How New York’s Underground Economy Grew Under Bloomberg

Squeegee men and street prostitution may be on the wane, but sociologist Sudhir Venkatesh, author of Floating City, says another type of black market is surging in New York.

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At some point, Columbia professor Sudhir Venkatesh got branded a “rogue sociologist,” which sounds a little like “rebel accountant” or “outlaw librarian” — the start of an unfunny joke. But as it turns out, the sobriquet is pretty apt. Venkatesh made his name in 2008 with a book called Gang Leader for a Day, a visceral account of the time he spent embedded with drug gangs in Chicago.

A November 2012 New York Times profile highlighted not only Venkatesh’s unorthodox approach to his discipline, but also an investigation into how he spent thousands of dollars in research money. The “rogue” brand may rattle some of his peers, who see sociology’s unsexiness as key to its credibility. But Venkatesh’s style brings something to the profession that arcane questionnaires and spreadsheets can’t: accessibility.

His new book, Floating City: A Rogue Sociologist Lost and Found in New York’s Underground Economy, documents the professor’s attempt to infiltrate the seedy underbelly of an ever-less-seedy New York. While Venkatesh does his due diligence to ensure that his study would survive a peer review, the reader gets to tag along on his wild nights hanging out with the cast of characters he comes across. Through his adventures, we learn about the bylaws and hierarchies that dictate life in the city’s informal realm, a world where prostitutes, drug dealers, porn store clerks and high-end madams live by their own sets of rules. We ultimately discover that their needs and desires aren’t all that different from ours.

We spoke to Venkatesh about the churning market that keeps New York running from the bottom up.

Next City: Your book is basically a chronicle of New York’s underground economy during the Bloomberg years. I think a lot of people assume that the underground economy would have suffered as the city has been spiffed up, but it’s not that cut and dry.

Sudhir Venkatesh: There are three streams of [underground] activity in New York that we might want to differentiate from one another, because I think each was affected in a different way. The first is the sale and distribution of illicit goods and services: Drugs, sex, gambling, etc. A lot of this was pushed indoors, and a lot of it was made more efficient by the availability of information technology so people didn’t have to expose themselves on a street corner buying drugs, taking bets. They could just order it via text. So for some of the classic underground economies, the ones that are often called “criminal,” they became more efficient and more hidden, but they grew.

There’s a whole other stream of informal activity that’s basically unreported income: Nannies, personal trainers, personal chefs, gypsy cab drivers — all the support staff that helps predominantly white, upper-class people take advantage of New York. To say that this grew would be an understatement. It burgeoned out of control.

And there’s a third side that’s coming up. I don’t know if Bloomberg intended to make this happen, but it certainly speaks to the entrepreneurial zeitgeist. It’s what I call the Other Innovation economy. Things like Airbnb, car sharing, the kind of support and sharing you see at farmer’s markets, barter and trading. Things that are driven by mainstream commerce, but they don’t have the same kind of regulation, and much of the money may not end up in the tax coffers. They’re not doing anything to jeopardize society, but it’s still almost like a Wild West spirit.

NC: It’s true that many of the “wonders” of the Bloomberg years have only been made possible by the informal, underground economy that exists to support them, yet most people who pay nannies and gypsy cabs under the table wouldn’t consider themselves to be participating in the underground economy at all. Why don’t they?

Venkatesh: I think the easy answer is that we as human beings are very good at looking at the world in a way that doesn’t implicate ourselves. It’s always the neighbor down the block that’s the problem. I think there’s another issue, though, that’s deeply American. On the one hand, we love the outlaw, whether it’s policing, business — we love the person who is breaking rules and innovating. On the other hand, we’re nervous when that ingenuity leads people to break away from the pack. Alexis de Tocqueville talked about this. We really embrace the guardian angels: Community policing, block clubs that confront thugs — those are examples of self-help, bootstrap thinking. Taking care of one’s self. But we don’t like it when people take the law into their own hands. So we want to be creative and innovative, but we don’t want people who play unfairly. That’s a fine line.

NC: Speaking of the law, one of the people in your book is a cop named Officer Mike who’s basically surrounded by this underground activity, yet he doesn’t really try to stop it, even though it’s illegal. It’s almost as if the cops understand that this economy helps the city run, and they’re not going to shut it down, which is different than how we normally think of the NYPD these days, as a sort of ruthless tactical strike force.

Venkatesh: I want to answer that question carefully. In my opinion I don’t think police are allowing crime to occur. I think the job of policing in a metro area is essentially triage, and you have to understand there are things you’re going to prevent and there are things you’re going to respond to. It’s very difficult for police to prevent prostitution. They’ll allow it to occur only because they need to focus on things that have a greater toll, like gun violence. So you’ll see a good cop using a prostitute as a confidential informant to trade on information about something more serious. If we don’t have a good ecological view of the underground economy, we’re going to see that cop as negligent, but I think that’s mistaking the challenge of being a police officer.

NC: New York is about to have a new mayor. Let’s say it’s Bill de Blasio. Do you think New York’s current trajectory on these issues will change under him?

Venkatesh: I think the two are really unrelated: The political regime you have in the city, and the waxing and waning of underground activity. I do think what a mayor can do is affect the rate at which the underground economy is criminalized. [Former Mayor Rudy] Giuliani changed a long-standing practice by going after quality-of-life misdemeanors — squeegee men, prostitutes on the street, drug peddlers — and changed the ability of people to walk around and feel safe. But I don’t think he by any means reduced the size of the underground economy. I don’t know what de Blasio’s vision of public safety is. If he wants to keep criminalizing people on the street, that just shifts the costs elsewhere.

NC: In your book, you really focus on the underground economy’s class divide. You have people like Analise, a young white woman who uses the Internet to run a high-end escort service out of her Gramercy Park apartment, and you have people like Angela, an aging hispanic prostitute, and Shine, a black drug dealer, who are struggling to make it. Is it possible to make a killing in the underground economy if you’re an Angela or a Shine, or will those people always just be surviving?

Venkatesh: There are two types of limits in the underground economy. The first is social limits. To be crass, typically you find that when white young middle-class people are developing fancy Internet schemes like Airbnb, we call it innovation. The creative economy. When blacks are doing it in the low-income ghettos of New York, we call it criminal. I’m using hyperbole to show that race is still important.

The second limit is just as important but we don’t really recognize it. The same limit that affects CEOs affects the underground entrepreneur: The best CEOs, and the best madams and drug kingpins, know how to take the long-term view, and in the underground economy sometimes that means succeeding, disappearing and coming back at a later date.

NC: It also strikes me that people’s fetishization of the “bad old New York,” the pre-Giuliani years, is essentially a yearning for a time when the underground economy was more visible. Why do we like that idea?

Venkatesh: As much as Giuliani and Bloomberg have tried to clean up the city, I don’t think they’ll ever get rid of the fundamental motivation that draws many of us to the city, which is a place to realize basic emotional desires and fantasies. In New York you’re not just making money, you’re on top of the world. You’re not just getting by, you’re aspiring. And this affects people in the underground economy, too.

I think that’s great. It’s terrific that the city remains a place of fantasy, a place for us to express ourselves creatively. Sometimes that leads to exploitation and inequality. That’s the price we pay. There’s a really strong element of risk that we want there, when we walk out the door, the idea that something interesting could happen: A person we hadn’t met before, an experience we couldn’t have predicted. We want to play dice when we live in the city, and that’s a very healthy attitude.

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Will Doig was formerly Next City’s international editor. He's worked as a columnist at Salon, an editor at The Daily Beast, a lecturer at the New School, and a communications staffer at the Open Society Foundations. He is the author of High-Speed Empire: Chinese Expansion and the Future of Southeast Asia, published by Columbia Global Reports.

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Tags: informal cityinformal economymichael bloombergwater

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