Between the New Deal era of the 1930s and the late 1970s, it was the formal policy of the federal government to care about and try to reduce regional economic disparities. But as neoclassical economics steeped with market fundamentalist ideology started to gain ascendency in the 1970s, the federal government gradually abandoned efforts to help lagging regions.
But as Rob Atkinson writes in American Compass, the result has been a disaster: Many regions are economically hollowed out and their populations and incomes falling, leading to deep frustration and political discord. It’s time to recognize that this policy experiment has failed and to resurrect place-based thinking in national economic policy. Franklin D. Roosevelt, John F. Kennedy, and Lyndon B. Johnson all passed policies that focused on struggling regions, helping to support economic development strategies and fund industrial development, workforce development, and other initiatives. By the 1970's, the idea of helping specific places was deemed as "inefficient," pushing the government to ease up on assistance in struggling areas. Over the last 40 years, this had lead to a massive increase in income inequality, regional inequality, and a divergence in income and prosperity.
Imagine where the nation would be today if the federal government had spent the last few decades supporting lagging regions to the tune of $50 billion per year? We may not have reached regional parity, but it would have made a big dent in the divergence and substantially improved the quality of life of tens of millions of Americans.
