Twenty-five years ago, a mayor of Chicago was defeated for renomination because of an insult rendered by his public transit system. The city was digging out from a blizzard, and there weren't enough trains to carry all the passengers who needed service. The few trains heading downtown filled up with middle-class white riders at the outlying stations, and by the time they reached the inner city, they didn't even bother to stop. Thousands of angry black and Hispanic residents were left stranded on the platforms. A few weeks later, the city's minority voters took their revenge on Mayor Michael Bilandic.

Nothing like that could happen today in Chicago. That's not because the current mayor is infallible, or because the system couldn't get overloaded in an emergency. It's because the demographics have changed. Minorities and the poor aren't clustered on the inside anymore. Nowadays, if service broke down and trains started skipping the inner-city stations, the angry passengers would be the affluent professionals who live in the lofts and townhouses on the outskirts of the Loop.

Everyone has heard of gentrification, and almost everyone has an opinion about it, but to call what is happening in Chicago gentrification is to miss the magnitude of it. Prosperous and well- educated people are not only returning to the center of town but almost encircling it, building enclaves of affluence that stretch miles in every direction but east, where no one has yet figured out a way to build condos in Lake Michigan.

This is not the sort of gentrification we talk about in Denver or Memphis, where a few thousand young people and empty-nesters move back downtown and add some life to the entertainment and restaurant scene. This is a different phenomenon altogether: an inversion of rich and poor that is gradually turning Chicago into something more like a 19th-century European city--a Paris or Vienna--with money and glamour on the inside and immigrants, minorities and working-class residents living on the periphery.

I'm struck by this every time I return to Chicago. I'd like to be able to document it, but Census figures don't tell us anything very definitive as yet. The 2000 Census reported that Chicago as a whole had shown a slight gain in population in the 1990s, after several decades of overall decline, due mostly to immigration from foreign countries; the most recent mid-decade reports suggest this momentum may have slowed down in the flat economy of the past few years. But none of the data captures the essential rearrangement of people and groups that is going on all over the city. To get a sense of that, it is necessary to ride around, open your eyes and look.

One Saturday morning a few weeks ago, I rode the CTA's Orange line to the corner of Roosevelt Road and Wabash Avenue, a mile or so south of the Loop. This is a part of the city with a lot of history. The near- South Side neighborhoods surrounding it formed the home base for several waves of immigrants in the 19th and early 20th centuries. Jews and Italians lived a short distance west of here; blacks, Mexicans and Chinese all had their own enclaves a few blocks to the south. By the 1950s, however, when I used to pass by on the train as a kid, the area around Roosevelt and Wabash was essentially a wasteland: empty warehouses and industrial buildings, a few decrepit hotels and lots of vacant land.

One of the hotels, the Roosevelt, still stands on the corner as it has for the past 114 years. Now, however, it has been reborn as a luxury apartment building, with an upscale fusion brunch restaurant and a Laughing Iguana boutique downstairs. Next door, a brand-new, much larger development is going up: State Place, a three-building high-rise complex whose motto is "Above It All" and whose literature describes it as "a community within a neighborhood."

One can find pockets of this sort of renewal throughout urban America these days--industrial districts reconfigured for the loft generation, with chic restaurants and places to drink espresso every hundred feet or so. What's different in Chicago is the sheer ubiquity of it. Every little pocket of land within a few miles of the Loop, no matter how unlikely its revival might have seemed, is getting swept up in the trend.

If you start in the Loop and travel a couple of miles west instead of south, you come upon an area once known simply as the "West Side," an area where the Chicago fire started, where the Cubs once played, where Jane Addams ran Hull House, and where my grandfather operated a tailor shop, which he proudly called the Vienna Cleaners and Dyers, naming it after the city he considered the exemplar of urban civilization.

Most of the buildings of the old West Side were demolished in the 1960s to make room for the Chicago campus of the University of Illinois, following a bitter dispute in which Mayor Richard J. Daley was accused of betraying the neighborhood and its residents to satisfy his own thirst for a mega-project. The corner that once housed the Vienna cleaners now is part of the university's science center.

UIC is, in fact, an ugly, sterile campus, a product of the concrete- slab mentality that dominated American public architecture in the decade when it was built. But alongside it, where tenements used to be, a new neighborhood has arisen: University Village, with town houses expensive enough that the school's junior faculty members usually can't afford to live there. If you walk just a couple of blocks west from Taylor and Halsted, where the Vienna Cleaners stood, you can order a filet mignon at Chez Joel for $23.95.

My grandfather never would have understood paying that much for a steak, but I think he would understand what is happening to the neighborhood in a larger sense. He would find it sensible that people with money like to live close to the center of things, as they did for hundreds of years and that people without money settle on the periphery, where it is less expensive.

In late-19th-century Vienna, there was no Loop, but there was a Ring, a circle of fashionable boulevards built to replace the medieval fortifications that had been torn down earlier in the century. The Ring was where opera was sung and plays performed, where rich merchants and minor noblemen lived in spacious apartments, and where gentlemen and ladies promenaded in the evening under the gaslights.

If you were part of the servant class, the odds were you lived far beyond the center, in the neighborhood called Ottakring, a concentration of more than 30,000 cramped one- and two-bedroom apartments, whose residents--largely immigrant Czechs, Slovaks and Slovenes, not native Viennese--endured a long horse-car ride to get to work in the heart of the city.

Twenty-first-century Chicago has nothing comparable to Ottakring, even in the worst parts of town, but if you ride some of the transit lines to the last stop, on the outskirts of the city or beyond, you see something interesting. This is where the newcomers are, the Asian and Hispanic immigrants who came to the city in the 1990s. At the far end of the Brown Line, in Albany Park, the street known for a century as Lawrence Avenue has been given the honorary name of Seoul Drive. At the short-order cafe a couple of blocks down the street, the last time I was there, newspapers in Arabic sat on tables next to the latest issue of the Blade. Albany Park--and its counterparts in other distant corners of the city--is Chicago's modern counterpart of the Viennese Ottakring.

People moved from the center of Chicago and other American cities for many reasons, but the most important one was that heavy industry had made them unattractive places to live. Downtown was a magnet for factory smoke, soot, noise and noxious odors worse than any affluent family wanted to put up with. And unlike European cities such as Vienna, ours had vast amounts of empty land on the outskirts. For those who could afford it, there was every reason to move out. It isn't any mystery why very few people wanted to live at Roosevelt and Wabash in Chicago in 1950.

But the urban industrial era is over now. Nobody manufactures anything much in downtown Chicago these days, and even the more heavy- duty services tend to be performed out toward the periphery. The neighborhoods surrounding the Loop may not possess the pristine qualities of the countryside, but they don't assault the senses the way the old West Side probably did when my grandfather first saw it in 1889.

While urban life isn't everybody's idea of paradise, the arguments for avoiding it just don't have the validity they possessed even a generation ago. That doesn't mean that the current crop of American suburbanites is going to abandon cul-de-sacs and take up loft living en masse. It probably does mean that gentrification is going to take off exponentially in quite a few cities in the years ahead, as it already has in Chicago, establishing a solid core of affluence on the inside and a working-class, heavily immigrant population further out.

It is a mistake to describe this as either a blessing or a curse. The renewal of downtown residential life makes cities more exciting places. It does not end poverty or cure any other serious social problems; it simply moves poverty around. But the return to the center represents a return to rules of urban life that were taken for granted for centuries all over the world. Although America broke those rules in the late 20th century, nobody should be too surprised to see them reappear in the 21st.