Interesting paper by He-Who-Was-MaxSpeak, EconoSpeak, alas in Word. An excerpt:

By the late 1960s, as manufacturing jobs were disappearing in New York, the city began what came to be known as planned shrinkage--a cynical program designed to eliminate many working class people from the city. [New York City Housing Commissioner] Roger Starr later attempted to justify his program in the New York Times Magazine. The paper, which would make him a member of its editorial board within two months, naturally offered him a sympathetic outlet. Starr titled his piece, "Shrinkage Is Inevitable." Even in his plea for understanding, Starr was hardly apologetic:

Planned shrinkage is the recognition that the golden door to full participation in American life and the American economy is no longer to be found in New York .... The role of the city planner is not to originate the trend of abandonment but to observe and use it so that public investment will be courted for those areas where it will sustain life. [Starr 1976]

Starr's statement was not entirely consistent with the facts. First of all, the city was actively promoting abandonment by intentionally diminishing public investment in order to promote shrinkage. Finally, investment was expected to come later, but only after the city's policy had driven people from their neighborhoods.

A little context will help. As finance was replacing manufacturing, clearing for people from large tracts of land represented a potential boom for real estate interests. The RAND Corporation developed one of the most effective techniques for achieving this objective. By impeding the fire department from reaching targeted neighborhoods, communities would rapidly deteriorate. Property values were expected to fall, while the accumulation of burnt out buildings and abandoned housing create a dangerous environment in which more people would voluntarily flee, eventually giving the city an excuse to clear out entire area.

The plan worked as expected. Knowledge about many of the details of this strategy only recently became accessible in a horrifying book appropriately titled, Plague on Your Houses: How New York Was Burned Down and National Public Health Crumbled (Wallace and Wallace 1998).

In a sense, the New York program was even worse than the earlier wave of primitive accumulation. I know of only one case when someone was intentionally burned to clear the property in the early stage--probably because those in power regarded the potential labor of the workers as important. In the New York case, the people were presumed to be entirely disposable.

It's interesting to think of the condo-ization and Disney-fiction of Manhattan being the flip side of the mortgage meltdown. Remember all those not-rich folks who bought houses in Pennsylvania and commuted to New York*, and then started losing their homes when the mortgage debacle first started?

If "we" hadn't gone nuts for suburbia, where all the styrofoam McMansions got built, packaged into "investment vehicles," and flipped, we wouldn't have been plagued by the housing bubble, our addiction to oil would be a lot less, and our cities would be a lot safer, because there would be more working neighborhoods in them.

But that would have stood in the way of a great deal of "primitive accumulation," wouldn't it? Can't have that!

Why is it, when the economy teeters on the brink of collapse, that we don't hear any talk of "claw back" from the people who made a whole lot of money pushing us to the brink? Just asking.

NOTE * Can't find the cite; it was in the Times like, three years ago.

UPDATE See this interesting straw-in-the-wind by Big Media Matt:

My understanding of the data is that central city areas have been weathering the shitpile's collapse much better than have the fringes (basically, when prices fall, the demand pattern collapses inward toward the center and its people who owned in the rim who are really left holding the bag)

Much as I'm out of sympathy with the entire suburban model, the people who are responsible for, and profited from, the Big Shitpile, should have all their profits clawed back. Give the money to people who lost their homes because they got suckered by hucksters.