Thursday, June 5, 2014

Income inequality, political culture and economics - unintended consequences?

There has been a lot of dialogue about income inequality recently. Now we have some counter-intuitive research results about the relationship of political culture, political policies and income inequality - and proposals for reducing inequality.

"Why Democrats Are Focused on Inequality: Liberal Metros Face the Worst of It

U.S. metro areas that voted for Obama tend to have higher levels of inequality and segregation" 

"As my CityLab colleagues and I have noted before, there is a strong association between density and liberal politics. In election maps broken down by county, nearly every big metropolitan center is painted blue, with red concentrated in the outer suburban rings surrounding these centers and in the rural parts of the country..."

“The fact that Democrats represent districts that are (on average) more unequal than Republican districts suggests that the parties may have such divergent views on income inequality in part because their members (and constituents) have divergent experiences of income inequality.' This was true on the level of congressional districts, and it remains clear for metropolitan-level voting patterns as well."


"The Blue-State Path to Inequality

States that emphasize redistribution above growth have a wider gap between lower and higher incomes.

"...When politicians get fixated on closing income gaps rather than creating an overall climate conducive to prosperity, middle- and lower-income groups suffer most and income inequality rises. The past five years are a case in point. Though a raft of President Obama's policies—such as expanding the earned-income tax credit and food stamps, and extending unemployment benefits—have been designed to more fairly distribute wealth, inequality has unambiguously risen on his watch. Those at the top have seen gains, especially from the booming stock market, while middle-class real incomes have fallen by about $1,800 since the recovery started in June 2009.
This is a reversal from the 1980s and '90s when almost all income groups enjoyed gains....
Our view is that John F. Kennedy had it right that a rising tide lifts all boats. It would be better for low- and middle-income Americans if growth and not equality became the driving policy goal in the states and in Washington, D.C."

It is worthwhile reading the complete articles if you want to further explore the subjects of the excerpts.