2. What Doesn’t Work

It is better to start by identifying what doesn’t work — because, if we stop doing it, we may be able to use the money saved to invest more in what does work. After the disturbances in 1992 in South Central Los Angeles that followed the Rodney King trial, a national CBS/New York Times poll asked a cross section of Americans whether they would be willing to support, financially and politically, creative solutions for inner cities. A majority of the respondents nationally said they would be willing to do so — as long as the strategies actually worked. The next question in the poll was, “What is the major obstacle to doing more?” A majority of the respondents said that the major obstacle to doing more was “lack of knowledge.”

That is not so. To a considerable extent and based on scientific evidence, we know quite a bit about what doesn’t and what does work. Enough is known to assemble a national private and public sector policy that stops doing what doesn’t work and that uses the money so saved to help replicate what does work, “at a scale equal to the dimensions of the problem,” to quote the Kerner Commission.

In the 1980s and 1990s, much public sector policy on the truly disadvantaged has been premised on the assertion that, in effect, nothing works — except supply-side economics and prison building. In fact, considerable evidence suggests just the opposite. Supply-side economics and prison building are on the top of the list of what doesn’t work for the truly disadvantaged.

Supply-side economics is, in particular, the notion that tax breaks should be given to the rich and to corporations — so that they will invest more. When they invest more, benefits will “trickle down” to the middle class and to the poor, according to the theory.

Supply-side economics also rests on the notion of an infallible self-regulating market. The market is said to be the most rational and equitable mechanism for regulating human affairs. Efforts to interfere with it by governments or outside agencies will only reduce its power, it is said.

However, in the real world, the market comes up short when it comes to democratic as well as moral values.

In terms of democratic values, supply-side politicians try to present markets in terms of pure competition. Entrepreneurs are said to serve the public by lowering prices and improving quality in constant, intense competition. In reality, this vision is the worst nightmare of any corporation. Successful corporations move quickly to lessen their risks by increasing their size and reducing the threat of competition. Many markets become oligopolies — controlled by a few, with tough barriers to entry to prevent new competition. Supply-siders “revel in the rhetoric of the free market, but the reality is one of highly concentrated, unaccountable economic power,” concludes Professor Robert W. McChesney at the University of Wisconsin. This is undemocratic. In markets, says McChesney, “one’s income and wealth determine one’s power. It’s a system of ‘one dollar, one vote,’ rather than ‘one person, one vote’.”

What of moral values? The commercial marketplace needs advertising. Something becomes “true” in the advertising marketplace if you can get people to believe it. For example, as McChesney observes, the notion is false that drinking a certain beer will make someone more athletic and more attractive sexually. But if advertising convinces people of this Marlboro Man image and they purchase the beer, the notion becomes “true” and the advertising executive who created the message is financially rewarded. In other words, the morality of the market can be based on distortion if not outright lies. The morality of the market is not based on values like love, family and friendship — even though polls consistently show that these values are prized more highly than the materialistic values associated with the market.

Beyond issues of democratic and moral values, the supply side market ideology has failed the poor, the working class and the middle class in terms of economics. Chapter 1 suggested the long-term trend since the Kerner Commission of the rich getting richer and the poor getting poorer. As measured by a number of indicators, this inequality grew most rapidly during the height of supply-side economics in the 1980s, as chronicled in many books, among them The Politics of Rich and Poor, by conservative analyst Kevin Phillips.

For example, from 1980 to 1992, overall child poverty increased by 22 percent, according to the Bureau of the Census of the Department of Commerce. Today, the child poverty rate in the United States is 4 times the average of Western European countries. From 1980 to 1990, taxes for the poorest 20 percent of the population were increased by 10 percent, while taxes for the richest 5 percent were reduced by about 13 percent, based on statistics from the Congressional Budget Office. (Figure 2-1). From 1977 to 1988, the incomes of the richest 1 percent in America increased by 120 percent and the incomes of the poorest fifth in America decreased by 10 percent based on statistics from the Congressional Budget Office and the Center on Budget and Policy Priorities. (Figure 2-2.) From 1979 to 1989, persons in the 10th percentiles had their real wages reduced by over 13 percent, while persons in the 90th percentile had their real wages increased by 5 percent, according to the President’s Council of Economic Advisors. (Figure 2-3.) The U.S. has had the most rapid growth in wage inequality in the Western world, with racial minorities suffering disproportionality. Today, the top 1 percent of Americans have more wealth than the bottom 90 percent. In terms of wealth and income, the U.S. is the most unequal industrialized country in the world, and is growing more unequal faster than any other industrialized country.

From 1981 to 1991, the national debt increased from $800B to well over $3T, during the height of supply-side economics. Intentionally, some like Columbia University Professor Alan Brinkley assert, the debt, and the need to finance it, has undercut support for what works — not by discrediting successful inner city investments, but by sacrificing them to deficit and debt reduction.

Supply-side economics also placed a priority on deregulation. One notable result consisted of the failures in the savings and loan industry. The federal government bailed out the industry by floating 30 year bonds. Mark Zepezauer and Arthur Naiman estimate that, depending on interest rates, the cost of the bailout will be perhaps $950B — or about $32B per year for 30 years:

All this money will come from taxpayers and will go to the people who bought the bonds. So, ultimately, the S&L bailout amounts to a massive transfer of wealth from ordinary people to investors (most of whom are wealthy) — as well as to the crooks who looted the S&Ls. (Few of them were convicted, by the way, and the average sentence of those who were was less than two years.)

Supply-side enterprise zones have failed, for the most part. Tax breaks were given to corporations so that they, it was argued, would move into neighborhoods like South Central Los Angeles and employ young minority dropouts. Yet, for example, 6 years after the Los Angeles riot, supply-side had incentives failed to attract businesses into South Central, and the unemployment rate for young, African-American males was over 30 percent.

Beyond Los Angeles, more than 500 enterprise zones have been tried in 37 states. Evaluations have not found significant employment or economic development benefits. For example, in Louisville, Kentucky, there was little evidence that tax breaks induced anyone to invest in an enterprise zone who otherwise would not have done so. Only 14 percent of the jobs created in the zone went to persons unemployed or on welfare who lived in the zone. Experience so far suggests that most of the jobs and businesses are imported from another city or nearby neighborhoods not quite devastated enough to fit the enterprise zone criteria. This has not added up to many new jobs or reduced the overall unemployment rate in the enterprise zone. Nor does the plan guarantee that the jobs will pay decent wages or go to inner-city residents.

The U.S. General Accounting Office’s evaluation concluded that the Maryland enterprise zone program “did not stimulate economic growth as measured by employment or strongly influence most employers’ decisions about business location.” According to Business Week, one study found that infrastructure, low crime rates and access to labor markets were more important factors in site selection than tax rates.

In its evaluation, the Urban Institute reported that “...extensive evaluations of state enterprise zone programs have found no evidence that incentives have contributed to employment or investment growth in designated areas.” The study also found that “most proposed enterprise zone incentives are poorly targeted on the poor. Few of the tax benefits in the leading proposals accrue directly to the disadvantaged residents of enterprise zones. Instead much of it goes to reward businesses for behavior that will not necessarily benefit the poor.”

The Urban Institute study examined proposals for 50 enterprise zones. It was estimated that the 50 zones would cost $1.8B in tax revenues forgone over 5 years. Yet it also was estimated that, even if the proposals had been a complete success — an outcome that the Institute considered quite unlikely — they would have affected at most 1.5 percent of the U.S. poverty population. Importantly for us, the Urban Institute study concluded that the federal resources expended to provide these generous tax subsidies in the 50 enterprise zones could better be spent expanding effective programs for low-income children.

Enterprise zone-like tax breaks and related benefits also have led to scandal in the inner city, like the money misspent by the Wedtech Corporation in the Bronx.

As studies both in the United States and in Great Britain show, the hidden costs of enterprise zone strategies in lost tax revenues actually render them prohibitively expensive, in terms of costs per job created. “There is evidence,” wrote the conservative Economist, “that they [enterprise zones] are often wasteful and tend to displace rather than create business activity.”

Based on thinking similar to enterprise zones, the supply-side targeted jobs tax credit, given to employers who hired welfare recipients and other low income people from 1978 to 1995, failed. According to the U.S. Department of Labor Inspector General, audits found that 92 percent of the workers hired under the program would have been hired anyway. The program generated $140M a year in benefits at a cost of $374M a year. In terms of cost-benefit ratios, this means that, for every dollar invested, taxpayers received 37 cents in benefits.

The federal government’s empowerment zones have eliminated many of the shortcomings of enterprise zones, but conclusive evaluations are not yet available. The empowerment zones still include tax breaks to corporations, but add direct investments of public funds to create linkages among economic development, housing rehabilitation by community-development organizations, transportation, job training and placement, youth development, and community- based policing. The overall program is funded at $3.5B. Six urban empowerment zones — Atlanta, Baltimore, Chicago, Detroit, New York, and Philadelphia-Camden, New Jersey — are funded at $100M each, in addition to tax breaks to business to settle in the zones. The funds are being distributed over 10 years. Two “supplemental” urban empowerment zones — Los Angeles and Cleveland — are funded at $125M and $90M, respectively.

The Job Training Partnership Act

Begun in the 1980s, the supply-side Job Training Partnership Act (JTPA), which remains the primary federal job training program today, has failed out-of-school youth. Evaluations in the 1980s showed that, while the results were marginally positive for disadvantaged adults, out-of- school youth in the program actually did worse than comparable youth not in the program. For example, young men under age 22 who participated in the program had earnings $854 lower than their comparison group, with significantly greater deficits for those who took on-the-job training.

JTPA does not provide for job creation — only training. JTPA enrolls only about 5 percent of those eligible for assistance, and critics say it is the wrong 5 percent — certainly not the truly disadvantaged. A 1991 assessment by the U.S. General Accounting Office concluded that much JTPA training actually involves placing “trainees” in low-skill work rather than investing in improving skills. As Elliott Currie, of the University of California at Berkeley, concludes, studies of how JTPA works suggest that its main function has been to provide a stream of low- wage workers — most of them already comparatively “job-ready” — to private employers who would probably have hired similar people anyway without the program. Similarly Gary Orfield and Carole Ashkinaze conclude:

[The program] placed many in what turned out to be marginal, short-term, part-time jobs with high turnover rates. What appeared to be high placements at low cost often actually involved spending many hundreds of dollars per young person to get a part-time job that would have been available without training and which lasted less than three months.

For women, goal of the current federal training system has been not so much to provide skill training than to channel relatively well-prepared women into traditionally “female” and low- paying jobs in private industry, says Elliott Currie. For example, in Atlanta the local JTPA program “concentrated its resources on training African American women with high-school degrees for traditional low-wage, dead-end, entry-level jobs, a substantial number of them as hotel maids.”

JTPA also replaced public sector oversight largely with great delegation to contractors, who focused on the short-term and led to many faults in the system. Concluded Jeff Faux:

There is a problem when you do this [training] on a short- term contract basis... [I]n human capital development, you’re looking at what happens to the person down the line — you need institutions that are going to be around in 10 years...Where you have a system of annual contracts, and people bid for them and put together a program, those people may be here tomorrow or may not be. What you miss is people who are professionals in this field and who see themselves as responsible for developing these programs over a long period of time.

These views are further reinforced by Harvard Kennedy School Professor John Donahue, who concludes in his book, The Privatization Decision, “There is no compelling evidence that the JTPA system, on balance, makes much difference for the employment, earnings and productive capacity of American workers.”

In 1994, the U.S. Department of Labor concluded, “JTPA programs in general appear to have no positive impact on the earnings, employment, criminal involvement or welfare dependency of male and female out-of-school youth.”

Some critics believe that control for implementing training and placement should be taken from corporate-dominated Private Industry Councils (PICs) and given to redesigned, local entities in which indigenous, non-profit, community leaders have at least as much representation as the for-profit sector. We endorse this recommendation, and propose a new national and local workforce development system in Chapter 6 to replace JTPA.

The Success of Alternative Macroeconomic Policy

Beyond this documentation that supply-side economics does not work (except for the rich) there is evidence that the opposite policy has worked over the 1990s. In 1993, taxes were raised to cut the federal deficit. Said Representative Christopher Cox, (R., California) at the time, “[The tax increase] will kill jobs, kill businesses, and, yes, kill even the higher tax revenues that these suicidal tax increases hope to gain.” Instead, in 1998, the economy was robust. Inflation and unemployment were as low as they had been in a generation. At least this was so for mainstream, middle class Americans. High rates of child poverty and of structural unemployment remain in inner cities.

Smokescreens

Especially during the 1981 to 1992 period when supply-side economics was most in vogue, but also continuing on in the 1993 to 1998 period, certain political catch phrases have been attached to policy for the truly disadvantaged. The phrases include words like civil society, civility, volunteerism, self-sufficiency, empowerment, coalition, partnership and devolution. With appropriate recognition of their strengths, weaknesses and limitations, we have found that these concepts have a role to play in national policy. However, used to excess, cynically, as public relations political spin vehicles and without an understanding of what happens on the street, these concepts sometimes become supply-side smokescreens for continued disinvestment. They can cover up budget decisions against investing to scale in the children, youth, families and neighborhoods of the inner city. Briefly, consider each phrase:

Civic Society and Civility. It is fashionable to lament that families, neighborhoods, schools and congregations are in disrepair because Americans have lost the sense of small town civic mindedness that Alexis de Tocqueville praised over a century and a half ago — the “habits of the heart” on which he said democracy depends. A healthy civic society is said to promote considerate manners, neighborliness, a willingness to help others out in the community — a sense of civility. Today, there is a profusion of projects and commissions on civic renewal and civility headed by persons of widely differing political philosophies.

However, in some cases, calls for a civic society and more civility appear to involve those at the top, who have benefitted from supply-side economics, asking those at the bottom to behave themselves. As Professor Michael Sandel of Harvard University has concluded:

When the growing gap between rich and poor leads the affluent to flee public schools, public parks and public transportation for privileged enclaves, civic virtue becomes difficult to sustain, and the common good fades from view.

Any attempt to revitalize community must contend with the economic as well as the cultural forces eating away at the social fabric. We need a political philosophy that asks what economic arrangements are hospitable to self-government and the civic virtues that sustain it.

Volunteerism. In the case of military spending, there is agreement that we need money for paid professional staff, paid support staff, equipment and infrastructure. Corporation executives say that, to be competitive, salaries must be high, managers need qualified support staff, and equipment and infrastructure must be in place. Yet many also say that, for American poverty in the midst of plenty, increased racial segregation, the deterioration of inner city infrastructure, the growing gap between rich and poor, and high unemployment in places like South Central Los Angeles 5 years after the riot there, the answers don’t involve money as much as volunteerism and self-sufficiency.

Such views form a double standard that our experience finds unsubstantiated. Evaluations by the Eisenhower Foundation have taught that, while the spirit of volunteerism is to be commended, it has sharp limitations in the inner city. Drawing on effective volunteers is difficult even in more advantaged communities. For example, a 1989 national Washington Post- ABC poll found 85 percent of the respondents agreeing that very few people “would be willing to join a community group against the drug problem.”

The limitations of volunteerism are more apparent in the inner city. The fact that inner city residents are resource-poor to begin with is part of the reason why they are faced with the problems of drop outs, unemployment, crime, drugs and deterioration of community life. In a West Philadelphia inner city nonprofit community program which the Eisenhower Foundation had evaluated in the 1980s, staff noted special difficulty in recruiting volunteers because of the high proportion of female-headed households in the neighborhood. Many women in the community already had their hands more than full coping with both family and work. The requirements of recent welfare reform make this limitation more relevant. Yet the Eisenhower Foundation also found that it often was difficult to recruit male volunteers in poor neighborhoods. Many of those who might have been qualified for volunteer work needed paid employment. An Eisenhower-evaluated program in the East New York section of New York City, for example, planned a volunteer subway station watch. Despite considerable efforts, there was little success in finding volunteers. The Project Director attributed the lack of response to residents’ need for paid work, as opposed to volunteer work, and the possible danger involved. Even when sufficient volunteers can be found, programs do not necessarily show positive outcomes. For example, volunteer citizen block watches do not necessarily reduce crime in inner-city neighborhoods, based on many evaluations over the last decade. Sometimes they reduce fear while crime remains high or even increases. This can create a false sense of security.

Some of the clearest quantitative evidence on the limits of volunteerism is found in the recent Eisenhower Foundation evaluation of youth development organization and police partnerships in Boston, Chicago, Philadelphia and San Juan, summarized in Chapter 3. Inner city nonprofit youth safe havens were integrated with police ministations, which operated in the same space. Police mentored youth. Youth leaders joined police on community patrols and school consultations. During the first 2 years, the programs in the 4 cities were funded at levels about as originally planned. During the last year, there were very sharp funding cuts, because of federal belt tightening. During the first 2 years, paid civilian staff ran the programs, — and serious crime declined an average of 18 percent in the target neighborhoods in the 4 cities. During the last year, paid staff were cut to the bone, much more reliance had to be given to volunteers — and serious crime declined by an average of 3 percent in the 4 target neighborhoods. The findings were statistically significant. Just as the Eisenhower Foundation’s evaluations have found that good, reliable volunteers are not easy to find in inner city neighborhoods, so others have warned about reliance on middle class or wealthy volunteers who live in the suburbs. Andrew Kohut, who headed an extensive study of “citizen engagement” for the Pew Charitable Trusts, has concluded, “It’s a truism that people volunteer in their own social strata in areas where they feel comfortable.” Professor Julian Wolpert, at Princeton University, has observed that volunteers overwhelmingly prefer to work in their own communities. “As a rule, volunteers don’t commute.” The problem is illustrated in a current Eisenhower Foundation evaluation, where middle class mentors promised to volunteer, but then did not participate. Talking about the exodus to the suburbs, Richard Leone, President of the Twentieth Century Fund, has concluded, “What used to happen in cities is that well-established and well-off people and major corporations had a real stake in neighborhoods. But economic stratification has increased every decade since World War II and it’s had a real impact.”

In other words, volunteerism in poor neighborhoods has suffered as the rich have gotten richer and the poor have gotten poorer.

A related issue is that good volunteerism is really not free. Professor Abe Wandersman at the University of South Carolina, who specializes in volunteerism, has said, “Effective volunteerism requires understanding the costs and benefits to the volunteers.” For a volunteer to benefit and to be productive, the volunteer must be screened, oriented, trained and supervised. One-to-One/The National Mentoring Partnership, which links mentors to children, has said that the cost for one mentor for one year in New York City is $192. However, in its evaluation of volunteers in the Big Brothers/Big Sisters Program, Public/Private Ventures estimates the cost for one mentor for one year to be $1,0000. This evaluation also estimates that perhaps 5 to 15 million youth need such volunteer mentors. Hence the cost might be $5B to 15B per year if such volunteerism were replicated to a scale equal to the dimensions of the problem. To us, therefore, those who advocate for volunteerism are not necessarily in agreement among themselves on the real costs needed to generate real benefits.

In this context, a 1997 Philadelphia summit on volunteerism has been viewed with skepticism by some observers, including ourselves. At the time of the summit, the New York Times interviewed residents in the impoverished Logan neighborhood of North Philadelphia, where the Eisenhower Foundation earlier had funded a community-based youth development and crime prevention replication. One resident thought the summit a bit “naive” because “you have to have a certain expertise among the volunteers, and in communities like Logan, people don’t have the expertise.” The director of the nonprofit community program observed, “Volunteering is really good, but people need a program to volunteer for, and in order to do that, you have to have dollars.” Pablo Eisenberg, Executive Director of the Center for Community Change, concluded that “no matter whether you attract lots of volunteers, money is still the most important ingredient in reducing poverty and helping poor people. You need money even to organize volunteers.”

Self-Sufficiency. Because of the national debt that expanded from $800B to over $3T from 1981 to 1991, during the height of supply-side economics, we were told that programs for the truly disadvantaged had to be reduced or eliminated. This made sense, we were told, because these programs didn’t work anyway. To make best use of the diminished domestic funds that remained, inner city programs, typically run by nonprofit organizations, were encouraged to become financially “self-sufficient” from public money. Private sector funders also tended to require self-sufficiency. There are some examples of such self-sufficiency that works. One of the best is Delancey Street in San Francisco. Co-founded by Mimi Silbert, Delancey Street is run entirely by adult ex- offenders, who net over $4M per year from their businesses. Delancey Street has been replicated in several locations.

However, Delancey Street has been an anomaly when it comes to self-sufficiency — especially for high-risk children and youth who are too young to work. In the 1980s and 1990s, over and over again Eisenhower Foundation evaluations found that such programs were frustrated, hampered, and sometimes stillborn because of insufficient funds for paid staff, insufficient funds for staff development, an absence of qualified, trained people to hire even had the funds been available, lack of space for program activities, lack of money to pay for the most basic, essential supplies and lack of internally generated income streams. For example, in the program which the Foundation had evaluated in East New York, despite help from several VISTA volunteers, the project was “overwhelmed by the work.” One staff member said, “There are too many things to do at one time — block organizing, clean-ups, meetings, fundraisers, the after-school program and cleaning the office.” We found such programs had trouble hiring, and even more trouble retaining, Project Directors — in part, as one evaluation notes, because of the “low salaries offered.” In West Philadelphia, the program we evaluated had only one staff member for the first 10 months of operations. The first Project Director “received a better job offer and resigned” after a few months’ work, as did the coordinator of a program for senior citizens. The program’s Executive Director commented, “With non-profits, it’s terrible. The pay is low, especially for professional people. They’ll do it when they don’t have other opportunities, but when something better comes up you can’t blame them for taking it.”

Until a long run public and private strategy can be funded and well managed to sustain promising groups while they are technically assisted to carry out the principles of Delancey Street-like successes, the shortcomings of supply-side self-sufficiency are all too apparent. This conclusion is relevant when it comes to replicating programs that have sustained themselves long enough to become models. Even Delancey Street, which originally accepted no public or foundation funding, now is approaching the public sector and foundations for funding to replicate on a broader scale. The shortcomings of self-sufficiency also mirror the limits of volunteerism.

Empowerment. In the 1980s, “empowerment” also became a fashionable term. As part of supply-side philosophy, empowerment meant control by the poor over their own destinies. The example used most was in public housing. Empowerment was used to describe programs for tenant management and tenant ownership. One tenant management demonstration, in Washington, D.C., became a showcase for visitors. Even the Queen of England came to see it. Yet no national strategy was created and funded to replicate tenant management and ownership to scale in public housing across the nation. Funding would have been needed to train tenants in management. Job opportunities would have been necessary to assure that those who owned their homes could pay their mortgages. In the absence of such a policy, tenants in only a relatively few demonstrations around the nation were “empowered.” There never was much attention given to how “empowerment” would be a practical, day-to-day mechanism through which a model was replicated to scale. That seemingly required money, and money, at least public sector funding, was never central to “empowerment.” However, after public sector executives who articulated empowerment left government, money came into play — in that they received large fees for talking about empowerment to audiences that were well off and could afford the fees.

Nor has empowerment been used in ways where it could have real meaning. For example, reform of the Job Training Partnership Act to better link it to real jobs with upward mobility for welfare mothers and out-of-school youth could well be labeled as act of empowerment — by enabling dependent populations to become wage earners and taxpaying citizens.

Coalitions and Partnerships. Grassroots coalition building was another popular catch phrase for inner city programs in the 1980s. There was, and still is, a lack of clarity in many grassroots initiatives as to why coalitions might help solve inner city problems. Part of the rationale seemed to be that resources presumably already were available in the communities, but were poorly managed and needed coordination via a coalition.

Especially in the climate of scarce resources for the inner city, there has as yet been no proof that this assumption holds. Perhaps the best examples come from the Center for Substance Abuse Prevention (CSAP), a federal agency which we believe has done a good job. Over the last decade, CSAP has made hundreds of grants — to both community-based coalitions and to single youth agency service providers. There is no evidence that the coalitions produced better outcomes than the single agencies. Coalitions required a lot of meetings. The single agencies gave priority to direct service provision, building partnerships with others only if and when they appeared productive. It has been the experience of the Eisenhower Foundation that resource- poor organizations will resist collaborations and their many meetings unless there is a reasonably clear promise that the organizations will secure more funds for their work.

However, if coalitions and partnerships are not used as smokescreens for disinvestment by the public sector, we believe they have potential. For example, if the partners of a coalition are adequately funded, and if there also is additional funding for joint work, then the partners can make site visits to learn one another, create evaluations which might not be feasible on a single agency basis, and perhaps share a common media director who communicates their successes in ways that generate publicity and then more funding.

Devolution. The word devolution has become popular as a supply-side strategy to shift power away from federal government. The most publicized current venue for devolution is to shift welfare programs to state government. However, there is no clear-cut evidence that state government works better than federal government. There is some basis for saying that states have been “creative laboratories for change,” to use language that frequently is used today. An illustration is the success of southern states in reducing infant mortality. Yet there is great variability among states. There are relatively innovative states — like New York. There also are states which are much less innovative. Some states, like Vermont, have true participatory democracy, while other states are entrenched with cronyism.

Experience also has shown that, when the federal government makes block grants to states that affect high-risk children and youth, governors do not always distribute the block grants proportionately to the populations in need. For example, there have been years when California did not grant Los Angeles nearly its proportionate share of drug block-grant money. The same has been true for Wisconsin and its distribution to Milwaukee.

But the key issue is why we should devolve to the state public sector bureaucracy when, as we shall see in Chapter 3, there is considerable evidence that local, private, nonprofit, grassroots programs are more successful than state bureaucracies. One reason why supply-side supporters may be against devolution to the grassroots level is that grassroots organizations tend to be opposed to supply-side economics. They tend to support bubble up, demand-side economic development that is run indigenously. Another reason may be that too much devolution is not necessarily good for the monied interests that benefit from supply-side economics. Such interests often can be at the losing end of local battles led by grassroots groups. These interests often have more clout in lobbying state legislators. In fact, there is some evidence that lobbyists are increasing brandishing a new weapon against local and grassroots empowerment, as part of devolution: pre-emption. Some well-financed lobbyists are pressuring state legislatures to pre- empt local ordinances. For example, grassroots activists have won local restrictions on indoor smoking and handgun use in some localities. In response, the Tobacco Institute and the National Rifle Association have taken pre-emption campaigns to statehouses — to try to reverse such victories.

Conclusion. We do need strong civic institutions in the inner city. Volunteers usually are present in adequately funded programs that work. Delancey Street is a worthy model for self- sufficiency that should be replicated. Inner city families can exit poverty if they are empowered by real job opportunities. Those opportunities need to be partnered with quality education, remedial education and job training in grassroots programs that work. Devolution can succeed — at that grassroots level, based on existing evidence. These words only become suspect when used as smokescreens in place of real investment in the human and physical capital in the inner city.

In recent years, it has become fashionable to base policy not only on supply-side economics and its associated smokescreens but also on the argument that, in effect, prison building is one of the best short run policies to deal with the truly disadvantaged and the inner city — especially when it comes to the young minority males who are viewed by many as a threat to civic society and civility.

As a result, while there were 200,000 people in prison in 1970, today there are about 1,585,000 in prison and 2,300,000 on probation and parole. There are more people in prison in the U.S. than any country in the world, including China (about 1, 237,000) and Russia (about 1,017,000), based on estimates by The Sentencing Project. (Table 1-1.) In the 1980s and 1990s alone, the number of prison cells tripled, to over 1,000,000. Prison operating costs rose from $3B in 1980 to almost $18B in 1994. Over that period, combined prison construction and operating costs totaled $163B.

The single most important explanation for the increase in the prison population was drug enforcement. The 1985 Omnibus Drug Enforcement, Education and Control Act greatly increased penalties for drug offenders. These policies include mandatory minimum sentences, and repeat offender provisions such as “three strikes and you’re out.”

In the 1980s and 1990s, the U.S. continued to have both the highest rates of violent crime, the highest rates of child homicide and the highest rates of incarceration in the industrialized world. These comparisons among nations do not provide clear evidence that more prisons result in less crime. In the 1990s, police-reported violent crime rates have declined in the U.S., especially in big cities. Prison building has been given as one of the reasons. Other explanations include success with problem-oriented policing, success with community-based youth development and prevention programs, a decline in the relative proportion of persons in their high-crime teen and early adult years and a decline in turf wars among big city drug dealers.

In addition, in the mid-and-late-1990s, murder rates in middle-sized cities, like Louisville, KY, and Nashville, TN, began rising — in large part because drug dealers began moving into such places, where a new cycle of violent turf wars may be starting.

The Impact of Prison Building on Crime

A number of studies have attempted to measure the relative impact on crime of the national prison building boom. The most prestigious, complete and recognized study is by the National Academy of Science. The Academy’s Panel on Understanding and Preventing Violence found that, from 1975 to 1989, “Increases in both a convicted violent offender’s chance of being imprisoned and the average prison time served if imprisoned at all combined to cause a near tripling of the expected prison time served per violent crime.” As a result, the Panel estimated that increased use of prison from 1975 to 1989 prevented 10 to 15 percent of potential violent crimes. However, the number of violent crimes committed in America was the same in 1989 as in 1975 — 2,900,000. “This suggests that by itself the criminal justice response to violence could accomplish no more than running in place,” the Panel found.

Conventionally, it is argued that prison has 2 crime reducing effects — incapacitation and deterrence. Incapacitation is the separation of incarcerated criminals from the community to prevent them from committing more crime. It is plausible that the estimated 10-15 percent of violent crimes prevented by prison building, according to the National Academy of Science, was due to incapacitation.

It is less plausible that it was due to deterrence. Deterrence means discouraging potential offenders on the outside through the threat of punishment. Joan Petersila, former Director of the RAND Corporation’s Criminal Justice Program, concludes, “Prison is most likely to deter if it meets two conditions: social standing is injured by the punishment and the punishment is severe in comparison to the benefits of the crime.” Among truly disadvantaged young men in particular, often neither condition holds. Violence can be the only, or one of the few, effective ways to achieve status, respect and other personal needs in low income neighborhoods, based on the research of Professor Delbert Elliott at the University of Colorado. This is especially so if a youth is a member of a gang. Going to prison can toughen one up, enhance one’s reputation and provide good education in crime, based on research by Professor Elijah Anderson at the University of Pennsylvania. In the case of drugs, the persons most frequently arrested are not the mid- to high-level drug dealers, but young street runners, and they are almost immediately replaced. For overall youth crime, Beatrice Hamburg, departing President of the William T. Grant Foundation concludes:

The evidence is clear that enactment of increasingly harsh and punitive laws, including reducing the age for sentencing youngsters to adult prisons to 12 or 13 years old, does nothing to deter youth crime or remove the causes of youth crime or violence. On the contrary, a number of studies confirm that the harshest laws have led to an unintended opposite effect of higher recidivism and more serious crime.

While the decline in violence is relatively small, according to the National Academy of Science, the cost is relatively great. State prison operating costs rose from $3B in 1980 to about $18B in 1994. Over that period, combined state prison construction and operating costs totaled $163B. In a state like New York, it costs over $100,000 to build a new prison cell. It costs up to about $30,000 per year to keep someone in a New York state in a high security cell. This cost is higher than sending a young person to an Ivy League university. The dollar costs do not appear to compare well to the benefits of programs that work, some of which are summarized in Chapter 3. Many public and private initiatives that work, like preschool, the Quantum Opportunities Program and Job Corps, appear to have superior cost-benefit ratios when it comes to crime. In addition, these programs often simultaneously improve educational attainment, improve employability, reduce teen pregnancy and reduce dependency — while prison does not.

Boot Camps

Nor do boot camps appear effective or cost-effective. Boot camps are for young criminals — most of them first-time offenders who were engaged in nonviolent acts, like burglary and drug dealing. Several months of tough treatment and close supervision by uncompromising drill instructors are used to try to instill discipline and a desire not to repeat. By the mid-1990s, 30 states and 10 localities operated boot camps, as does the federal government. However, evaluations have consistently found that the recidivism rates of boot camp graduates are no better than those of convicts sentenced to traditional prisons. In the most comprehensive scientific evaluation to date, of boot camps in 8 states, Professors Doris MacKenzie and Claire Souryal at the University of Maryland concluded that “the impact of boot camp programs on offender recidivism is at best negligible.”

The Costs of Prison Building

The dollar costs of prison building, prisons and boot camps are just part of the total costs. There also are other costs — related to race, education, housing, lobbying and supply-side economics.

Prison as Civil Rights Policy In the early 1990s, 1 of every 4 young African-American males nationally was in prison, on probation or on parole at any time. By the late 1990s, 1 of every 3 young African-American males nationally was involved in the criminal justice system at any time. From 1988 to 1994, 38 states and the District of Columbia experienced an increase inthe racial disparity in their rates of incarceration. Nationally, the African-American rate ofincarceration in state prisons during this period increased from 6.9 times the rate of whites to 7.7.

These numbers are harsh reminders of the Kerner Commission’s prophecy of widening racial disparities. As a result, today the rate of incarceration of African American men in the U.S. is 4 times the rate of incarceration of Black men in pre-Nelson Mandela, apartheid South Africa.

One important reason for these high rates of African American incarceration and for the growing racial disparities has to do with the long prison terms given for crack cocaine, disproportionately involving minorities, compared to the relatively short prison terms given for powder cocaine, disproportionately used by whites. In terms of such sentencing disparities, and the failure of national policy and leadership to reverse them in the 1990s, prison building, we believe, has in some ways become a part of the nation’s civil rights policy.

Prison as Education and Housing Policy. Based on a 1997 study by the Justice Policy Institute, from 1987 to 1995 state government expenditures on prisons across the nation increased by 30 percent, while spending on higher education fell by 18 percent. In 1995 alone, state spending on prison construction increased $926M nationwide, while state building funds for higher education dropped a similar amount.

The state of California has the highest number of prisoners. Over the past 20 years, California has built 21 new prisons. Despite record numbers of college-eligible students, only 1 new university was added to what had been a preeminent public university system. California now is spending more for prisons than for higher education. Over the 1990s, the number of prison guards has increased by 10,000, while the state university system had to lay off 10,000 employees. Today the California state university system spends $6,000 per student and pays $34,000 a year per prison inmate.

Similarly Florida now spends more on its prison system than on its public universities, while a decade ago its education budget was considerably higher than its prison budget. In response, the Justice Police Institute report recommends a moratorium on new prison construction and a 60 percent reduction in the nonviolent prisoner population over the next 5 years. We concur.

The Justice Policy Institute study compares prison building to university building. Other studies have compared prison building to local public elementary and high school building. One study has reported that, since the mid-1980s, about 10 percent of our new public schools have been built nationally while about 80 percent of our new prisons have been built. To illustrate, in Florida, serious middle school and high school overcrowding has developed during the prison building boom. Ocoee, a town in the electoral district of Florida’s Speaker of the House, has three quarters of the students of one school in portable classrooms.

Not only has prison building therefore become part of our education policy, through money redirected from schools to prisons, but it also has become a way of housing the poor. While we were tripling the number of prison cells over the 1980s, the federal government reduced appropriations for housing the poor by about 80 percent.

Prison, Lobbying and Money. A large portion of the nation’s new prisons have been built in rural areas. In rural counties, the new inmate population amounted to nearly half of all population growth during the 1980s.

Fremont County, Colorado illustrates the 1990s trend of using prison building as a growth industry for rural development. Four federal prisons have opened in the county since 1994. Ruth M. Carter, the Mayor of Canon City in the county, says, “We have a nice, nonpolluting, recession-proof industry here...We as a community are doing better and better....” The county has gained 3,100 new jobs. Unemployment is 4 percent. Local t-shirts proudly are sold, proclaiming, in red letters, “Corrections Capital of the World — Fremont County.” Fifteen thousand tourists a year visit the county’s prison museum in nearby Florence, where there is one prisoner for every citizen on the outside. An upscale housing development centered on a golf course is being built across from one of the prisons. Local officials lobbied the U.S. Bureau of Prisons hard for the $60 million prison complex — for example, by appearing on network Good Morning America, putting up a local cash match and donating the land.

Like Fremont County, many hardpressed small rural communities have fought for and won prison building development and jobs money places like Hobbs, NM; Tupper Lake, NY; South Bay, FL; and Beeville, TX.

Inmates are disproportionately minority in these prisons. But administrators and guards often are mostly white males. In this sense, prison building has become a kind of economic stimulus package for rural white men. The 1996 National Criminal Justice Commission identified a “prison-industrial complex” in which well paid lobbyists in Washington, DC, pressure Members of Congress to build more such rural economic development prisons and generate jobs. Nationally, the employment of prison staff and supervision jumped 31 percent in the early 1990s, according to the U.S. Department of Justice, to 347,320.

Some of the new prisons are privatized. The profit makers usually are white male controlled corporations. The inmates disproportionately are minorities. In this sense, prison building has become part of a supply-side economics process in which the white rich have become richer and the nonwhite poor have become poorer.

As for drug policy, which especially interrelates with prison policy because of the long sentences given for crack cocaine use (disproportionately by minorities) compared to powder cocaine use (disproportionately by whites), there is little evidence that the “war on drugs” has worked. Drug Strategies, in Washington, D.C., has concluded in a recent report:

From 1981 to 1997, the federal government spent nearly$60 billion on domestic drug law enforcement. Federal expenditures for domestic drug law enforcement during the period1991-95 were 8 times larger than expenditures from 1981-1985. Moreover, state and local spending on drug law enforcement over the past two decades is estimated to be at least twice as great as Federal spending on domestic drug law enforcement.

Despite these budget increases, the drug problem persists. Arrests for drug offenses (possession or sale) have risen sharply in recent years, climbing from 460,224 in 1980 to 1,167,600 in 1995. While arrests for serious property crimes have gradually declined since 1991, drug arrests increased 46 percent. In 1995, 23 percent of state prisoners and 60 percent of Federal prisoners were incarcerated for drug law violations.

Since 1991, drug use has climbed sharply among junior high and high school students, according to the annual survey, Monitoring the Future. Increases have been most dramatic among the youngest teens. In the past 5 years, drug use has more than doubled among eighth-and tenth-graders.

There are scores of other good examples of what hasn’t worked for the truly disadvantaged and the inner city — like, for example, the Urban Renewal and Model Cities programs that emerged shortly after the Kerner Commission. In this Chapter, we have stressed the failure of supply-side economics and prison building because an enormous amount of the policy debate in recent years has been monopolized by these themes, and by their associated misleading political rhetoric. Given the evidence that shows such policies are neither particularly effective nor cost-beneficial, and have devastating class and race dimensions that tend to reinforce the prophecy of the Kerner Commission, we can move on to what does work.