I attended an election results party last night here in Cambridge. Most of the attendees were reasonably rich biotechies or computer nerds. Having predicted a victory for Obama, I was gratified to learn that nearly all had voted for him. A recent New Yorker magazine carried an article (abstract) on Cory Booker, the mayor of Newark, NJ. He is often lumped together with Obama in the “young, gifted, and black” category (Nina Simone). The article is not available online, but the magazine does serve a video interview with Booker. Booker was voted in with high hopes, which have been mostly disappointed. Newark remains crime-ridden and poor.
Neither the article nor Booker ever states Newark’s problems clearly, choosing to talk about incremental fixes. It seems to me simplest way to characterize Newark’s problems is that its citizens have a Third World level of education and skill while its city employees are paid a First World salary. With citizens capable of competing only for the lowest wage jobs and public employees drawing above-average salaries, the inevitable result is a crushing tax burden. To some extent welfare payments from the federal government can supplement local income, but that doesn’t seem sufficient to pay a standard city employee bureaucracy, not to mention pensions for city employees hired during the 1950s, 60s, and 70s. Newark sits at a transportation nexus and is close to New York City, but there are plenty of nearby towns with lower taxes and crime that are more attractive to employers and residents.
It seems that being young, gifted, and black is not sufficient when an economy has structural problems…
Theoretically one could reduce the size of the city bureaucracy, reduce the tax burden and minimize red tape. I would expect such a course of action to revitalize business interest.
It’s incredibly inefficient, not to mention unjust, to tax people for the end goal of just giving their money back to them, less the not insignificant costs of running the entire process… Why not just cut spending drastically, reduce taxes, and get government mostly out of the way, so that business development will choose Newark over competing cities. And with business will come new residents, who will create demand for new businesses, which will bring in even more new residents…
Reducing the size of the city bureaucracy is surely a good idea, but remember that the city is still on the hook for pensions of workers from the past 50 years. Chapter 11 bankruptcy protection is not available to cities so those pension obligations cannot be shed in a reorganization. Whoever still lives in Newark will have to pay whatever it costs (i.e., if there were only one person left living in the city, he or she could technically be liable for a $50 million per year property tax bill or however much it cost to pay the city’s debts).
A town in the South or Southwest should be able to offer lower tax rates and better services because it doesn’t have to pay debts from the past. (Newark, of course, gets some benefit from having existing infrastructure and not having to build roads, sewers, etc., but these benefits are probably outweighed by the financial burden of 50 years of corrupt and inefficient government.)
What you describe may not be the root of the problem. I work in software, and I’m surrounded by hypercompetent people educated in third-world countries. Obviously, they’re exceptional people, but they came from systems with fewer resources than even that of Newark. Is Newark really resource-constrained? The abstract describes a corrupt political culture; it’s possible that corruption has the ability to absorb any extra resources that could conceivably be sent to repair the problems.
This article documents a case where they (without lowering the salaries of the bureaucrats) were able to add immense resources to an awful school system to little positive effect: http://www.cato.org/pubs/pas/pa-298.html
Kind of depressing reading.
Thanks, Mike. That was an interesting article, albeit disheartening. Adding to the depressing nature of the story is that the article itself proposes few concrete solutions and those are put off to the very end.
Just because there are nearby towns with less crime and similar transportation assets Newark should be written off?
I have been almost all over NJ but Newark truly frightened me – it really is a different world and I don’t think it is possible to imagine what it is like. His interview with New Yorker magazine was inspirational.
One question I could not find an answer was why did manufacturing leave after the war? It does not make sense.
The problem with cutting taxes and reducing government bureaucracy is that that will only work if the city is otherwise a good place to live and work. Why would I move into a city where I have a high probability of becoming a victim just to pay less taxes. Why would I open a business in where nobody will live or work? He has to rebuild the city and find all ways to generate revenue.
Cory Booker is only 18 months into his administration. If he makes any significant changes in 10 years he will be an incredible success. Who else would take on such an entrenched administration?
If he wanted to be young, gifted and black he could have gone to Wall Street.
SuperMike,
Thank you for the link to the Cato Institute story. There are no easy solutions to problems associated with the poor and dysfunctional.
As the owner of a rather diverse group of real estate holdings (high end and low end) I can attest to the fact that simply adding more money to problems doesn’t seem to add any real help to the larger problems.
To get to the solution of any problem you trace it to it’s origin, and most kid’s issues begin with a very poor and or disfunctional familial situation.
This may be old hat but it’s true:
Kids are what they are based on(the majority of the time) their local environs and the people they are raised around. It’s a birthright… or “wrong”.
The really sad thing is that the country seems on course to elect a President who will do for the rest of the country what the Democrats have done for Newark.