Saturday, May 2, 2015

Redistribution vs Trickle Down

Whenever there is unrest in a large metropolitan area like Baltimore, you can count on headlines like this one from Rich Lowry: Baltimore's Decline is All Democrats' Work. Of course that's a convenient tool for conservatives to use because they abandoned urban areas a long time ago and headed for the suburbs. There is no such thing as an "urban agenda" for Republicans - unless you think that giving yet more tax breaks to the wealthy and large corporations is going to someday - by some miracle - finally trickle down.

As a true conservative, Lowry bemoans the fact that Baltimore raised taxes. I guess he thinks that it would have been better to abandon schools, police, public works, etc. That's the kind of thing local property taxes pay for. But as the wealthy (i.e., Republicans) and businesses abandoned large urban areas, poverty increased and revenue decreased. So what is the alternative? Too many cities responded by doing what Lowry described.
To counterbalance the taxes, they note, developers need to be lured to the city with subsidies, and the developers, in turn, contribute to politicians to stay in their good graces. This makes for fertile ground for the city’s traditional corruption.
With only one party (Democrats) at the table and developers greasing the wheels for their pet cause, the result was often corruption.

I would offer Lowry a different example of how Democratic policies in urban areas have worked. Back in 1973, TIME magazine noticed that something interesting was going on in Minnesota. Here was their cover:

No, the story was not about how this land of 10,000 lakes was good for fishing. The story was about the Minnesota Miracle that was launched in 1971 to address the fact that resources were vacating both the rural and urban areas of the state - leaving them cash-strapped to provide basic services.

What was the answer that the Minnesota Miracle came up with? It's that r-word that is so dreaded in conservative circles - redistribution. Instead of forcing local communities to rely on regressive property taxes, state income taxes were made more progressive and revenue was sent back to poor local governments to ensure an even playing field among urban, suburban and rural areas when it comes to government services.

Derek Thompson recently looked at how all that has impacted the Minneapolis/St. Paul Twin Cities area 40 years later.
Only three large metros where at least half the homes are within reach for young middle-class families also finish in the top 10 in the Harvard-Berkeley mobility study: Salt Lake City, Pittsburgh, and Minneapolis–St. Paul. The last is particularly remarkable. The Minneapolis–St. Paul metro area is richer by median household income than Pittsburgh or Salt Lake City (or New York, or Chicago, or Los Angeles). Among residents under 35, the Twin Cities place in the top 10 for highest college-graduation rate, highest median earnings, and lowest poverty rate, according to the most recent census figures. And yet, according to the Center for Housing Policy, low-income families can rent a home and commute to work more affordably in Minneapolis–St. Paul than in all but one other major metro area (Washington, D.C.). Perhaps most impressive, the Twin Cities have the highest employment rate for 18-to-34-year-olds in the country.
To be honest, the Minnesota Miracle has taken some pretty big hits lately - especially during Gov. Tim Pawlenty's two terms. And we've got a lot of work to do when it comes to the disparities between white people and communities of color in the state. But this is the foundation on which Gov. Mark Dayton has been able to build over the last four years and why his results have been so impressive.

The Twin Cities area is a great place to live - if you can stand the cold. The reason for that is that the rest of the state didn't abandon us, but worked to "share the wealth." The truth is that redistribution works for everyone and trickle down never seems to get to a destination other than lining the pockets of the already wealthy.

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