Transcript up538povertyporter

2000 Census: TM-P067. Percent of Persons Below the Poverty Level in 1999
Source: American Factfinder (accessed Oct. 21, 2003)
2000 Census: TM-P067. Percent of Persons Below the Poverty Level in 1999
Source: American Factfinder (accessed Oct. 21, 2003)
DETROIT
2000 Census: TM-P067. Percent of Persons Below the Poverty Level in 1999
Source: American Factfinder (accessed Oct. 21, 2003)
SAN FRANCISCO
2000 Census: TM-P067. Percent of Persons Below the Poverty Level in 1999
Source: American Factfinder (accessed Oct. 21, 2003)
CHICAGO
2000 Census: TM-P067. Percent of Persons Below the Poverty Level in 1999
Source: American Factfinder (accessed Oct. 21, 2003)
CHICAGO
2000 Census: TM-P067. Percent of Persons Below the Poverty Level in 1999
Source: American Factfinder (accessed Oct. 21, 2003)
NEW YORK
2000 Census: TM-P067. Percent of Persons Below the Poverty Level in 1999
Source: American Factfinder (accessed Oct. 21, 2003)
CENTRAL
PARK
NEWARK
BROOKLYN
NEW JERSEY
NEW YORK
Teitz, Michael B., and Karen Chapple. 1998. The Causes of Inner-City
Poverty: Eight Hypotheses in Search of Reality. Cityscape 2 (2).
“In brief, the eight hypotheses on inner-city poverty are:
1 Inner-city poverty is the result of profound structural economic shifts that have
eroded the competitive position of the central cities in the industrial sectors that
historically provided employment for the working poor, especially minorities. Thus
demand for their labor has declined disastrously.
2 Inner-city poverty is a reflection of the inadequate human capital of the labor force,
which results in lower productivity and inability to compete for employment in
emerging sectors that pay adequate wages.
3 Inner-city poverty results from the persistence of racial and gender discrimination in
employment, which prevents the population from achieving its full potential in the labor
market.
4 Inner-city poverty is the product of the complex interaction of culture and behavior,
which has produced a population that is isolated, self-referential, and detached from the
formal economy and labor market.
5 Inner-city poverty is the outcome of a long, historical process of segregating poor
and minority populations in U.S. cities that resulted in a spatial mismatch between
workers and jobs when employment decentralized.
6 Inner-city poverty results from migration processes that simultaneously remove the
middle-class and successful members of the community, thereby reducing social capital,
while bringing in new, poorer populations whose competition in the labor market drives
down wages and employment chances of residents.
7 Inner-city poverty reflects an endogenous growth deficit that results from low levels
of entrepreneurship and access to capital, especially among minority populations.
8 Inner-city poverty is the unanticipated consequence of public policy that was
intended to alleviate social problems but has, in fact, caused them to worsen in some
respects.” [pages 36-7]
Can we assess the relative causal
strength of each of the eight
hypotheses? …. We would assign the
greatest weight to the first two
hypotheses: industrial transformation
and human capital. Without
employment opportunities and
adequate human capital, there is little
prospect that the situation of the
inner-city poor will improve.
Following these two causes, our
assessment is that the evidence
shows that segregation, the spatial
mismatch, and employment
discrimination are very significant
factors. In general, we are inclined to
give less weight to migration and
cultural behavior as explanations.
However, the role of the social
system within which the inner-city
poor live remains open to debate.
Whether it constitutes an iron cage or
a rational adaptation to a harsh
environment, and whether (and how)
it must change before poverty can be
alleviated, are now in the realm of
ideology, though good ethnographic
research is revealing the weaknesses
of some underclass arguments. The
question of endogenous growth in
low-income communities appears to
be important, but it is sadly deficient
in rigorous research. Finally, we see
public policy as a contributing but
not a dominant factor that, in
principle, can be alleviated.
[page 59]
Michael Porter, "The Competitive Advantage of the Inner City"
(Harvard Business Review, May-June 1995: 55-71).
This article, which led to much publicity and debate, argues that past policies have failed to
help the inner city because they were based on a "social model built around meeting the
needs of individuals." Porter argues for a radically different approach "through private,
for-profit initiatives and investment based on economic self-interest and genuine
competitive advantage -- not through artificial inducements, charity, or government
mandates."
The larger context:
a. what to do with the inner city
b.
the sources of poverty and inner-city despair and unemployment (supply vs.
demand side) [is this a supply side approach?]
c.
the role of the government: here, it is limited, and to set the right business
climate. (but should not business set the business climate?)
Themes: self-help, emphasis on human capital, limited government, innovation,
public-private partnerships, responsible business (though without sanctions).
integrating the inner-city into the rest of the regional economy.
Theme and Variations
old anti-poverty programs addressed the problem indirectly.
Needed: strategies that address the problems directly.
To be precise: strategies that address the problem of the isolation of the
inner-city economy.
To be the same success as elsewhere, inner-cities must play by the same
rules (economic) as elsewhere. the same competitive rules of the
marketplace. (govt policies treat the inner city as if it should be insulated
from the rest of the regional and national economies, when this insulation
is exactly the problem. hence CDCs, welfare, etc., are isolating policies.)
Therefore, use what works in successful economies.
the trick is to find the real competitive advantage of the innercity.
(Porter emphasizes "real," "authentic", etc. as if to say that inner-city
policies up to this point have not been real, but rather distorting,
artificial, etc.)
Relate to the economist's complaint that govt. intervention distorts the
real economy and replaces it with an artificial set of rules -- to be real is to
compete in the real economy.
an emphasis (p. 57) on clusters, agglomeration economies.
Gunnar Myrdal's cumulative causation].
[relate to
4 true advantages
1. strategic location LOCATION
2. local market demand (e.g., spending
power per acre is still high, even if
per capita is lower than elsewhere)
DEMAND
3. integration with regional clusters
(linkages) INTEGRATION
4. human resources. LABOR
real disadvantages
1.
land assembly
2.
building costs
3.
other costs (higher regulatory costs)
4.
government problems are obstacles
(linkages payments, etc.) regulations,
environmental liability, etc.
stress partnerships
trickle down (66)
class-based, not race based policies (68)
(though he doesn't use the term class, but
rather economic need.)
shift from CDCs to traditional, mainstream
banks to help business. Business is best to
help business.
Mistakes of current ED efforts
PORTER’s ALTERNATIVE
Just meeting existing needs ; Fail to understand the real
competitive advantage of inner cities
Address long-term competitiveness.
tries to buffer the inner-city from competitive pressures of the
larger regional, national and global economies,
Need to compete; integration with larger economies the only way
towards sustainability.
Exceptionalism
assimilation
Too broad and confusing a notion of ED: leads to confusion,
unnecessary controversy
ED should keep the eyes on the prize: for-profit business and job
development.
Defy market forces
Harness market forces,
An emphasis on altruism
Profitability of the inner city will drive its revitalization.
ROLE OF GOVERNMENT: direct intervention and heavy
reliance on operating subsidies to attract companies (that
distort the market and don't create long term development)
ROLE OF GOVERNMENT: Create a favorable environment for
business (schools, job training, infrastructure, streamlining
regulation)
Assembling parcels of land; environmental remediation, better
public safety.
Genuine, long-term, structural advantages.
Government: "a marketer" [44]
So: artificial, distorting, temporary benefits
Access to capital: loan pools, etc.
"the only viable solution is to harness market forces and the
resources of the private capital markets." [43]
COMPETITIVE ADVANTAGE OF INNER
MYTH
Low cost labor (cheaper in rural and
3rd world)
CITIES
REALITY
Strategic location [NB: yet w e now
see a non-contiguous space of real
estate and economic linkages emerge
in addition to global city advantages -very selective advantages of contiguous
space.]
Cheaper real estate (also cheaper in Integration with regional clusters
the suburbs)
(agglomeration economies; regional
institutions)
Unmet local demand (e.g., in retail
and services) e.g., national chain
stores in the inner city, such as
Fairway in Harlem. Substantial
purchasing power.
Banks (CRA)
Human resources -- though needs
training.
Myths about the inner city
No work force willing to work
A lack of entrepreneurship (the key is to shift their emphasis onto for profit businesses, not just on non-p
Skilled minorities will leave once they have a chance. (relate to WJ Wilson)
High crime
Needs / Strategies
Stop diluting the competitive advantages of inner cities with poor policies and leadership.
Improve communication between entrepreneurs and companies.
"The best (and only) way to develop the economies of inner cities is to make them attractive and
welcoming places in which to invest and do business, both for residents and nonresidents." [39}
"eliminate the tax on capital gains an dividends from long-term equity investments in inner-city-based
businesses (or subsidiaries) that employ a minimum percentage of inner-city residents." [43]
additional tax revenues would outweigh the lost revenues.
Simplify, but don't abandon, regulation. [43]
[Implicit: US-born minorities should act more like immigrants] [38]
Community Based Organizations (CBOs): very useful, but need to refocus their efforts. [44] should
work more closely with the private sector. Use a business-based model. Don't duplicate existing
private sector business services (which are inherently better anyway). Be intermediaries between
business and communities, rather than opposing business. EXAMPLE:
Local-hire regulations can backfire [45]
"A more productive approach is to understand the needs and perceptions of local businesses and to
develop programs to address them." [45]
Some Concerns
1.
too much supply side: sees that the solutions are all to be found in the inner city (implying
that the causes of unemployment are there as well).
2.
underplays the role of discrimination, spatial inequality and segregation. and the impact of
suburbanization.
3.
asks for businesses to be responsible, to hire locally, etc. (all good things), but then does not
follow through with govt. programs to implement this/enforce it. (voluntary?)
4.
he underestimates the real disadvantages and overestimates the real advantages of the
innercity.
5.
will the private sector really step in to fill the vacuum left by a shrinking public sector in the
innercity? [67]
6.
Porter “wants his cake and eat it too”: he stresses the need for a new rethink and new
directions, but if he won't let government or CDCs lead the change, who will? If business is
in business to do business, and they are quite happy to ignore the innercity now, what will
make them change?
7.
Overall, however, the argument is appealing, and infusing into the debate a sense of
freshness, innovation, and entrepreneurship. (similar to the argument against using the
term "underclass" as marginalizing, Porter opposes the marginalization of the innercity,
arguing that it must play by the same rules as others.)