more desirable than new ones, so that depreciation does not apply.
These two factors encourage the assumption that property price increases are natural and desirable. It would be good to think that the current economic crisis might give cause to revise such assumptions and encourage a view that property prices should not be so important that they are regarded as a barometer of economic wellbeing. It might also serve to remind us that what is bad for some groups, is actually very welcome for others. The media, and particularly the BBC, should perhaps acknowledge this more.
In this sense, housing is possibly unique. If I want to buy something desirable, say a new car, a reduction in prices can be considered a good thing - I pay less and more people can afford the item. In fact, a reduction in prices is widely considered desirable for the development of affluence and the reduction fo poverty.
The reason that housing is considered different is down to two main reasons.First, tax and other financial incentives have encouraged more people to become home owners than tenants, so that approximately 70% of all households currently own their homes in the UK. As a majority has been created, home owners inwevitably represent a powerful voice seeking to protect the value of their assets, creating the impression that a reduction in asset values is bad. Yet for the young or less well off wanting to get on the ladder and join the party, a reduction is prices would be highly attractive. What we are witnessing is the media reflecting the interests of the majority, not the most deserving minority assuming, of course, that home ownership is desirable for all in the first place.
The other reason that makes housing different from other assets is that the price is not related to whether they are new or old. With any other commodity or necessity of life, (perhaps except wine!) new ones tend to be more valuable than old ones. With homes, older ones may actually be considered more desirable than new ones, so that depreciation does not apply.
These two factors encourage the assumption that property price increases are natural and desirable. It would be good to think that the current economic crisis might give cause to revise such assumptions and encourage a view that property prices should not be so important that they are regarded as a barometer of economic wellbeing. It might also serve to remind us that what is bad for some groups, is actually very welcome for others. The media, and particularly the BBC, should perhaps acknowledge this more.
Wednesday, 1 April 2009
Rescuing the housing market
At a meeting in the British Academy yesterday (31 March) details of which are available at: http://www.britac.ac.uk/events/2009/housing/index.cfm) Professor Susan Smith of Durham University’s Institute of Advanced Study chaired a meeting of housing experts from UK and Australia to consider issues and options relating to the current housing crisis. As she stated in the introduction to the meeting, the current housing dislocation is of global proportions, though it has to be said that almost all the presentations and subsequent discussion focused on the situation in the UK, USA and Australia.
The first speaker, Professor Gavin Wood of RMIT, Melbourne, reminded the audience that 30 years ago mortgage lending was undertaken by building societies or banks on the basis of loans financed by savings or deposits and the risks were borne at the local level – the buck stopped with the local manager. As a result, a relatively closed mortgage market operated. In the last two decades, risk has been increasingly spread making mortgages cheaper through competition and stimulating demand.
As the equity in the housing market increased, so did the trend for owners to withdraw some of the equity in their properties. Professor Wood claimed that this was not necessarily to sustain a champagne lifestyle, but to meet routine needs. This is not my experience - many people I know started to live above their means as a result of their new-found housing wealth. When foreclosures started after 2005 this severely depressed prices and equity values dropped accordingly. Did this contribute to increases in credit card debt as people then sought to maintain their newly acquired taste for the high life by any means available?
Professor Susan Whitehead of LSE and Cambridge University introduced her talk by saying she was old enough to remember her first mortgage when access was restricted and had no desire to see a return to those days, though she didn’t say why. She even claimed that market volatility was even greater then than now, though that is not what I remember. She presented the case for shared equity systems as a means of increasing access to affordable housing by people wanting to get on the housing ladder whilst spreading the risk – and benefits. Whilst shared equity is certainly an attractive option, Professor Whitehead acknowledged that it a major reason for its popularity is that it “goes with the grain of individual ownership”.
For me, the surprise was that this was the only alternative mentioned to home ownership. All the speakers seemed to assume that ownership was the preferred option, despite the fact that it is a far lower proportion of all tenure categories in Germany and their economy is weathering the crisis better than that of the USA or UK (Euro problems aside). No mention was made of co-operative housing, public or private rental, or other means of diversifying housing supply to meet the needs of a diverse demand system.
The implication of the presentations was that home ownership is best and that alternatives are probably restricted to flats/apartments in inner cities for the young. This was a profoundly restricted view of the housing crisis facing the UK and USA as I consider it, and does not suggest that these experts should be allowed to have any influence over countries with very different situations, such as developing countries. Sadly, they all too often take their lead from the USA and UK, especially when home ownership and land titling programmes are being so actively promoted by international donor agencies.
Home ownership has been widely promoted in the UK – and internationally – for largely political reasons. In the UK, mortgage tax relief for many years gave financial benefits to those seeking to “get on the housing ladder” (until such artificially stimulated demand led to inflationary prices which negated the benefits and it was dropped). Such benefits were not available to those in social housing, so Thatcher encouraged council tenants to become owners through the ‘right to buy’ programme. The carrot to tempt tenants to become owners was a heavily discounted price (selling off public assets at a knock-down price) and the political objective was to increase the constituency of support for the Conservative party as the one which would protect home owners.
In other words, the housing market has been biased for many years in favour of home ownership and this has attracted a massive level of investment, much of it speculative, rather than based on the desire for living in a decent home. Such a tendency for housing to become yet another market commodity has contributed to market volatility and financial and economic crisis. We do not need help for home owners – we need help to improve the diversity of supply options. Such a diverse system of housing supply is more likely to meet the needs of the UK and USA – and is particularly relevant for developing countries.
The first speaker, Professor Gavin Wood of RMIT, Melbourne, reminded the audience that 30 years ago mortgage lending was undertaken by building societies or banks on the basis of loans financed by savings or deposits and the risks were borne at the local level – the buck stopped with the local manager. As a result, a relatively closed mortgage market operated. In the last two decades, risk has been increasingly spread making mortgages cheaper through competition and stimulating demand.
As the equity in the housing market increased, so did the trend for owners to withdraw some of the equity in their properties. Professor Wood claimed that this was not necessarily to sustain a champagne lifestyle, but to meet routine needs. This is not my experience - many people I know started to live above their means as a result of their new-found housing wealth. When foreclosures started after 2005 this severely depressed prices and equity values dropped accordingly. Did this contribute to increases in credit card debt as people then sought to maintain their newly acquired taste for the high life by any means available?
Professor Susan Whitehead of LSE and Cambridge University introduced her talk by saying she was old enough to remember her first mortgage when access was restricted and had no desire to see a return to those days, though she didn’t say why. She even claimed that market volatility was even greater then than now, though that is not what I remember. She presented the case for shared equity systems as a means of increasing access to affordable housing by people wanting to get on the housing ladder whilst spreading the risk – and benefits. Whilst shared equity is certainly an attractive option, Professor Whitehead acknowledged that it a major reason for its popularity is that it “goes with the grain of individual ownership”.
For me, the surprise was that this was the only alternative mentioned to home ownership. All the speakers seemed to assume that ownership was the preferred option, despite the fact that it is a far lower proportion of all tenure categories in Germany and their economy is weathering the crisis better than that of the USA or UK (Euro problems aside). No mention was made of co-operative housing, public or private rental, or other means of diversifying housing supply to meet the needs of a diverse demand system.
The implication of the presentations was that home ownership is best and that alternatives are probably restricted to flats/apartments in inner cities for the young. This was a profoundly restricted view of the housing crisis facing the UK and USA as I consider it, and does not suggest that these experts should be allowed to have any influence over countries with very different situations, such as developing countries. Sadly, they all too often take their lead from the USA and UK, especially when home ownership and land titling programmes are being so actively promoted by international donor agencies.
Home ownership has been widely promoted in the UK – and internationally – for largely political reasons. In the UK, mortgage tax relief for many years gave financial benefits to those seeking to “get on the housing ladder” (until such artificially stimulated demand led to inflationary prices which negated the benefits and it was dropped). Such benefits were not available to those in social housing, so Thatcher encouraged council tenants to become owners through the ‘right to buy’ programme. The carrot to tempt tenants to become owners was a heavily discounted price (selling off public assets at a knock-down price) and the political objective was to increase the constituency of support for the Conservative party as the one which would protect home owners.
In other words, the housing market has been biased for many years in favour of home ownership and this has attracted a massive level of investment, much of it speculative, rather than based on the desire for living in a decent home. Such a tendency for housing to become yet another market commodity has contributed to market volatility and financial and economic crisis. We do not need help for home owners – we need help to improve the diversity of supply options. Such a diverse system of housing supply is more likely to meet the needs of the UK and USA – and is particularly relevant for developing countries.
Thursday, 26 February 2009
I thought this would be of interest to all those curious about urban development in China. It is from Access Asia (www.accessasia.co.uk) for those who would like more (I appreciate their permission to reprint):
The China Luxury Game...Played with Different Rules
In the West, the luxury business has slumped alarmingly. Yet in China, stores keep opening and the luxury brands and mall owners keep on pumping out the good news press releases. But when anyone visits these malls and stores they're empty, and the staff are standing around picking their noses. So, what's going on, you might reasonably ask? And it seems set to continue. We know of at least three high-end mall projects, attracting luxury brands in Beijing, set to go ahead and with secured funding. Then there's Japan's Takashimaya upscale department store, which has just announced a 40,000 square metre (yes, that's right 40,000!) store in a Shanghai suburb. Over Chinese New Year, Louis Vuitton opened a flagship store in Taiyuan, a city most fashionistas would have trouble finding on a map. Meanwhile, last week, a sale of luxury goods in Macao led to fist fights among brawling women from the Mainland and Hong Kong Hell-bent on snapping up glitzy bargains. So here's how it can work... A property developer approaches a local authority with a plan to build a luxury high-end mall. Lots of talk of "international", "luxury", "lifestyle", etc. The local officials like the idea and tell the bank so; the bank manager (a Party member of course) lends the money (rather softly) to the developer. The developer then gets lots of migrant workers to build the mall, and subsequently fills it with luxury brands (who don't have to pay much in the way of rent or service charges). And hey presto, another luxury mall appears. All this, of course, depends on the following:
· A developer who's not really a developer, in the traditional sense, but who can build a mall, but get a larger loan, thereby trousering the difference between the total loan value and the cost of construction (while hopefully quickly flipping the project and selling it for a profit soon after completion);
· A bank that isn't really a bank, in the traditional sense, in that it make loans based more on policy considerations than financial ones, and takes advise from the local officials;
· Brands that, in China at least, aren't retailers, in the traditional sense, but want shop windows in China for advertising to encourage purchasing by local consumers when they go to duty free Hong Kong, Macao or wherever;
· Local officials who are driven by pride more than reality, and need to be able to claim they are making their tier-2 or -3 city (or tier-1 city district) more "international" and "modern", and who also have retail development targets to meet, friends who are property developers and comrades who are bankers;
· Central government officials who share the aims of the local officials above, but more so in terms of striving for a perceived "internationalism";
· Customers, who aren't really customers in the traditional sense, in that they are just looking before they go to buy in Hong Kong or elsewhere. So, we get the malls, the brands and the supposed prestige. The developer gets a payday maybe; the bank gets to lend where it's told; migrant workers get to migrate and work and local officials look good higher up the chain, while the top of the chain gets to claim China has more luxury stores than anywhere else, as well as faster trains, longer bridges, and so on, and so on. And, the FT gets to hold a silly luxury conference every year that says the same thing. Everyone's happy - who needs customers!! Leslie Chang's excellent new book Factory Girls contains a sign she saw somewhere that said something like "Let's build more power stations, roads and bridges so we can profit and make more power stations, roads and bridges". We're all familiar with this from the USSR, and so on. What makes you think it's any different with luxury malls? The truth is - it isn't. Existence is everything; turnover secondary. Now get out there and shop!
The China Luxury Game...Played with Different Rules
In the West, the luxury business has slumped alarmingly. Yet in China, stores keep opening and the luxury brands and mall owners keep on pumping out the good news press releases. But when anyone visits these malls and stores they're empty, and the staff are standing around picking their noses. So, what's going on, you might reasonably ask? And it seems set to continue. We know of at least three high-end mall projects, attracting luxury brands in Beijing, set to go ahead and with secured funding. Then there's Japan's Takashimaya upscale department store, which has just announced a 40,000 square metre (yes, that's right 40,000!) store in a Shanghai suburb. Over Chinese New Year, Louis Vuitton opened a flagship store in Taiyuan, a city most fashionistas would have trouble finding on a map. Meanwhile, last week, a sale of luxury goods in Macao led to fist fights among brawling women from the Mainland and Hong Kong Hell-bent on snapping up glitzy bargains. So here's how it can work... A property developer approaches a local authority with a plan to build a luxury high-end mall. Lots of talk of "international", "luxury", "lifestyle", etc. The local officials like the idea and tell the bank so; the bank manager (a Party member of course) lends the money (rather softly) to the developer. The developer then gets lots of migrant workers to build the mall, and subsequently fills it with luxury brands (who don't have to pay much in the way of rent or service charges). And hey presto, another luxury mall appears. All this, of course, depends on the following:
· A developer who's not really a developer, in the traditional sense, but who can build a mall, but get a larger loan, thereby trousering the difference between the total loan value and the cost of construction (while hopefully quickly flipping the project and selling it for a profit soon after completion);
· A bank that isn't really a bank, in the traditional sense, in that it make loans based more on policy considerations than financial ones, and takes advise from the local officials;
· Brands that, in China at least, aren't retailers, in the traditional sense, but want shop windows in China for advertising to encourage purchasing by local consumers when they go to duty free Hong Kong, Macao or wherever;
· Local officials who are driven by pride more than reality, and need to be able to claim they are making their tier-2 or -3 city (or tier-1 city district) more "international" and "modern", and who also have retail development targets to meet, friends who are property developers and comrades who are bankers;
· Central government officials who share the aims of the local officials above, but more so in terms of striving for a perceived "internationalism";
· Customers, who aren't really customers in the traditional sense, in that they are just looking before they go to buy in Hong Kong or elsewhere. So, we get the malls, the brands and the supposed prestige. The developer gets a payday maybe; the bank gets to lend where it's told; migrant workers get to migrate and work and local officials look good higher up the chain, while the top of the chain gets to claim China has more luxury stores than anywhere else, as well as faster trains, longer bridges, and so on, and so on. And, the FT gets to hold a silly luxury conference every year that says the same thing. Everyone's happy - who needs customers!! Leslie Chang's excellent new book Factory Girls contains a sign she saw somewhere that said something like "Let's build more power stations, roads and bridges so we can profit and make more power stations, roads and bridges". We're all familiar with this from the USSR, and so on. What makes you think it's any different with luxury malls? The truth is - it isn't. Existence is everything; turnover secondary. Now get out there and shop!
Sunday, 28 December 2008
The elephant and the mouse
There was once an elephant and a mouse living next door to each other. Now although the elephant was the largest and strongest of creatures, it did not know much about the world and was actually scared of things that were different, even mice. Naturally, the mouse had to spend most of its time and energy avoiding being trampled by the elephant. As a result, it became quick-witted and adaptable, but had no energy left to grow strong and healthy.
One night, the elephant had a dream that it need not be scared of other things and woke up determined that change was possible. The mouse, whose name was Cuba, was very happy at the idea that they might actually be able to live peacefully together as neighbours.
Cubans are nothing if not realistic. Whilst they have hopes that Obama may relax the embargo which has crippled the Cuban economy for several decades, they realise that the older Cuban-Americans, who are vehemently opposed to any change, still exert influence in US politics, even though younger ones are so integrated into US society that they have no interest in returning to Cuba or opposing change.
The US imposed embargo has had a serious impact on the Cuban economy by reducing opportunities for international trade and forcing the country to live by its wits with minimal natural resources. Despite these constraints, Cuba has much of which to be proud. The civil defence system is arguably the best in the world in that although two of the worst hurricanes in recent memory, (Gustavo and Ike), destroyed over half a million houses and large areas of tobacco and other agricultural products, only about two people died as a direct result and these were reportedly due to people leaving shelters. Whilst the mayor of New Orleans was boasting on CNN that the city had successfully evacuated a few thousand people to areas of safety, no mention was made of the fact that Cuba successfully protected over 300,000 people. The country has a vibrant culture and its health and educational systems have enabled the country to equal the US in terms of Human Development Indicators (a more useful guide to social wellbeing than GDP, since they measure infant mortality, levels of literacy and life expectancy, etc).
However, it should also be acknowledged that domestic economic management in Cuba has been a failure. Vast tracts of fertile land remain uncultivated, since farmers understandably see no point in working hard if they are forced to sell most of their produce to the state for a pittance. Similarly, joint ventures with foreign investors often fail if the Cuban government suspects that they are making what are considered excessive profits, or if an investor falls out of favour.
During a recent visit to Cuba, nobody spoke about Fidel in other than positive terms. It was acknowledged that whilst he was authoritarian, he was also inspirational and idealistic. No such affection appeared to exist towards his brother Raül, who assumed the presidency in February this year and who, as head of the military, seems intent on maintaining tight political control. Whilst Cubans may now legally stay in hotels, the costs prevent this for all but a small minority. Similarly, it is now legal to own a cellphone, but getting a line costs far too expensive for the average worker.
Cubans, especially the young, are desperate for change and feel that whilst they are proud of their country and the achievements of the revolution, this very achievement makes it unnecessary for them to fight the same battle as their parents and grandparents fifty years ago.
This pressure for progress poses a genuine problem for the government. If it relaxes political control too far, or too quickly, the country may fall into the sort of chaos faced by Russia after the collapse of the Soviet Union. At the same time, Cuba is constrained from adopting the Chinese approach of liberalising the economy whilst maintaining strong state controls politically because they have a minute domestic market and no internal capital base.
Intriguingly, the presidents of both Russia and China have visited Cuba in the last month and as both these new political and economic giants are immune to US economic pressure, this may open options for domestic change. Certainly, one observer indicated that the party is planning a major review of economic policy in 2009 in order to provide incentives for farmers and workers in other sectors to increase production and to reduce dependency on tourism as a source of hard currency. Official concern that this may increase social and economic inequality has to be offset by the fact that there is already a massive disparity in incomes between a senior professional earning at most US$40 a month, a primary school teacher receiving US$8 a month and those working in tourism who can earn up to US$250 a month. Such disparities also force many trained professionals to abandon their vocations to take any work where they can earn foreign currency. This is not only a waste of their education, but a source of great personal frustration. One taxi driver told me he was a qualified engineer who could earn far more in a week as a driver than he could as an engineer. He consoled himself that he “was still an engineer in his heart”.
Anyone planning a book on economics in Cuba would do well to use the title “It all depends”, since this is the answer given if you ask the price of anything. It alls depends on whether you work in, or know somebody working in the sector, you have something to swap, or are paying in local, or foreign currency. The failure of the formal economy has forced large sections of the population into an illegal black or informal economy which in turn enables the authorities to selectively punish those it deems a threat.
A pessimistic assessment of the future would be for the military, which already enjoys considerable influence and economic benefits, to increase its hold over both political and economic spheres to the detriment of both economic and social progress. An optimistic assessment for the country’s talented and creative population would involve a relaxation of the US embargo once Obama is in power, followed by a steady increase in external investment managed by an increasingly pragmatic and self-confident government. This would facilitate a range of joint ventures with foreign investors and donors in ways which can build the economy and maintain high standards of public services and welfare, whist accepting a degree of difference in the allocation of benefits (as exists already).
The global economic crisis has destroyed faith in unregulated markets even in the bastions of neo-liberalism. In doing so, it has opened the door to approaches which seek to achieve a balance between social justice and environmentally sustainable economic development. Obama’s election provides hope that the US may place a higher priority on meeting social policy objectives which can reduce inequality. Similarly, there are signs in Cuba that Raül Castro will relax central government controls and promote economic growth and investment, possibly with Russian or Chinese help.
As Cuba prepares to celebrate the fiftieth anniversary of the revolution in the beginning of 2009, a gesture from the US to progressively relax the embargo could help build confidence that change is possible for both countries.
One night, the elephant had a dream that it need not be scared of other things and woke up determined that change was possible. The mouse, whose name was Cuba, was very happy at the idea that they might actually be able to live peacefully together as neighbours.
Cubans are nothing if not realistic. Whilst they have hopes that Obama may relax the embargo which has crippled the Cuban economy for several decades, they realise that the older Cuban-Americans, who are vehemently opposed to any change, still exert influence in US politics, even though younger ones are so integrated into US society that they have no interest in returning to Cuba or opposing change.
The US imposed embargo has had a serious impact on the Cuban economy by reducing opportunities for international trade and forcing the country to live by its wits with minimal natural resources. Despite these constraints, Cuba has much of which to be proud. The civil defence system is arguably the best in the world in that although two of the worst hurricanes in recent memory, (Gustavo and Ike), destroyed over half a million houses and large areas of tobacco and other agricultural products, only about two people died as a direct result and these were reportedly due to people leaving shelters. Whilst the mayor of New Orleans was boasting on CNN that the city had successfully evacuated a few thousand people to areas of safety, no mention was made of the fact that Cuba successfully protected over 300,000 people. The country has a vibrant culture and its health and educational systems have enabled the country to equal the US in terms of Human Development Indicators (a more useful guide to social wellbeing than GDP, since they measure infant mortality, levels of literacy and life expectancy, etc).
However, it should also be acknowledged that domestic economic management in Cuba has been a failure. Vast tracts of fertile land remain uncultivated, since farmers understandably see no point in working hard if they are forced to sell most of their produce to the state for a pittance. Similarly, joint ventures with foreign investors often fail if the Cuban government suspects that they are making what are considered excessive profits, or if an investor falls out of favour.
During a recent visit to Cuba, nobody spoke about Fidel in other than positive terms. It was acknowledged that whilst he was authoritarian, he was also inspirational and idealistic. No such affection appeared to exist towards his brother Raül, who assumed the presidency in February this year and who, as head of the military, seems intent on maintaining tight political control. Whilst Cubans may now legally stay in hotels, the costs prevent this for all but a small minority. Similarly, it is now legal to own a cellphone, but getting a line costs far too expensive for the average worker.
Cubans, especially the young, are desperate for change and feel that whilst they are proud of their country and the achievements of the revolution, this very achievement makes it unnecessary for them to fight the same battle as their parents and grandparents fifty years ago.
This pressure for progress poses a genuine problem for the government. If it relaxes political control too far, or too quickly, the country may fall into the sort of chaos faced by Russia after the collapse of the Soviet Union. At the same time, Cuba is constrained from adopting the Chinese approach of liberalising the economy whilst maintaining strong state controls politically because they have a minute domestic market and no internal capital base.
Intriguingly, the presidents of both Russia and China have visited Cuba in the last month and as both these new political and economic giants are immune to US economic pressure, this may open options for domestic change. Certainly, one observer indicated that the party is planning a major review of economic policy in 2009 in order to provide incentives for farmers and workers in other sectors to increase production and to reduce dependency on tourism as a source of hard currency. Official concern that this may increase social and economic inequality has to be offset by the fact that there is already a massive disparity in incomes between a senior professional earning at most US$40 a month, a primary school teacher receiving US$8 a month and those working in tourism who can earn up to US$250 a month. Such disparities also force many trained professionals to abandon their vocations to take any work where they can earn foreign currency. This is not only a waste of their education, but a source of great personal frustration. One taxi driver told me he was a qualified engineer who could earn far more in a week as a driver than he could as an engineer. He consoled himself that he “was still an engineer in his heart”.
Anyone planning a book on economics in Cuba would do well to use the title “It all depends”, since this is the answer given if you ask the price of anything. It alls depends on whether you work in, or know somebody working in the sector, you have something to swap, or are paying in local, or foreign currency. The failure of the formal economy has forced large sections of the population into an illegal black or informal economy which in turn enables the authorities to selectively punish those it deems a threat.
A pessimistic assessment of the future would be for the military, which already enjoys considerable influence and economic benefits, to increase its hold over both political and economic spheres to the detriment of both economic and social progress. An optimistic assessment for the country’s talented and creative population would involve a relaxation of the US embargo once Obama is in power, followed by a steady increase in external investment managed by an increasingly pragmatic and self-confident government. This would facilitate a range of joint ventures with foreign investors and donors in ways which can build the economy and maintain high standards of public services and welfare, whist accepting a degree of difference in the allocation of benefits (as exists already).
The global economic crisis has destroyed faith in unregulated markets even in the bastions of neo-liberalism. In doing so, it has opened the door to approaches which seek to achieve a balance between social justice and environmentally sustainable economic development. Obama’s election provides hope that the US may place a higher priority on meeting social policy objectives which can reduce inequality. Similarly, there are signs in Cuba that Raül Castro will relax central government controls and promote economic growth and investment, possibly with Russian or Chinese help.
As Cuba prepares to celebrate the fiftieth anniversary of the revolution in the beginning of 2009, a gesture from the US to progressively relax the embargo could help build confidence that change is possible for both countries.
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