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Baltimore: Smacked Down by the Invisible Hand

8 May 2015
by Guest author
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Today’s post is by Bill Below of the OECD Directorate for Public Governance and Territorial Development

The recent riots in Baltimore following the death of Freddy Gray bring a tragic focus, once again, on inequality. Maryland’s largest city, Baltimore is a perfect laboratory to study it, thanks in part to the superb comparative statistics the city keeps.

The contrasts in Maryland are surprising. State-wide, Maryland boasts a median household income of $73,538, (the US median household income is about $52,000). Although that’s down from $87,080 pre financial crisis, it’s still high enough to make Maryland the income leader amongst all fifty states.

And then there’s Baltimore…

The city’s median income is $41,385, but as always the devil is in the details. To find the real picture of inequality you have to de-aggregate. The median income for whites in Baltimore is $60,550, but drops precipitously to $33,610 for blacks. Unemployment for young white men in Baltimore is 10%, but for young black males it jumps to 37%. As a point of reference, the unemployment rate at the worst point of the Great Depression was 25%.

Nearly 24% of the city’s population lives below the poverty line drawn at $20,090 per year for a family of three. 35% of children live below the poverty line and 63% live in low-income households (calculated as less than twice poverty level income).

Life expectancy follows trends that have been well established in OECD countries and elsewhere, namely significant disparities linked to income. Of Baltimore’s 55 neighbourhoods, average life expectancy in the bottom quintile is 68 years compared to 81 years in the upper quintile. Forget the Invisible Hand, this is an invisible Berlin Wall dividing contiguous neighbourhoods like Downtown/Seton Hill (low life expectancy) and Inner Harbor/Federal Hill (high life expectancy). That’s a 13-year difference for people living a five-minute walk from each other (albeit, across the invisible wall, life-styles can be radically different). If you compare Downtown/Seton Hill to outlying neighbourhoods such as Roland Park/Poplar Hill, the life expectancy difference increases to 19-20 years.

In Downtown/Seton Hill and similar neighbourhoods, people die young. The homicide rate is up to 10–20 times higher than of the richest neighbourhoods. Residents are 20 times more likely to die from HIV/Aids. There is also a higher risk of death from heart attack and diabetes (3 and 8 times higher respectively than Baltimore’s highest income neighbourhoods). The Washington Post provided some context. If Downtown/Seton Hill were a country, it would rank between Madagascar and Yemen in terms of life expectancy.

One of the poignant voices heard during the riots summed it up. A woman interviewed on MSNBC said: “The time for taking stock and talking about inequality is over. It’s time to act!” But for some reason, when it comes to inequality, hands—invisible and otherwise—always seem to be tied. Republicans use Baltimore as proof that Democrats have failed to fix the problem of poverty. Tom Hogan, Maryland’s present Governor, was recently elected on a promise to lower taxes and cut government spending. His predecessor Martin O’Malley, former Baltimore Mayor and possible Democratic presidential contender, defends his two terms as mayor stating that, since the 1970s, the lack of a federal agenda has left cities to “fend for themselves.” To his credit, that’s the exact moment when laissez-faire fundamentalists went from standing in the wings to taking centre stage on both sides of the Atlantic.

Administrations come and go and ideological debates rage on. Meanwhile, Baltimore, or portions of it, continue to garner more than their share of inequality and despair.

Elections, like policy choices, have consequences, at local and national levels. The regulatory failures and policies that caused the financial crisis were particularly hard on Baltimore’s many fragile neighbourhoods. In 2012, Wells Fargo was ordered to pay out to the city and many of its residents a record $175 million for discriminatory lending. The city accused the lender of steering minorities into subprime loans, providing less favourable rates than whites then foreclosing on hundreds of homes, causing blight and higher public safety costs

What numbers don’t reveal is the civic pride and the sense of community that binds Downtown/Seton Hill and other communities. But these are only small parts of the solution to persistent, systemic inequality.

This is not a partisan problem. But no one can seem to find a starting point to solve it. I suggest that elected officials look at some of the work that is already underway in countries around the world where policy makers have chosen to put ideology aside and approach the issues that are condemning portions of their populations to systemic poverty. There are processes and best practices to begin to reduce systemic inequality and the good news is they circumvent the tired dichotomies of too little or too much government or the problem of throwing money at ideas that haven’t worked. It starts with policy frameworks that support inclusive growth. This is a major thrust of work at the OECD. In our Public Governance Directorate, we work with member countries and partners as they go beyond “taking stock,” designing, implementing and evaluating policies that help give traction to all actors and would-be actors in the economy.

OECD work on the regional and city-level shows just how critical the spatial dimension is to accessing resources and services that ensure the well-being of citizens–a lesson that is painfully demonstrated in the stark differences between two Baltimore neighbourhoods.

 A portrait in inequality: two contiguous Baltimore neighbourhoods
Source: City of Baltimore

Inner Harbor/Federal Hill Downtown/Seton Hill All of Baltimore
Total population 12,855 6,446 616,802
White 81.5% 37.5% 29.7%
African American/Black 11.7% 41.8% 63.3%
Unemployment 2.5% 4.8% 11.1%
Median Household income 19.5% earn less than $25,000 36.3% earn less than $25,000 33.3% earn less than $25,000
Families in poverty 8.8% 21.8% 15.2%
Aged 25 or older with Bachelors’ degree 69.2 58.7%* 25.0%
Tobacco store density (store per 10,000 inhabitants) 38.1 130.3 22.8
Fast food restaurants per 10,000 residents 5.4 35.7 2.4
Number of homicides per 10,000 residents (based on location of victim, not residence) 6.2 34.1 20.9
Life expectancy (years) 77.1 63.9 71.8
Age-adjusted mortality (deaths per 10,000 residents) 83.5 238 110.4
Total annual years of potential life lost (per 10,000 residents) 617.3 1511.1 1372.3
Avertible Deaths (if every community had the health services of the top 5 communities) 15.5% 70.1% 36.1%
Mortality rate from:
– Heart disease 23.5 71.0 28.4
– Cancer (lung) 5.5 16.1 6.9
– HIV/AIDS 1.3 10.4 3.9
– Homicide 0.4 3.4 3.5
– Drug induced 1.1 3.6 2.8
– Diabetes 2.9 5.5 3.2

*High number reflects proximity of University of Maryland campus. For example, the percentage of the population with a Bachelors’ degree is 10% in Upton/Druid Heights, the neighbourhood directly to the north.

Useful links

OECD work on inclusive growth

OECD work on trust in government

OECD work on inclusive growth and public governance

Inclusive growth publications from the OECD




One Response leave one →
  1. lilych permalink
    May 8, 2015

    Marginalization, systemic & structural inequalities and intractable poverty have always been the bane among so-called middle income (low & middle) countries. While transparent, good and accountable governance, inclusive eco growth and policies, access to resources, jobs education, health & social services, sustainable development etc etc topped by political will have dominated the development cooperation/assistance to these countries for a long time. Now that the the same issues/challenges confront donor-developed countries, what lessons (universal and local) can intl development agencies & multilaterals offer (generated from their experiences in their overseas development assistance) that may find relevance among developed county-contexts?

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