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A strong financial centre contributes to inequality

Columbia University’ Saskia Sassen on urban issues in the global and Indian contexts
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First Published: Tue, Jan 29 2013. 10 23 PM IST
Sassen says that in fragile environments, especially in the case of migrants from rural areas who don’t have a long trajectory of living in a particular city, the woman migrant becomes the public actor in the household.
Sassen says that in fragile environments, especially in the case of migrants from rural areas who don’t have a long trajectory of living in a particular city, the woman migrant becomes the public actor in the household.
Saskia Sassen is an expert on cities, and global financial centres in particular. The Dutch-American sociologist is the Robert S. Lynd professor of sociology and co-chair of the Committee on Global Thought at Columbia University. Recent books authored by Sassen are Territory, Authority, Rights: From Medieval to Global Assemblages; A Sociology of Globalization; and the fourth, fully updated edition of Cities in a World Economy. Among her older books is The Global City. Her books have been translated into over 20 languages. A recipient of diverse awards and mentions, including being selected as one of the Top 100 Global Thinkers of 2011 by Foreign Policy magazine, Sassen spoke about urban issues in the global and Indian contexts in a recent interview. Edited excerpts:
Have large financial centres been able to avoid the dichotomy between slums and enclave economies?
It’s not that it has to be a slum at the bottom, but one impact that a strong financial centre seems to have...is that it tends to contribute to inequality.
In a city like New York, you don’t get a slum, but what you get is that a lot of people are expelled from the city. They cannot survive there anymore, they go farther and farther out or they simply leave. There is a process of expulsion. In other cities, poverty takes the form of a slum.
The second issue is the footprint. The very interesting irony for me, is that when you have a dynamic financial centre, with its electronic, digitized sector, it has an expanding physical footprint, thereby raising the price of land in the city, whether to rent or to buy!
It expels all kinds of operations that cannot compete. In a city like New York, where clearly Wall Street is a very major sector—where directly and indirectly it accounts for a very good part of its economy—it will always have a great deal of inequality. It is a complex economy, it requires very specialized people as well as low-servicing people.
Look at the Census data of 1979 and take a particular measure. In 1980, the top 1% of people of salaries received 12% of all salaries produced. In 2010, the top 1% of salaried people (and those people have other sources of income also, but we’re just looking at salaries) got 44% of all the salaries.
That is an inequality that is simply dysfunctional. Then you know there is something really wrong. In the microcosm, you are capturing the larger trend-set that we know, there’s a growing capture at the top. The financial sector has an enormous stake in the city, to feed that growth in inequality, to feed capture at the top. Not all sectors have that: the big manufacturing plants of the new 1960s, and 1970s, even if they wanted it, the DNA of that sector does not lend itself to that kind of capture at the top.
Finance has extraordinary powers to financialize non-financial sectors. Housing gets financialized, loans get financialized, enormous shadow effect, either directly or indirectly.
Mumbai ranked really low among your list of 67 financial centres.
Mumbai and Sao Paulo have very powerful economies, and very powerful financial centres. When you look at the financial variables, they tended to rank in the top 20. Total of 67 corporate centres that we looked at. Variables that had to do with finance, they ranked much higher than at the more general variability—such as a decision to locate a firm in Mumbai. Mumbai and Sao Paulo both dropped, very, very sharply.
Because?
We had a lot of variables, like 50 variables we looked at. A lot had to do with the quality of life, security, guarantees of contract, the larger social situation, conditions of life of workers, enormous inequality, workers with no access to proper infrastructure—whether transport, housing, electricity. And in the end, firms said this spells trouble. That was a big deterrent, if you want, for people to go there.
The firms were able to recognize this?
Yes, we asked employers. These 50 variables were objective measures: for example, how long does it take for a firm to execute a transaction? If a new firm wants to move into Mumbai or Brazil, how long does it take? For Brazil, it takes two years of paperwork. And there were parallels between Sao Paulo and Mumbai: it took forever to get out. Let us say you brought your firm into Mumbai and if you then wanted to get out and close contracts, it would take forever. And that was a disincentive. But the big disincentive was the larger, social situation of many, many workers.
Please tell us about your views on the interaction between the powerful and the powerless in complex cities such as Mumbai?
I’m very interested in powerlessness, when you lack power, such as the slum dwellers, or the impoverished lower middle classes, or the small little low-profit firms, in the context of the city, a complex city that in principle should enable, multiple types of trajectories, high profit firms, little firms. Cities do that mostly.
And I argue that the city is one of the spaces that can make powerlessness complex. And if you are poor, and in Mumbai—the fact that you are poor and in a complex city—actually makes a difference. And so from there, I’m also interested in the street, and there Mumbai is formidable, of course.
I’ve been doing some research on what I call the Global Street. The street is a very particular space, it’s not the piazza, where you are essentially on display. I think the street is a space where the powerless can get things done—one example in Mumbai are all those little, probably informal, shops at the edges of major streets.
What I find stunning in Mumbai, is that no car, no matter how rich the driver, can fully control the street as happens in so many rich cities. It is not only the vast numbers of people. Most of those people walking on the street, risking their lives. It is deeper: because they are so many, they are making a claim to the street, and they succeed! They manage, in that complex space, to gain a certain complexity in their powerlessness, even though this does not empower them.
In the Anglo perspective, you either have power or you don’t. If they are not empowered, the complexity they gain from occupying the street becomes invisible. You look at Mumbai’s poor families, and they are out there walking on the street or on their motorbikes, and how can one not recognize that they can occupy the space of the street, actually force the Maserati or the Audi to slow down. This is an interesting dynamic.
People in Mumbai are getting tired of the ‘resilient’ narrative: So what would you prescribe as the top three suggestions to a policymaker, in terms of physical, spatial solutions to addressing economic inequality?
You need to know a city well in order to be able to answer. But let me say in a generic sense, not specifically Mumbai—I would not dare! One item concerns the spaces where the disadvantaged live. Housing is a critical dimension and the critical intervention is to upgrade living space. We know many people come and live and work in Mumbai, stay for a few days...and then go back. I know that Mumbai is too crowded but you’ve got to find a way, even if it means articulating the territory of the region differently so that you redistribute certain activities that don’t need to be in the centre of Mumbai and need a certain kind of access or affinity to other kinds of activity.
The Chinese government, with their central planning, have created nine satellite cities around Shanghai. And that actually worked rather well. They are about a million or so in size each.
Economically, these cities are specialized, like manufacturing or car-making, some of them taking a lot of foreign outsourced activities. Some do textiles, etc. Traditional array of industries. Then you have housing—some rich people, some poor people, some middle class people. When it comes to poor people, it should be easier to provide livable infrastructure.
The Chinese state is different from the state in a place like India or the US—I don’t have all the details. My understanding is that they built these cities from scratch or developed existing cities. So these ‘articulated cities’ are better because it is more balanced, it’s not 25 million population.
Mind you, the Chinese built housing for three million people displaced from the centre of Shanghai in a period of five years—they built a ring of high-rises on the outskirts. Terrible living. One has to address, in a complex way, housing for the disadvantaged, and link that to economic nodes: that’s the important point.
You don’t house them, as the Chinese did, on the outskirts, where there is nothing. But, low-wage workers are part of the economy, they are needed everywhere. Work on that concept and frankly, Mumbai is running out of space. Build a real city, not just an intelligent city.
Two, scale up: In New York, there was depopulation and new immigrant communities moved in. In Mumbai, there are neighbourhood economies such as working slums. Urban space creates a scale-up effect. Degraded neighbourhood—each individual household is selfish, wants their individual household to be fixed up. Their little yard to be nice.
Collectively, they have produced neighbourhood upgrading.
In Mumbai, you would have a lot of people who would be available for all that stuff. You don’t have to be collectively oriented. You can be selfish as hell, and yet, in a certain setting, it produces a collective good. Even people who live on the edge of the street, they do upgrading to make it better, if you look carefully.
If one could enable that process, use of capacity, to take it to the next level, and enable the willingness to fix it up, that could actually escalate.
How do you scale up individual efforts so that it actually produces a better neighbourhood? A better space? A better area for people to live in and for children to play? A better running space? A collective scale-up. Everyone does their bit, and suddenly you are in a better place.
It doesn’t need to be facilitated by a local government body, or a political party, that’s the point. This is why there is a marriage between individuals who are up for upgrading their own houses—they can be very selfish—you don’t have to feel solidarity with the other—and you just want a nice, little house and a clean yard in the front. If everyone on the block feels that way, the urban space within which people exist is upgraded.
What role do women play in poor communities in terms of their contribution to the city and how they exercise their voice?
I see this in my research and it’s really interesting. In fragile environments, especially if they are migrants from rural areas—in other words, if they don’t have a long trajectory of living in a particular city—in these kinds of households, when you have man, woman, children, etc.—and that the woman migrant, the woman who does not belong—actually becomes the public actor in the household.
The man typically has a job in the warehouse, in a factory and he disappears. He comes back late at night, dead tired. The woman has to deal, even if she has a job and works, she has to deal with the apparatus of the city at the local level; the school, the local police, the local health facility, the local office who has to turn on the water or the electricity. The woman becomes the public figure and the man, given the job situation that they have, becomes truly invisible. They are not there during the day, they have no contact with the police and the schools, the woman is the one who does.
The women collectivise it—that’s a kind of scale-up too. And I understand that in Mumbai that’s happened with toilets and with other projects that women have organized. I find it extremely interesting and I like to use the notion of the ‘urban subject’ rather than other descriptions like ‘workers’. A big complex city also generates the urban subject as the person. And I think that these women become the quintessential ‘urban’ subjects. It doesn’t matter what their religion or their caste is—they are quintessentially ‘urban subjects’.
The men’s identity is increasingly identical or flattened, into whatever their job is. Women, no matter what their job, have these other responsibilities.
It’s the urban space that enables it, if they were all on a plantation, that would not have happened.
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First Published: Tue, Jan 29 2013. 10 23 PM IST