"Enterprise zones," where people are exploited, aren't the key to solving black unemployment, but "charter cities" might be.
In The Wall Street Journal yesterday, conservative economist Arthur Laffer, he of the famous "Laffer curve," said he'd found a way to stem the rising tide of double-digit unemployment in the black community. "[E]nterprise zones," wrote Laffer, "are desperately needed in our inner cities [and] there are lots of areas in the hollows of Kentucky and West Virginia that need enterprise zones as well, not to mention barrios in California and New Mexico."
"What's an enterprise zone?" you might ask. By Laffer's definition, an enterprise zone is an area set up in a financially dilapidated neighborhood that allows corporations and the zone's poor residents to form a symbiotic relationship—the residents get jobs and the corporations get productivity. Sounds like a great idea, right? But, of course, there's a catch.
"Federal and state minimum wages must be suspended in the enterprise zone," Laffer writes. "If not for all employees, then at least for employees under 30. These young people need on-the-job training, and at the present minimum wage many of them aren't worth hiring. That is why they are unemployed."
After arguing that black people should be forced into working for peanuts in enterprise zones, Laffer goes on to recommend that the zones be unburdened of stringent building codes, unions, business regulations, and all payroll taxes. On top of that, Laffer wants profits made by companies employing people in enterprise zones taxed at one-third the rate of other companies. That means that if a global corporation like Nike were to open up a single store in an enterprise zone, it could cut its taxes by more than half.
As you can tell, what Laffer is proposing isn't a solution to black unemployment, but a euphemism for neo-slavery. In enterprise zones, rich companies would benefit from cut-rate black labor under the guise of "on-the-job training." And because building safety codes and unions would be abolished, the workers would be both powerless against management and working in unsafe conditions, which is how things like the Triangle Shirtwaist Factory fire happen. For all their predatory efforts, the companies would be rewarded with huge tax breaks.
There is a better way, and it comes courtesy of economist-cum-software magnate Paul Romer. Romer is the modern founder of the "charter cities" concept. While Laffer thinks on a micro level, Romer goes macro, advocating that entire third-world cities come under outside rule in the name of defeating poverty and unemployment. For instance, say America and Canada teamed up to create a capitalist oasis in a big plot of land just outside of Havana. The rest of Cuba would remain under Castro's rule, where Communism and rationing control the financial tides, but the U.S./Canada-helmed locale would operate under agreed upon Western rules. The result would probably be something similar to Hong Kong, which skyrocketed in wealth and productivity under British colonialism while mainland China languished.
Charter cities sound a bit icky because of the dark history of colonialism, but it's important to not throw the baby out with the bath water. If one really wants to, it's actually quite simple to establish business outposts in other parts of the world without being horrifically racist and violent. Past colonialists haven't really wanted to do that, and we all know the damage that's wrought. A good charter city would simply work like any normal Western nation, just one that happens to be placed smack in the middle of a third-world country.
Where charter cities and enterprise zones differ is in their intent: Romer wants to use capitalism and Western laws to help lift people out of extreme poverty, while Laffer proposes eroding American laws for the benefit of corporations while black employees get stuck toiling in dangerous conditions for sub-minimum wage pay. Somewhere, there's a middle ground between Laffer's exploitation and Romer's off-shoring. If we can find a way to coax corporations into wrecked urban landscapes while still offering fair wages and benefits to employees, that will be the true solution to black unemployment.