The Greater Economic Gap between Regions in the United States: The Gap between the Rich and the Poor Is Hard to Return

category:Finance
 The Greater Economic Gap between Regions in the United States: The Gap between the Rich and the Poor Is Hard to Return


This economic and social difference clearly leads to political polarization, Krugman said. Although the United States has invested a lot of subsidies in backward areas, the differences are still intensifying, which shows that the economic forces at work are very strong.

Greater economic disparity between regions in the United States

The above report shows that the widening gap in economic development between regions in the United States is not a short or slight phenomenon. In fact, the first widening of the gap between rich and poor occurred between large-scale industrialization and 1900. From the 1920s to the 1980s, the economic gap between regions in the United States began a long process of narrowing, and then another turning point appeared around 1980.

Krugman points out that the emergence of two critical points in the 19th and early 20th centuries can be explained by technological changes, such as the successive rise of rail and road transport. So why did the last critical point when regional disparities began to increase?

Krugman argues that the most obvious reason is the rise of knowledge economy, where industries requiring highly educated labor tend to develop in geographic areas where these populations are concentrated. The report shows that areas with high concentration of university-educated workers have an advantage over areas with low density. In 1990, the more educated the U.S. population, the easier it is to consolidate its economic leadership.

According to the EIG report, the highest concentration of affluent communities in the United States lies in the north and east, especially near supercities such as New York or Los Angeles on both sides of the East and west. The south is the most densely populated area of poor communities. The Western affluent states are represented by Utah and California, where nearly half of the population lives in economically prosperous communities. At the same time, poor communities are more concentrated in central and western states such as Alabama, Arkansas, Mississippi, Louisiana, New Mexico and West Virginia.

Wang Yong told First Financial Journalist that this is a natural economic result under the economic globalization. He said: The higher education level, closer to the international market, more developed infrastructure and more open thinking on both sides of the United States are the reasons for the development of globalization as well as the results of the development of globalization. Both sides of the East and the West have become the areas where the United States has benefited most from the wave of globalization.

The areas with the highest concentration of affluent communities in the United States are located near supercities such as New York or Los Angeles on both sides of the East and West, while the areas with the highest concentration of poor communities are located in the south.

Failure of American Domestic Public Policy

Wang Yong told First Financial Journalist that the trend of economic globalization is a natural process. In fact, the problem lies more in the failure of public policy in the United States. On the one hand, the process of economic transformation in the United States has brought some areas into decline.

The Midwest, especially the Great Lakes in the Northeast of the United States, used to be a major economic center in the United States as a center of heavy industry. But after decades of economic globalization, these areas have become so-called rust zones, which are often characterized by high unemployment, high crime and low wages.

Parag Khanna, an adviser to the National Intelligence Commission and researcher at the Brookings Institution, said in an interview with First Financial Journalist: If the United States does not produce cars, people in Detroit, Michigan and Pennsylvania will lose their jobs and will not be able to buy goods, so the United States needs to keep one. The industrial base enables workers to consume. What the United States is worrying about has nothing to do with other issues. What the United States is worrying about is the level of inequality at home.

On the other hand, Wang Yong pointed out to the First Financial Journalist that the current distribution policy in the United States is not effective, not only can not make up for regional differences, but also aggravate the gap between strata. He said: The United States has benefited tremendously in the process of integration with the world economy, and can even say that the United States is the biggest beneficiary of economic globalization. Data show that globalization can bring more than $1 trillion a year to the United States. However, the U.S. government has failed to make up for regional disparities in the United States, especially between the Midwest and the two coastal areas of the United States, through effective government means such as redistribution of wealth or regional support.

Monica Prasad, a professor at Northwestern University, has argued that American concerns about a consumer-oriented economy have disrupted the foundations of welfare states and marginalized those who cannot participate in consumption through decent work or credit.

The distribution policy of the United States is more inclined to capitalists, such as the capital groups represented by Wall Street. On the contrary, the income growth of middle and lower wage earners in the United States is relatively slow, and there has been little growth in many regions and groups since the late 1970s, which is terrible. Wang Yong bluntly said, Even in the developed areas of the East and the West, which are more deeply integrated into the globalization, there are also stratum differences. That is to say, the problems of the United States are a mixture of regional and class differences.

Krugmans report is even more pessimistic, pointing out that the federal government is actually implementing payment transfers, and that most of these aid is used to support employment in the field of health care, but the real effect has been cumulative. I regret to say that the ability of policy to reverse this gap is not optimistic... Its hard to find any way to stop this trend.

In the 2016 U.S. presidential election, Trump was elected president under the Electoral College system because he won the votes of blue-collar workers by winning the swing states of Ohio and Michigan, which used to be major auto-producing cities.

Trumps coming to power has both accidental and inevitable factors. Wang Yong told First Financial Journalist, It should be said that no matter whether the president is Trump or not, this wave of political changes in the United States will come sooner or later.

Source: First Financial Responsibility Editor: Guo Chenqi_NBJ9931