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In network language, poor people are excluded from forming weak links with strangers or casual acquaintances that could help them make money. The economy from which the poor are excluded is an intricate web of weak links that arise spontaneously and easily when enterprise is established. This can happen only when people own property or other capital, and can rely upon a framework of law to make their assets work for them. Without such links, people are utterly dependent on strong links–friends, family and the immediate community. Without proper legal title to assets, such commercial transactions as there are must take place within the poor community, and even then they can be enforced only by goodwill or violence.
If poverty is to be escaped, the networks of the poor must be enlarged through the injection of a few weak links that connect to capital and enterprise.
Provided there are links outside a community, it also seems that the common identity afforded by a struggling group can be a great help. Examples include Dr Yunus’s village-solidarity groups, black communities in the north-eastern USA, and previously poor or oppressed groups–the Mayflower pilgrims; later waves of immigrants to the United States, including Irish, Italians, Russians, Poles, Ukrainians and Hispanics; and Scottish and Jewish communities throughout the world. Most helping hands came from within the community but outside immediate circles of family and close friends. For instance, most Irish or Italian families landing at Ellis Island in the late nineteenth and early twentieth centuries were met on the quayside by compatriots who were weak links–friends of friends, more tenuous family or occupational acquaintances, even strangers wanting to do a good turn (or make a quick buck renting a room or hiring cheap labour).
Community, then, appears to be most valuable where common identity coexists with a large and scattered group that has links to other worlds or to the mainstream. We may see, for example, the Irish community in Boston or New York as a bridge for Irish immigrants fresh off the boat to the wider American society. What is the celebrated American ‘melting pot’–really a succession of melting pots for each ethnic group–but a series of weak links writ large?
What of the widely mooted idea, then, that poor communities may be a curse–that escaping from poverty may require escaping from the community itself? George Gilder cites the negative effect of single young men setting the tone in many ghettos. Carol Stack shows how ‘the sisterhood’ in the Flats discouraged the only possible escapes from poverty–marriage, leaving the community or buying property. Sudhir Venkatesh recounts how the Robert Taylor Homes project on Chicago’s South Side–both a series of dismal and dispiriting high-rise buildings and a genuine, if largely extra-legal, community–was eventually razed to the ground by President Clinton, scattering the Black Kings drug gang and ending much of the associated extortion and money-laundering.
Malcolm Gladwell says:
When we’re faced with an eighteen-year-old high-school dropout whose only career option is making $5.50 an hour in front of the deep fryer at Burger King, we usually talk about the importance of rebuilding inner-city communities, attracting new jobs to depressed areas, and re-investing in neglected neighborhoods. We want to give that kid the option of another, better-paying, job right down the street. But does that really solve his problem? Surely what that eighteen-year-old really needs is not another marginal inducement to stay in his neighborhood but a way to get out of it altogether. He needs a school system that provides him the skills to compete for jobs with middle-class kids. He needs a mass-transit system to take him to the suburbs, where the real employment opportunities are. And, most of all, he needs to know someone who knows someone who knows where all those good jobs are.
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Economists talk about ‘failed cities’. They’re easy to identify–houses are dirt cheap. In thriving cities, the cost of a house comes more from the cost of the land than the building. But in downtown Detroit, for example, the land appears to have zero or even negative value–the average price of a house is $60,000, but its building costs alone are at least $80,000, meaning that the land is worth minus $20,000. You can see the evidence by visiting the Masonic Temple in central Detroit. It’s surrounded by acre upon acre of abandoned land and buildings. Nobody can build anything there and sell it for the cost of building.111
It’s the same sad story in St Louis or New Orleans–old housing stock, low prices, and people attracted to the city, if at all, only by the low price of housing. Generally such people are retired or have few skills. The absence of lively networks within the city diminishes opportunity and leads to a vicious circle–skilled or ambitious people leave; there are fewer newcomers and they have less to offer.
After Hurricane Katrina in 2005, the federal government allocated two hundred billion dollars to rebuild New Orleans. Economists reckoned it was money down the drain–rebuilding a trap, baiting the hurricane victims to return to poverty. Far better, they said, to spend the money on grants to the people rather than the place, so they could improve their lives, in New Orleans or elsewhere. One writer calculated that each family of four could have been given eight hundred thousand dollars that way!
But the economists ignore the unfortunate network effects that would probably have kicked in had their approach been adopted. Given a pile of cash, New Orleans residents who were the most enterprising, or had links beyond the local community, might well have left town in large numbers. And once residents who stayed in New Orleans had spent the cash, the problem of isolation and lack of skills or links to any viable economic network would have been even worse. The examples of Father Divine and Muhammad Yunus and the theories of Hernando do Soto suggest that there might be a better solution, based on stimulating a large number of tiny enterprises–primed by outside capital, but using the complementary skills of the community to make profits and build fresh capital.
Jane Jacobs discusses other important community issues in The Death and Life of Great American Cities.112 She was the first person to claim that, while successful neighbourhoods protect us from crime by facilitating ‘eyes on the street’, tower blocks, especially in poor communities, cannot fulfil this role. Tall buildings take people away from the street. As we’ve seen, Jacobs was also the first to claim that cultural diversity makes cities more productive and innovative through cross-pollination–ideas leap from firm to firm and from industry to industry, and sometimes even create new industries, when there are many different types of commerce in the same place. She also says that thriving cities and neighbourhoods require a mixture of different activities on top of each other–residences and businesses and places to shop and relax: restaurants, cafés, green spaces, markets, all cheek by jowl. Economists have since validated these theories.113
The real problem, then, may not lie so much with poor communities per se, or even with the reliance on friends and family within those communities, but rather with people’s exclusive or nearly exclusive reliance on the community and its strong ties. The problem occurs when poor communities are monolithic, isolated from broader society and especially from capital providers.
The antidote, perhaps, is the addition of bridging weak ties, of diversity, of links beyond the shanty town, the ghetto or the isolated rural village.