The Balimore rot
Certainly the tax policy of Baltimore makes no sense. But there is also the embedded corruption of Democrat politicians in the city and the state. The Wire has demonstrated some of this corruption, but it mainly focuses on the most blatant aspects of it. It seeps down into the soul of the city and robs from everyone.If you've seen HBO's "The Wire," you know why those of us who live in Baltimore are often asked whether our city really is the hellhole it is portrayed to be on TV.
Our answer is, well, yes. Baltimore deserves the Third-World profile it has developed because it has expanses of crumbling, crime-riddled neighborhoods populated by low-income renters, an absent middle class, and just a few enclaves of high-income gentry near the Inner Harbor or in suburbs.
This wasn't what Baltimore looked like in the 1950s. Then it was a prosperous, blue-collar city of about 950,000 with a median family income 6.6% above the national average. Back in the good old days, Baltimore had a smaller percentage of residents living in poverty (22.7%) than the nation as a whole (27.8%), and a greater percentage of families (23.1%) earning a middle-class income of at least $44,600 in today's dollars than the rest of the country (19.1%).
Today, the city has a population that is almost 50% smaller, and about 40% of families with children live at or near the federal poverty line. Among the country's 100 most populous cities, Baltimore ranks a shameful 87th on median household income.
How did this happen?
Most people think of cities as dense concentrations of people. They are that, of course. But they are also dense concentrations of capital – homes, offices, factories, theaters and roads. All of these assets are attractive to people because, when they are in close proximity to each other, they offer the chance of a more prosperous life.
The problem is that once capital is built, it can become a target for tax-and-spend politicians who bank on the fact that physical capital will continue to draw people, even as it is taxed more heavily. This is what has happened in Baltimore. The city has waged a war on capital for more than 50 years, raising property taxes an astonishing 21 times from 1950 to 1985.
But what politicians don't seem to understand is that the target may be degraded or destroyed in the process. There are now at least 30,000 housing units in Baltimore that are abandoned and waiting to be demolished, while even old, upper-crust neighborhoods now have a seedy look. Property taxes are so high – as well as the strong likelihood they will soar even higher in the future – that even maintenance, no less capital improvements, are a losing proposition. Renovations or upgrades may add less value to a house than it will cost in taxes on that house with a higher assessed value.
Politicians, in short, reason that because physical capital cannot typically be picked up and moved, it is immutable. Wrong. It depreciates. Fail to replenish or improve it, and it decays to uselessness.
Moreover, while physical capital may not be mobile, financial and human capital are. Property tax rates in Baltimore County (outside the city) are less than half of those inside the city (1.1% versus 2.268%). The suburbs are thriving even with the center city decaying.
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No longer does the guy with the best product or service at the best price get the business. Instead it goes to the guy with the best connections whether it is through payment or other affiliation. The city has never had the kind of leadership that Giuliani brought to cleaning up New York.
If you have not watched The Wire you owe it to your self to do so. You will get to know the culture of corruption that infects the Democrat Party.
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