Baltimore: Smacked Down by the Invisible Hand

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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



City slickers and water security: governments getting their hands dirty

Today’s post is from Xavier Leflaive of the OECD Environment DirectorateWater meme

If you’ve just visited the room with no windows and enjoyed the effortless push of the “deposit disposal button” followed by a stream of fresh, clean tap water to wash your hands, you could well be in an OECD city. Count your blessings too if your basement or street has avoided flooding from heavy rain or if your lawn and plants are still in vibrant colour because they are well hydrated during the dry summer. This urban providence doesn’t mean you’re not exposed to the risk of flooding, water scarcity or pollution. It probably means that your city is rolling up its sleeves and getting equipped to manage these risks and minimise their consequences in a way that you and your fellow city slickers can afford.

Water security is providential: globally 1 billion people have no clean drinking water (that’s double the population of the EU) and 2.5 billion lack access to basic sanitation. 20 million people in the São Paulo region don’t know if they’ll have a reliable water supply in the coming months. The number of people at risk from floods is projected to rise from 1.2 billion today to around 1.6 billion in 2050 (nearly 20% of the world’s population). The economic value of assets at risk is expected to be around $45 trillion by 2050, a growth of over 340% from 2010. From a global perspective, the level of water risk protection that OECD city dwellers enjoy is remarkable. The question is, can it last?

Water infrastructure (particularly piping) in our cities is old, cracking and needs to be upgraded. In some cities, leakage from distribution networks is as much as 40%. This is not only a waste of water, but a monumental waste of energy in pumping, treating and channelling this water. It also represents lost opportunities for economic development and equity as this water could have been put to more valuable uses, depriving others of this vital resource.

Deteriorating water quality and increasing competition among water users indicates that many cities in OECD countries have outgrown their water supplies. We are witnessing an unprecedented rate of urbanisation: 86% of the OECD population will be living in urban areas by 2050 with a concentration in cities with over 1 million inhabitants. Climate change generates more uncertainty on how much water will be available and when. It puts cities in coastal zones at greater risk as sea level rises. It gets one asking “does my city have a viable plan to ensure a sustainable water future?”

The upcoming OECD report “Water and Cities: Ensuring Sustainable Futures” warns that managing urban water in the future will need to combine new perspectives on financing, the diffusion of innovative techniques and practices, co-operation between cities and their rural environment, and governance.

Cities in developing countries need to build new infrastructures to secure access and protect against water risks.

Cities in OECD countries face a distinctive challenge: how to renew existing infrastructures and adapt them to a new context, characterised by more variable rain, declining consumption in city centres, and new expectations from city dwellers? This requires additional finance to upgrade existing infrastructures.

We need to explore ways to jumpstart and leverage private investment from groups like financiers, property developers, as well as small entrepreneurs. In France, a new urban water tax is raising revenue that contributes to long-term urban rainwater management by incentivising property owners to manage rainwater close to the source to limit stormwater run-off.

Beyond financing, we are seeing new methods in managing change and retrofitting maladapted infrastructures, architectures and business models. Combining a long-term strategy with a pragmatic approach to renewing the stock of buildings and assets can prove worthwhile. In Tokyo and San Francisco, water recycling is reducing dependence on surface water as well as raising public awareness of the importance of saving water.

Civil society can’t tackle future water challenges on its own. Smart partnerships and better governance can contribute to sustainable urban water management. The “Greenways” programme in Auckland aligns city council actions and investment across a range of policy and operational units, with the aim of delivering multiple freshwater, biodiversity, transport, urban design and stormwater-related outcomes from the same investment. Future water management in OECD cities will also largely depend on the capacities of different tiers of government to work together along a coherent pathway, as well as engage with, and make the best use of, initiatives by local entrepreneurs and stakeholders.

You may now be able to better appreciate the “privilege” of sporting clean hands and dry feet. The OECD is helping governments get their hands dirty in the transition from an era of exploiting existing infrastructures to one of building new assets and retrofitting infrastructure to adapt to changing future conditions. This action is both critical and pressing, to ensure city slickers’ health, economy and environment remain intact.

Useful links

OECD work on water

Managing Future Water for Cities

World Water Forum in Korea, 12-17 April

Stats and the city

Wikimedia says this is a Utopia
Wikimedia says this is a Utopia

We can’t decide if it sounds like David Beckham’s new range of men’s accessories or a handy fold-up bicycle. In fact, the Metropolitan Explorer is neither. It’s actually a nifty tool from the OECD that lets you explore statistics for 268 metropolitan areas (that’s basically cities and their surroundings) in OECD countries.

It’s remarkable what you can discover. For instance, if you’re looking to live somewhere with plenty of room to swing a cat, try Las Vegas in the U.S. state of Nevada, the OECD’s least-crowded metro area. The average person there has almost 170 times more elbow room than someone in busy Changwon in Korea.

Or perhaps you’d prefer to live surrounded by well-off neighbours? In that case, try Edmonton in Canada, where the per capita GDP of $61,000 is close to double the Canadian average and more than six times higher than Mexico’s Tuxtla Gutiérrez at the other end of the scale.

Urban sprawl

Feeling breathless? Avoid Milan in Italy, the metro area with the worst air pollution in the OECD, and head instead for the clean, coastal breezes of Concepción in Chile.

The Metropolitan Explorer is just one of a range of tools – covering everything from aid to tax – at the OECD Data Lab. As the title suggests, all these tools are works-in-progress and will be ­­developed further based on responses from users like you. So, click, explore, send your comments.

Useful links

OECD work on measuring metropolitan areas

Jolly Green Giant

Aviation endangers biodiversity. And vice-versa in this case.

Towards the end of the 1933 King Kong movie, one of the pilots sent to kill the upwardly mobile but soon to be downwardly plummeting ape helpfully points out the target to his dimwitted gunner, who otherwise may not have recognised the world’s most famous skyscraper and the world’s most infamous monkey.

The movie has been interpreted as everything from a parable of the Great Depression to a return of the repressed, but everyone agrees that the Empire State Building, completed two years before the film, was an inspired choice for the final symbolic showdown.

The building itself embodies the rivalry between its main financer, John Jakob Raskob, creator of General Motors, and rival automaker Walter Chrysler, whose Chrysler Building had been the world’s tallest building.

But it was also intended to represent modernity, and the architects actually carried out a long-term forecasting exercise to make sure the design would meet the needs of future generations.

Today, this could no doubt be presented in terms of sustainability, as could a just-completed $20 million retrofit to make it more energy efficient and environmentally friendly. The new approach uses technology (such as better insulation and continuous monitoring and control of temperature and other conditions) as well as changes in tenants’ behaviour, such as moving desks to allow in more daylight or not over-using air conditioning.

Payback time for the retrofit is calculated at around three years and it is expected to reduce the building’s carbon footprint by 100,000 tonnes over 15 years – the equivalent of taking 20,000 cars off the road.

The “sustainability” incorporated in the original thinking was there to make sure the building remained a good business proposition for many decades to come. Likewise, the latest changes were carried out: “not because it’s the right thing to do, but because it makes business sense. If we don’t reduce our energy consumption, we will lose money and be less competitive against China, India, Brazil and the other expanding economies” according to owner Anthony Malkin, speaking to the The Guardian.

This echoes the thinking behind the OECD’s Green Growth Strategy: “Together with innovation, going green can be a long-term driver for economic growth, through, for example, investing in renewable energy and improved efficiency in the use of energy and materials”.

The green growth link will take you to a number of resources, including an interim report published in May. The Green Growth Strategy Synthesis Report to be presented to the 2011 OECD Ministerial Council Meeting will propose tools and recommendations to help governments identify the policies for the most efficient shift to greener growth.

Energy is obviously a major aspect of this, and with IEA projections  showing that cities will consume nearly 75% of world energy in 2030 compared with around 66% today, the Empire State Building’s example is worth following. The Guardian article claims that if just a fifth of the largest buildings in America replicated the Empire State Building’s performance, it would save 2.3 billion tonnes of carbon emissions, equivalent to the amount of greenhouse gas pollution produced by the whole of Russia each year.

Useful links

Interim Report of the Green Growth Strategy: Implementing our Commitment for a Sustainable Future

Declaration on Green Growth adopted at the Meeting of the Council at Ministerial Level on 25 June 2009

Green Growth: Overcoming the Crisis and Beyond

From Grim to Green – OECD Messages on Green Growth