Earlier this year, the tiny Persian Gulf nation of Qatar was looking for a safe place to park some of its vast oil wealth. Qatar’s investment arm chose to pump $700 million into the new CityCenterDC, a downtown Washington apartment, office and retail complex that doesn’t have a major tenant signed up yet. The District, the Qataris decided, was as low risk an investment as could be found anywhere in the world.Foreign investment in DC real estate and businesses is not new. On the one hand, this investment in cities has been a worldwide strategy by investors since the late 1970s. Deregulation and high interest rates at that time in the US financial markets made foreign investors very interested in putting their money in US markets. Foreign investors as well as domestic investors (such as mutual funds and pension funds) realized that they could make much more money in financial markets than investing in production. My favorite sociologist Saskia Sassen, as well as other great sociologists like Greta Krippner, talk about the enormous inflow of capital into the US especially from Japan, how this expansion of credit has inflated real estate prices and created new forms of financial risk, and the resulting financialization of our economy (the increasing dominance of financial profit making, as opposed to profit making in production, in our economy).
On the other hand, as discussed by geographer Jason Hackworth, since the 1970s, cities around the world have actively encouraged investment in real estate in their center cities. Enticing foreign investment in such real estate is a strategy by city governments and business groups around the world. As I talked about in a previous post, "What is Neoliberalism?," in this new context, cities like Washington, D.C. have taken on many of the tasks once carried out by the national state, but these cities do not have the resources to realize these tasks (due to austerity and low tax rates) and do not have the power to stand up to the demands of multinational corporations. Cities have thus become what sociologists and geographers call "entrepreneurial," competing with other cities for international investments, high-bond ratings, and high-income residents (including the "creative class" discussed by Richard Florida). The entrepreneurial city must focus on competition and neighborhood branding to lure new residents and international investors. These trends create "dual" cities, with areas of great wealth and other areas of great poverty, through gentrification and dispersal of the poor from certain places (The Yards in SW and Hine Jr. High, both in Ward 6) to make way for new development projects funded by international investors, which in turn fund the entrepreneurial city government. As a result, as the Post article quotes the chair of the Federal City Council, which represents the DC business elite:
'there's less of a local D.C. business community' now that companies based elsewhere control many of the city's major employers. But businesses owned by out-of-town interests also have a stake in the city's financial and political health...those executives are recruiting candidates to run against council members who are 'taking us back 20 years.'Does "taking us back 20 years" mean taking us back to a time when politicians responded more to their constituents and less to the demands of international capital in our nation's capitol? Are we unintentionally turning DC into a kind of Disneyland for adults and a safe investment for international investors, while undermining what makes DC interesting and compelling as a city? Furthermore, are all DC residents equal, as democracy requires, or are residents measured by the revenue they generate?