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Blue States are Getting Bluer, and Red States are Getting Redder. One Reason? The Economy

(Source: inc.com)

What really happened in the 2018 elections?

To a large extent, the coastal states, cities, and suburbs that already leaned Democratic became more Democratic, while rural and middle America became more Republican. Despite all the noise, the 2018 elections were in many ways a hardening of the same political map that existed during the 2016 election.

It’s easy to explain the present political reality as being solely the result of race, immigration, and America’s growing gender divide–in other words, the hot-button issues that dominate cable news and talk radio. Those issues are obviously a big part of our political divide (a divide that I wrote about in my recent novel, The Civil War at Home), but they don’t tell the whole story.

What’s missing from that story?

A recognition that in America, economic opportunity often depends on where you live–and more often than not where you live is determined by where you were born.

I have traveled to some of the most disadvantaged and struggling communities in America through my work as a consultant. In some instances, formerly industrial communities in the middle of America have witnessed fifty years or more of steady decline. That steady decline was one reason formerly solid Democratic states like Michigan, Pennsylvania, and Wisconsin flipped in 2016. In two years we will know if those states will remain Trump country, or revert to being part of the Democratic “blue wall” the party has depended on since the 1992 election of Bill Clinton.

Blue states have become bluer, in part, because younger and more diverse voters are increasingly attracted to urban cities along the coast. But why did red states like Missouri, Arizona, Indiana, and North Dakota seemingly become even redder during the election?

It’s not just immigration.

One reason may be because for the first time in recent memory, the economic story in those states is starting to change. Unemployment is historically low across the country, but the gains aren’t just concentrated in wealthy, coastal cities. Mid-size cities and rural communities are also witnessing historically low unemployment. And, while it’s debatable as to how much credit Donald Trump (or any president) should get for the unemployment rate, the Trump administration and the Republican-held congress have created at least one piece of innovative public policy designed specifically to shift some of the prosperity of the coasts to struggling communities in the middle of America.

Opportunity Zones, a program championed by Senator Tim Scott (R-SC) and enacted in the recent tax bill, allows capital gains to be invested in communities that have struggled for decades with high poverty rates. Those who leave cities like Erie, Pennsylvania, and make their money on the coasts can now reinvest their capital gains in venture funds designed to support startups in communities wholly neglected by the coastal venture capital community. A group of civic leaders in Erie, led by brothers Tim and Matt Wachter, is working to create one of the first venture capital funds based on Opportunity Zone legislation.

Those who write about startups know that early-stage money is almost nonexistent outside of a handful of coastal communities.

Venture capital funds created by the Opportunity Zone program are one of the few pieces of public policy in recent memory to seriously try and redirect wealth created on the coasts back into poorer communities, and it came from a very red administration and Congress.

It is easy to boil our polarization down to a few hot-button issues: race, immigration, and gender. And those issues are important. However, it neglects the issue that historically determines elections: the economy.

For decades, the economic challenges facing significant portions of middle America–from the impact of outsourcing to the lack of investment capital–have been neglected. Slowly, that might be changing with shared economic gains and initiatives like Opportunity Zones.

And the impact of economic change shouldn’t be neglected when we’re trying to understand why blue America is getting bluer, and red America is getting redder. 

More Info: inc.com

Money Matters
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