Capitalism is bad for working-class people. Unregulated capitalism is even worse, particularly for black and brown citizens and immigrants who suffer the additional burden of systemic racial, ethnic and gender discrimination.
So says a new study by Brandeis University’s Institute on Assets and Social Policy. The study shows a dramatic quadrupling of the wealth gap between African American and their white counterparts in the two decades since 1984. The study tracked median wealth between whites and blacks.”The greatest wealth produced in this period accrues primarily to highest income whites,” says the study. This group was the chief beneficiariy of Republican tax cuts.
Several causes are seen as contributing to the unequal outcomes: tax cuts on investment income, tax deductions for home mortgages and patterns of discrimination in housing, credit and labor markets. Growing debt as a result of predatory high cost home loans is also seen as one the chief causes.
The size of the wealth gap is startling. “Measured in 2007 dollars, the disparity in assets increased $75,000 on average, from $20,000 to $95,000 over the 23-year period. At least one in four black households had no assets,” writes the LA Times.
Significantly this economic racism affects African Americans across class lines, which saw almost no wealth increase even among higher income brackets. “The study found that even as white families saw their financial assets grow from a median value of $22,000 in 1984 to $100,000 in 2007, black families experienced only the slightest growth in wealth during this same period,” continues the LA Times.
Median wealth does account for class differences among a given population and may overstate wealth accumulation among working-class whites, given the stupendous capital accumulation of wealthy white elites. The study however does point out that “economic stagnation and decline was experienced by both low wealth whites and low wealth African Americans.” Still, one if four African Americans had no assets at all.
On the other hand African Americans at the higher end of the income bracket lost ground during this same period leading the study to conclude that “African Americans who have worked hard at well paying jobs to achieve the American Dream are still not able to achieve the wealth of their peers in the workforce, which translates into very different life chances.”
The new consumer protection agency contained in the recently passed financial reform legislation is seen as an important potential safeguard. It does not however target wealth building measures.
Thomas Shapiro one of the study thinks more is necessary, including special targeting measures, say the Times:
“Shapiro said while he is in favor of the ‘general ideas that frame’ the provisions for such an agency in the proposed financial reform bill, he hopes the agency would take on more of an advocacy role and have more autonomy than contained in the current proposal. Wealth building policies, he recommends, should carry provisions to ‘target…families of color.'”
The Brandeis study only indirectly refers to the double digit unemployment among African Americans that has been a consistent presence throughout the 23 years it tracked economic data. It does not address the racial wage differential.
The Great Recession which has seen severe worsening of unemployment, foreclosure and wealth loss is sure to make these matters worse. The subprime crisis has precipitated the biggest wealth loss in Black and Latino history in the United States.