Yahoo Finance: How improved infrastructure could end America’s vicious cycle of poverty
When it comes to solving rising inequality in the US, fixing our crumbling infrastructure may be the solution.
“Lower income populations can’t get to jobs and so their incomes remain low,” Harvard Business School (HBS) Professor Rosabeth Moss Kanter told Yahoo Finance. “We have a vicious cycle of poverty, of disadvantage that comes from only being able to afford to live in certain places that are less desirable because they lack transportation.”
Kanter, who participated in HBS’ new study on competitiveness, added that lower-income populations—who can’t afford cars at the same rate as more affluent groups—are stuck.
“Mobility is opportunity,” she said. “If we want to fix the big income divide in America, if we want to help restore the middle class, we must focus on transportation.”
A record of reduced US infrastructure investment
The dire need to invest in and update transportation infrastructure illustrates one example of the US failure to “keep up,” as explained in the HBS report.
America’s public investment in transportation infrastructure is down from 2.2% of GDP in the 1960s to 1.6% today—less than in Europe and far less than in China.
Starting around 1980, when the middle class began to stagnate as a result of geopolitical and technological changes, instead of investing in areas like infrastructure, credit was extended. As the report outlines, the US instead expanded entitlements, increased public-sector employment and benefits, and cut taxes. And as the federal and state governments became overextended, public spending shifted from investing for the future to paying for the past—ultimately hurting development in infrastructure, research and education, and putting the US in a position behind other countries around the world.
Limited public resources and rising inequality added to this backdrop, increasing polarization and paralysis.
