Urban planners’ debates about gentrification have been going on for many years. How does a well-meaning local government encourage neighborhood improvement without inadvertently pricing longtime residents out?
If you are reading this in hopes that I have a suggested solution to that dilemma, you’re in the wrong place, although there are certainly some intriguing theories floating about. But there is one approach to upgrading deteriorating neighborhoods that I enthusiastically support. It’s an insight I owe to my husband, from his years as Indianapolis’ Director of Metropolitan Development.
The typical downward trajectory of lower-middle and working class neighborhoods starts with a lack of visible maintenance–houses with peeling paint, unkempt yards, perhaps even broken windows. Lack of maintenance is evidence that leads many disapproving observers to conclude that “those people” just don’t care. My husband’s conclusion was rather different: “those people” were applying their inadequate incomes to “frivolities” like food, utilities and transportation to work.
What would those neighborhoods look like if we raised the minimum wage to $15/hour? What if desperately poor people, or those on the cusp of poverty, had some disposable income?
There is an often-overlooked connection between economic health and neighborhood revitalization. Regular readers of this blog have read my rants about job creation before, and are aware of my absolute conviction that jobs are created by demand. The owner of the widget factory isn’t going to hire more people to manufacture his widgets if there aren’t more people willing and able to buy them.
A recent study has added to the already ample evidence for this conclusion–and to the also-ample evidence that “supply-side” economics is, and has always been (as George H.W. Bush memorably labeled it) “voodoo” economics.
“Supply-side” is the economic theory embraced by Reagan and others in the 1980s. That theory dismisses the importance of wages at the bottom of the economy—the demand side. Instead, it rests on the theory that if we “free up” capital at the top—the supply side—wealthy entrepreneurs will create new jobs and a rising tide will lift all boats.
This is the theory that has justified Republicans’ forty-year commitment to tax cuts for the rich. The theory never made sense, and during the past forty years, all evidence has rebutted it. Tax cuts for the rich have never sparked economic growth, although they have certainly made the rich richer.
And that’s what the most recent study has found.
In their study of 18 countries over 50 years, scholars at the London School of Economics and Kings College concluded that tax cuts do not “trickle down.” In fact, they do little to promote growth or create jobs. Instead, they drive up inequality, by limiting their effects to the people who get the tax cuts.
Focusing on the bottom of the income distribution–ensuring that low-wage workers don’t sink into poverty, that they can afford to put food on their tables, buy diapers for the baby, and see a doctor when necessary (a different but equally pressing issue) and still have funds to fix that broken window and repair the lawn-mower–would do more to “revitalize” neighborhoods than many if not most of well-intentioned government programs.
Would there still be people who don’t keep their properties up? Sure. Would there still be landlords who are basically stingy slumlords? Yes. But investments in real estate represent a considerable asset to most owners, and the fiscal incentives to protect those investments by maintaining the properties are strong.
The real lesson behind my husband’s long-ago insight, however, is the holistic nature of our communities, and the importance of not limiting our focus when trying to improve one aspect of our common lives. We need to recognize the inter-relationships of such things as economic development, job creation and neighborhood improvement.
And “bottoms up” isn’t a phrase limited solely to alcohol consumption.
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