Imagine a capitalism in which private money is invested in government and nonprofit antipoverty work because it offers a high rate of return. Yes, it sounds unlikely. How can that kind of work provide investors a return?
That was the question I asked David Aylward of the University of Colorado Farley Health Policy Center last Thursday when I sat down with him and Dr. Pam Brown, Executive Director of the Anne Arundel County Partnership for Children, Youth, and Families. He was in my office because he represents an initiative called Investing in Fluorishing, launched by the Federal Reserve Bank of New York, and they have just selected Anne Arundel County as one of three jurisdictions to pilot their model.
His answer to my question made sense. The return on investment results from the removal of the costs of poverty, or lack of flourishing, specifically among children and their families. Those costs are borne by local employers, victims of crime, insurance companies, hospitals, and the taxpayers. Their model packages the measurable cost savings from comprehensive interventions and sells them to investors.
They heard about Dr. Brown and the work of our Partnership, particularly in Brooklyn Park where it has convened local residents to participate in Governor Wes Moore’s ENOUGH program. They believe that the work we are undertaking in Brooklyn Park has the potential to demonstrate the measurable economic benefits that their finance team can package and sell to investors. The plan is to cover the up-front program costs with philanthropic dollars.
Dr. Brown will attend a meeting at the New York Fed in November where the program will be presented. She’ll also hear about other innovative efforts to connect communities to the capital they need to thrive.
I don’t know if this initiative will succeed, but I do know that these kinds of efforts are taking place because our economy is leaving far too many people behind to be sustainable. Poverty and failure to flourish - I know, it’s a strange word that sounds like the chemical that they put in toothpaste - are far higher in the United States than other wealthy countries, and Anne Arundel County is not immune.
On Wednesday, the Community Foundation of Anne Arundel County released the eighth edition of Poverty Amidst Plenty, a 120-page report authored by Dr. Brown showing the disparities in health and wellness across our county. It tells us that 33% of our residents are Asset Limited Income Constrained Employed (ALICE). That means that they are either unable or barely able to afford their monthly expenses, and that a missed paycheck or two begins the spiral into poverty.
The report also tells us that median rents increased from $1,600 to $2,000 between 2018 and 2023, that childcare has risen to $419 per week for infants and $352 for school-age children, and that the waiting list for housing vouchers grew from 18,453 in 2020 to 22,889 in 2024.
The report shows some areas of progress, with wage growth being the most promising, but for people at the low end of the income scale, the growing costs exceed income growth. If the federal government is allowed to follow-through on its plans to cut Medicaid, cut food assistance, cut housing assistance, reduce federal employment, add tariffs, and deport our essential workers, poverty will grow - a lot.
The United States is an outlier. When Europe’s economy grew after World War II, they created a social safety net that left far fewer people behind. Asian countries have moved hundreds of millions of people out of poverty over the last fifty years as their economies have grown. But in our country, we stopped fighting poverty and stopped investing in infrastructure around 1980, and that’s when we launched the massive transfer of $50 trillion from the bottom 90% to the top 1% of our population. It’s also when our federal government stopped trying to pay for what we spend, and began building the $37 trillion debt that burdens our nation today.
The University of Chicago School of Economics’ Milton Friedman planned it that way. He packaged his trickle-down economics not only to Chile, where they were implemented by a U.S.-supported military dictator, but also to a group of political operatives in the United States who ended up taking power here in 1980.
The stress that this economic strategy has put on working American families has turned them against corporate elites, governments, and anyone who is a part of “the system.” Donald Trump’s promises to lower prices and “drain the swamp” won him the election, but approval of him and his policies have been dropping sharply since he took office. People are looking for something new.
Our future as a nation depends, in my view, on reversing the accelerating transfer of wealth to the top 1%, and on doing what so many other countries have done to ensure that wealth actually benefits the hard-working people who create it. That starts with proving the value of comprehensive programs like ENOUGH and our Partnership in Brooklyn Park, and succeeds with either incentives or mandates that drive capital into those efforts.
I won’t give up trying, and I hope you won’t either.
Until next week…