Can Clinton's urban policies really work? B.E.'s economists weigh the value of empowerment zones and community banks in revitalizing America's cities - includes related article on prospects on jobs and increased incomes for African Americans - Black Enterprise Board of Economists - Cover Story

Black Enterprise, June, 1994 by Frank McCoy

But even a viable EZ won't have an impact on every unemployed person in the area covered. Alexis says EZs are not created with the unemployed in mind. Instead, they are directed at "people who have serious entrepreneurial ambitions on a small scale," possess an idea, a risk taker's mentality and some capital to work with. As he points out, the goal of EZs--but not the requirement--is that workers would be hired from the neighborhood surrounding the EZs.

There are no guarantees that this will happen, though, and the board has other, deeper misgivings. Most members see the EZ plan as a rewarmed, old idea. There is also a belief that in spite of all the administration's intentions, enacting the EZ and EC plan only serves as a sop to minority demands without addressing the real problem: the corrosive legacy of U.S. systemic and institutional racism.

For those reasons, Swinton, Benedict College president-elect and former dean of Jackson State University's business school, believes that "the program should not be widely hailed or accepted by African-Americans." He contends that the EZ concept lacks a solid theoretical base. In effect, he says, it's a feel-good solution based on the mistaken assumption that if there's a problem and you direct enough energy at it, you'll somehow solve the problem. As a result, he says, African-Americans must not get caught up in the politics of just getting something done.

Barnard College economics professor Cecilia Conrad also questions the type of jobs brought to an EZ. Can success be declared if warehousing firms open up instead of labor-intensive manufacturing plants? It is not unreasonable, she says, to assume that firms moving into an EZ may receive large tax credits and then hire few workers from the surrounding neighborhood. Or what does a community do if labor-intensive companies are attracted to the area, but all the jobs require an education and skills level not found locally?

There was one dissenter to this negative litany from the board. Edward Irons, dean of the Clark Atlanta business school, acknowledges that the EZs will face difficulties regardless of how they're structured. But he says that whether companies are lured by tax incentives or by access to transportation hubs, even EZs that produce only a small number of jobs are a positive force in poor communities where such businesses, jobs and income did not exist before. In addition, the one pure benefit of the EZ plan, he says, is that even cities that are not selected will still benefit: Simply by creating a serious proposal to submit, they will end up with a blueprint for how their community can move ahead in the future.

BANKING ON COMMUNITIES

The purpose of the proposed community development banks is to bring capital, credit and financial services to populations and areas not served by traditional financial institutions. Before BE went to press, the House and Senate had each passed versions of the community development bank (CDB) initiative, which allocates the dispersal of $382 million or $500 million, in the respective versions, during a four-year period. The plan now awaits final compromise in a joint House-Senate committee, which is expected to reach an agreement before the summer recess.