A multi-year investigation by TRNN reporters reveals how neoliberal policies and public-private partnerships have led to tax-free zones for private interests, while taxpayers foot the bill.
Story Transcript
This is a rush transcript and may contain errors. It will be updated.
Taya Graham: Hello. My name is Taya Graham and welcome to the Real News Network. As you know, along with my reporting partner, Stephen Janis, I usually host the Police Accountability Report, but today we’re going to focus on a different topic, economic inequality. Don’t worry though. We’re still going to discuss it through the lens of our overarching focus as journalists, accountability. That’s because our country’s inequitable landscape is no accident. In fact, it’s the result of a political economy that benefits the few at the expense of the many. And to give you a deeper understanding of how that works, we’re going to do what good journalists do, show don’t tell. And that telling will include two parts. One, the story of a working class community who lived in this public housing project for years, and who are now asked to relocate to make way for luxury apartments and two, how the aforementioned political economy is driven by the ideology of neoliberalism, made this seeming injustice possible.
So to begin, we’re going to start with the tale of people who endured the abandonment of public housing firsthand, and who were hoping that their collective suffering was finally over. A story about a community that until four years ago had known little but neglect. I’m talking about the residents of Perkins Homes, a low income housing project located not too far from Baltimore’s top tourist attraction, the Inner Harbor. The project was home to roughly 500 families and had been built shortly after World War II to provide affordable housing for blue collar workers to live proximate to the city’s most treasured amenity. But over time, the federal government and city officials had let the community fall into disrepair. A tale of neglect that residents shared with us as they contemplated an uncertain future a few years ago.
Speaker 2: And these places are so, so bad. You know that… The rodents, the bed bugs, the smells, the pipes, everything is wrong with these places.
Taya Graham: The reason we were talking to them back in 2017, is that the city had announced plans to revitalize the buildings. In fact, the plan was to raze the entire project and replace it with new apartments. However, it came with a catch and concerns because for almost a decade, developers have been gentrifying the surrounding area, building new gleaming towers and luxury office space, while Perkins Homes sat abandoned. Hundreds of millions poured into the already wealthy neighborhoods while Perkins suffered from neglect. It was a history that left residents wary. Would they really be allowed to stay in Perkins? Let’s listen.
Speaker 2: Even if they decide to get rid of these places and stuff, I’m fine with that, but where am I going to go? I have a disability son and four other children and at the end of the day, I haven’t talked to anybody. Nobody letting me know where they moving us, what they… What we just supposed to pick up and go? Where is we going to go?
Taya Graham: Despite their concerns, city officials promised they would be allowed to come back when the redevelopment was finished. In fact, we spoke with Baltimore Mayor Jack Young, who told us he would only support redevelopment, if indeed Perkins Homes residents would be prioritized for the newly upgraded apartments. Let’s listen.
Mayor Jack Young: Because I’m not, I don’t have an appetite for [inaudible 00:03:21]. I have to have a guarantee that these folks who live there, can come back. Because what I don’t want to see is that neighborhood gentrified.
Taya Graham: But in the intervening years, something changed. The plans that once included affordable housing units for the Perkins Homes was substantially altered. And the promise that current residents could return to their homes after the development was finished, had been significantly changed. As a matter of fact, in the most recent plan presented to the city, reporter, Melody Simmons says most of the low income units were moved to a location far removed from the Perkins site.
Melody Simmons: Well, the way we’re hearing, what we’re hearing now and what we’re seeing in public meetings that are being held is that most of the affordable is going to be placed at the old Somerset site, which is near Dunbar High School, right off of Central Avenue in that area and near the Old Town redevelopment. Oh, the tip right now is about 150 million. And that is going to start moving its way through the city now. There will be some public hearings on it. We’re going to hear more details on that this fall, but it’s going to cost the city a lot to upgrade that lot.
Taya Graham: But why that happened is what we’re going to tackle next. And by explaining the process which made it possible, touch on a broader theme that informs much of the income inequality we see today. Of course, part of what drove the change in plans is a process we’re all familiar with, gentrification. We all know about the phenomena that is widespread in this country that has moved low income residents from communities they lived in for years, to make way for an influx of high income residents. The location of Perkins Homes, proximate to the city’s most visited tourist attraction, means it was easy pickings for well-financed and already rich developers. But that’s just a symptom, not the disease.
And it’s not the only reason this apparent bait and switch occurred. It’s not just greed and the desire to move working class people out of the way that made this plan passable. It takes more than a blueprint and a bank account to effectuate that kind of maneuvering we’re witnessing here. That’s how we get to the political economy. A process that not only fuels this type of iniquity, but makes it both fiscally and politically inevitable. What do I mean? Well, to explain this, I’m going to have to refer again to one of our favorite thinkers on TRNN. His name is Thomas Piketty and he is the French economist best known for his book, Capital in the 20th Century. In it, he said inequality was an inevitable byproduct of capitalism, but his latest book offers a slightly different take, titled Capital And Ideology. It makes case that inequality is the result of an ideology of wealth that has little to do with economic processes.
That in fact, the allocation of largess to a small group of elites is the byproduct of the constant drum beat from the mainstream media and popular culture that, put simply, the rich are simply more deserving. Which brings me back to the situation at Perkins Homes and the plight of the residents who live there. Because the deal we’re talking about is fueled by a phenomenon that is so widespread, it is almost invisible, but still a big part of the ideology Teddy’s talking about. A tax incentive tool that in part explains how wealth inequality is not really inevitable, but an idea, because the wealthy developers who are building a new upscale oasis, aren’t financing it on their own. No, in fact, just the opposite. They are relying on taxpayers to fund it and for more on how and why this is happening, I’m joined by my reporting partner, Stephen Janis. Stephen, thank you so much for joining us today.
Stephen Janis: Taya, thanks for having me. I appreciate it.
Taya Graham: So Stephen, the tax break that’s financing the project has a special name and as a result of a special, should I say, dispensation? Can you talk about it?
Stephen Janis: Yeah, exactly. This is what’s known as a TIF or a tax increment financing. It might sound fancy, but what it really does is it allows a developer to take all of the property taxes they would have paid for 30 years and invest it back into the project. Now, a lot of times they’ll say it’s for infrastructure. In this case, they’re going to build a school, but no one really knows where the money goes. And the truth is, it’s a huge benefit because the money doesn’t go into the city’s coffer. So, it’s going into the developer’s pockets. So I think it’s a tax break.
Taya Graham: Now, these special tax districts are part of a broader trend. Can you describe this trend?
Stephen Janis: Throughout the world and since the 1970s, there has been an uptick in what’s called specialized economic zones, and that is ports and other areas that are sort of set aside by government where companies don’t have to pay taxes, have special tax incentives, don’t have to abide by labor rules or environmental regulations. They are sort of not just a trend, but actually something that has grown to epic proportions where most countries have these deals or arrangements where private corporations can go in and make tons of money, not pay taxes on it, not pay fair wages, not allow for unionization. It is actually something that is a huge trend. And a growing trend.
Taya Graham: What I find interesting about these tax zones is how they’re justified and how they have multiplied. Can you explain this for us?
Stephen Janis: Well, what’s interesting about it, if you look at a case in Baltimore, it’s a narrative. A narrative that starts with, we can’t afford to build this city because we can’t pay the taxes and everyone else does. And that narrative doesn’t make any sense. I mean, they’re saying that a person lives in the poorest part of town has to pay more taxes than a rich developer. And that story is that we aren’t going to invest our money in the city. Well, we all know Baltimore has a higher tax rate and that’s because Baltimore has been cut off from the surrounding jurisdictions. And so the poorest people have to support the largest government infrastructure. And I guess it’s something we would call extra state [inaudible 00:08:52] where the tax breaks and the need for infrastructure is sort of a narrative ideology foisted upon the people to make them embrace policies that make no sense.
It makes no sense, that a rich developer from the suburbs would be able to get a huge tax break and then move residents who have lived generations at Perkins Homes. That only is achieved through ideology and convincing people that there’s no other way it’s going to happen.
Taya Graham: So, as Stephen explains, what we’re dealing with is the proliferation of an idea, not a necessity. The widespread use of specialized tax zones has created havens where billion dollar corporations to flout all sorts of laws regarding fair labor practices, environmental regulations, and not pay their fair share of taxes, that support policies, which fund critical public services. It’s a policy that is driven by ideology. I mean, think about the Perkins Home dilemma in a broader sense. For years, we have disinvested in public housing. The federal government has refused to provide funds to maintain and upgrade public housing. Meanwhile, the federal bailout for investment bankers and corporations totals $6 trillion, a fraction of which could transform the public housing across the country, into state of the art domiciles. But it didn’t happen. Instead, authorities allowed Perkins to deteriorate. Then they burdened one of the poorest cities in the country with the highest property tax rate. And then, like some sort of dystopian recipe, they create large swaths of real estate where tax burdens don’t apply.
It’s a veritable, obligation free zone where funds for critical services and public investment stay right in the developer’s pocket. And that’s why during these reports, we’d like to have what we call our neoliberal moment.
It’s the part of the show, that we recognize the ugly achievements of a philosophy that has abandoned the true principles of liberal policies for free market solutions and deregulation. The greed that led to the so-called public private partnerships that turn public assets into private profit machines, like we are witnessing at Perkins, and the idea part of the ideology, which Piketty believes is so critical to enriching the already wealthy. And today we’re going to credit neoliberalism with creating this explosion of obligation free districts, by giving them a name that truly reflects what they are. A moniker, which we believe rightly, gives credit where credit is due. A name which symbolizes the fraught partnership between unfettered wealth and misleading ideology. For our neoliberal moment, we’re going to call these tax free havens, Neoliberal Autonomous Zones.
Remember autonomous zone, the 12 block area in Seattle that protestors took back from police? The small area of land upon which the mainstream media fixated as a sign of the end of civilization, the tiny sliver of land that existed without law enforcement for a brief moment in time that made front page news for weeks. Now, we realize that the zone had real problems and that establishing a police-free zone is a work in progress, fraught with missteps and teachable moments. But our point here, is a matter of balance and it starts with a question. What has wreaked more havoc on the wellbeing of humanity? Tax havens or multinational corporations or brief experiments with the absence of police? And as we confront the existential threats, climate change, entrenched poverty, what plays a bigger role in these life-threatening challenges? Small groups of protestors or the rampant deregulation of capital. Isn’t it odd that the hysteria over this relatively short-lived experiment, however flawed, has seen more breathless coverage than 30 million people losing their jobs. And with that their health insurance.
Isn’t it telling that the mainstream media obsession with autonomous zones that affected 12 blocks of real estate, far exceeds any reporting on the fact that the U.S. has roughly 500,000 personal bankruptcies occur every year due to unpaid medical bills? Well, perhaps that’s why we do what we do. Why we follow the lives of residents of Perkins Homes, while the mainstream media chases the latest celebrity drama or clash between the elites. We spent four years and published multiple stories on the working class people of our city and why we will continue to hold the wealthy and their political benefactors accountable. The point is, we have to recognize how the ideology of wealth affects the perception of public policy. How the stories which create the narrative of a false necessity have prompted one of the poorest cities in the nation to give a $150 million tax break to a small group of wealthy developers. And I must pause to say this. To move low income residents from a community they have lived in for generations. As our final thought on this topic. Let’s listen to them, the people the mainstream media doesn’t want you to hear from.
Speaker 2: Yeah. And I feel like it’s a lie. That they’re going to move all of us back in here, and it’s going to be a better place and all that, because half of the people not going to be able to come back at all.
Taya Graham: My name is Taya Graham, and I want to thank you for watching the Real News Network.
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