Homes in London by Shutterstock.com
My yearly cleaning out of The Economist is producing the usual horde of unread gems. One from last June (admittedly, I’m really behind here) is about the new plutocracy invading London. The article notes that 60 percent of “prime London home sales” 2011–12 went to foreigners, and 11 percent overall to Russians. The point of the article was a somewhat ambiguous celebration of British capitalism, not merely for attracting flush foreigners, but also in the emergence of hordes of concierge services to ease the ex-pats’ way into English society. Despite the conclusion that this generation of nouveaux riche is less interested in assimilating than their predecessors, the point of London’s on-going attractiveness is made clear.
American cities may have neither the history not cultural cachet of London, but rich foreigners are snapping up properties in them, as well. Perhaps piggybacking on The Economist’s piece, a week later in June 2012, The Wall Street Journal reported that foreigners, a majority of whom pay in cash, bought close to 9 percent of the U.S. residential real estate on sale in the previous 12-month period. Like those in London, they often were buying extremely high-end property, far out of the reach of 99 percent of Americans. Yet unlike in London, American economic trouble, in the form of a weak dollar, was enticing many of those investors to take the plunge. They were concentrated, not surprisingly, in Manhattan, California, Texas, and other major metropolitan areas.
In some way, this is tied to Victor’s observations on the homepage today, of American decline. In hollowing out the middle class, we drive ourselves towards an unsustainable two-class system, the “cans” and “cannots.” As Victor points out, we all have so much more than at any time in the past, it’s hard to talk about deprivation. But we are trending ever closer to a society in which the majority, even of hard-working families, can barely keep up with the expenses they have, not because of profligacy, but because of stagnant wages that are not expected to recover for another decade, higher taxes, and declining U.S. competitiveness. One symptom of that weakness is the wealthy from abroad living the American dream while the rest of us struggle and see our inter-generational mobility flatten out, especially at the lower levels. And it leads directly to the sharp increase in the number of Americans receiving government handouts, such as food stamps (a statistic conveniently ignored by the MSM over the past several years).
That is our cosmopolitan problem: our weaknesses manifest in opportunities for those from abroad versus those at home. To an immigrant society, this is probably not seen on the surface as a problem, but it should be, as it inverts the reason earlier generations of immigrants came to these shores. It also provides a future warning sign of real decline, when those foreigners stop even buying here because of crumbling infrastructure, low returns on real estate investment, rising crime, and the like.
London’s problem is different: how to maintain “British” culture when the capital is increasingly populated by those with little or no ties to the U.K. but who hold the most expensive property, send their children to elite schools, invest in art, etc. Of course, this is not a new issue for London. Anthony Trollope devastatingly satirized both the grasping nouveaux riche and the hypocritical and sclerotic British aristocracy nearly a century and a half ago in The Way We Live Now. Perhaps for Britain, such problems have now become as traditional as the rest of its culture. As for America, we should begin to recognize ours.