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Systemic and intractable problems - Part 3 - inner cities

Many of the problems we face are very hard core. Do we declare our problems unresolvable and drag them into the future to continue living with them? Will we survive festering problems that we ignore? This is a four part series, with a researched and out of the box look at working smarter with four problems:

  1. Part 1: Resolving systemic problems with assistance, in the educational system
  2. Part 2: Resolving systemic problems from the medical system
  3. Part 3: Resolving systemic and societal problems in the inner cities
  4. Part 4: Resolving systemic and societal homeless problems

Resolving systemic and societal problems from the inner cities

First, understand that I'm not from the inner city, and have not worked in any official capacity with inner city problems, so I am very aware of the difficulty with an "outside looking in" approach to problem solving. I've been looking at them since 1966, when I wrote an extensive paper to a politician about them. Nothing much changes, even though there are attempts at change.

Second, understand that momentum, habit, environment, and attitudes are against resolving these problems. For example, the most current attitude hardening meme on the Internet is that when the Irish first came to the US, they had difficulty in finding jobs and fitting in communities, but they raised themselves up. That's true of almost any group that tries to put down roots in a new culture. But these memes reinforce attitudes that people should magically levitate out of their situations, without help, and disguise the difficulty of the situation. The devil is always in the details.

The medical system offers good examples of how the momentum and habit problem works. Doctors and the medical system use treatments that they know (evidence based medicine, standard of care), and for a number of reasons reject individualized medicine and even looking outside the box. They use administrative and organizational policies that they know, instead of adopting individualized medicine and team diagnostic approaches. They hate and resist change, just like the rest of us. They yell and scream that new things won't work, and will expose them to litigation, and try to make people believe that this will cost more.

The problem is, people get comfortable with the life they know, and changing it not only takes considerable effort, it places them in situations they don't know. People fear the unknown and change makes them unhappy. Nowhere is this more evident than in the world of illicit sex and abuse. Battered women return to the men who beat and in other ways abuse them. The prostitute recidivism rate is extremely high. Intervention in programs runs 6% getting them into a program, and 18% getting them permanently off the street. In a Chicago study on longer term intervention, "We found that 50% of the program vs 79% of the non-program participants had at least one criminal charge (p<0.05) corresponding to an incidence rate ratio of 0.43 (95% CI, 0.18 to 0.89) favoring the program."

Happiness studies indicate that people around the world adapt to their situations, even war torn environments, and have a level of happiness that precludes their trying to attain more. Even people who are homeless, adjust to living on the street, and cease trying to better themselves.

What we have in inner cities, are areas that provide habitation for people who can't find much for a job, and can't afford transportation and higher priced housing. They are functioning communities in every way, except to bring opportunity. People there don't need an education. They don't need a high paying job. They can live for short periods on government assistance. They can go to emergency rooms at hospitals. They can survive and be among family, friends, and familiar surroundings. The incentive to change is minimal. The incentive to keep an identity as a survivor, or alternately as a victim of society who is helpless, is very high.

On one hand, people know that they can survive the worst society can hand out, and the most dire circumstance. They will continue on as they are. On the other hand, there are many people who believe they are society's rejects, victims, hopeless, who will forever turn to government assistance to survive, and hate their perceived oppressors. Hopelessness is a very demotivating, destructive, attitude. The primary thing lacking for people in these situations is hope.

Almost all inner cities have pockets of poverty, unemployed, nearly unemployable, high minority populations, with minimal education, and with high violence and crime rates. The fast food industry is their biggest employer, which ensures they will remain at poverty level and on government assistance, and they travel by bus. Some write them off as hopeless. But the violence is spreading. I talked to two people recently who simply won't even visit the city because of the crime rates. The misery index is high.

This is what these pockets of poverty look like: In these pockets, kids feel hopeless about their future, so education is irrelevant to them. The few businesses that might hire them, won't because they are uneducated and often don't have transportation. The police often harass them. Gangs and gang violence are high. The schools are crumbling from disrepair because school funding distribution is based on the taxes paid in the community. Homes are in bad repair. Having more children is a way of getting more welfare and other government aid payments. Chronic disease rates are high from poor diets and limited access to medical care. They may or may not be able to keep a vehicle running. Taxes come from these areas are limited to sales and property taxes. Many work just enough hours to qualify for assistance. Many are felons, which limits their job prospects. They are families and neighborhoods who love each other, and want better lives. But they can't pull themselves up by flapping their arms, and they have a way of life that works. They remain a significant drain on our economy, at minimum.

Jobs, wages, and transportation are the things that will cure the problem. But that requires education, and in many situations, child care. And it requires a commitment from the surrounding communities and governments to get jobs into the area.

How do you fix the problem?

In 1966, not that anyone cared, I recommended to Senator Dirksen, that people in these poverty communities be re-homed in other, much better, communities. That isn't a complete answer, but it is a step in the right direction. Simply rehousing people in a different community doesn't work. The Cabrini Green housing project in Chicago housed 15,000 people. "...Crime, gang violence and neglect created deplorable living conditions for the residents." Moving people and their problems wholesale into another community only puts the same problems in a new setting.

Progress: "The Near North Side site formerly home to the William Green projects has been undergoing major redevelopment since the late 1990s, resulting in a combination of upscale high-rise buildings and row houses, with the stated goal of creating a mixed-income neighborhood, with some units still being reserved for public housing tenants."

The difficulty in staying in the same community is that problems can't be left behind, and if what you see around you is deterioration, then that's the normal you accept. There is little incentive to change things. But moving people in large numbers breaks up important social structures that it is better to leave intact.

The more likely answer then, is urban revitalization, which is also plagued with problems, but more realistic and offers more chances of success. This is outlined below:

Urban revitalization

Revitalization isn't urban renewal where areas are destroyed and people moved out. Most people don't want to leave their communities. They grew up there. Their family, friends, religious institutions, schools, stores, connections, and places they congregate, are there. They identify with all of this. Their lives are there. Instead, this is revitalizing communities and individuals, where possible.

Urban revitalization might also include the demolition of older, run down, unsustainable areas and migration into very close areas that have been modernized, with no destruction of the community.

For some, a fresh start is needed to break away from the wrong people and intractible problems. Give them incentive to go to better areas. This doesn't mean give them a bus ticket. But people don't fit well without some assistance.

The above two solutions, revitalization and fresh start, aren't inexpensive, but eventually it will end a horrible problem. They will turn around the education situation because people will have hope of a brighter future, and get people into jobs.

These problems are extremely difficult to fix. Corruption, learned helplessness, government dependence, waste, fraud, drugs, gang pressure, lack of social and business skills, violence, and pirating government programs for personal gain - are well entrenched in these areas. It's very hard to get employers into the area because of safety concerns and employee difficulties. But if 80% benefit, while 20% waste it, that's 80% helped. It is still a major boost in employment and income. In reality, test programs could be done to see how well it works, and then ramp up.

Financing urban and individual revitalization

St. Louis, MO, for example, has nearly 3 million residents. The pockets of poverty and crime are communities of around 8000 people. There are at least 12 of these. Around 58% of these people are in the age group 18 to 64, which is 4,640 people. If you invest $10,000.00 in each of these people to help them help themselves up, through various programs, that's $46 million for only one year.

In comparison, the cost of a sports stadium is $550 million.*1 So for a much smaller price, you can help 12 communities in St. Louis become what they should be.

Would this make financial sense? The tax revenue base for 96,000 new wage earning people for retail tax alone, based on $12,500.00*2 per household on average spent on consumption, annual retail tax revenue for (4640 people x 12 communities = 56,000 people x $12,500.00 x .08) would be approximately $56,000,000.00 annually. So the return on $46 million investment would be $56 million in each subsequent year in retail tax alone for all 12 communities. Return is 22% more than invested, in a single year. If there is an 20% dropout and failure rate, the return breaks even for the first year. Still a good deal, that keeps on giving year after year.

Another comparison: The average cost of college tuition and fees is $32,000.00 a year. This is based on 9 months, or 10,666.00 for 3 months. So supporting people in paying apprenticeship or training programs for 3 months, including room and board, should be comparable, or less. Administrative costs should be held to 5 to 10% as a condition of contracting this, otherwise administration takes all of the money.

These problems can be resolved. What it takes is the political insight, vision, financing, and will to do it. Our best future depends on finding ways to resolve problems without causing greater problems. The next two sections discuss programs that work, and financing opportunities.

Programs that work

The lessons others have learned are that every place and situation is different. Nothing consistently works everywhere. But the things that are consistent, without which nothing works, are:

1. The need for philanthropy in these programs, to get them going.

2. The need for government scaling. This takes a long term commitment from government leaders, not something that changes every time new leaders come in.

3. Prevention. As the old saying goes, an ounce of prevention is worth a pound of cure. We are not aware that most Americans are one paycheck away from being on the street. Ensuring that job loss does not become a cycle of poverty is one way of preventing these problems from eventually becoming intractable horror stories.

Political, community, and philanthropic leaders have found ways to work together in financial partnerships. And I would suggest adding the private sector in programs. One example is "the social impact bond (SIB)—a new tool for scaling programs that help poor and vulnerable people. A SIB is a multistakeholder partnership in which philanthropic funders and impact investors—not governments—take on the financial risk of expanding proven social programs. Nonprofits deliver the social program to more people who need it; the government pays only if the program succeeds." The SIB was introduced in the UK.

"Despite their name, SIBs are not bonds or debt instruments but rather partnerships managed through a series of contracts. In fact, the original idea was to call them “social impact partnerships,” rather than bonds. SIBs bear some resemblance to the multiyear contracts governments already enter into, which are subject to annual budget appropriations." The McKinsey Institute has many helpful articles on financing social change.

Another effective solution was done by one benevolent man in Florida. One Man’s Millions Turn a Community in Florida Around. Property values have climbed. Houses and lawns, with few exceptions, are welcoming. Crime has plummeted. Graduation rates soared.

Many companies have philanthropic programs, or their leaders have gone on to start philanthropies. Examples include Google at Google.org, The Gates Foundation, the Chan Zuckerberg Initiative, and the eBay Foundation (Opportunity Project).

A consortium of many of these companies, philanthropic organizations, interested sports figures, local and federal government funding, and wealthy individuals, could focus on various aspects of community improvement, business and job creation, education, and other things to give these communities a hand up and make them self sufficient.

References

Suburban Poverty: A Year of Lessons - Brookings Institute

Confronting Suburban Poverty In America

Five Lessons from Leading Innovators on Confronting Suburban Poverty

One Man’s Millions Turn a Community in Florida Around

Chan Zuckerberg Initiative

Google.org

The Gates Foundation

One Man’s Millions Turn a Community in Florida Around

eBay Foundation (Opportunity Project).

Most Americans are one paycheck away from the street

Cabrini Green Housing Project - Wikipedia

The McKinsey Institute has many helpful articles on financing social change.

Discuss issues of the future in the FaceBook Group, The Future Project, or on your own page in the FaceBook comments below.

Notes

*1 An estimated $15 billion has been spent in recent history by cities on stadiums. They received an estimated $118 billion in business revenue over a d15 year period. This is an estimated 8% return on investment, which is about the same as the sales tax rate for one year.

*2 Households spend an average of $10,000 to $15,000 on consumption, which is taxed at retail tax rates of 6 to 8%. Households in the $40,000.00 and below federal tax brackets mostly don't pay any federal income tax, but they pay a lot of retail and other taxes and contribute to the community's business revenue. The lower two financial quintiles, when looking at what most households make who are below $40,000.00, are in a major node around $15,000.00. They are mostly single parents, as are over half of households in the US. In pockets of poverty, the income per household is mostly from minimum wage jobs in the fast food industry.