Is Minneapolis an Economic Success, or Is It too White to Qualify?

Two recent articles In The Atlantic concern themselves with Minneapolis, Minnesota. This is rare in itself. Minneapolis is a large, cultured city, but it doesn’t feature often in the national news media.minneapple
In “The Miracle of Minneapolis,” Derek Thompson asserts that “No other place mixes affordability, opportunity, and wealth so well. What’s its secret?” One important factor is that it has more corporate headquarters per capita than any other city in America.

Minneapolis–St. Paul is the headquarters for 19 Fortune 500 companies—more than any other metro its size—spanning retail (Target), health care (UnitedHealth), and food (General Mills). In the past 60 years, 40 Minneapolis-based businesses have made it onto Fortune’s list. “We’re not like Atlanta, where half of its Fortune 500s moved there,” Myles Shaver, a professor at the Carlson School of Management at the University of Minnesota, told me. “There is something about Minneapolis that makes us unusually good at building and keeping large companies.”

Shaver’s theory, which he’s developing into a book, is that Minneapolis is so successful at turning medium-size companies into giants because its most important resource never leaves the city: educated managers of every level, who can work at just about any company. Shaver looked at the outward migration of employed, college-educated people who earn at least twice the national average income—his proxy for the manager demographic—and found that of the 25 largest American cities, only one had a lower rate of outflow than Minneapolis (although he couldn’t compute data for three others). Among all college-educated workers, Minneapolis also had the second-lowest outflow. “It bears out the old adage: ‘It’s really hard to get people to move to Minneapolis, and it’s impossible to get them to leave.’ ”

Also, importantly, Minneapolis uses a system of redistributive taxation to transfer wealth from its richest citizens and biggest companies to poor neighborhoods.

In the 1960s, local districts and towns in the Twin Cities region offered competing tax breaks to lure in new businesses, diminishing their revenues and depleting their social services in an effort to steal jobs from elsewhere within the area. In 1971, the region came up with an ingenious plan that would help halt this race to the bottom, and also address widening inequality. The Minnesota state legislature passed a law requiring all of the region’s local governments—in Minneapolis and St. Paul and throughout their ring of suburbs—to contribute almost half of the growth in their commercial tax revenues to a regional pool, from which the money would be distributed to tax-poor areas. Today, business taxes are used to enrich some of the region’s poorest communities.

The upshot is that Minneapolis is a great place to live. College graduates have relatively little trouble finding jobs at successful local companies, and the poor have a relatively high chance of moving into the Middle Class. But according to another author at The Atlantic, that’s not enough.

In “Minneapolis’s White Lie,” Jessica Nickrand takes Thompson to task for ignoring the fact that Minneapolis is majority-white. It may be a successful economy, but as other cities have more poor minority residents, what works in Minneapolis won’t work in other cities.

Applying policies that work in a relatively white-heavy city, like Minneapolis, to a more diverse municipality without consideration for racial inequality will make the region vulnerable to economic disaster; poor and working-class residents will be relegated to areas of concentrated poverty, which would contribute to a city’s overall loss of wealth, a diminishing tax base, and a larger number of people dependent on city services.

I think most research now agrees that segregation is bad for white people and minorities alike. But this is the first time I’ve heard that segregation leads to economic disaster. Nickrand compares Minneapolis to Detroit to make her case: “Detroit’s economic problems are directly related to policies and actions that deliberately excluded black residents from the city’s progress. This exclusion occurred while the city was championed as a welcoming middle-class haven that was ideal for people to start their adult lives—much like is Minneapolis today.”

Nickrand assumes that anti-minority policies in Detroit are “directly related” to its economic problems. As far as I can tell, she doesn’t present an argument that this was the case. Detroit’s economic collapse is usually attributed to economic factors, like the fact that its economy was built upon the American automotive industry, which contracted massively, disproportionately hurting working class workers of all races. White workers in Detroit had a higher net worth and were more able to leave the city for the suburbs or for other metro areas where jobs were more plentiful, leaving Detroit a city which is today no more than 11% white.

Here’s the problem: the people who create jobs are usually not poor. The (relatively) well-off employ the poor, which enables them to reach out of poverty toward economic stability. In the United States, because of a sad and bloody history of racial discrimination, it is often well-off white people creating jobs for poor minorities. That doesn’t make it a bad thing.

Nickrand relates troubling statistics about racial inequality–although it seems likely to me that comparing Minneapolis’s minority population (which is disproportionately made up of recent immigrants) to its stable and multi-generational indigenous white population is not a good metric.

Ultimately, Nickrand believes that Minneapolis must reenact “the progressive policies of the 1960s and 1970s” to ensure racial economic equality. She doesn’t go into more detail, but I imagine that involves more wealth redistribution than is already occurring. If you don’t think Minneapolis is a progressive city, do you even know what “progressive” means? For Nickrand, economic success for most people is actually a “lie” unless everybody is doing just as well as everybody else–including immigrants just off the plane who have few marketable skills and are happy to have the low-wage jobs that they do qualify for.

The key to Minneapolis’s economic success is economic: it’s the home to large, smart, diversified corporations like 3M. And if Minneapolis’s economy fails on the scale that Detroit’s has, it will also be because of economic factors–not racial ones.

The question, “is Minneapolis economically successful, or is it too white?” is nonsense. Why do attempts to create a “race-blind” society show us to be as obsessed with race as we ever have been?

 

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6 thoughts on “Is Minneapolis an Economic Success, or Is It too White to Qualify?

  1. Why do those attempts show us to be obsessed, or why are we obsessed with race?
    This is the first time I have ever heard that being racist or exclusive is bad for you economically. From everything I’ve ever learned about capitalism, the existence of classes (setting race aside) is what allows some people to become wealthy and others to stay poor (or so the ideology goes).

  2. Yes, I think most people would agree that Capitalism “allows” some people to stay poor. That is usually regarded as a bad thing (again, setting race aside).

    The capitalist would respond that “a rising tide lifts all boats,” meaning that when wealthy “job creators” prosper, they create more and better jobs for less well-off workers, who in turn spend more, fueling growth in wages and standard of living across the economy.

    The left-wing/socialist response is that it is not good enough for the poor to prosper only when the rich prosper, that Capitalism unfairly benefits Capitalists and leaves everyone else comparatively by the wayside. There are many valid arguments for this, however the race-based anti-capitalism put forward by the author of the second article is a dangerous aberration. Either you support Capitalism or you don’t, fine–but that decision should be based on economic factors. What system truly produces the greatest good? It should not be made, as I think you will agree, based on racial demographics. Economics should be race-blind.

    1. Maybe not racial demographics, but what if we are in a situation where the “coincidence” is that the poor demographic and a racial demographic overlap? If we are going to set up an economic situation that takes a poor demographic into account and what to do with them, we would also be taking a racial demographic into account.
      Let’s say there is a suburb in Detroit or Chicago that is largely African American–and largely poor. How is capitalism (is it? The kind in Minneapolis?) going to benefit them in a way that is better than the “not good enough” that liberals object with?
      Economics isn’t something I often think about, but I have heard that trickle-down economics (is it equivalent to a rising-tide-lifts-all-boats model?) is stupid to some people. I don’t see how it could be stupid. It seems to make sense.
      What is it and would it ever benefit the poor in a city where the demographic is divided?

      1. In a largely poor African-American suburb (actually, any poor neighborhood) there are not going to be the kind of opportunities that Capitalism offers to the less fortunate (entry level but upwardly-mobile jobs in enterprises owned by the rich).

        So, I would say that if there is systemic poverty in a poor area, it is likely to be caused by economic factors, specifically economic segregation: its residents don’t have access to economic opportunities. However, in a racially-segregated poor area, there are other questions. Why are African-Americans poorer on average than whites, Asians, or Hispanics? One theory I’ve heard is that they’re less likely to seek after economic opportunity if it forces them to leave the black community they’re in. African-Americans often self-segregate because they are made to feel uncomfortable in white neighborhoods.

        Whether society “owes” it to poor racial minorities to fix this problem with state action depends on what you think about redistributive justice: does the average person who becomes wealthy do so unjustly–must we therefore redistribute wealth? Or, should we redistribute wealth/jobs to the descendants of slaves because of the horror of lifelong servitude and oppression that our ancestors inflicted upon them?

        In short, I agree that trickle-down economics makes sense only in certain areas at certain times. In large, majority poor neighborhoods, or areas where there is little economic opportunity for anyone, it just doesn’t work.

  3. That’s a good question. Poverty is sometimes–perhaps often–a conscious choice or the inescapable result of conscious choices. If low-wage work is a choice for you (if you have the capacity to increase your earning potential but don’t), then no one owes you anything. But I think the church should help the truly indigent, and if the church fails (as it has) then the state should.

    So in short, I don’t think we are obliged to provide economic opportunities to the segregated poor, but we are obliged to help the indigent. However, and this is key, I think providing these opportunities is a huge boon to society as a whole. Companies flourish when they can hire from an educated workforce–one of the points of the original article was that Minneapolis succeeds because companies based there have a huge and well-educated white-collar workforce to draw from.

    For example, I work for a company that makes a lot of money helping community colleges demonstrate their economic worth to a community. Community College represents an investment by the “rich” (taxpayers) into the “poor” (those who benefit from subsidized tuition). This is an investment that a community makes and every community college in the country (by our measurements) is a *good* investment for the community to make. It makes for an educated workforce, and that is good for workers, companies, and the broader economy.

    So it may not be an obligation, but it is the smart thing to do.

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