For example, middle-income white households had greater gains in financial assets than high-income African Americans; by 2007, they had accumulated $74,000, whereas the average high-income African American family owned only $18,000. At least 25% of all African American families had no assets to turn to in times of economic hardship.
To read a more detailed report click here.
The Heller School for Social Policy and Management
Brandeis University
32 comments:
Are you saying that African Americans can't manage money as well as whites or did I miss the point?
So much for the effectiveness of "Great Society" programs. ere I black (I'm fat old white man)I'd look for, indeed demand of the politicians programs to make my family members more productive. That means encouraging health care, education, and saving for investment, the three legs upon which production of wealth is based. Yesterday I drove through a neighborhood on million dollar plus homes, and coulodn't help thinking how we all would be so much better off if the money those homes represented were innvested in stores, factories, all the things that build wealth. Instead, politicians try to redistribute that money directly to the poor (ok, indirectly, after the government skims off its cut). That's a one-time thing. If our tax laws encouraged investment and discouraged spending in these McMansions, there'd be more wealth to spread around. Flat tax now! Better for all.
After reading the full cited article, the assumptions and the fix are preposterous. There is no accounting for choices made by the subject families. There is no enlightenment as to the fixes that social policy could bring about. The presence of a tax code that somewhat justifiably provides encouragement for some high wage earners to save or invest is not necessarily the cause of why high wage African American families ignore that same opportunity.
There are also many factors that go into loan underwriting. Not one of them is race. However, there is some truth to the fact that if someone lives in a neighborhood, where the bank is at greater risk to lose its collateral, then yes, the interest rate would be higher. Justifiable or not, the bank is taking a bigger risk. It has less to do with race, and more to do with neighborhood, which can have a high concentration of one race. So what Social Policy, can we enact to smooth out the difference? Force fewer African Americans to live in a neighborhood? Force neighborhood integration? Anything by force will be resisted. (And should not be attempted. )
The tax code is not the problem either. The way Congress gets to use the tax code is the real problem. A politician gets to take your money and then ask you to jump through hoops to get it back. For example, they say, give me 25% of your income. Now, I will give you 1% of that money back if you jump through the “buy a house” hoop. I will give you another 1% back if you jump through the “put money away for your retirement” hoop. Etc. There is not one mention of race there. But because races and different people have different values, some jump through some hoops and not others. Mostly because they don’t want or care about the rebate, because they don’t want a house, or think they will retire, or whatever. How do you make them care?
The article also does not evaluate many poverty traps the minorities might have fallen into. For example, one of the greatest predictors of poverty is unwed teenage pregnancy before graduating high school. If there is a greater incidence of this by percentage of the population in the African American community than in the white community, it is more aligned with a value code than the tax code. Perhaps the Tax Code is truly color blind, and it is the values code that isn’t.
So what if, as the article mentions, inheritance plays a part of the wealth disparity? Sam Walton’s wealth has no impact on my creating my own. If we had said, Sam Walton’s family can’t keep any of that wealth at his death, not one of the families in the article would have received even a dime of it. So what does it matter?
The one thing you can count on is politicians using this type of study to reach into the pockets of the “wealthy” to redistribute that wealth to the “needy”, but never helping neither the wealthy, nor the needy, but rather themselves and a power hungry government. You cannot make a poor man richer, by making a rich man poorer.
No, Chris, that's not what he's saying. Please, please tell me you aren't serious with that comment.
What the numbers say is that African-Americans started at a tremendous disadvantage. While our white ancestors counted African Americans as assets (in the form of slaves), AA's had no chance of gathering assets themselves (since they were slaves). Generations of Black sharecroppers didn't fare much better. So there is a wealth gap because, when my grandparents died they had nice houses that were paid for and they left these to their kids. If you're Black, most likely no one had anything to leave you. So wealth accumulates in even the most modestly well-off white families and never has in most AA families.
(If you weren't kidding, it's shocking I had to explain that.)
This comparative process is notably let wing. There is no Constitutional right to equal prosperity. The whole kit and caboodle on comparative income is nothing more than an effort at repatriations for blacks/africans who happen to be American.
Perhaps if one is under 30 you might benefit from the assets of parents. However, in my age group seldom does one benefit from parents who had a hard time themselves.
If you were high income AA from 1984-2007 and built only $18,000 in wealth, then I would take a long look at your investment strategy. Under normal conditions, if one does nothing, investments double every 7 years. The $74,000 even sounds way off also.
Regarding this statement by Anon Tue 8:00 a.m.:
"Yesterday I drove through a neighborhood on million dollar plus homes, and coulodn't help thinking how we all would be so much better off if the money those homes represented were innvested in stores, factories, all the things that build wealth."
Money was invested - a developer bought land, bought materials and supplies, contracted for services, hired labor, built homes. These homes were sold, costs were paid, profit was made, and people moved in. Investors now have more money to find good uses for - like stores, factories and other things that build wealth. Thankfully, it was and hopefully will remain the free choice of investors as to what they do with their own money. Input, transformation, output, feedback. The system worked.
If a "high income" person of whatever race has only $18,000 in assets at the end of 20 years, then something is wrong with the person. That's the price of a good used car.
I certainly suspect some of the difference was bad choices. We've all probably seen the stories about sports stars in particular spending cash like water. But part of even that issue is having had no role models in their lives to have any inkling what to do with money once they get it. We inherit more than genes and our parents' estate. We inherit habits and mind-sets. Are they bad personal choices? Absolutely. But if you never heard anyone speak about "investing", this is going to be a completely foreign concept. But none of it is completely divorced from the issue of one's inheritance, broadly understood, and it all plays a role in one's attitude toward money and wealth and assets, and in one's ability to make good use of such things.
What does "trickle down" benefits have to do with anything? If one is intelligent enough to be "high income" perhaps they should be smart enough to manage said income. I get weary of the victim mentality.
Anon 7:48, "trickle down economics" promises that when those at the top do very well, those at the bottom will receive an equivalent benefit if they work hard. Just ain't so if you believe data driven evidence. Advantage at the top seldom means much benefit at the bottom. No victim mentality here, just hard data about 30 years.
But you were not comparing high income with low income. You were comparing high income AA with middle income whites. If there were any "trickling down" it should have been from the high income AA to middle income whites. You also compared them in the same income range.
RE: Larry' statement - "...'trickle down economics' promises that when those at the top do very well, those at the bottom will receive an equivalent benefit if they work hard."
I thought about hammering this statement myself, but maybe it would be more fun to hear Larry defend it. Where did you get the idea that in trickle down economics everyone would receive a "equivalent" benefit? Or is it part of the straw man you've constructed to enable easier criticism?
Anon 12:41, I didn't say that trickle down economics delivered an equivalent benefit, rather that is what its proponents promised it would do. Obviously, it didn't work that way.
LJ, What proponents are you referring to who state that trickle down economics delivered an equivalent benefit? Trickle down is an economic concept that describes the pass through impact of tax reduction on the macro economy.
My guess is this is another one of those special/shifting definitions that you Alinskyites are so fond of!
How old are you, Anon 3:08? In 1980, I was 30 and I recall the arguments and the debates, even between Mr. Reagan and Mr. Bush about "trickle down" and its supposed benefit on the poor. Mr. George HW Bush referred to the concept as "voodoo economics." BTW--I understand what supply side, trickle down economic theory is. Now, how old did you say you were?
Anon 3:08 is old enough to know the truth, Larry. I immediately noted the subtle shift in defintion. No one (n-o-o-n-e) ever promised, stated, or suggested that the investments of the wealthy class would ensure an equal ROI on any one in a lower economic class. However, it is simply true that when those with means invest in projects, many people benefit directly and indirectly.
By the way, this logic is so secure even democrats attempt to practice it. They merely replace a wealthy investor with a govt. entity. The flaw in this approach, however, it that a govt. investor is not interested in profit, which interferes with all sorts of intermediary effects: efficiency, high performance, motivation, etc. When a govt. raises money for a project it issues bonds or raises taxes. In the former, investors do not demand high organizational performance from a govt. b/c the return on the bond is secure. In the latter, "investors" have not choice but to pay up and must wait until an election is held to vote in a new management team. The market response is delayed and an inefficient feedback process dilutes the impact of the reaction. Further complicating the issue is the political function. You might replace the concepts of profit with votes. Just like large corporations are tempted to cook the books to ensure stockholders and potential investors bid up stock prices, politicians cook the evidence of govt. programs to get people to buy in to their policies.
You're not doing that, are you?
Anon 10:39, your theory is just a bit too neat. Of course, every major US corp does business with govt funds and for govt orgs. The point, the irrefutable reality is that during the supply side revolution more people fell into poverty, the middle class shrank, the upper class concentrated more and more of the nation's wealth in its control and the economy almost failed completely.
If you don't accept this fact, how do you explain these obvious realities? I won't be surprised if you turn to blaming the millions who are victims.
And, for the record, we don't "cook the books"--wouldn't if we could; but as I've told lots of audiences, if Wall Street had been monitored and regulated like my back street operation, there would have been no irregularities, or at least not as many.
I have followed the CDM financial statements for a few years. It is rather curious that the statements are out of sync two years (2008 statements in late 2010?)
The amount siphoned to legal firms for services in south dallas suggests a continued on-going entrance fee for continuation in the south dallas political sphere. Moreover, the payoffs (salaries) to CDM staff activists further supports and reinforces this cozy relationship.
Larry, please argue from a factual base. See http://uspolitics.about.com/od/economy/ig/Consumer-Income--Insurance/US-Poverty-Rate--1959-2006-.htm.
I will post more later. It's just no fun when I can counter your points in under 20 seconds, thanks to google.
Anon 3:49, your reading of our public record/published financials are incorrect. Our published financials always trail by about a year due to our annual, independetn financial audits. We'll be pleased for you to come to our offices at any time and go over our books in a real time basis.
The most serious error in your analysis has to do with what you call "legal fees." We have no legal fees paid to S Dallas law firms. CDM acutally has a public interest law firm with 4 full time lawyers on staff that we pay. 82% of their work takes place in family law courts representing low-income children and women. The remainder of the work is civil law practice for the poor. We pay no fees to firms to represent CDM. We underwrite all the costs to represent the poor. Please get your facts right before publishing libeous statements.
Anon 4:01, you'll notice how poverty dropped during the Johnson Admin and who it rose after that; the data your report doesn't negate my point. Trickle down doesnt' work for the poor.
My initial post did not ask if you were cooking the financial books. I asked if you were working the political end and reporting fake political results to fool the public into thinking a tax and spend, centrally controlled economic policy was a better alternative than a low tax, decentralize one. The irony in your answer was palpable, you didn't deny it. Instead you demonstrated the point by misquoting the definition of trickle down economics and again later by misrepresenting the data on chart. Enron execs have nothing on true blue democrats.
I posted a link to a chart illustrating the poverty rate from the early 1960s to 2006. You managed to read the only positive aspect of the chart from a liberal perspective. (I would argue that Johnson's policies had an immediate positive impact on poverty and a long-term negative impact on the economy and therefore poverty).
You didn't consider the impact of Jimmy Carter, or tax and spend republicans, like the two Bushes. Reagan's efforts did reduce poverty rates, as did Clinton's (but then you must consider both were engaged with opposition power in congress). But both of these eras were characterized by restrained social program spending. Both were characterize by significant market investment. You managed to overlook this info. I don't mind using data that shows what dems or conservatives may have done well. I expect you to fair, though, and your reaction was quite skewed.
Your conclusion, that "trickle down doesn't work," is not supported by the facts. You note at one point your comments are supported by "hard facts." No, not really. I gave you data that Reagan's work produced and he supported the low tax, decentralized investment approach some called trickle down economics.
Yes, the Bushes made similar promises but did not follow through. This is one reason why conservatives longlingly look for the next Reagan. When investors are free to use their money in any way they see fit, rather than into forced social spending, they generally contribute to the whole welfare of the people.
This is not an argument for a wholly unrestrained free market. But the extreme tax rates economists estimate are needed to pay down our dept. suggest we are heading in the wrong direction.
Anon 11:49, for the record, we have never paid anyone anything for influence, nor have we reported "fake political results to fool the public," whatever that means. To be clear, CDM doesn't do politics, it is about service and working with people to craft better lives.
What I do know is that the old welfare/public benefit system is basically gone. Most folks don't understand that, but it is. Welfare reform and its aftermath have gutted most public benefits to the poor. If your theories are correct, Texas should be the best place in the US for the poor, yet poverty continues to rise in the state, a state that spends last or next to last on the problems associated with low-income families. And the wealth gap, as this post points out, continues to grow and that began in the early 1980s.
We can argue forever about our different understandings of history, economics, the ebb and flow of the economy and public policy, and likely get nowhere. I respectfully disagree with you and your worldview. Clearly, you disagree with mine. So, I'll leave it at that. One last note though: it would be nice if you simply signed your name.
Me: "My initial post did not ask if you were cooking the financial books. I asked if you were working the political end and reporting fake political results to fool the public into thinking a tax and spend, centrally controlled economic policy was a better alternative than a low tax, decentralize one."
You: "Anon 11:49, for the record, we have never paid anyone anything for influence, nor have we reported 'fake political results to fool the public,' whatever that means. To be clear, CDM doesn't do politics, it is about service and working with people to craft better lives."
Who passed the civil rights act? If you say the Democrat Party I will quote and cite from the Federal Register, proving the opposite. Yet, the poor are continuously misinformed the conservatives opposed it and continue to work against them today.
Next, which segment has benefited most during the last generation? If you say the caucasion and/or "the rich" then look at http://pewsocialtrends.org/pubs/706/middle-class-poll. The "Winners and Losers" graphs says a lot.
The "tricle-down" misinformation you presented is not supported by much, if any, evidence. It is a lie or a mistaken belief, on your part. We do have different worldviews. Many other centrally planned economies have demonstrated the general downward spiral of their economies and the welfare of their people. See the European experiment. While you profer to the poor info that they are suffering b/c of an uncaring caucasion middle class, or b/c of the manipulation of an elite rich class, the truth is there is more upward economic mobility than ever. A disciplined lifestyle, a concerted effort at self-development, and the gracious gifts of others have made these gains possible. No, we have not arrived at economic nirvana. However, your party's leaders are moving us in the wrong direction and we can observe it in the headlines daily. But you must be willing to acknowledge the data and share it with those who do not read it.
Thanks, Anon 1:28. Sure be nice for all of us to know your name.
Yep, Anon 1:28, do us two favors:
1) Explain the gap in wealth that Larry's post speaks to and 2) sign your name. If I were LJ, I wouldn't post your comments w/o a John Henry!
Ah, yes. The wealth gap. Though I just supported my arguments that the middle class grew from 1970-2006, those in lower classes from minority races have benefited substantially over the last generation, and that movement among economic classes is fluid under free economic conditions, we now turn our attention to that age old, liberal standard, envy. It's a sin, you know.
Simply put, greed is a sin, too. But, those who work hard and choose to work ethically, thinking they will get rich, do create opportunties for many other people. I am so happy Ross Perot started EDS and Perot Systems. Look at all the people who have benefited from his efforts. He grew very wealthy and sandwich makers across the street in Plano have him to thank for the noon-day rush.
But wait. What if I am Ross Perot. Would that nullify my arguments? Hmmm...
Anon 3:26, I know that in reality your arguments are not strengthened or weakened by giving your name, but it would pretty much put to bed the last sibilance of an argument that the liberal side has offered against you. Your arguments are sound, especially the last one about old Ross. I cannot imagine why adding your name to a post would hurt anything. I add my name and have only been sent one ugly email and it wasn't from Larry. It will never be from Larry. I believe him to be a good an honorable man. This blog is thankfully an open discussion. Think about giving your name. What could it hurt?
We all know what happens when the liberals on this site see the name "Chris."
I promise that has not been Chris posting.
Pride goeth before the fall, rc.
Giving a name simply helps keep all of the anonymouses separate. But if you want to make something out of it as being some seedy, liberal agenda, I'm not surprised.
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