Are there worse days ahead for America?

With our economy limping along and the gap between the rich and poor growing, it's increasingly reminiscient of Carter presidency's malaise days.  Much of the economy is based on confidence, positive expectations for the future.  President Obama hasn't inspired much confidence - in either consumers or business owners.  Frankly, his political philosophy of higher taxes and more government is exactly the wrong approach.

This article discusses the growing income gap and what to do about it.

Declining prospects for upward mobility, and the simultaneous social inequality, are the existential issues of our time. The percentage of adults who believe things will be better for their kids is at its lowest point in 30 years, with a majority now saying upward mobility for the next generation is not likely. The kids, God bless them, are still far more optimistic.

Despite President Obama's occasional class-warfare rhetoric, this gap has widened significantly under his watch; the top 1 percent of earners garnered more than 90 percent of the income growth in his first two years, compared with 65 percent under George W. Bush. But the problem is more extensive than one or two administrations. Most Americans' incomes have stagnated for almost a quarter century.

Inequality is on the rise throughout the country, while there are significant differences in its depth by geography and region. California is producing ever more billionaires, three times as many as in regularly faster-growing Texas, but the middle class is in secular decline, according to a recent Public Policy Institute Study, and now constitutes less than half California's population. The state also suffers the highest rate of poverty in the country and is now home to roughly one-third of the nation's welfare recipients, equal to almost three times its proportion of the nation's population.

He points to the importance culture plays in the economic well being of a society.

Certainly urban form, and the existence that produces middle-income jobs, helps determine levels of inequality. But perhaps the least-appreciated factor may be ethnicity, something discussed more emotionally than logically. The least inequality, Morrill notes, occurs within what he calls the “Germanic belt” that extends from large parts of Pennsylvania, across the northern Great Lakes and the Plains, all the way to the Pacific Northwest, as well as Utah; many Mormons are of German, Scandinavian and other northern European stock.

Peruse a map of U.S. ethnicities, along with Morrill's findings, and you can see this extremely high degree of confluence. One key may be culture. German and Scandinavian heritage, Morrill notes, embraces egalitarianism, self-control and social obligation, all of which are ideal characteristics for economic progress.

After all, Scandinavia itself has less poverty, and more widespread prosperity, than virtually anywhere in the world. A Scandinavian economist, promoting social democracy once told Milton Friedman: “In Scandinavia we have no poverty.” Friedman replied, “That's interesting, because in America, among Scandinavians, we have no poverty, either.” Indeed, the poverty rate for Americans with Swedish ancestry is 6.7 percent, about half the U.S. average. Economists Geranda Notten and Chris de Neubourg have found the poverty rate in Sweden to be an identical 6.7 percent.

The “Germanic belt” areas also tend to emphasize education, most importantly, at the grade school level. The best science scores among eighth-graders, according the National Educational Assessment, are found almost totally in the northern-tier, heavily Germanic region of the country. Northern European redoubts such as Minnesota, the Dakotas, Montana, Utah and northern New England all scored best. Amazingly, California, the nation's undisputed technological capital, ranks 47th; New York, much of the south (excluding Texas) and the Southwest do much more poorly.

More troubling is the correlation between large populations of certain groups – notably African Americans but also Hispanics – and extreme inequality. Morrill's analysis shows a huge confluence between states with the largest income gaps, largely in the South and Southwest, and the highest concentrations of these historically disadvantaged ethnic groups.

This is an uncomfortable topic. Many liberals celebrate diversity in any form, and tend to reject the importance of culture in economic success. Conservatives, for the most part, dismiss discussions of inequality as socialistic in nature; others refuse to acknowledge the continued legacy of slavery, the extreme poverty of many Latino immigrants and the impacts of globalization on blue-collar employment, which historically paced the upward mobility of other low-income ethnic groups.
We simply can't wish away reality; the scar of racism and the impact of economic change, has made it tougher for less-educated minorities to rise in contemporary America.

  What the answer?  Not the liberal redistributionist programs of the left.

This growing inequality, with its racial connotations, is fundamentally socially unsustainable. Yet how to restart upward mobility remains a difficult proposition. Progressives might shout loudest about inequality, but their economic policies have failed to produce either upward mobility or greater equality.

Indeed, under the current liberal regime, the prospects for the poor and working class have decreased markedly while the wealthy, often villainized by the administration, have luxuriated. During much of the tenure of the first black president, the gap between Anglo incomes on the one side and those of blacks and Hispanics has widened, doubling since the Great Recession.

Indeed, racial economic disparities are mostly unchanged or are growing. The black unemployment rate remains more than double the white jobless rate and reaches 40 percent among black youth.

A debate is needed now about what policies best promote upward mobility. Some combination of encouraging broader-based economic growth and nurturing fundamental values of education, family and social engagement arguably offers the best approach. It is a message likely neither political party particularly wants to hear, but it's one they need to acknowledge and confront.