The Wealth Gap

I believe that a picture is worth a thousand words, so I am providing a link to a website that offers some very interesting maps of poverty and wealth:  http://www.visualizingeconomics.com/2007/08/11/united-states-poverty-map/ .  If you look at the three maps, one on poverty, one on income inequality, and one on household income, a pattern is revealed.

The worst-off part of the country is the South.  In fact, there is a striking relationship between those states that are called red states and having sizable areas of the state that fall into the lower-income categories.  Of course, this high-level cut of the data makes any conclusions about the meaning of this relationship suspect.  I will leave it to the reader to ponder the issue and consider the possibilities.

What can be said is that there are consequences that are reverberating through the United States as income inequality increases.  These gaps show up in those with lower incomes having lower health status, less educational attainment, and even less motivation as workers.  In addition, even as we extol the virtues of education as one of the saviors of our economy, states, especially the poorest, are cutting education budgets at every level. 

As wealth increasingly rests among the few, the traditional mechanisms of educational funding, including property and sales taxes, have become strained.  The explanations for this is simple.  First, wealth now rests in the investments of a smaller and smaller subset of the population, investments that once were sources of property taxes such as manufacturing plants, but are now often in non-taxable investments that are outside of the U.S.  This is compounded by the fact that that share of income that is paid in sales taxes tends to go down, so as income distributions become more skewed, the proportion of sales taxes goes down. 

There is probably no easy solution to this problem, but if we don't begin to look at it and address it, we will see the standard of living of our country decline.