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Inequality of opportunity has a fundamental geographical dimension

This month, two women on the frontline of global economic policy made powerful statements on the importance of confronting opportunity inequality, writes Geraldine Gardner.

Christine Lagarde, managing director of the International Monetary Fund, said in a speech two weeks ago that collective action was needed to “deliver the jobs, the incomes, the better living standards that people aspire to.”

Meanwhile, U.S. Federal Reserve Chair Janet Yellen stated last week in Boston that there is a fundamental inequality of opportunity that threatens the U.S. economy and values. While reactions to the speech have been mixed, Yellen’s focus on what she identifies as “building blocks” of economic opportunity is significant, especially since two of the four elements — access to education and resources for children — are not under her purview. Yellen’s stance reinforces what many scholars have said for years: reduce income inequality by increasing access to opportunity, whether through education, workforce development, healthcare, childcare, services, or capital.

But what Yellen and Lagarde missed is that opportunity inequality has a fundamental geographic dimension. Nowhere is this more on display than in U.S. cities and metropolitan regions. Studies by the OECD, the Brookings Institution, and the Martin Prosperity Institute have all dissected the issue and the data, leading to headlines linking income inequality in New York City to levels seen in Swaziland, San Francisco to Madagascar, and Seattle to Nigeria.

The urgency of this issue swept several new mayors into power in the November 2013 elections and led to the creation of a special task force within the U.S. Conference of Mayors in August. New York City Mayor Bill De Blasio famously ran his campaign on a platform of levelling the playing field for residents in response to what he described as a “Tale of Two Cities.” De Blasio brought his message to a European audience last month on his first international trip as mayor when he spoke at the annual meeting of Britain’s Labour Party in Manchester.

De Blasio’s warm reception in Britain suggests that concerns about inequality translate easily to a European context. With over 70 percent of EU citizens living in urban areas, the economic crisis and corresponding austerity measures have plagued municipal budgets and were felt by residents, even in wealthy countries like Germany. Income inequality in many European cities is on the rise, despite relatively low levels at the national level when compared to the United States. More telling are the disparities in poverty rates and unemployment between urban neighbourhoods, which parallels trends in the United States. However, while in the United States, the economic and spatial manifestations of inequality are fundamentally linked to race and class, in Europe they are often linked to immigration.

So what does income inequality and the geography of opportunity have to do with the health and vibrancy of cities on either side of the Atlantic? At the German Marshall Fund’s inaugural Bilbao Urban Innovation and Leadership Dialogues (BUILD) this past June, keynote speaker Angela Glover Blackwell of Policy Link laid out her vision of “equity as the superior growth model.” Blackwell’s message of a place-based approach to investing in people and opportunity resonated with the conference’s 120 participants. BUILD participants concluded that a solution was not to stymie urban regeneration policies and investment that brings vibrancy, people, and economic activity to many US and European cities. Rather urban leaders must recognise that the benefits of development are not evenly felt and they must be careful to make their cities great places of opportunity for all.

One may argue that Lagarde and Yellen do not need to include a geographic dimension in their perspectives on inequality due to the scope and scale at which they are making policy. However, it is precisely at the intersection of policy discussions taking place at different scales where real breakthroughs can take place. Cities and metropolitan regions are stakeholders and strategic partners in advancing from political discourse to meaningful change, and they must be at the table.

Geraldine Gardner is the director of urban and regional policy with The German Marshall Fund of the United States in Washington, DC. The GMFUS first published this article as part of its Transatlantic Takes series.

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