Notes from the Underground Economy

Floating City: A Rogue Sociologist Lost and Found in New York’s Underground Economy is a new book by Sudhir Venkatesh that explores the struggles and aspirations of disparate New Yorkers and shows how the city’s underground economy connects its inhabitants from all walks of life. In the book, Venkatesh introduces us to a range of characters: Shine, a crack dealer breaking into the high end cocaine market centered around the art galleries, bars, and clubs of the rich; Manjun, a porn store clerk who allows prostitutes to rent his back room; and Venkatesh’s friend, Analise—the beautiful daughter of a wealthy family—who confesses to him that she manages a group of high-end prostitutes that cater to the rich.

In his previous work, Gang Leader For a Day: A Rogue Sociologist Takes to the Streets, which chronicles the lives of drug dealers in Chicago, Venkatesh found that people took pride in staying within their own communities. That’s not the case for the characters in Floating City—as the title of the book suggests,  Venkatesh sees people “float” between the different neighborhoods and social spheres in New York. The surprising threads that connect the rich and the poor intertwine before Venkatesh’s eyes when Shine connects with Analise at an art gallery. Venkatesh experiences first-hand how illicit activity can link separate worlds in confusing and unexpected ways.

Venkatesh has spent his career trying to understand this underground economy. The Prospect spoke to him about his newest book, the surprising things learned over the course of his time observing the rich and the poor in New York, and how his work relates to public policy and government spending.

What was your main question in studying the underground economy in New York, and what did you find?

I was interested in a particular question that started to arise about global cities like New York, Paris, or London in the late 1990s. There was this notion that these kinds of cities fostered connections across social boundaries. The ways that people established that fact was that they “looked at the skyscrapers,” as they like to say. They looked at elite, artistic communities. They looked at Wall Street or real-estate financial transactions to see money flowing across nations and across social groups.

I said, “I wonder if you can find these types of border crossings in the underground economy, in the alleyways?” That’s not a question people normally would ask in Chicago because Chicagoans have great pride in staying in their neighborhoods so to speak, staying in their station in life. In New York people are crossing all over the place, so I wondered if I could figure this out by looking down instead of up.

What I found in New York was an American story of mobility, of a dream of making it in the city, but that wasn’t necessarily only a Donald Trump story. That was the story of a madam, that was a story of a crack dealer turned cocaine dealer, that was the story of immigrants, that was the story of people making independent films. I wanted to tell the story of people doing things on the margins in a way that you might tell a story of people doing things on the higher echelons. And that is in the form of an epic.

How do their stories affect how you think about public policy in our current climate of decreasing federal spending?

I like to call what I like to study the “other innovation economy.” Yes, it is underground; yes, it is criminal, etc. There are examples now where informal underground economics are starting to show more creative spirit than just a criminal motivation. That requires that we realize policy. By that I mean we are well past the day when we are going to have a really strong safety net for most people. I really don’t think we are going back to a liberal democratic regime in which government is going to be the key provider of social resources. If that is the case, then we are going to have to figure out how to use our civic resources to support people’s communitarian and individual pursuits. We aren’t really asking that question, we are just battling how much crumbs we are going to let spill down to the lower economic realm, and I think that is a waste of our energy.

I would estimate, having studied the food-stamp economy, that roughly 40 cents of every food-stamp dollar is sold by a food stamp recipient for a non-food-stamp-related item. And what that means is that people need a version of block grants. People need to have flexibility because they are exchanging their food stamps. I mean it is absolutely useful and necessary for food, I am not trying to come off as some sort of libertarian, but what people do with government resources is they turn it into currency. We can either criminalize them, or say, “You know what? People might have a better understanding of what their needs are and if we can give them flexibility we might go in a much better direction in terms of supporting their household needs.”  Not everyone is a welfare queen driving a Cadillac. Let’s at least have a dignified approach that treats low-income people as intelligent, and capable of making smart decisions.

What were some of the surprising realizations that you have found about those who participate in the underground economy through your research?

I found that the very rich and the very poor have a similarity that I think we need to pay attention to. Both of them have marginal attachments to the labor market. The poor often can’t find work, and the rich don’t want to work or don’t need to work.

In New York, the funny thing I found was that kind of aspiration, to make it, is an aspiration that exists at both ends of the spectrum. I thought that when I hung around the wealthy they were largely not going to complain about much in life. They have anxieties and hang ups just like anybody else. One of the hang ups is that it is very difficult for someone young and wealthy to be taken seriously. What can you do if you are wealthy, have 50 million dollars in the bank, and people largely look at you as the son of the boss or the daughter of the boss?

One thing that some people say is, “I am going to do something with the highest risk possible which is in the underground economy: I am going to run a brothel, I am going to make these films illegally, I am going to engage in financial trading when I am not supposed to.” It gives them a certain thrill, but it also gives them a sense that they are doing things on their own accord. It’s a sense that whatever they are doing, no one is helping them or facilitating their success or failure.

This conversation has been edited for clarity.

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