Trump's Right: It's Time to Turn Our Inner Cities Around
Donald J. Trump is known for his hyperbole. He often says, for instance, that “China is killing us.” Things he likes are “huge,” while anything amiss is a “disaster.”
In the final presidential debate, he told the audience something similar: “Our inner cities are a disaster.” And last Wednesday in Charlotte, North Carolina, Trump delivered a speech, pitched at urban voters, in which he echoed that sentiment, asserting that “the conditions in our inner cities today are unacceptable.”
But what if Trump’s right? And what if we declared — under federal law — the crime, urban blight, and economic malaise affecting our urban cores what it really is: a disaster.
In his speech, Trump proposed just that, saying: “I will further 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.” The idea did not make headlines, but it should have. It’s radical, revolutionary, and just what urban America needs — a federal disaster declaration for our most impoverished, hard-hit neighborhoods.
Under current law, 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, with only 100 days required for planning and review. Compare that to the average of seven to eight years on most federal infrastructure projects.
Federal lawmakers took the lessons of that project — as well as the crawling pace of the post-Katrina response — to heart after Super Storm Sandy, ordering FEMA to streamline the process for aid.
Urban “HOPE zones” — as Trump’s proposal could more aptly be termed — would enable individuals and businesses to apply more quickly for revitalization aid, including home improvement and personal loans. Most especially, they could also apply more quickly for start-up capital available from the Small Business Administration.
That’s where Trump’s second, but equally radical, proposal comes in: microloans in lieu of social-assistance payments. To take an obvious example, unemployment payments could be turned into repayable but forgivable loans, according to Trump.
Access to capital, even a small amount, is one of the biggest hurdles to most aspiring entrepreneurs starting their businesses. We often envision start-ups traipsing around Silicon Valley and Wall Street pitching wealthy investors on their concepts in sharp suits and wingtips. But the fact is, most start-ups rely on the generosity of family and friends and personal savings to get going.
That means entrepreneurs are burning both personal and social capital in their efforts to build out their dreams. But for inner-city entrepreneurs, even bank loans are hard to come by, since most institutions do not lend to individuals without assets and shaky credit — all too common circumstances for poor and working-class Americans residing in our urban cores.
Furthermore, 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, bar working and outside income for those receiving benefits. Only a handful of states (those administering unemployment) allow entrepreneurs to collect benefits (and stop seeking salaried and hourly work) while they start-up.
This is absurd.
New business creation is the life-blood of thriving communities and new, well-paying jobs. Indirectly, it is also the source of tax revenue through taxes on those enterprises, employed individuals, and their sales.
For black and Hispanic Americans, who are the primary residents of these inner-city neighborhoods, personal wealth (assets plus income) has actually fallen in real dollars in the years since the Great Recession.
Without assets or income, credit-lending institutions frequently avoid high-risk ventures and rarely make loans to individuals living in impoverished neighborhoods. That scarcity of capital creates a vicious cycle since new, organic and home-grown business formation is a rarity. The result: New jobs that come with new businesses never appear.
As a consequence, inner-city residents cannot build wealth from commerce and must rely, instead, either on social assistance (a largely static, subsistent source of income) or on hourly or salaried work outside their own communities.
If social assistance were converted into loan payments, and the bar lifted on recipients’ ability to start businesses or work, these individuals could begin the urban renaissance our inner cities desperately need.
For those that wish, the federal government should allow lump-sum payments of projected assistance to individuals with business ideas to help them get started. Micro-lending models like this have been fabulously successful in developing nations as well as 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 these dollars help to spur new business formation, job creation, and, most of all, hope in these distressed communities.
We should declare our most beleaguered neighborhoods to be “disaster zones” immediately and encourage entrepreneurial activities through access to capital and microloans.
Hope is infectious. Donald Trump is right that we must act, because, in his words, “America’s future belongs to the dreamers, not the cynics.” Nowhere is that message — and the policies to back it up — more urgent than in our inner-cities.
Sean Kennedy is a Visiting Fellow at the Maryland Public Policy Institute.