Tuesday, October 22, 2013

Chicago Stealing from Poor, Giving to Rich. By Walter Russell Mead.

Chicago Stealing from Poor, Giving to Rich. By Walter Russell Mead. Via Meadia, October 22, 2013.


Chicago, like New York City, is becoming a microcosm of California, a two-tiered society where public policy props up and privileges the tastes of the rich while ignoring the needs of the poor. A new piece in City Journal explains that Mayor Rahm Emanuel’s ostensibly painful and difficult cuts to services like public safety and schools are actually more like a diversion of funds from blighted residents to wealthy ones. Hundreds of millions of dollars have been used to fund a bike share program, a “riverwalk”, a hiking trail, and (what else?) a sports arena, even as Chicago public education and law enforcement sectors are facing deep crises.
City Journal explains that Mayor Emanuel is relying on something called Tax Increment Financing (TIF) subsidies to fund upper-class projects at the expense of basic social services, in the hopes of luring in new wealthy residents and keeping the ones who are thinking about moving:
Chicago’s TIF program has long been criticized as a mayoral slush fund. Ostensibly a tool for redeveloping blighted neighborhoods, TIF enables any new tax dollars generated in a district—the so-called “increment”—to be fed back into a special fund that can only be spent in that district. This projected revenue stream can be used to back bonds to finance infrastructure and jump-start development. At least, that’s the theory. Many of Chicago’s most prosperous neighborhoods are located in TIF districts and have generated huge incremental revenues. The Central Loop TIF district took in nearly $1 billion over its lifetime. When the district was slated to expire due to a statutory sunset, the city created the giant LaSalle Central TIF—covering a booming part of the West Loop—to replace it. None of the taxes from new developments in these districts flows automatically to police, libraries, parks, or schools. The funds go into the city’s TIF account, and the mayor has discretion on how they’re spent. Some TIF funds have been used for construction of new schools, but more than half have been handed out as subsidies to private businesses. The true purpose of Chicago’s TIF districts—which now take in about $500 million per year—appears to be tending to high-end residents, businesses, and tourists, while insulating them from the poorer segments of the city.
Chicago is clearly afraid of sharing Detroit’s fate: losing wealthy residents and their sizable tax dollars. Mayor Emanuel is banking on the hope that keeping the rich folk happy will provide enough revenue over the long run to fund the social services that the less fortunate depend on. This is a big gamble: if the $100 million waterfront boardwalk and $54 million biking trail turn out to be boondoggles that do nothing for the one percent, the closure of dozens of public schools and thinning out of a police force during an internationally famous murder epidemic will be difficult to defend. Our guess is that Chicago will continue to hemorrhage the residents it has faster than it can attract high-income new ones.
But if it pays off, Chicago will approach something like Mayor Bloomberg’s New York. Under Bloomberg, New York thrived as the “Luxury City,” home to a small contingent of super rich, accompanied by a large, struggling servant class. It’s possible, if not always easy, for these two groups to coexist, but the high taxes, regulations, and high cost of living have driven the middle class out in droves. The cutting edge of blue urban policy, then, is catering to the rich at the expense of the middle class.
Cutting funds from schools, police, libraries, and parks while funding chic promenades and trendy nature walks to mollify the rich is not what many blue city voters think they’re voting for.

New York’s Blue Suicide. By Walter Russell Mead. Via Meadia, October 15, 2012.

Well-Heeled in the Windy City. By Aaron M. Renn. City Journal, October 16, 2013.

Rahm Emanuel splurges on amenities for the elite, while poor and middle-class Chicagoans suffer.

The gentry liberals. By Joel Kotkin and Fred Siegel. Los Angeles Times, December 2, 2007.

They’re more concerned with global warming and gay rights than with lunch-pail joes.

Kotkin and Siegel:

After decades on the political sidelines, liberalism is making a comeback. Polls show plunging support for Republicans and their brand of conservatism among young, independent voters and Latinos. But what kind of liberalism is emerging as the dominant voice in the Democratic Party?
Well, it isn’t your father's liberalism, the ideology that defended the interests and values of the middle and working classes. The old liberalism had its flaws, but it also inspired increased social and economic mobility, strong protections for unions, the funding of a national highway system and a network of public parks, and the development of viable public schools. It also invented Social Security and favored a strong foreign policy.
Today’s ascendant liberalism has a much different agenda. Call it “gentry liberalism.” It’s not driven by the lunch-pail concerns of those workers struggling to make it in an increasingly high-tech, information-based, outsourcing U.S. economy – though it does pay lip service to them.
Rather, gentry liberalism reflects the interests and values of the affluent winners in the era of globalization and the beneficiaries of the “financialization” of the economy. Its strongholds are the tony neighborhoods and luxurious suburbs in and around New York, Washington, Boston, San Francisco and West Los Angeles.
Just as the number of industrial workers and traditional middle-class households has declined, the ranks of the affluent class have grown. From 2000 to 2005, the number of millionaires in the U.S. rose 26%. Meanwhile, households with incomes of more than $100,000 a year were the most rapidly growing income category, according to Ogilvy & Mather demographer Peter Francese. From 1994 to 2004, the number of six-figure-income households jumped 54%.
Although many of the newly affluent are – as is traditional – politically conservative, a rising number of them are turning left. Surveys done by the Pew Research Center indicate that an increasing number of households with annual incomes greater than $135,000 – the nation's top 10% – are moving toward the Democrats. In 1995, there were nearly twice as many Republicans (46%) as Democrats (25%) in this category. Today, there are as many Democrats (31%) as Republicans (32%).
The political upshot is that Democrats now control the majority of the nation’s wealthiest congressional districts, according to Michael Franc of the conservative Heritage Foundation.
In part, this is because the Democratic gains in the 2006 elections were in affluent districts once held by the Republicans. In Iowa, for instance, the three wealthiest districts now send Democrats to Washington, and the two poorest are safe Republican seats.
Perhaps the best indicator of the growing political power of gentry liberals, however, is their ability to generate campaign contributions. Chiefly drawing on Wall Street, Hollywood and the Silicon Valley, this year's Democratic presidential candidates have raised 70% more money than their GOP counterparts, according to the Wall Street Journal. The securities industry, which awarded Republicans 58% of their campaign dollars in 1956, gave the GOP only 45% in 2006. In the newest sectors of the securities industry, most notably hedge funds, Democrats are favored. This year, hedge fund managers have given 77% of their contributions to Democrats in congressional races, reported the Journal.
Gentry liberalism is not an entirely new phenomenon. Its intellectual roots can be traced to historian Arthur M. Schlesinger Jr.’s 1948 book, The Vital Center. Schlesinger himself was the archetype of the gentry liberal. A product of Harvard University, he was as comfortable in the fashionable precincts of Manhattan’s Upper East Side as he was advising presidents in Washington. Schlesinger was suspicious of the traditional liberalism of President Truman, who baldy appealed to the basic interests of returning middle- and working-class veterans of World War II.
In The Vital Center, Schlesinger dismissed both the then-largely Republican business class, as well as mainstream Democratic politicians like Truman, because he thought they were too craven in their appeals to middle- and working-class interests. He believed that government should be in the hands of “an intelligent aristocracy” – essentially men like himself – whose governance would be guided by what it considered enlightened policy rather than class interests.
Since the 1960s, the intellectual class epitomized by Schlesinger has grown many times over. Academic liberals have become something of a political power in their own right. College campuses constituted the largest single base of contributors to the 2004 presidential campaign of Sen. John Kerry. Professors are among the highly compensated and pampered professional cadres of the knowledge economy – which also includes lawyers, engineers, doctors, wealth managers, investors and other educated professionals – that make up the ranks of gentry liberalism and flatter the politicians who advocate its positions.
Gentry liberalism has established a strong presence on the Internet, where such websites as MoveOn.org and the Huffington Post are lavishly funded by well-heeled liberals. These and other sites generally focus on foreign policy, gay rights, abortion and other social issues, as well as the environment. Traditional middle-class concerns such as the unavailability of affordable housing, escalating college tuitions and the shrinking number of manufacturing jobs usually don’t rank as top concerns.
But gentry liberalism’s increasingly “green tint” distances it the furthest from the values and interests of the middle and working classes. Leading gentry liberals, whether on Wall Street, in Hollywood or in Silicon Valley, are among the greatest scolds on global warming. They justifiably excoriate the Bush administration for its overall environmental record, but some of them – movie stars, investment bankers, dot-com billionaires – are quick to insulate themselves from charges that their private jets or 20,000-square-foot vacation homes in Nantucket spew prodigious amounts of carbon dioxide. Repentance typically includes the purchase of carbon “offsets,” parcels of rain forests, hybrid vehicles or solar panels.
The gentry liberal crusade to tighten U.S. environmental regulations to slow global warming could end up hurting middle- and working-class interests. U.S. industry needs time and incentives to develop new technologies to replace carbon-based energy. If it doesn’t get them, and an overly aggressive anti-carbon regime is instituted, the shift of manufacturing, energy and shipping jobs to developing countries with weak environmental laws and regulations could accelerate.
Ignoring these potential Third World environmental costs would result only in shifting the geography of greenhouse gas emissions without slowing global warming – and at a terrible cost to jobs in the U.S.
The ascent of gentry liberalism remains largely unchallenged, in part because of the abject failure of the Republicans to address middle-class aspirations in a serious way and in part because of the absence of a strong pro-middle-class voice among Democratic presidential contenders, with the exception of former Sen. John Edwards. As a result, Democrats are unlikely to stop, let alone reverse, the current economic trend that dispenses major benefits to gentry-favored sectors such as private equity firms, dot-com giants and entertainment media.
Over the last half a century, liberals have moved from strong support for basic middle-class concerns – epitomized by the New Deal and the G.I. Bill – to policies that reflect the concerns and prejudices of ever more elite interests. As a result, neither party speaks for broad middle class concerns.
The nation deserves better than that.