FacebookTwitterRedditEmail

Poor Neighborhoods Need More Than “Investment”

Where some of us see distressed neighborhoods — where families endure poverty and homes fall into disrepair — others see dollar signs. In fact, the Trump administration now brands them “opportunity zones,” offering tax breaks to investors who invest capital there.

What remains unclear is this: Opportunity for whom? Big investors may stand to cash in, but many communities are saying they’re not getting the benefits they were promised.

This story goes back to the 1980s, when British Prime Minister Margaret Thatcher’s conservative government introduced 11 “enterprise zones” throughout the United Kingdom. Inspired, conservatives in the U.S. under President Ronald Reagan promoted the creation of these zones in 40 states.

Even many Democrats warmed to these zones as a viable pro-market approach to urban renewal. The idea resurfaced as “empowerment zones” under the Clinton administration in 1994.

Whatever you call them, they’re spaces where businesses can delay, reduce, or even eliminate taxes altogether on the money they invest.

The Trump administration has certified an estimated 8,700 census tracts as opportunity zones; the official list is 186 pages long. There are nearly 900 such zones in California, more than 600 in Texas, 500 in New York, and 300 in Ohio. The designated tracts in Puerto Rico account for nearly the entire island.

Advocates argue that these incentives encourage investors to direct money into distressed communities in ways that will lead to new jobs, better housing, and other businesses being willing to open up shop in the revitalized community.

There are at least two problems with that argument.

First, many distressed communities suffer from economic challenges that investment alone cannot address, including redlining and housing discrimination. These communities need systemic policy changes that get at the root of discrimination to set the stage for lasting economic change.

Second, studies across the country (as well as in the U.K.) offer little evidence that such incentives actually benefit neighborhoods in the long run.

An expansive study of 75 enterprise zones in 13 U.S. states concluded that tax incentives had “little to no impact on economic growth.” One study of a zone in New Jersey even concluded that increased economic activity within its zone came at the expense of non-zones in the nearby area — the kind of zero-sum economics that would discourage investments in the long run.

Amid all of this is the concern that opportunity zones will mean escalating housing costs, accelerating the process by which residents are displaced because they can no longer afford to live there.

There are ways opportunity zones can be made to work so that the people living in the zones benefit as well as investors.

One strategy is for investors to partner with anchor institutions — enterprises such as hospitals and universities that are anchored to the community by both location and mission. These institutions can play special roles in employing people in opportunity zones and supporting local small businesses through purchasing and contracting.

Even better, they should invest in employee-owned businesses.

A prime example for both strategies is the Evergreen Cooperatives in Cleveland, whose Cuyahoga County is home to 64 low-income “opportunity zones.”

Evergreen’s enterprises show the power of employee ownership to turn communities around and create economic opportunity. Employees who own parts of their place-based business have a long-term source of wealth and an incentive to stay and improve their neighborhoods, because doing so improves their businesses.

We also need to make more affordable housing available, especially through community land trusts, limited equity housing cooperatives, and other strategies that offer opportunities for resident equity building.

Under the Trump administration, opportunity zones — the rebranded “enterprise” and “empowerment” zones of the past — will have some new features but the same bottom line: investors stand to win, while residents lose.

Ensuring that people living in these zones are also winners will require us to push for more fundamental change.

Amadi Anene is a fellow at The Democracy Collaborative. He served as a senior adviser in the Small Business Administration during the Obama administration.

Distributed by OtherWords.org.

More articles by:
bernie-the-sandernistas-cover-344x550
February 27, 2020
Jim Kavanagh
Bloomberg’s Game
Kenneth Surin
Trump in Modi’s India
Jonathan Cook
How We Stay Blind to the Story of Power
David Swanson
Bernie Finally Puts a Number on Cutting Military Spending
Nyla Ali Khan
Jammu and Kashmir Cannot be Reduced to Rubble
Aya Majzoub
Return to Bahrain: Nine Years After the Uprisings, the Nation’s Human Rights Record Has Worsened
Binoy Kampmark
Julian Assange Against the Imperium
Dean Baker
The NYT’s Analysis of Democratic Tax Plans: a Really Big Number Orgy
Lawrence Wittner
Trump Betrays His Promise to Protect and Fight for American Workers
George Wuerthner
Wilderness Preservation is Our Best Protection Against Wildfires
Brian Horejsi
Dancing Bears Weren’t Having Fun
Jesse Jackson
The Important Word in “Democratic Socialism” is Democratic
John Stanton
Democratic Socialism: From Fromm to Sanders
February 26, 2020
Matthew Hoh
Heaven Protect Us From Men Who Live the Illusion of Danger: Pete Buttigieg and the US Military
Jefferson Morley
How the US Intelligence Community is Interfering in the 2020 Elections
Patrick Cockburn
With Wikileaks, Julian Assange Did What All Journalists Should Do
Manuel García, Jr.
Climate Change and Voting 2020
Kollibri terre Sonnenblume
Russiagate: The Toxic Gift That Keeps on Giving
Andrew Bacevich
Going Off-Script in the Age of Trump
Jeremy Kuzmarov
Anti-Russian Xenophobia Reaches Ridiculous Levels
Ted Rall
Don’t Worry, Centrists. Bernie Isn’t Radical.
George Wuerthner
Whatever Happened to the Greater Yellowstone Coalition?
Scott Tucker
Democratic Socialism in the Twenty-First Century
Jonah Raskin
The Call of the Wild (2020): A Cinematic Fairy Tale for the Age of Environmental Disaster
George Ochenski
Why We Shouldn’t Run Government Like a Business
Binoy Kampmark
Julian Assange and the Imperium’s Face: Day One of the Extradition Hearings
Nozomi Hayase
Assange’s Extradition Hearing Reveals Trump’s War on Free Press Is Targeting WikiLeaks Publisher
Peter Harrison
Is It as Impossible to Build Jerusalem as It is to Escape Babylon? (Part Two)
Max Moran
Meet Brad Karp, the Top Lawyer Bankrolling the Democrats
David Swanson
Nonviolent Action for Peace
Ed Sanders
The Ex-Terr GooGoo Eyes “The Russkies Did it!” Plot
February 25, 2020
Michael Hudson
The Democrats’ Quandary: In a Struggle Between Oligarchy and Democracy, Something Must Give
Paul Street
The “Liberal” Media’s Propaganda War on Bernie Sanders
Sheldon Richman
The Non-Intervention Principle
Nicholas Levis
The Real Meaning of Red Scare 3.0
John Feffer
Cleaning Up Trump’s Global Mess
David Swanson
How Are We Going to Pay for Saving Trillions of Dollars?
Ralph Nader
Three Major News Stories That Need To Be Exposed
John Eskow
What Will You Do If the Democrats Steal It from Sanders?
Dean Baker
What If Buttigieg Said That He Doesn’t Accept the “Fashionable” View That Climate Change is a Problem?
Jack Rasmus
The Nevada Caucus and the Desperation of Democrat Elites
Howard Lisnoff
The Powerful Are Going After Jane Fonda Again
Binoy Kampmark
Viral Losses: Australian Universities, Coronavirus and Greed
John W. Whitehead
Gun-Toting Cops Endanger Students and Turn Schools into Prisons
Marshall Sahlins
David Brooks, Public Intellectual
FacebookTwitterRedditEmail