The American Way of Poverty: How the Other Half Still Lives (40 page)

At the risk of flogging a dead horse, let me reiterate a key point here: cutting education grants to poor people is utterly counter-productive.
It’s stupid, slash-and-burn, public policy
. It burdens families who stay the educational course with crippling levels of debt, and it discourages others from staying in school and going to college in the first place, thus tamping down their income potential for the remainder of their working lives.

It doesn’t take a whole lot of imagination to conceive of better alternatives. We could start with education accounts opened for every child at birth, at first relatively small ones funded by existing revenue sources; then larger ones, funded by the newly created Educational Opportunity Fund. We could expand AmeriCorps and other service options in lieu of debt payments. We could modify debt-repayment schedules so that ex-students only have to pay down their debt once their income, averaged over three or four years, rises above a certain amount. And we could enact Representative Clarke’s legislation so that low earners aren’t burdened with student debt repayments throughout their working lives. Above all, we could elect people willing to go to bat for valuable communal goods such as higher education; willing, and able, to explain to the public the necessity of raising enough taxes to build protective firewalls around proven success
stories such as the Pell Grants and to try out new programs, such as the EOF, so as to reduce the crippling levels of debt too many students today leave college with.

LAND BANKS, STATE BANKS, AND THE NORTH DAKOTA WAY

Let’s continue thinking about connections. Boosting wages, making higher education more accessible, perhaps setting in place minimum income standards—all are good starting points.

But what about building up public and environmental infrastructure? What if there were ways to kill two birds with one stone, using public funds to improve the commons in a way that simultaneously reduced poverty and stimulated a renaissance of American manufacturing and industry?

The answer is, there are.

Again, to reiterate: Hundreds of billions of dollars of additional government revenues could be generated annually, without grievously damaging the economic dynamism of the country, through the financial transaction tax, profit taxes on energy sales, and a few other eminently practical changes to the tax code. Why not use some of that extra revenue to help establish state banks—similar to Germany’s seven
landesbanks
, and to the state bank already in existence in North Dakota—the purpose of which would be to provide funding for local infrastructure projects, small businesses and other community-building projects, and to provide a backstop for a coherent national industrial policy aimed at regenerating good-paying, blue-collar jobs in areas hammered in recent years by outsourcing.

In North Dakota’s case, the bank, originally established in 1919, with $2 million of seed money from the state, as a way to shore up investments in local grain farms and agricultural technology, today circulates upwards of $270 million per year through the state’s economy and controls assets worth upwards of $4 billion. All North Dakota state taxes and fees are deposited in the bank, and the institution then
loans the money out to build up infrastructure: its dollars go toward student loans—the first federally insured student loans in the country were issued by the bank in 1967—small business expansions, responses to weather-related disasters, investments in new farm equipment, and so on. Half of the bank’s profits get reinvested in the state’s general fund each year.

It’s a good system, and one with bipartisan support in the state. “We invest back into the state in economic development type of activities. We grow our state through that mechanism,” bank president Eric Hardmeyer told
Mother Jones
’s Josh Harkinson in 2009. “We’re using this to spur economic growth for our state, to provide niches where others aren’t comfortable, whether it’s in-state financing of residential loans or making student loans.”
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As of 2012, state banks had been proposed by legislators in a dozen other states. Running into ideological opposition—of the knee-jerk sort that deems all things state to be “socialist” and therefore suspect—none of these proposals, so far, has been successful. It’s a shame. For a carefully thought-through network of state banks
could
play a powerful role in a national campaign to eradicate poverty and improve public infrastructure.

In fact, with money from the federal anti-poverty fund along with targeted investments by a network of newly created state banks, both the federal government and state governments could begin a decades-long investment in green jobs, helping both to boost the economy and also address serious, and growing, environmental challenges.

Some of these funds could be used to create markets for high-tech green transport, construction, and energy generation methods. Some—as discussed by President Obama’s onetime “green jobs czar,” the Los Angeles–based community organizer Van Jones, in his book
Rebuild the Dream
—could be used specifically to train people from groups and neighborhoods long blighted by high unemployment and poverty in the skills needed to get jobs in green industries. Such is already being done by the Women’s Bureau of the federal
Department of Labor, which set up a green jobs training project in 2009, and also by the Environmental Protection Agency, which has, for the past several years, given out grants to nonprofit groups to train low-income, minority, and unemployed residents in cleaning up contaminated sites in their communities.
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Such could be the case on a larger scale if legislation that has long sat un-acted on in Congress passed to create a subsidy for low-income Americans to weatherize their often aged, dilapidated, homes, so that they had to spend less money and use less energy heating their homes in winter and cooling them in summer.

Done well, these investments would serve both to boost environmental protections and to intervene against poverty simultaneously. They would, ultimately, set in place a virtuous circle—a have-your-cake-and-eat-it scenario—in which economic and environmental benefits reinforced each other rather than being set up in opposition to each other, as conservative critics of environmental regulations claim is often the case currently. Call it “green neo-Keynesianism,” Van Jones explained. Put in money from the state, and, at the same time, utilize people’s skills to implement local, environmentally sound, economic investments.

That’s what the Mott Foundation was doing in Flint, Michigan, a city long bedeviled by high unemployment and low educational attainment levels, where it worked with local companies to train several dozen workers to be able to repair distressed, foreclosed-on properties, gathered together into what was called a “Land Bank”—which they were then allowed to buy at a discount after the work was completed. It was a great idea: tackling blight, rebuilding the value of properties no one wanted, providing an affordable entry point into a housing market from which too many impoverished families had historically been excluded. In partnership with the Open Society Foundation and the state-run Michigan Works Agency, Mott was also helping run a local Earn-and-Learn program. The program fully subsidized for several months the wages of several hundred employees
hired on by local companies. The catch? The employees had to go through rigorous retraining programs so that their skills were matched to the needs of employers.

There was no reason such programs couldn’t be replicated, on a larger scale, with an emphasis on training the out-of-work in the skills needed to man a green economy.

Green investment dollars could also be used to encourage the urban gardens movement in Detroit and elsewhere; to create local markets for the fresh produce grown on these miniature farms; and to rehabilitate the land and soil of abandoned lots in struggling cities across the country.

This list is, of course, not comprehensive. But it
does
give an idea of some of the creative anti-poverty strategies that could swiftly be brought to bear were we, as a country, willing to impose small, and entirely manageable, taxes on the money-making transactions of the powerful financial sector as well as the super-profits generated by energy companies and other large-scale multinationals. Again, let me stress a point I made earlier: our problem is not a lack of resources to tackle poverty; rather, it has been a lack of will to enact the legislative and taxation reforms that would free up the necessary dollars for such an effort.

PUTTING THE BRAKES ON HOMELESSNESS

Done well, however, an anti-poverty program would have to recognize that it isn’t simply a matter of getting more money into poor people’s hands, either through micro-lending or through green job training, through tax reforms or subsidies on low-end wages. For, at the end of the day, many Americans are still going to struggle to pay their bills.

In no area is that more the case than in housing.

And so, if we’re serious about rolling back the hardship that has emerged in recent years, investments must be made to render housing more affordable for those struggling at the bottom of the economy.
Both through pumping more money into time-tested subsidies such as Section 8, which allow the poor to take part in private housing markets, and also through building more, and better, public housing for low- and middle-income Americans, government must once more acknowledge its power to modify markets for the broader public good.

For some people, those with particular difficulties in accessing housing, new protections will be needed. A case in point here is the enormous difficulty that children in state foster care systems have in navigating the move into adulthood. A 1995 study found that three in ten of America’s homeless population had been in the foster care system at one point; other research indicates that about one-quarter of erstwhile foster kids report having spent some time homeless within four years of leaving the system.
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“These are the Commonwealth’s forgotten children. They come to the state abused and neglected and we house, clothe, feed, educate and provide health care for them until they turn 18. Then, they are sent out to live on their own with minimal, if any, assistance. The cutoff of services at age 18 does not make sense given what we know about child and adolescent development, the impact of trauma and what it takes for youth in the general population (let alone abused and neglected youth) to achieve self-sufficiency,” wrote the authors of a 2005 report by the Massachusetts Society for the Prevention of Cruelty to Children.
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One in four homeless young adults in Massachusetts, the authors noted, had recently left foster care.

It is because of these dismal numbers that Illinois, California, and several other states have moved in recent years toward bulking up their foster systems, staggering the age-out process so that onetime foster care residents can continue to receive state welfare benefits and housing assistance through the age of 21. University of Chicago researchers who have compared Illinois with neighboring states that continue to remove all benefits from foster kids at the age of 18 have found that a lower percentage of ex-foster kids in Illinois end up homeless than is the case elsewhere.
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But simply extending the age limit won’t solve this crisis. There are, after all, simply too many problems that foster kids bring with them regardless of when they age out: profound feelings of abandonment, oftentimes posttraumatic stress disorder, addiction, insecurity, a complete lack of family resources to fall back on. To deal with this cocktail of crises—each ingredient of which in itself is frequently enough to knock a person off track and into destitution—advocates have long urged an expansion of Section 8 housing, the use of rental vouchers, one-year rent subsidies for those leaving foster care, and, perhaps most significantly, the building of transitional housing units, complete with networks of counselors, specifically to be used by young adults leaving the fragile protections of the foster care system.

“It felt like I was being abandoned, I was the problem,” explained Aaron, a 28-year-old ex-foster kid, whom I met in a small, remote town in the far north of California. “My mom
did
abandon me, allowed my dad to convince her to get rid of me.” In the group homes in which he was placed, Aaron claimed to have been beaten and physically restrained, leading to a lifetime of back pain.

When I met him, Aaron was picking up casual day jobs to supplement the few hundred dollars a month in Social Security that he was receiving because of his injured back. He was shopping at thrift stores and picking up food at a local pantry. Four or five days out of each month, he estimated, he went without food so as to be able to afford his $475 rent and the roughly $100 that his utilities cost him.

Making it easier for people like Aaron to navigate their worlds isn’t just a matter of charity but of simple, common sense: if states can provide a safety net for these young men and women at the start of their move into adulthood, they are far less likely to have to provide emergency interventions, be they shelter assistance, expensive emergency medical care, or the exorbitant cost of housing a person in jail or prison, down the road. There are, after all, over two million prison and jail inmates in twenty-first-century America, hundreds of thousands of whom are serving time for nonviolent crimes; the sorts
of relatively low-level crimes—street drug sales, vagrancy, stealing from shops—that down-and-out young men are particularly likely to engage in.

In 2011, the California Senate’s Office of Research conducted a study of the state’s 171,000 prison inmates: it found that 14 percent had been in foster care.
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The same University of Chicago study of three Midwestern states that concluded people who received foster benefits until the age of 21 did better than those left to fend for themselves at 18 found that one-third of foster kids ended up with a “high involvement” in the criminal justice system; moreover, upward of eight out of ten males and more than half of all females with a foster care background reported being arrested at some point.
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