What is more important -- developing economy or people?


THE WAR BETWEEN the states is on again in America. It's a war to attract and retain business, jobs and tax revenue. It's a war whose victims are the poor, the frail and the vulnerable who are discarded by the private sector. It's a war whose victim is our humanity.

Nowhere is this more evident than in Maryland. When Starbuck's chose to locate in Pennsylvania and Motorola in Virginia, Maryland public officials were quick to note that pro-business governmental policies in each of those states were the key. Relative to Maryland, Pennsylvania and Virginia both set aside millions more in their "sunny-day" funds (accounts used to subsidize business relocation); both impose fewer regulations on business, and both maintain lower personal income tax rates.

Banking on sunny days

And so in last year's state budget, Maryland fought back. Appropriations to its "sunny-day" fund were increased by roughly $20 million. To pay for this, cash assistance for 22,000 disabled Marylanders was eliminated and funding for early-childhood intervention programs was reduced.

This type of barter continued, ironically, during the pope's visit last month. Eschewing the pontiff, members of the Maryland Chamber of Commerce dined in Ocean City to calculate the size of an income-tax cut and the amount of state budget cuts needed next year to compensate for it. In the meantime, the pope dined with patrons of Baltimore's largest soup kitchen -- their numbers have increased with the termination of disability aid.

In Baltimore, the pope continued his promotion of a human state, described in his encyclical letter, "Evangelium Vitae," as one "which recognizes the defense of the fundamental rights of the human person, especially of the weakest, as its primary duty." In Ocean City, business leaders advanced a different state, one which has an obligation to compete for economic activity by mimicking the economic-development policies of its neighbors, regardless of the fiscal or human cost.

The governor apparently prefers the Ocean City perspective. On the third day after the pope's departure, he wielded his budget knife again, this time announcing a plan to scale back help for poor dependent children, ostensibly because of pending federal cutbacks. What the governor failed to mention, however, was that he had set aside $190 million in anticipation of such federal pruning, but will be applying that fund to pay for the personal income-tax cut instead.

This trade-off by the public sector between investment in economic development and human development is not new. During the city-subsidized economic development of Baltimore's Inner Harbor, city spending on education and social services dropped in real terms by 25 percent and 45 percent, respectively, and Baltimore's rooming-house industry -- the primary mode of housing for the mentally ill and those on the economic margin -- was obliterated.

The fruit of our choices

While economic development was needed, Baltimore is now reaping the fruit of its choice with poor schools, disintegrating neighborhoods and increased homelessness.

What is different today, however, is that federal cutbacks are causing all state and local governments simultaneously to view increased private business activity as their savior -- thereby intensifying the economic-development game and its attendant trade-offs.

The governor said in a recent letter to the editor that it is time for us to "think outside of the box," to be creative in fashioning responses to federal cuts. Creativity, however, is not simply deciding which human-service cuts to make. If the governor really wanted to think out of the box, he could put his mind toward ending the historic trade-off between economic development and human development, and transforming the battleground among the states.

He can do this by making human development not simply a hoped-for by-product of his economic-development strategy, but, in fact, the goal of that strategy. In economic-development jargon, this means giving greater weight to measures of "quality of life" and "labor force preparedness" than to assessments of tax rates, business regulation and development subsidies.

Over the boundary

In practice, it means peering over the state boundary fences and looking at comparative rates of poverty, homelessness, educational achievement and child development. It means examining levels of domestic violence, teen violence and teen-age pregnancy. It means understanding why Maryland, relative to other states, does better in some areas and worse in others.

It means "thinking out of the box" enough to develop a human-economic development strategy that emphasizes creating jobs with social utility in such industries as environmental clean-up, home health care, day care and housing rehabilitation. It means directing pension and state bank investments toward affordable housing and commercial activity in distressed communities, augmenting the small slice of the budget pie already dedicated to community development.

It might also mean creating special-purpose public authorities and revolving loan funds dedicated to training the unskilled and providing start-up capital for socially responsible entrepreneurs. It could mean employing wage and tax policies that compensate employees for low-wage work, as the federal earned-income tax credit does, and that reward businesses for investments in hiring, training and education statewide -- not just in Baltimore's empowerment zone.

It undoubtedly means having the courage to confront politically connected industries and groups that benefit annually from $1.8 billion in state tax breaks, most of which have long outlived their social utility, and using the funds instead to develop human capital.

There is a way out of this, but it's not by enslaving ourselves to the false idol of regional economic competition. It is only when we understand that public-sector involvement in the marketplace must always be subservient to the demands of human development that we will ultimately "win" the only competition that really matters: to realize the fullness of our humanity.

J. Peter Sabonis is executive director of the Homeless Persons Representation Project.

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