AUG. 15, 2014
Roger Cohen
London is in the midst of a boom so giddy it has parted company with the rest of
Britain. Construction is everywhere, from the new towers of the City of London (a
global financial center larger than Wall Street) to the mansions of Kensington
(where the world’s superwealthy burrow below ground to accommodate staff
quarters and the de rigueur swimming pool) to ever-hipper eastern districts like
Hoxton (sought after by the ordinary mortals driven from the center).
Money does not precisely gush from every home, business and storefront in
central London, as it did before the meltdown of 2008, but it oozes again in sticky
abundance. House prices in London have jumped about 19 percent in a year. The
London economy is set to grow by over 4 percent this year in a nation that,
elsewhere, struggles to shake off stagnation. The capital has become a glittering
enclave in a country often resentful of its dominance. It presides with spiffy
superiority, like squeaky-clean Singapore looking down on dusty Southeast Asia.
There is talk of a bubble. Nobody cares. Foreign money pours in, to the City of
course, where the Shard skyscraper now rises over 1,000 feet, but also into houses
and apartments often used only a few weeks a year. In Belgravia, Mayfair and
Marylebone the oligarchs of Kazakhstan, the oil-rich of the Gulf and the newly
affluent of Asia bivouac with their staffs. They shop, oblivious to the displaced
masses with day jobs. The average masters of the universe in London, unlike those
in the United States, can enjoy residency without being taxed on global income.
Large numbers of luxury properties sit empty most of the time, palatial slivers
of big portfolios. If Vladimir V. Putin is serious about defending Russian speakers
wherever they are, he may have to annex the Royal Borough of Kensington and
Chelsea, where Russian is a lingua franca on the King’s Road.
None of this will be unfamiliar to New Yorkers. The other great global city —
like London a magnet to strivers of every kind and home to every kind of bad
English — has its own bubble. It sucks in money from across the globe, even
without those tax advantages. Real estate prices soar. Ordinary people are pushed
out. As in London, far-flung districts rise. Bushwick has arrived; East New York
looms. New York is a world apart, even if its relative weight in the national
economy is much smaller than that of the British capital.
What draws the world to London and New York is opportunity. That’s fine, of
course. But they are also magnets to people looking for a safe place for their
money. Having made it big in autocratic countries with parlous legal systems (if
that), a cowed press and rampant corruption — say, Russia and China — oligarchs
and crony capitalists wake up one day and find that, gosh, they like nothing as
much as democratic systems under the rule of law held accountable by an
independent press. Having trashed the West, they trust the West with their
money.
This then is the way the world works: Autocratic hypercapitalism without
Western checks and balances produces new elites whose dream is an American or
British lifestyle and education for their children, and whose other goal, knowing
how their own capricious systems really function, is to buy into the rule of law by
acquiring real estate, driving up prices in prime markets to the point where the
middle classes of those countries, with incomes often stagnant or falling, are
pushed aside.
This process is mirrored at the national level, where the bargain is that
American debt is bought by Asian governments, notably the Chinese, and Asians
make money through access to credit-fueled American markets and consumers.
Asians lend America money to police the world: Their new wealth depends on
American-underwritten stability. They know it. Surface conflict often masks
inextricable connectedness.
London and New York, with roughly the same populations, have become
booming city-states that reflect 21st-century openness and fluidity, but also the
skewed economics and growing inequalities of a world where finance has
outflanked the law and the global rich find ways to game a system that holds the
majority in its grip.
In London during these boom times, the disparities can feel obscene. Still,
London does the public sphere, like bike schemes, road surfaces and the subway,
much better than New York. It is a European city, after all. But it sits in a middling
nation well past its zenith. New York does power, directness and steak a lot better
than London. It races and churns. London carries on.
Take your pick. In the end it’s personal. Waiting for a table the other day in a
New York restaurant, I was asked for my name. As I spelled it out, the maître
d’hôtel interrupted me: “Of course, of the priestly class,†he said, referring to the
name Cohen given to the high priests of ancient Israel.
That would not happen in London.
You can follow Roger Cohen on Twitter at twitter.com/nytimescohen.
A version of this op-ed appears in print on August 16, 2014, on page A19 of the New York edition with the
