What is the relationship between the opulence and granduer of the World Fair and the poverty and degradation that surrounded it?
After the Fair ended, Ray Stannard Baker noted, "What a human downfall after the magnificence and prodigality of the World's Fair which has so recently closed its doors! Heights of splendor, pride, exaltation in one month; depths of wretchedness, suffering, hunger, and cold in the next" (pg 334) The Devil in the White City by Erik Larson
Erik Larson's historical book The Devil in the White City recounts the events leading up to the Chicago World's Fair in the late 1800s. It is a story of contrasts, as evidenced first by the title. The Fair was known as the White City, as it was both literally white and a shining example of the best America and the world had to offer. In contrast is the devil in the person of Holmes, committing foul acts mere blocks from the monument to greatness.
Your question points out more contrasts. The quote you cite refers specifically to the "before" and "after" of the Fair, and it is true that once the Fair was over and the visitors all left, there was little of the grandeur remaining. In other words, the opulence of the Fair did not have an elevating or enduring effect on anything around it.
This is not an uncommon phenomenon. The only modern thing we have which might compare is the Olympics, and it is well documented that once the Olympics are over, there is nothing particularly positive left behind in the host city. The buildings and other facilities are not generally useful and fall into disrepair, and the areas near the sites are certainly in no better shape--and often worse for all the traffic and activity--than before. On a personal note, I was in Greece the summer after the Athens Olympics, and I heard many stories from shop owners as well as individuals that it was not worth it for them to have had the Olympics in their city. Too much money and energy spent on something which only benefited the visitors and left the Athenians in worse shape than before the Olympics. The event prospered, but the people around it and built it did not.
Chicago was not a rich city, and the harsh conditions of weather, crime, and just plain living took a serious toll on the people who lived there. It was a city on the verge of becoming what it is today, but at the time it was no place for the fainthearted to live. The World's Fair in Chicago was built primarily by people who needed work; however, once the Fair was built, the work was gone and the conditions of these laborers remained the same.
The contrast is between the extravagant and lavish White City which the world came to see and the place around it which was still relatively undeveloped: muddy and dirty and miserable. All the glorious innovations displayed at the Fair promised a bright future; in contrast was the squalor and deprivation of the present. In other words, America's image and standing in the world increased after the Chicago World's Fair, but the living conditions and quality of life for the residents of Chicago did not--at the time--improve. It's hard to say that things did not get better for Chicago in the long term, given the city's stature today; however, at the time it must have been disheartening for Chicagoans to walk through their muddy, smelly streets and see those gleaming towers of white mocking their squalor.