A Reminder & Remaining Lecture Notes on Black Wealth/White Wealth

As I noted this past Thursday, I will distribute a write-up of our next essay, which will be an out-of-class one, on Tuesday (Oct. 30). It will involve reading a chapter from a book on Native Americans entitled, Killing the White Man's Indian. I have placed five copies of that chapter on reserve in the library. You'll have plenty of time to do this, but it would be best if you got the topic on Tuesday.


I made some more progress commenting on Black Wealth/White Wealth on Thursday. In both sections, we left off at the beginning of the Epilogue, "Changing Context of Black Wealth/White Wealth: 1995-2005," (p. 199). Since I have struggled to present this material in an interesting way in class, I am simply going to post the remaining lecture notes I had planned to present on Tuesday, which will give us more time to begin on Native Americans.

Chapter 8: Wealth Inequality Trends (p. 201)

A. Although the median net worth of families increased by 39% and the median net financial assets grew by 60%, those at the bottom of the wealth spectrum made little progress in the past decade. And regarding the racial dimension of this, as the authors note: "Using the most recent data available, it appears, not surprisingly, that the level of racial wealth inequality has not changed but has shown a stubborn persistence that makes the data presented in 1995 more relevant than ever because the pattern we discerned suggests a firmly embedded racial stratification. The most optimistic analyses suggests that the black-white median net worth ratio is 0.10, that is, blacks have control of ten cents for every dollar of net worth that whites possess. However, the most pessimistic estimate indicates that the ratio is closer to seven cents on the dollar." (pp. 203-204)

1)They, then, go on to discuss some reasons for this, which have to do with broad factors such as growing debt that affects many people across racial lines.

a.) Residential segregation continues to be a problem, leading black families' homes to increase in value at a much lower rate than whites. "The typical home owned by white families increased in value by $28,000 more than homes owned by blacks." (p. 211)

b.) Increased credit card debt is another factor, and not just for frivolous consumer goods, but often for housing payments, health care costs, etc.

c.) Note the tremendous increase in "subprime lending" (an unfolding crisis today), which is an opportunity for people with low incomes, poor credit, to obtain a house. But the danger of default (i.e., not being able to make your mortgage payments) is much greater due to higher interest rates, balloon payments, etc. The number of foreclosures is rising, which is not only a personal disaster but adversely affects communities and revitalization efforts.

d.) Pay-day lenders, check cashing places concentrated in minority areas contribute to their inability to build wealth. In this context the authors nicely summarize the "poor tax" that many African Americans often have to pay. (See last paragraph, p.223 and first paragraph, p.224, where "poor tax" is referred to.)

e.) The rapidly increasing rate of incarceration among African American males, combined with the economic decline of central cities, has been a "catastrophic tragedy." And since most economic indicators used in this book exclude the incarcerated population, there is a strong likelihood that we are underestimating the gap between black wealth and white wealth.

Summarizing: "... the bottom line is that the racial wealth gap worsened during the last decade." (p. 226)


Chapter 9: The Emergence of Asset-Based Policy (p. 229)

A. Ironically, despite the growing evidence of this wealth gap, public policy over the past decade has led to increasing, not decreasing, wealth inequality.

1.) For example, the push to repeal the estate tax by the Bush Adm. is one of those policies. They note how few people this affects, yet how repealing it will mean foregoing some $1 trillion over 10 years! They go on to propose a more reasonable estate tax reform based on the principle that very wealthy individuals should not have the power to simply pass on economic success, material comfort, power to those who have not earned it, even if they happen to be family or relatives.

a.) "Repeal of the estate tax gives imprimatur to the sedimentation of inequality for African Americans and hence framing it as a civil rights issue is legitimate." (p. 236)

2.) They challenge the claim that privatization of Social Security would benefit Blacks because they don't live as long as Whites. But the authors effectively counter that, noting how Blacks greatly benefit from the disability aspects of Social Security.

B. The authors make a very good overall point about how the lack of investment in public goods such as education and health care undercuts efforts at building wealth among African Americans and many others. (A point I made earlier, as well.)
(See middle paragraph, p. 240)

1.) African Americans are also more likely to deplete their wealth due to a severe health condition.

C. They go on to outline some positive developments in assisting the poor in building assets -- eg. "matched savings" in areas such as education, home ownership; providing more access to regular banking services and conventional mortgages; they cite the "Community Reinvestment Act" which forced banks to provide some money to re-build poor areas.

1.) "Inner-city black neighborhoods continue to suffer from segregation, isolation from jobs, and poor city services and schools. Regional policy that directly attacks these issues would increase the value of homes in these communities, making access to better jobs and greater incomes available, and improve the quality of schools." (p. 253) Also, improving transportation to suburbs where jobs are and "inclusionary zoning" (i.e., require developers to build low-to-moderate income housing in suburban communities) would help.

2.) They want to create a "stakeholder society" -- that individuals have a stake or investment in all aspects of society. Would contribute to more stable marriages, children doing better in school, support for community organizations. (And I would also add: important in terms of fighting crime.)

3.) They suggest we embrace the "reparations" movement (rather than just dismiss it) on a community-wide basis. And making the case for this by exposing the legacy of discrimination.

D. They conclude with an insightful comment on residential segregation being the lynchpin of race relations today. (See last paragraph, p. 267, and all of p. 268) Concluding with a call for "a new civil rights movement," which I would add, is not all that different from what Dr. King was trying to do when his life was cut short.