Ever since the Occupy Wall Street protests erupted in the wake of the 2008 financial crash, the notion of inequality has been thrust into the public consciousness. The discussion around economic inequality gained momentum when French economist Thomas Piketty released “Capital in the Twenty-First Century.” His book sparked a global debate that seemed to anticipate the reactions leading to Brexit, Trump’s election, and the gilet jaunes protests.
While economists and policymakers debated Piketty’s ideas, social and economic inequality continued to grow. The United Nations’ World Social Report 2020 showed that income inequality is increasing in most developed countries. UN Secretary-General António Guterres called for action to tackle the “harsh realities of a deeply unequal global landscape.”
Unequal societies
Research from Dartmouth College shows how inequality is even gumming up something fundamental to the American psyche, as it showcased how the American Dream is increasingly out of reach for many Americans. The research showed that income inequality is sharply divided by race, with Black homeowners’ net worth only 25% of that of white homeowners, and their poverty rate is four times higher.
Geographical disparities make things worse. In his book “Tightrope: Americans Reaching for Hope,” Nicholas Kristof documents the struggles of “left behind” communities, often plagued by industrial decline and lack of opportunities. Kristof asks how we have allowed “tens of millions of people to suffer an excruciating loss of jobs, dignity, lives, hopes, and children,” and what we can do to help them recover.
This was further reaffirmed in recent research from Cornell, which showed a clear urban/rural divide across America that has been gradually growing over the past 30 years.
“Rural and urban Americans began moving apart politically in the late 1990s, and the division has widened and deepened since then, transforming the nation’s politics,” the researchers explain. “The rural-urban political divide is a major problem threatening the foundations of American democracy for everyone.”
Levelling up
While regional inequalities are increasingly well known, that so little progress has been made on changing matters hints at the difficulties involved. In our own research, we found that the lack of success is often underpinned by a centralized approach that treats deprived communities as homogenous entities that can be improved via cookie-cutter solutions. The reality is that coastal communities differ from rural communities, which in turn differ from post-industrial towns and inner-city neighborhoods.
While local governments are often best placed to understand the needs and the nuances of their areas, local and state finances have suffered since the financial crisis, which has meant that despite comprising around 12% of GDP and employing 1 out of 7 workers, their ability to adequately reach and support those most in need has been limited.
Thankfully, our research found that improving the prospects of deprived communities need not cost huge sums. Indeed, significant gains can be made from relatively low-cost interventions, such as encouraging returnees. Most participants in our study felt proud of their community and were saddened by its decline. While bringing in outsiders, such as digital nomads, can be beneficial, they are often seen as not belonging. People who grew up in the community and then left can bridge this gap. Encouraging these individuals to return can bring new ideas, connections, investment, and energy, boosting entrepreneurship and job opportunities.
Relatively small investments in social infrastructure can also yield big returns. Research suggests that 25% of “leveling up” funds should go towards “social infrastructure” that fosters community interaction and a sense of local identity. Although not directly tied to employment and entrepreneurship, a strong sense of place and robust social networks will support both.
It takes a village
It’s also important to recognize that improvements will require a wide range of stakeholders. Continuity and longevity of interventions are crucial to their success, and local government budgets can be beholden to political whims in ways that those of other stakeholders are not.
What is needed is not a one-time project, but an ongoing, institutionalized service, rather than a ‘stop and start’ approach funded by external bodies. This highlights the crucial role that ‘co-investment’ can play in creating a sustainable service, and ensuring continuous support.
In a follow-up paper, we highlight how housing providers can be a key player in providing this co-investment. This is because the very nature of housing provision puts providers in daily contact with people in deprived communities, while the relative permanence of the housing they provide ensures consistency and longevity of interaction with those individuals and communities.
Deloitte’s William Eggers and Donald Kettl argue that government needs “bridgebuilders”, who are capable of connecting networks and forging collaborations with stakeholders across society. To improve the prospects of deprived communities, these networks will need to contain housing providers, local colleges and education providers, employers, and social and religious groups. If local governments can get all of these stakeholders pulling in the same direction then we can start to improve the lives of those who are so often ignored and forgotten.
