It’s easy to talk about lost Golden Ages in Berlin. Everyone has their own romanticized era: louche Weimar Berlin before the Nazis, Iggy and Bowie’s seventies Berlin before the Wall fell, or maybe the squatter’s Berlin of the good old nineties. So when people start complaining that something has changed in the city, it’s tempting to dismiss it as insider one-upmanship, the old game of “I was here when.” And yet something has felt different in recent years.

Berlin has always hosted poverty better than other European capitals, but this time around, Berlin has embraced an economic model that makes poverty pay. The idea is to cash in on Berlin’s cachet by branding it as a “Creative City”—but it is also, to judge by what has happened, to gut public services, to sell off public housing, and to strategize about new ways of turning taste into profit. This new Berlin is a city where imaginative expression supports, directly or indirectly, a grand scheme for making a small number of people rich. One of these days, some lucky Berliners and expats will finally attract venture capital from London, Palo Alto, and Boston. But the others—the scenic poor and the clever unemployeds who make the city so attractive—will find it ever more difficult to make ends meet.

There is nothing novel about this story. Berlin’s dream is the same fantasy that is embraced by out-of-the-way metro areas all across the United States. But the stakes in Berlin are higher than in most places. For one thing, when our story begins, Berlin was broker than almost any other Western European city, living on the life support of government transfers. In 2005, unemployment peaked at a Depressionesque 19 percent, and the city’s debt had doubled. In the mid-aughts, Berlin was not bailing out Athens. Berlin was Athens.

It was here, in this economically stagnant metropolis, that mayor Klaus Wowereit, affectionately known as “Wowi,” stood at City Hall and laid out a ten-year plan for the city. He began by denouncing striking transit workers for “attempting to cripple public life,” but went on to dream big for the city he called “poor but sexy.” He imagined a future when a hipper working class would thrive unburdened by unions: “I imagine one thousand women and men of all ages gathering for a World Congress of Creatives. The designers who live here will deliver their ideas to the world’s biggest corporations,” and “Berlin will be the mecca for the creative class.” A theme song for the city’s new ten-million-euro marketing campaign was available for download: an eight-second ringtone designed by a techno DJ with a vaguely Turkish trill and an echoing call to “be Berlin, be Berlin, be Berlin.”

Less than a mile away, one of the city’s most recognizable icons was being demolished. The enormous steel-and-glass Palace of the Republic, built by East Germany in the mid-seventies, had been a uniquely socialist megaplex, containing the hall of the national legislature alongside a theater, a bowling alley, and an ice cream parlor. The city rejected various appeals to restore and reuse the building, and the last concrete columns fell at the end of 2008. As demolition concluded, a blue-and-white cube arose facing the empty site—a “Temporary Art Hall” that hosted installations made of old doors and detritus, talks by art critics, and, on one occasion, a performance by a Canadian expat band who shredded on guitars while cutting their way out of a giant plastic bag filled with smoke. The financial supporters of the Temporary Art Hall were more staid than one would expect from such daring interventions: a textile manufacturer, an advertising agency, a pharmaceutical company, and an American law firm. The latter, which claimed to be “positioned at strategic intersections in the global economy,” had evidently determined that a gathering place for artists, hipsters, and expats was such an intersection. Here was the New Berlin: a city where a faintly daring cube built by companies replaced a palace for the people built by government.

The spectacle must have made Wowi proud. Since the number of people employed in “creative” pursuits like design, music, media, and fashion had finally surpassed those in manufacturing in 2005, he had gone all in on a strategy of catalyzing growth and investment with art exhibits and noise bands. Berlin became part of the UNESCO “Creative Cities Network” the same year, making it officially one of the world’s “breeding grounds for creative clusters” where people “create synergies that optimize their potential.” Meanwhile, double-digit unemployment and cheap real estate made Berlin both an employers’ and a buyers’ market. But the question remained: How could the city remain “poor but sexy” if Wowi’s intention was to become rich?

The Red Mohawks of the New Working Class

Enter the hipster. In the aughts, Berlin’s package deal of pilsner, falafel, Airbnb, and bleary nights at the famed Berghain (described by one in-flight magazine as “the best club in the world”) was a big success. The number of nights that tourists spent in the city doubled between 2003 and 2011—from eleven to twenty-two million. Beginning around the contested Bush victory of 2000, and accelerating after the recession of 2008, the face of the typical visitor to Berlin changed: from German to non-German, from the oversize sweaters of the academics to the zigzag haircuts and fluorescent sweatshirts of the artists or, at least, the arty. As rents peaked in Brooklyn, San Francisco, Vancouver, Melbourne, Copenhagen, and London, Berlin beckoned. Streams of young people with postsecondary degrees in literature, art, and theory arrived in the city seeking rooms in shared apartments. Craigslist became a clearinghouse for stolen cruiser bikes and homogeneous Ikea-furnished rooms where savvy landlords added one hundred euros to their usual asking price and promised proximity to the “current hipster district Berlin-Neukölln, with lots of bars, galleries, international artists.”

Welcome, creative class, the ads implied; we value your clicking, swiping, and staring.

The feedback loop began as people from distant scenes were sold on the city by its similarity to the places they had left. Tattoos, formerly the exclusive province of the white German working class, began to appear at the sidewalk tables of the cafés; shorts began to appear on men. By 2010, Californians were serving eight-euro huevos rancheros to Parisians wearing Aztec-printed pants, while Danes dressed in shapeless black sacks sipped lychee Bionade. Spaniards cooked enormous paellas at the streetside markets, and enterprising Brits did vintage arbitrage, buying eighties silk jumpers in the flea markets of the Turkish and Arab neighborhoods in the south, then selling them at a premium in the hipster and tourist neighborhoods in the north. Last November, the New York Times Magazine published an account of an Australian in Berlin who had to leave because he was just having too much fun to get anything done.

Those who did stay had to find work, and some expats found jobs as art installers in the galleries in Mitte, while others created their own jobs as freelance cupcake bakers, yoga instructors, bicycle mechanics, show promoters, and iPod DJs. Many subsisted on one-euro trays of salami and Brötchen, and all felt grateful that German groceries were so cheap. On certain streets, it became increasingly rare to hear the local language. People searched for English-speaking doctors and tips on dealing with immigration on the expat website Toytown Germany, a name that captured the liberating atmosphere of eternal youth and play. Many thought they had found a bohemian paradise.

Mayor Wowi returned to the wellspring of hip in his 2011 reelection bid. A billboard campaign across the city featured his new Berliners in their natural state of interface with liquid crystal displays. One featured a young father in a cowboy shirt checking his text messages while holding his skull-and-crossbones-clad baby in a light clutch. Another showed two women, one in Sally Jessy Raphael glasses, leaning toward a screen, rasterizing intently. A third was of Wowi himself, photographed through the lens of a smartphone. You, the viewer, were taking the picture, capturing the celebrity mayor. Welcome, creative class, the ads implied; we value your clicking, swiping, and staring.

And it wasn’t just Wowi anymore: now the entire Social Democratic Party (SPD) had decided to bet its fortunes on the new, wired working class. The symbol of the change was the party’s Internet guru, Sascha Lobo, known for his fuchsia Mohawk, his Fu Manchu mustache, and the wireless headset he frequently wears in photographs. In his 2006 book, We Call it Work, Lobo had celebrated what he called the “digital Bohème” and described himself as “online for most of my waking life.” In the course of the 2009 campaign, Lobo appeared on stage at numerous public events for the SPD, the red of their logo (a nod to their origins as a Marxist working-class party) coordinating perfectly with his Mohawk. At the same time, Lobo was the face of commercials for Vodafone that featured house music, time-lapse footage of Berlin streets, and clips of Lobo texting and photographing himself on a city bus. The ads provided the spiritual template for Wowi’s 2011 advertising campaign. The digital bohemian had arrived; he was the new constituency for the old SPD.

But who would stay poor and who would cash in on sexy in this brave new Berlin? The New York Times reported in 2010 on the “wave of international creative types” populating the Kreuzberg-Neukölln neighborhoods with “cafes, wine bars, the odd organic grocery and . . . an unusually hip monthly flea market.” Two years later, another Times scribe rhapsodized (this time in the Real Estate section) about the rise in property values that had resulted, quoting both a property broker on the “dance and yoga studios” springing up in the inner courtyards of formerly working-class neighborhoods and an Austrian transplant who holds “art lectures and concerts” in her apartment saying “confidently” that the value of her apartment had doubled in five years. The article also described the anti-gentrification protests of June 2010 as “light-hearted”; activists, even those who got arrested, were presumably just part of the “cosmopolitan crowd” “enlivening” the area.

In fact, the grievances of the protesters were not purely aesthetic. The share of Berliners on some form of social assistance had come close to 20 percent by the time the Times article appeared last year; Wowi’s policies were undeniably pro-sexy—Fashion Week was given prime locations, and even permitted to erect a tent on top of a memorial to the Nazi book burnings—but they were hardly pro-poor. Der Spiegel reported that, as tourism boomed, the mayor sold off 110,000 units of city-owned housing and ended subsidies for 28,000 units more. Rents in subsidized buildings rose more than 20 percent. Housing costs also rose 20 percent in the same period, considerably more than did the overall cost of living. The contradictions were especially stark in the neighborhoods where tourists and hipsters were thickest on the ground. In Friedrichshain-Kreuzberg, where the city’s website promised “urban buzz, vibrancy and diversity at every turn,” both unemployment and rent were above the city average, with joblessness at 16 percent and rents in many parts running as high as 50 percent above the city mean. Neukölln, with a city-high unemployment rate of nearly one in five, nevertheless experienced a jump of 17 percent in rent in certain places in just a couple of years. It was a good time to be a landlord in Berlin. Workers? Not so great.

As the gap between wages and rents expanded, artists and expats became the scapegoats. Last summer, “Berlin doesn’t love you” stickers were plastered in English everywhere, and reports of expats barred entry to bars and galleries multiplied. The owners of one bar received international exposure when they denounced their own clientele in a home-edited web video as “all these fucking students, artists, layabouts, the complete mob called ‘creative class.’” Other signs appeared. On the door of a gallery scrawled in felt-tip marker: “No entry for hipsters from the U.S.” and “Other people imitating American hipsters are also not welcome. The capacity of Spanish hipsters and tourists is almost overdosed.” The term EU-Ausländer appeared with increasing frequency, especially as Spaniards and Greeks took refuge from the economic abyss of their own home countries and the tabloids demanded “no German money for Athens.” In 2012, Zitty magazine put a man in a purple plaid shirt, chunky spectacles, and a mustache on its cover and declared the Neukölln hipster the city’s “favorite hate object.”

Tensions spilled over into violence in an area that had resisted gentrification when three new chic eateries, including a cocktail bar, opened simultaneously on a street otherwise populated by a taxi-driving school, a Thai massage parlor, and a slot machine casino. One morning, shortly after the grand opening last summer, customers found the windows smashed and red paint splashed onto the sidewalk. The bar received the brunt of the attack and looked like the end of an art performance, both edgy and creepy in the violence of dripping red paint on the building’s cream exterior. An anonymous letter was posted on Indymedia claiming responsibility:

A scenester yuppie cocktail bar for rich West German students is going to open where a corner bakery sold fresh rolls to neighborhood residents a few months ago. We’re not interested in neighborhood upgrading schemes like these. The residents will have to follow the bakers soon when they can’t afford their apartments anymore, and the cocktail bar will bring hipsters too! The rents will rise sky-high and we won’t be able to afford anything that’s left.

Still, the hipster proliferation persisted, and it climaxed with last year’s “Berlin Hipster Olympics.” Over six thousand people cheered each other on in skinny jeans tugs-of-war, vinyl record spinning competitions, and tote-bag-hopping races. Most news publications took easy jabs at the self-consciously ironic nature of the Olympics, posting mocking photos of skinny young men and women wearing horn-rimmed glasses while tossing horn-rimmed glasses into the air. But few publications asked what the commingling of six-thousand-plus members of the loosely defined creative class meant for Berlin. Had Wowi’s vision been fulfilled? Was this a dress rehearsal for the 2019 World Congress?

The Toilet King’s Yummies

While the papers took potshots at the anti-athleticism of Berlin’s hipsters, it was an advertising agency, Wall Inc., that provided the sharpest analysis of what was happening. The company was a long-standing presence in Berlin, having established its foothold in 1984 after it won a contract to build and maintain a thousand bus shelters in exchange for the right to sell advertising on the shelters’ walls. The year after the fall of the (other) wall, Wall Inc. built eight hundred more bus shelters in the East and brought the West’s ads to the once-Communist streets. Then, in the nineties, Wall Inc. took over the provision of public toilets for the city, securing the rights to eleven advertising surfaces for every toilet they built and maintained for twenty-five years. While the old toilets had been free, these new ones cost fifty pfennig. So, for every service the company sold—services that the city used to offer for free—Wall also received a concession of public space, an exchange that has led to a virtual monopoly on outdoor advertising and an informal title, the “Toilet King,” for company owner Hans Wall. Playing on the German word for toilet (Klo), Wall has referred slyly to his model as Klo-balization, an apt term for his alchemy of public good into ad-revenue-producing private service.

How could the city remain “poor but sexy” if Wowi’s intention was to become rich?”

Last November, the Toilet Kings rolled out a campaign proudly naming the company’s “new target demographic”: the Yummie. This personage was <emYoung, was Urban, and was Mobile, and the company limned her glory with a composite character it called “Jessica,” a thirty-four-year-old woman with an English name, tousled blond hair, and red lipstick who lives in Berlin. Jessica looked the part of shabby chic, and had the retro blue sunglasses to prove it, but her occupation as a “real estate broker” demonstrated her professional savvy. On the company’s website, “Jessica” told the world how she liked to go out with friends, and “when we do, it’s especially important that we experience something cool!” Jessica’s hunger for the Cool and her casual hipness suggest the real appeal of the Yummie: they are the tastemakers, the consumer connoisseurs who discover and establish what the next trend will be.

This was the Berlin hipster, brutally reduced to her commercial essence. Click on “Was ist ein Yummie?” and you find that

Yummies like to consume. The target group tends to spend more than planned and to make spontaneous purchases. They are curious and open to inspiration. They are always up to date, follow trends and become trendsetters themselves. They never miss anything, thanks to their digital companion, the smartphone.

But how was an advertiser supposed to access a target demo that avoids the usual conduits of print, television, and radio advertising? Wall tried one strategy by offering free wireless access in twenty of its Berlin bus shelters along with outdoor outlets for charging electronic devices. Of course, it wasn’t really free: people had to download Wall Inc.’s app in order to access the internet, and forty thousand of them did, capturing the eyes of Yummies as they moved through the city. The longer-term solution that Wall unveiled late last year was the “Yummie Net”: a network of “points of interest” across the city that positions ads where Wall’s research showed that Yummies “gather spontaneously.” Ads are to be installed on Wall’s “street furniture”—bus shelters, benches, and so on—near cinemas, bars, cafés, and museums. While Yummies drink beer and smoke hand-rolled cigarettes at the folding wooden tables that ring every bar and café in Berlin, the Yummie Net will close in, stalking its tasty prey.

This is because the new, creative Berlin is also a privatized Berlin, where companies like Wall Inc. provide the necessary infrastructure in exchange for a chance to win the euros and brand loyalty of the Yummies. The Yummie Net also circles a fact even more unsettling: the public places where Berliners hang out are not really spaces for leisure or culture, but lucrative targets on a map. The sense of liberation that draws so many to Berlin only comes in the shadow of a new Wall.

Monetizing Toytown

That sense of liberation must be made to pay, must shed its traces of political activism. Toytown must be monetized.

Consider the city’s tech sector. A writer for Forbes reported in January 2013 on the “thriving start-up scene” in Berlin and compared the town’s tech innovations to—of course—the collapse of Communism: “Last time I was in Berlin [in 1989], there was a revolution going on. Now another has started, only this time it has nothing to do with politics.”

This was the kind of creativity that Wowi liked. In January, he paid a visit to the neighborhood that labels itself “Silicon Allee,” making his final stop at its most recent success story: Wooga, a company whose nearly three hundred employees are spread across two floors of a former bread factory in Prenzlauer Berg. The outfit develops video games for social networks, and is the largest such concern in Europe; over one hundred million people have played its hit game, “Diamond Dash,” and millions more have played Wooga’s other offerings, like the one where you can “build the kingdom of your dreams with your friends in Magic Land.” By creating worlds of perpetual play, Wooga attracted $32 million in venture capital by the end of 2012.

It wasn’t the hipsters who sacked Berlin; it was the man with the smartphone smile.

Wowi’s “poor but sexy” message has certainly found traction in Silicon Allee. For example, Wooga’s recruitment page invites you to come and work in “the coolest city in Europe,” a kingdom of your dreams where you can attend “parties held deep underground in bunkers, old breweries, and abandoned factories” and savor an atmosphere “like New York was in the 1980s.” Twitter announced they would establish their German headquarters in this coolest of cities, stating they were attracted to its “edge,” and Google has committed more than one million euros to an industrial complex close to the Berlin Wall Memorial. The name of the building—“the Factory”—takes a run at the legacy of Warhol while also cleverly acknowledging the city’s transition from the shop floor to the screen.

So maybe this time the Golden Age really has ended. Back when Berliners hung swings in window frames, painted houses in neon colors, and planted gardens on their rooftops, none of it was supposed to pay off. In the officially Creative city, though, everything is different. The town’s whimsy and play have been branded by the SPD, sold to venture capital, and dangled before its residents via the Yummie Net. As Wowi left Wooga’s loft office in the Berlin winter, he wore a scarf with a quote from French New Wave actress Jeanne Moreau knit into it: “The most beautiful memories are those yet to come.” The quote was fitting for someone who has presided over a period when so many old memories were erased. The monuments of East Germany have been demolished. Social services have been sold off, and with them have gone the memory of the city as a place of shared public goods. With the departure of manufacturing, the memory of the city as a place of manual labor is history too. The Creative reforms have worked to enrich a few, including a smattering of new arrivals, but they have done little for the rest of the city’s inhabitants. To this day, every fifth Berliner lives under the poverty line, and the number grows every year. Those looking to blame someone for what has happened—for a development scheme in which the most expensive places to live also have the highest unemployment, and in which the city known as the “capital of poverty” within Germany is sold for its gritty charm abroad—should forget about the expats and hipsters, no matter what easy targets they make. It wasn’t the hipsters who sacked Berlin; it was the man with the smartphone smile.