Third World lessons, applied to Baltimore

Marta Mossburg says African nations, unlike city leaders, understand the importance of private investment

August 02, 2011|Marta H. Mossburg

Visitors to Baltimore not shepherded through on official tours or staying in the Inner Harbor see what members of the Society for International Development would describe as the Third World.

The organization, whose members are luminaries of foreign aid, held its triennial meeting at the posh Omni Shoreham Hotel inWashington last weekend as debt ceiling battles were raging a couple miles away in the Capitol.

It would have been better for the group to hold its meeting in Baltimore, as some of the suggestions aimed at bettering far-away places in Africa and Asia could have been picked up immediately here.

Lesson No. 1: "The public sector shouldn't be funding something that the private sector can make a profit providing."

That came from Elizabeth Littlefield, President Barack Obama's pick to head the Overseas Private Investment Corp.

She told the sometimes incredulous crowd to "take our blinders off" about the role of the private sector in overseas development and said foreign companies are the main drivers of wage growth and higher living and environmental standards in developing countries.

Many people did not like what she had to say. Emmy Simmons, a board member of theWashington chapter of SID, feared that development officials couldn't direct private money. "The private sector goes after profit," she said, while the main goal should be "inclusive growth."

If the number of nonprofits in the city correlated to prosperity, Baltimore should be wealthy beyond comprehension. According to research from the Johns Hopkins University, they employ 33 percent of the private workforce in the city, compared to a national average of 8.6 percent. Yet the city struggles.

As Stephen Walters and Louis Miserendino write in theMaryland Journal (marylandjournal.org), "In 1950, the median family income of Baltimoreans was seven percent above the U.S. figure; by the 2000 census, the median household income for city residents was 28 percent below the national median."

Baltimore's sorry shape is not for a lack of trying on the part of our elected officials.

Casually perusing the fiscal 2012 city budget, I counted at least 10 different city-funded career services organizations that received from around $1 million to $8 million apiece this year. City taxpayers also spend millions promoting homeownership and home rehabilitation programs. And they are spending at least $40 million this year on economic development agencies, not including tax breaks and other incentives for developers to build here.

Where does that money go? The city's own budget shows the number of businesses steadily declining in the past five years and income taxes flat.

The city's poor performance should make everyone realize "inclusive growth" is a recipe for decline — another lesson from the conference.

As Donald Kaberuka, president of the African Development Bank, said, growth "requires investment. … We predicated too much on achieving the [development] goals on foreign aid."

He sought to quiet fears thatChina's increasingly large presence on the continent would exacerbate differences between the rich and poor. And he added that the only way countries could expect investment is if they offered a stable environment, a rule of law and well-educated workers.

Having overseenRwanda's much praised economic rise following genocide, he knows what it takes to create something from nothing. And he knows the conditions necessary to make success possible. One of the top priorities: "It is quite important to expand human freedom," he said.

That is something Baltimore needs to focus on if it is to succeed, but it will require a change of worldview for those in power. More freedom means less control for politicians. It means lower property taxes for everyone instead of no-bid contracts to favored developers. It means no more legislation aimed at ridding the city of Walmart or other progressive targets. And it means Mayor Stephanie Rawlings-Blake should stop acting as if she is the only "adult in the room" and treat her opponents and the taxpayers of Baltimore less like sheep and more like human beings worthy of respect.

Imperial oversight of Baltimore by a long line of liberals has crushed its spirit and its finances.

If we can't learn from their failed policies, at least African nations are learning from their mistakes.

Marta H. Mossburg is a senior fellow at the Maryland Public Policy Institute and a fellow at the Franklin Center for Government and Public Integrity. Her column appears regularly in The Baltimore Sun. Her email is martamossburg@gmail.com.

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