Trump’s right, Bal­ti­more is a ‘dis­as­ter’

Baltimore Sun - - COMMENTARY - By Sean Kennedy are Sean Kennedy (se­an­david.kennedy@gmail.com) is a vis­it­ing fel­low at the Mary­land Pub­lic Pol­icy In­sti­tute.

Don­ald J. Trump is known for his hy­per­bole, but not all of his ideas are a stretch. Our in­ner cities a “dis­as­ter,” as he said in the fi­nal pres­i­den­tial de­bate — and they should be of­fi­cially de­clared so.

Mr. Trump said on the cam­paign trail that he would “em­power cities and states to seek a fed­eral dis­as­ter des­ig­na­tion for blighted com­mu­ni­ties in or­der to ini­ti­ate the re­build­ing of vi­tal in­fra­struc­ture, the de­mo­li­tion of aban­doned prop­er­ties and the in­creased pres­ence of law en­force­ment.” Now that he’s cap­tured the pres­i­dency, let’s hope he fol­lows through.

The idea is rad­i­cal, rev­o­lu­tion­ary and just what ur­ban Amer­ica needs: a fed­eral dis­as­ter dec­la­ra­tion for our most im­pov­er­ished neigh­bor­hoods hard hit by crime, ur­ban blight and eco­nomic malaise.

When the pres­i­dent de­clares an area to be a dis­as­ter, ad­di­tional fed­eral as­sis­tance can be ap­plied while reg­u­la­tions and rules for re­build­ing and re­vi­tal­iz­ing the af­fected area are of­ten waived or re­duced.

Un­der the model es­tab­lished af­ter the I-35W bridge col­lapse over the Mis­sis­sippi River, fed­eral au­thor­i­ties can stream­line in­fra­struc­ture and other projects that of­ten take a decade from start to fin­ish. The Min­nesota bridge was re­built bet­ter than ever in 437 days by cut­ting out the red tape that typ­i­cally mires such projects.

Cities and states could up­grade and re­build quickly and cheaply.

Ad­di­tion­ally, if a dis­as­ter were de­clared, it would en­able in­di­vid­u­als and busi­nesses to ap­ply more quickly for re­vi­tal­iza­tion aid in­clud­ing home im­prove­ment and per­sonal loans, but most es­pe­cially start-up cap­i­tal avail­able from the Small Busi­ness Ad­mi­nis- tra­tion.

Ac­cess to cap­i­tal, even a small amount, is one of the big­gest hur­dles to most as­pir­ing en­trepreneurs start­ing their busi­nesses.

Most start-ups rely on the gen­eros­ity of fam­ily and friends and per­sonal sav­ings to get go­ing. But for black and His­panic Amer­i­cans, who are the pri­mary res­i­dents of th­ese in­ner-city neigh­bor­hoods, per­sonal wealth (that is, as­sets plus in­come) has ac­tu­ally fallen in the years since the Great Re­ces­sion in real dol­lars.

In Bal­ti­more, the fall in in­come and wealth has been es­pe­cially dra­matic, ac­cord­ing to Loy­ola-Mary­land eco­nom­ics pro­fes­sor Stephen Wal­ters. Prop­erty and in­come taxes have risen dra­mat­i­cally while real in­come, es­pe­cially for mi­nori­ties in the in­ner city, has fallen pre­cip­i­tously since 1950. As the tax base shrank in the city, the wealth gap grew dra­mat­i­cally — with the poor­est 20 per­cent in the area worth equal to 1/12th of the rich­est 20 per­cent.

Bank loans, too, are hard to come by for in­ner-city en­trepreneurs since most in­sti­tu­tions do not lend to in­di­vid­u­als with­out as­sets and shaky credit — all too com­mon cir­cum­stances for poor to work­ing class Amer­i­cans re­sid­ing in our ur­ban cores.

That scarcity of cap­i­tal cre­ates a vi­cious cy­cle be­cause new, or­ganic and home­grown busi­ness for­ma­tion is a rar­ity, so the new jobs that come with new busi­nesses never ap­pear.

Even worse, as­pir­ing busi­ness own­ers and in­ven­tors in the in­ner city are of­ten pre­cluded from re­ceiv­ing sus­tain­ing gov­ern­ment as­sis­tance while they pur­sue their dreams.

Un­em­ploy­ment and dis­abil­ity in­sur­ance, for ex­am­ple, of­ten have bars on self­em­ploy­ment and out­side in­come while re­ceiv­ing ben­e­fits. Only a hand­ful of states (which ad­min­is­ter un­em­ploy­ment) al­low en­trepreneurs to col­lect ben­e­fits (and stop seek­ing salaried and hourly work) while they start-up. Mary­land, for ex­am­ple, stopped ac­cept­ing the funds avail­able un­der fed­eral law to ad­min­is­ter such a pro­gram.

That’s where an­other, equally rad­i­cal Trump pro­posal comes in: mi­croloans in lieu of so­cial as­sis­tance pay­ments. The most ob­vi­ous ex­am­ple is un­em­ploy­ment pay­ments, which could be turned into re­payable but for­giv­able loans, ac­cord­ing to Mr. Trump.

If the so­cial as­sis­tance were con­verted into loan pay­ments and the bar lifted on re­cip­i­ents’ abil­ity to start busi­nesses or work to­ward their dreams, th­ese in­di­vid­u­als could be­gin the ur­ban re­nais­sance our in­ner cities des­per­ately need.

For those who wish, the fed­eral gov­ern­ment should al­low lump-sum pay­ments of pro­jected as­sis­tance to in­di­vid­u­als with a busi­ness idea to help them get started.

Mi­cro-lend­ing mod­els like this have been fab­u­lously suc­cess­ful in the Third World and in lim­ited ex­per­i­ments in the United States. For tax­pay­ers, the dol­lars are a sunk cost — re­cip­i­ents will get them ei­ther way from the gov­ern­ment, but the up­side is huge if they help to spur new busi­ness for­ma­tion, job cre­ation and most of all hope in th­ese dis­tressed com­mu­ni­ties.

Declar­ing our most be­lea­guered neigh­bor­hoods to be “dis­as­ter zones” and en­cour­ag­ing en­tre­pre­neur­ial ac­tiv­i­ties through ac­cess to cap­i­tal and mi­croloans would in­ject cap­i­tal, ex­pe­dite much needed in­fra­struc­ture and give our in­ner cities hope again.

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