The Atlantic takes a look at Minneapolis, which is an outlier in several ways: it’s doing relatively well economically (it’s no Detroit), but at the same time, it’s managed to avoid extreme disparities — there’s affordable housing without the overpriced real estate at the top (it’s no San Francisco, in a good way). How do they do it?
Among other factors, it’s all about…wealth redistribution.
In the 1960s, local districts and towns in the Twin Cities region offered competing tax breaks to lure in new businesses, diminishing their revenues and depleting their social services in an effort to steal jobs from elsewhere within the area. In 1971, the region came up with an ingenious plan that would help halt this race to the bottom, and also address widening inequality. The Minnesota state legislature passed a law requiring all of the region’s local governments—in Minneapolis and St. Paul and throughout their ring of suburbs—to contribute almost half of the growth in their commercial tax revenues to a regional pool, from which the money would be distributed to tax-poor areas. Today, business taxes are used to enrich some of the region’s poorest communities.
Never before had such a plan—known as “fiscal equalization”—been tried at the metropolitan level. “In a typical U.S. metro, the disparities between the poor and rich areas are dramatic, because well-off suburbs don’t share the wealth they build,” says Bruce Katz, the director of the Metropolitan Policy Program at the Brookings Institution. But for generations now, the Twin Cities’ downtown area, inner-ring neighborhoods, and tony suburbs have shared in the metro’s commercial success. By spreading the wealth to its poorest neighborhoods, the metro area provides more-equal services in low-income places, and keeps quality of life high just about everywhere.
The Republicans keep trying to destroy it, but Minnesota is more of a socialist paradise than most places in the US, and it freakin’ works.
The problem with such facts is that the Rethugs then need to invent another slogan to dismiss reality yet again.
It makes me so happy to see that the social-capitalist model is still working in pockets of America, and it breaks my heart that the media and the right-wing (i.e. the insanely rich) keep trying to crush it. I hope that things keep going strong in Minnesota, and that you can set an example for the rest of the country!
Nerd: I believe they already have such a slogan: “PUNISHING SUCCESS!!!”
Oh, and “CLASS WARFARE!!!” And who knows, they might find a way to get “SUBORNATION TO FALSE MUSTER!!!” into it too.
You can take North Europeans out of northern Europe, but you can’t take northern Europe out of North Europeans, it seems.
It is interesting to me that Scandinavian and German immigrant descendants has similar (not identical, but similar compared to the rest of the US) ideals about the social responsibilities of government compared to their modern day origin countries. It is interesting because these countries were very different back when people emigrated, which played no small part in why people emigrated in the first place.
Could it be so simple that if you live where it is cold outside most of the time, you hate to see anyone left out there?
There is some criticism of this article going around, focusing on the fact that Minneapolis (and Minnesota, as a whole) is not so good for non-whites. For example: http://www.washingtonpost.com/blogs/govbeat/wp/2015/02/17/if-minneapolis-is-so-great-why-is-it-so-bad-for-black-people/
http://www.questionthepremise.org/new-blog/2015/2/17/about-that-miracle
Something I haven’t seen mentioned in these critiques, and I don’t know how important it is, is that some refugee groups have come to MSP in considerable numbers, particularly, Hmong, Somali, and Karen. If it were so bad, why would they come here? I have no idea.
One of the biggest culture shocks I ever experienced when I moved away from Minneapolis was how dramatically the neighborhood could change just walking down the street.
In the Twin Cities metro, one suburb is pretty much like the rest. Burnsville isn’t really different than Bloomington. Bloomington isn’t that different from Richfield. I play a lot of tabletop games in and around the metro area. Never once I did feel that kind of culture shift. Eagan. Plymouth. St Louis Park. Roseville. Nothing huge. Certainly nothing like what I experienced out of state.
@kelecable
I suspect the more non-whites that move into the state the more push back we’ll see on this policy.
One of the biggest failings in Milwaukee County and the collar counties is we don’t have any fiscal equalization, and we should (saying this as I live in one of the suburbs that would never vote for it because we are the winners.)
What I find so frustrating is the political right insists that “fiscal equalization” and other wealth redistribution strategies don’t work. It is the denialism mentality again. You can show them tons of evidence (economic, sociological, etc.). They still insist it doesn’ t work. Then when the evidence is overwhelming they play the “punishing success” card and whine that it is fundamentally unfair and completely do not see the “fairness” and other measures of quality of life just demonstrated. Arrgh!!!
I’m no economist, but I’ve noticed this trend amongst state governments and the companies will move to were the best deal is located. I wonder what the data would look like if we subdivided it into job creation and job relocation.
@jehk There are little differences, I think. Edina definitely has embraced that they are “cake-eaters”. And the neighborhoods in Minneapolis have their flavors- I doubt anyone could mix up Tangletown from Uptown from Northeast.
But for the most part, it’s cold, we’re in this together (not that I necessarily like you) and go learn something seem to be our culturally defining traits.
I almost wonder if the high levels of immigration contributes to the income inequality as far as race goes. What does the inequality look like if you control for years living here?
@parasiteboy #9:
I also wonder what the data would look like if we subdivided it into the state politicians who receive campaign donations and subsequently retire from politics to take up comfortable directorships, and the people who get SFA from the deal.
The fiscal equalization policy is great (now if only we could get something like that for schools here), but I’m even more impressed by this:
They managed to fight off the tendency for cities to shove low-income/public housing into crappy towers because racism, and for rich neighborhoods to fight tooth and nail against any low-income housing in their midst. That’s amazing.
RE: Kelecable
I think I spoke too soon, considering that Washington Post article:
I guess that shouldn’t be surprising. A lot of the New Deal programs were built upon racial exclusion in order to get them passed, so it’s not surprising that in a much more racist era, Minneapolis being super-white probably helped pass better welfare and housing laws.
We have this system in Sweden too (where many of the ancestors of today’s Minnesotans came from): the richer communities are required to turn over a portion of their tax revenues to poorer ones … and you should hear them bitch! The new Swedish government is putting a lot of pressure on the richer places to start sharing the burden of integrating refugees from places like Syria and Iraq (there’s one city in Sweden which gave a refuge to more Iraqis than the entire US of A during Bush’s war). These richer communities (you can guess their political colour) have begun to learn the meaning of the word ‘solidarity’.
@4 “It is interesting because these countries were very different back when people emigrated, which played no small part in why people emigrated in the first place.”
I suppose many of the people who stayed behind not only shared the concerns, but also managed to do something about them.
Never understood what is so wrong with emulating Robin Hood (a little bit). As in, “take from the rich, give to the poor.” I mean, not really “take” (i.e. steal), but at least give the rich a reason to give away the money that they can’t use anyway, to people that CAN use it to buy Food and other staples. What is the harm in that? Charity contributions as a tax deduction go a little bit in that direction, but not quite good enough. Minneapolis redistribution policy reads like a good way to get started. Monty Python did a sketch that was a hilarious takedown of how the Robinhood ideal could go terribly too far.
Fair Warning, Python.
I’ve said too much. Discuss among yourselves.
Somewhat tangential. Specifically addressing homelessness, here’s a Mother Jones article on Utah and the Housing First program that seems to be making a differences. Perhaps something like that in Minneapolis would make it even more utopic and socialized?
The racial disparity in poverty is worrying, though, because no program on its own will wipe out bigoted views or unconscious biases that influence decisions.
kelecable @5
Can you post those two articles here, please? If not, let me know, I will put them up myself. Thanks!
Wow, it’s like they discovered economics isn’t just a binary choice between predatory pseudo-libertarian capitalism and all-out Soviet socialism. Who’d’ve thought you could enfold some of the egalitarian aspects of socialism into a traditional capitalist paradigm and not immediately descend into a hellish Marxist dystopia?
Contrastingly, Detroit by Air, which I just happened to stumble across yesterday. Even the very first photo of the CBD shows huge vacant blocks and tracts of weeds.
To understand why Republicans are so against programs like this, you must understand the Republican mindset.
According to Republican doctrine, hard work leads to success: if you work hard, you will become rich and realize your dreams. Therefore, if you are not rich, you must not have worked hard and you deserve to live in a shitty neighborhood with failing schools, poor job prospects, and all that other stuff. If you try to point out the bullshit, they’ll launch into a story about how they know of someone who never went to college and back in the post-WW2 economic boom started his own business and became wealthy, so why can’t you, you fucking Hippie?
Hard work leads to success for people that weren’t born into poverty and failed by the various systems designed to help them. Of course, Republicans would also believe that a need for social welfare is a sign of laziness and stupidity, but what else is new?
Hard work may lead to success, if work is available. Eventually. I am just sick and tired of young people and young families getting f*** all in support and assistance when they are most vulnerable under the stupid, short-sighted policies designed to punish them for not being established and successful yet.
Very cool article. I still think it fits into the monocentric urban economics model pretty well. One thing that I think of when it comes to MSP is the weather. That is pretty much like a constant (over space) disamenity which will serve to diminish the utility piece of spatial equilibrium. The tax scheme is interesting through the lens of Tibout sorting, I will think some more on that. It sounds like the biggest impact may well be agglomeration economies present in corporate management. I never considered that across industries, but it makes sense to me.
“The racial disparity in poverty is worrying, though, because no program on its own will wipe out bigoted views or unconscious biases that influence decisions.” – rq
Or conscious biases that reinforce superiority complexes…when did “United We Stand” become “I’ve Got Mine, You Can Stuff It?” I saw that Mother Jones article, and I’m impressed and amazed that Utah’s Housing First program ever came to be. I love that it’s proving to be cost-effective and successful, but people’s minds aren’t swayed by empirical data. How do you get this message past a huge swath of the population that genuflects to a man in a Mercedes and ignores a homeless person?
Another article from a MN resident on the racial disparities that weren’t mentioned. About That Miracle A historic fact not mentioned was how the interstate highway system cut through the poorest and often minority neighborhoods. The thriving African-american Rondo community in St. Paul was destroyed in the 60’s by removing the public streetcar system and building I-94 through it’s heart. Rondo bisected by I-94 construction
This article from last summer illustrates how highways were constructed through Minneapolis. ” Racist” Twin City maps make point about highways
One of the results of this is that African-Americans are disproportionately affected by air pollution.
kelecable @5:
Because the federal government intentionally settled them (specifically refugees from those three ethnic groups) here.