Breaking Promises

Obama’s “Promise Zones” anti-poverty program is a Trojan horse for deregulation.

Last week, President Obama announced the creation of a handful of “Promise Zones” in deprived areas of the United States. While the policy sounds like a euphemism from a forty-year-old sex ed pamphlet, it is in fact the administration’s most recent attempt to tackle poverty in the country.

Obama has promised more than twenty such zones before the end of his term — the first five in Los Angeles, Philadelphia, San Antonio, the Choctaw Nation in Oklahoma, and eight counties in Kentucky. Residents of the zones can expect a bundle of deregulatory measures designed to speed up their access to preexisting programs and encourage capital investment. These areas will be given bonus points when competing with other locales for aid from various federal programs, and businesses will be given tax breaks as incentives for moving to “Promise Zones.” Some of the locations will receive a handful of AmeriCorps volunteers as part of the program. The policy will also remove “financial deterrents to marriage” for low-income couples as part of an attempt to “strengthen families.”

Crucially, no new federal money will be allocated.

It should come as no surprise that what might be Obama’s most significant second-term anti-poverty strategy operates through deregulation and tax breaks rather than real redistribution of wealth. The policy itself is couched in the language of individual uplift and self-reform. The Department of Housing and Urban Development’s FAQ on the policy reminds us that “there’s a basic bargain in America [. . .] no matter who you are or where you’re from, if you’re willing to work hard and play by the rules you should be able to find a good job, feel secure in your community, and support a family.”

The burden for social mobility lies firmly with the residents of the zones and, to a lesser extent, on charity and businesses. The implicit diagnosis is one of over-regulation and over-taxation, rather than structural unemployment, racism, and a hollowed-out welfare state.

The Promise Zone is the latest example in a long history of local deregulatory solutions to poverty, a history which clefts some of the biggest ideological divides of the later twentieth century. These solutions, which have repeatedly proven major boons for capital, have an unexpected genealogy that can be traced back to the fantasies of a group of maverick urban planners writing in Britain in the late 1960s.

Led by the British urban planning guru and later government advisor Peter Hall, the group set out their vision in what became known as the “Non-Plan” manifesto. The Non-Planners called for large, county-sized regions of the UK to be freed from all state planning restrictions. Pitched as a critique of what they saw as a frustrating and ossified state planning regime, the authors imagined that a new world of social and aesthetic freedom would emerge in these regions. They imagined thatched British villages connected by vast Los Angeles-style freeways and houseboats sailing to “row-in movie theaters,” and held a radical vision of democratic urban planning. “Why not let people shape their own environment?” the non-planners asked.

It took the economic crises of the 1970s for this charming idea to be reworked into what would become known as the “Enterprise Zone,” perhaps neoliberalism’s most pervasive legislative spatial strategy. Peter Hall, once chair of the Labour Party’s Fabian society and an enthusiastic participant in the upheavals in Berkeley in the 1960s, was instrumental in this transition. After repeated visits to Hong Kong, where he fell in love with the then-British colony’s sweatshop dynamism, Hall — with the backing of Margaret Thatcher’s new government — developed the idea as a solution for Britain’s deindustrializing cities.

These zones would be small, inner-city areas, exempt from certain elements of state regulation (and crucially, taxation). Gone were the anti-authoritarian impulses and aesthetic hedonism of the Non-Plan experiment; the freedom that remained was to be the freedom of the market.

The enterprise zones were designed, in Britain at least, to pave the way for top-down, financial services-led gentrification. The original vision called for passport checks along the borders of the zones, and total exemptions from all fire and building code regulations. While the final versions of the zones were somewhat diluted, it was the enterprise zone, rather than the Non-Plan region, that become policy in Britain in 1981.

The idea then took off. The same year that enterprise zone legislation was being drawn up by Thatcher’s new government, it crossed the Atlantic, supported and further honed by neoliberal think tanks like the Cato Foundation. Championed by Reagan in his first inaugural address and introduced into Congress in 1981 by the feverish supply-side Congressman Jack Kemp, the enterprise zone floundered in Congress. At the state level, however, the policy thrived. Currently there are hundreds of state enterprise zones across the United States, seventy-nine in the UK, eighty-five in France and twenty-two in Italy. There are currently plans to set up enterprise zones in South Africa, Australia and Sweden. There is a fairly good chance you are sitting in an enterprise zone right now.

It is, of course, possible to see enterprise zones as macro-economic adjustments or tools for development rather than strictly neoliberal or libertarian interventions. But there is no doubt that the original authors of the policy intended the zones to be showcases for demonstrating and disseminating a new brand of free-market economics.

Indeed, Paul Ferrera, the Cato Institute apparatchik who bought the policy to the US, wrote in 1982, “The creation of islands of economic freedom in America’s major central cities will hopefully serve as useful demonstrations of the success of free markets.” Towards the end of the Thatcher administration, senior minister Geoffrey Howe delivered a speech in an enterprise zone in East London where he claimed that his government had “turned the country into one big enterprise zone.” Those outside the zone would watch those within it and learn from their example. The tall glass trading towers and cartoonish tech companies that sprouted in the zones would leave the regulated and taxed infrastructure outside looking shabby in comparison.

But the history of these London enterprise zone should stand as a warning for the future of Obama’s Promise Zones. A zone was created in 1981 in a 400-acre area of East London’s former docks, a neighborhood with high rates of poverty and unemployment following the collapse of London’s docking industry in the 1960s. The plan was originally greeted with enthusiasm by local Labour councilors, who were told to expect a revival of manufacturing jobs.

Instead, the zone was managed by a quasi-private body and turned into a global financial services hub. The tiny area covered by the zone boomed with giant glass skyscrapers and luxury flats, while the neighborhood as a whole became poorer — according to some current estimates, the poorest part of Britain.

Part of the failure of the Britain’s enterprise zones stemmed from nearby businesses moving a few miles down the street into the borders of the zone, leaving the periphery of the enterprise zones even poorer. In places like Western Philadelphia and Central Los Angeles, it’s easy to imagine a similar trajectory. Indeed, in Los Angeles there have already been complaints from community groups about the exclusion of South LA from the zone, and fears that the zones will only act as a conduit for gentrification.

In 1944, Karl Polanyi argued that a series of early nineteenth century upheavals ushered in, for the first time, single, integrated national markets which stretched taught across nation states like fitted sheets. Non-Plan areas, Enterprise Zones, Special Economic Zones, Export Processing Zones and, most recently, Promise Zones have pierced holes in these national economic fabrics over the last forty years. In places like China, they have allowed neoliberalism to live alongside state-planned communes seemingly without contradiction. In Britain, they have acted as perforations in the fabric of the welfare state through which neoliberal economics has leaked and spread.

The enormous global transformations of the last few decades, from entirely planned and socialized economies in the case of China and the USSR or a more modest Keynesian welfare consensus in the case of Europe (and, to a lesser extent, the US) towards a more global, neoliberal settlement has been described as a coup by business elites, a structural shift in the economic base, or the outcome of an increasing loss of solidarity and social totality in the wake of globalization. Looking at these geographically-based policies, we can see neoliberalism perhaps not as a discrete set of national policies or strategies of accumulation, but instead as a network of different zones crafted to the needs of capital — zones that are increasingly becoming the rule, rather than the exception.

The Promise Zones announced this week are only the latest in a long line of spatial policies designed to benefit market forces rather than meet people’s needs and reduce structural inequality. They are administrative, regulatory measures offering no new funding for distressed areas.

President Obama’s announcement of the zones last week coincided with the fiftieth anniversary of Lyndon B. Johnson’s War on Poverty. Maybe it was a scheduling mistake.