Will London Embrace the Monaco Model?

King's Cross.jpg

London’s goal — admirable for any city of medieval invention — is to drive the private car underground and replace it with a web of mass transit, suburban trains, bike lanes, taxi stands, and walkways. All of those are well calibrated to an urban grid that consists of mews, squares, and quirky side streets with names like Shoulder of Mutton Alley.

Despite the winds and rains, I recently pedaled all over London and came to the conclusion that it has an excellent chance to get past the automobile era. It could be Europe’s city of tomorrow, one that moves forward with its work/life balance on a human scale. Its future as Europe’s finance center, though, and its real estate forecast, as well as the outlook for its pubs, remain open questions.

I enrolled in Mayor Boris Johnson’s shared bikes — it took a few credit card swipes — and headed off to the City, London's financial district, which lies north of London Bridge.

Will London remain one of the world's top finance centers? The continuing economic crisis, the threat of the U.K. pulling out of the European Union, Scottish independence, and strict new regulations could all spell doom for its merchant banking.

The City’s accommodating genius is that while it is as established as the House of Lords or the East India Company, it is, among other things, a go-go offshore financial center — the Cayman Islands with bowler hats.

Neither continental European nor American nor Asian, London straddles all three markets, funneling money from one part of the globe to another. By comparison, Frankfurt, Paris, Zurich, and Amsterdam are staid regional financial centers. Only New York can give it a run for its money.

At G8 meetings Prime Minister David Cameron bemoans corporate-shell tax dodging and come-by-chance balance sheets, but when he gets home he might as well don a visor and leather sleeves. London is a casino cashing in the chips of a capital-intensive world.

During the Crimean crisis, London has been all for economic sanctions, provided, however, that they don't hurt the City, where Russian oligarchs still get their phone calls returned.

While I was there, London experienced its wettest January since 1670. But one of the city's virtues is that it copes well with bad weather. Houses and hotels are short walks to shops and trains. In most London neighborhoods you will pass many restaurants, drug stores, newsstands, and pocket supermarkets. On television, England was sinking; in London, it was business as usual.

The pleasure of London on a bike is that its very quickly reduced to an overlapping series of small towns, with such well known names as Chelsea, Fulham, Soho, Sloane Square, Lancaster Gate, and Hampstead Heath.

Fewer pubs were in evidence. I read later that about 1400 have been closing every year around England, victim to archaic licensing laws and restrictive franchising, not to mention the iPhone culture that does not cozy up with a pint to dank interiors with ersatz slot machines and pinball games. Industrial Britain has become a service economy, and the servers prefer bistros, bars, and Pret A Manger.

A downside to London is that the world’s happy money has made its property market an international savings bank, where apartments routinely sell for $6 million and some hotels (not mine) cost $700 a night.

Nevertheless, the excellent Tube, buses, commuter trains, and Boris bikes make it easier to stay in less fashionable quarters and connect to the bright lights. London has spent billions on upgrading its railroad stations, which soon will be the iron standard in Europe. By contrast, Moscow is choking on its gridlocked exhaust fumes, Paris prefers tourism to trade, and Berlin still has a hole in its heart.

When I lived in London in the 1970s, King’s Cross had the air of New York’s Port Authority bus terminal, and St. Pancras appeared only to offer connecting service to The Slough of Despond. The renovated St. Pancras International, where Eurostars depart for Paris, Brussels, Lille, and Avignon, is alive with spoken French, fresh croissants, trendy restaurants, and a five-star hotel. With a soaring glass interior, King's Cross could be an Asian airline terminal.

The East End and Canary Wharf still feel like warehouse districts, although now the only cargoes are winking screens in trading rooms. Nevertheless, it is easy to imagine in the next fifty years a second London growing up around the Thames docklands. It has the infrastructure in place — trains, an airport, businesses, nearby housing stock, and open spaces — to support a major city, one part Venice with canals, another part Shanghai with skyscrapers.

The risks to London’s future are political. Insular Tories could lead Britain out of the European Union, the British pound could become a second-tier currency, and the city’s cost structures could make it only an amusement park for Russian oligarchs and Arab sheiks, not the working or middle classes. Call it the Monaco Model.

Still, I would bet on London’s sustainability at all levels of a city’s food chain… if only because it is so eccentrically welcoming to bikes, banks, brokers, and bookstores.

Matthew Stevenson, a contributing editor of Harper's Magazine, is the author of Remembering the Twentieth Century Limited, a collection of historical travel essays. His new book, Whistle-Stopping America, was recently published.

Photo of King's Cross by Matthew Stevenson


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Shame! - on rentier "capitalism" and ignorant humanity

This assessment is helpful in that it rests on London's lucky "Global City" status.

One of the great unreasons swamping the world today, is urban planning manias that assume that any city anwhere, can and should try and go "post automobile".

London might be the only city that might justify even thinking this about. But it would be a totally "freak" city that would be exclusive of everyone trying to live a life approximating something like normality for the rest of humanity.

London even now has a major traffic congestion problem. Obviously there is still a need for driving. I am hugely skeptical that it is possible to completely substitute mass transit, walking, cycling, etc for all automobility; at least at sustainable cost.

There is an inherent problem with economic land rent. Pre-automobility, it was well understood that increases in incomes just capitalised into land rents, leaving no-one any better off except landlords. London is turning into a city where even the stock broker's magnificent income is being garnished by his landlord. Heaven knows where the cleaners and waitresses and supermarket shelf stockers exist - in cupboards below stairs? Commuting 4 hours a day from somewhere where they can afford the rent?

Subsidies to keep a transport system going, in the case of subsidies to automobility, work to dilute economic land rents. In the case of subsidies to fixed route public transport services, they concentrate economic land rents and hence comprise a wealth transfer. In so far as "labour" and even "entrepreneurship" are paying these subsidies rather than the landlords, the local economy is essentially in a self-destructive closed feedback loop.

To me, the smell test says that all this is impossible even in London, even if is accepted that "trickle down" urbanism is a myth and that London is to turn into a supersized modern equivalent of a medieval castle containing the elites and their domestic servants.

In so far as it "succeeds", it is a repugnant epitome of rentier capitalism - and it already is that. Weightless global rentier income (financial "services") capitalising into local land rents, and adding insult to injury, the entire local transport system largely paid for by "labour" and renters, also adding to the wealth transfer to the property rentiers.

I am an economic libertarian, lest anyone misconstrue me as a Marxist, and I say this is one of the most monstrous moral challenges facing our generation. Financial transfer (Tobin) taxes cannot come fast enough; Global cities public transport systems should be paid for out of land taxes and absolutely nothing else; and "too big to fail" SHOULD mean compulsory breakup, not guaranteed bailouts. One of the most absurd ironies in modern politics, is ignorant socialist-environmentalists calling for "Wall street" to be smashed, but celebrating global cities subway systems as a model of sustainability to be emulated by all cities.......!

Lenin said a capitalist will sell you the rope you use to hang him. Ayn Rand's retort was that crony capitalists should be hung before they sell the rope.