Surprise: Blue States Have More Economic Inequality

Do conservative fiscal policies drive economic inequality? Every liberal and their mother will tell you as much.

“The GOP tax bills look like attempts to entrench a hereditary plutocracy…it’s class warfare aimed at perpetuating inequality into the next generation” wrote the nauseatingly partisan economics Nobel laureate Paul Krugman ahead of the passage of the wildly successful Trump tax cuts. 

Others are known for sounding the alarm bells on income inequality, such as Robert Reich (who isn’t an actual economist, he just plays one on TV) commonly cite Ronald Reagan’s supply-side policies in the 1980s for the relatively high levels of income inequality we see today.

It’s no wonder liberals are the ones talking about inequality the most – they apparently can’t stop causing it

While tax and spending policies obviously do affect levels of income inequality (how could they not?), other structural changes to the nation’s economy over the past half-century have played a much larger role.

  • For example, according to a handful of studies: 41% of the economic inequality created between 1976-2000 was the result of the increase in single-parent households. 
  • The poverty rate would be 25% lower if today’s family structure resembled that of 1970.

I bring that up only to point out that there are more causes of income inequality other than how much the government invests in taxes and transfers.

And interestingly enough, a new study of inequality at the state level has shown that it’s Blue, not Red states with the most inequality. Below are tabled the results of a study from the financial education site HowMuch demonstrating that:

Based on Gallup’s definition of Red and Blue States:

  • Of the top 10 most unequal states (the District of Columbia is being included for the purpose of this exercise), there are eight states that are “Solid Democratic,” one that “Leans Democratic,” and one Purple State.
  • Of the 10 ten equal states, two are “Solid Republican,” three “Lean Republican,” one is “Solid Democratic,” one “Leans Democratic,” and three are Purple States.

Of course, these are just States, and countless variables could be tainting the data. That objection aside, the correlation between liberalism and inequality remains at the “congressional district” level. According to Axois, “Blue districts are more likely to have high levels of income variation than red districts. Red districts have more people with similar incomes.”

Below is tabled congressional districts by political ideology and their respective Gini coefficients. For some context, a Gini of “1” would indicate complete income inequality (whereas the top 20% owns everything, and the bottom 20% nothing), while a Gini of “0” would be a society where everyone earns an identical income. In other words, a higher Gini means more inequality, and a lower Gini, less.

When it comes to measuring the top 1% against the bottom 99%, an analysis from the left-wing Economic Policy Institute found that:

  • In states that voted for Clinton, the top 1% earned 23.6 times more than the average person in the 99%.
  • In states that voted for Trump, that ratio was 19.7 to 1, or 17% lower.

It’s no wonder liberals are the ones talking about inequality the most – they apparently can’t stop causing it.

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