The two economies

If you’re reading this, you probably don’t know about LA’s Other Economy. How do I know? Because you can read English, and the Other Economy is not, for the most part, English-speaking.

What is the Other Economy? It:

  • Comprises mainly immigrants and their American-born children
  • Is conducted in Spanish, Chinese, Tagalog, Khmer, and other languages
  • Is transacted in cash
  • Is offline
  • Has prices that are anywhere from 20-50% lower than those in the mainstream economy

Picture a food truck. If what comes to mind is a new vehicle with cool graphics staffed by hipsters with ironic facial hair, you’re a mainstream economy kind of person. The Other Economy foodtrucks are the original ones: usually a bit more beat-up, with hand-lettered signs, staffed by Latin people (often families), and charging much, much less (even though the food is often much, much better).

Car window broken? You can go to your dealership and pax X. Or you can go up towards Chinatown to the strip of places that specialize in just fixing windows, negotiate in Spanish, transact in cash, and get it done for probably 33% of X.

Need an apartment? All over LA, there are neighborhoods where no apartments get rented on Craigslist. Instead, when there’s a vacancy, the resident manager, who often speaks no English, puts out a sign in his/her native language advertising the vacancy. Unsurprisingly, the rents achieved this tend to be way, way less than what you would probably consider to be market.

One way to think about gentrification is as a process that moves physical assets (apartment buildings) from the Other Economy, where they generate lower returns, to the mainstream economy, where they generate higher returns. The negative side-effect of this process is that the Other Economy shrinks, making life more difficult to the people who live and work in it.