Tag Archives: Inequality

Relearning History

Remember that sarcastic insult–born too soon, smart too late, or something along those lines? I think I plead guilty.

I took the usual number of American history courses in high school and college, and thought I was at least superficially acquainted with the arc of American experience. But over the years, I began to realize that my knowledge of history was more superficial than informed. Visits to museums added uncomfortable details to the story of how European “settlers” and their progeny dispossessed Native Americans, and how administration after administration refused to honor treaties. Perhaps it’s the faulty memory of an older woman, but I don’t remember ever being taught about the Trail of Tears.

I was already teaching at the university level before I learned about  the deliberate American housing policies that are largely responsible for the continuing disparities between White and Black household wealth. I was serving on the dissertation committee of a social work student who was researching housing policy, and I was appalled to learn that redlining was official FHA policy for more years than we might imagine, effectively preventing Black Americans from building equity and security.

A recent book by Richard Rothstein, The Color of Law examines the local, state and federal housing policies that didn’t just allow, but actually mandated segregation. The Federal Housing Administration not only refused to insure mortgages in (or even near) African-American neighborhoods, it subsidized builders who were mass-producing entire subdivisions–if those builders would ensure that none of the homes would be sold to African-Americans.

In a recent issue of The Atlantic, a scholar described both the results of those policies and White Americans’ ignorance of those results. 

For the past several years, I, along with my Yale colleague Michael W. Kraus and our students, have been examining perceptions of racial economic inequality—its extent and persistence, decade by decade. In a 2019 study, using a dozen specific moments between 1963 and 2016, we compared perceptions of racial wealth inequality over time with actual data on racial wealth inequality. Perhaps unsurprisingly, the respondents in our study significantly overestimated the wealth of Black families relative to that of white families. In 1963, the median Black family had about 5 percent as much wealth as the median white family. Respondents said close to 50 percent. For 2016, the respondents estimated Black wealth to be 90 percent that of whites. The correct answer for that year was about 10 percent.

Trump’s recent tweets warning suburban dwellers that Biden and Harris will “wage war on the suburbs” is rooted in that history of American housing policy. As Paul Krugman writes in the New York Times,

Now, as the Trump campaign desperately searches for political avenues of attack, we’re hearing a lot about the “war on the suburbs.”

It’s probably not a line that will play well outside the G.O.P.’s hard-core base; Joe Biden and Kamala Harris don’t exactly come across as rabble-rousers who will lead raging antifa hordes as they pillage America’s subdivisions.

Yet it is true that a Biden-Harris administration would resume and probably expand on Obama-era efforts to finally make the Fair Housing Act of 1968 effective, seeking in particular to redress some of the injustices created by America’s ugly history of using political power to create and reinforce racial inequality.

Fred Trump was one of the developers who profited from the segregationist policies of the FHA and VA, and his son Donald clearly believes that the “Suburban Lifestyle Dream is basically a walled village that the government built for whites, whose gates were slammed shut when others tried to enter.”

If facing these and other previously. unrecognized aspects of American history wasn’t unsettling enough, the pandemic quarantine has given me time to read. From Jill Lepore’s magisterial These Truths to Ron Chernow’s turgid Hamilton to Isabel Wilkerson’s lyrical and unsettling Caste, my last few months have been eye-opening, to say the least.

I remember when Howard Zinn’s People’s History of the United States was dismissed as “anti-American.” But genuine patriotism needs to be based on an accurate understanding of our country’s flaws as well as its strengths. If we are ever going to create the America I used to think I inhabited, we need to know what we need to know.

But I am drinking a lot more these days….

 

 

Protecting The Privileged

The composition of the U.S. Supreme Court is a key area of dispute between Republicans and Democrats. I share the concern, but for rather different reasons than most of the people vocally involved in this debate.

It’s clear that Trump’s cult will sacrifice fundamental fairness and a competent (or even barely functional) federal government in return for reversal of Roe v. Wade.  I have increasingly come to file that possibility under “be careful what you wish for”–not only would abortion still be available in blue (and probably purple) states, but the backlash would be profound; it’s hard to think of any other ruling that would activate more more opponents of the fundamentalist cult that is today’s GOP.

My concerns with the Supreme Court are grounded in its less obvious and more dangerous retreat from the civil liberties jurisprudence of the Warren Court. The current Court’s most predictable bias can be seen a steady stream of decisions favoring the rich and powerful over the poor and disenfranchised.

A recent book by Adam Cohen–Supreme Inequality— is one of the emerging discussions of that bias. An article in Time Magazine by Cohen outlined the book’s central thesis–the conservative Court’s  “deep and abiding sympathy” for the rich. That sympathy is a hugely consequential change from the 1960s, when the Warren Court protected the rights of the poor–from welfare recipients’ right to due process to poor defendants’ right to appointed counsel in criminal cases.

As Cohen documents, however, for the past 50 years, “the Court’s sympathies have been the reverse: on one legal doctrine after another, it has expanded the rights of wealthy individuals and corporations.”

After the Warren Court, Nixon was able to appoint conservatives who shaped the Court we have today. Cohen provides striking examples of the consequences.

One of the first groups the new conservative Court came to the rescue of was rich children, or at least children in wealthy school districts. There was a growing consensus among lower federal courts, state courts, and law professors that the Equal Protection Clause required states to equalize spending between rich and poor school districts. In 1973, however, the Court, by a 5-4 vote, declared that Texas, and other states, had the right to spend more money on children in rich districts than children in poor ones.

As a result of that decision, today there are gaping disparities in school spending nationwide. An analysis of funding in Pennsylvania a few years ago found that one wealthy district spent more than three times as much as the state’s lowest-spending district. In the aggregate, these disparities mean that children from wealthy families across the country begin life with greater educational opportunities, and a better chance at success later on.

Other decisions that elevate the interests of the privileged over others include Citizens United and its forerunners–rulings that gave rich people and corporate “people (!)” a disproportionate voice in American politics.

Cohen isn’t the only person to notice. This week, James Dannenberg resigned from the Supreme Court Bar in a letter to Chief Justice John Roberts that has been widely published. Dannenberg has been a member of that bar since 1972. His letter compares the current Supreme Court, with its solicitude for the rights of the wealthy, privileged and  comfortable, to the widely-reviled Lochner court of the early 20th century that favored big business, banking, and insurance interests, and ruled consistently against child labor, fair wages, and labor regulations.

Dannenberg pulled no punches.

You are doing far more— and far worse– than “calling balls and strikes.” You are allowing the Court to become an “errand boy” for an administration that has little respect for the rule of law.

The Court, under your leadership and with your votes, has wantonly flouted established precedent. Your “conservative” majority has cynically undermined basic freedoms by hypocritically weaponizing others. The ideas of free speech and religious liberty have been transmogrified to allow officially sanctioned bigotry and discrimination, as well as to elevate the grossest forms of political bribery beyond the ability of the federal government or states to rationally regulate it. More than a score of decisions during your tenure have overturned established precedents—some more than forty years old– and you voted with the majority in most. There is nothing “conservative” about this trend. This is radical “legal activism” at its worst.

When a respected member of the Supreme Court bar questions the Court’s commitment to the rule of law, it’s an ominous sign.

The question is, as always, what should we do?

We should certainly think very seriously about the recommendation by legal scholars that the number of Justices be increased–a recommendation that long preceded the current administration.

And most obviously, we need to vote blue up and down the ticket, to ensure that people who will be elevated to the court in the future are “throwbacks” to the Warren Court, rather than pro-plutocrat right-wingers.

 

Race And American Inequality

This is Black History Month, but rather than a post on black history, I think it may be useful to share some depressing information about the current status of African-Americans vis a vis the White Americans who have occupied a privileged social position in this country even after most of the legal disabilities targeting people of color were repealed.

The Institute for Policy Studies recently issued a report on the wealth gap between whites, Latinos and blacks in the United States.The report looked at trends in household wealth among Black, Latino and White households over the past three decades.

Since the early 1980s, median wealth among Black and Latino families has been stuck at less than ten thousand dollars, while the median wealth of White households, adjusted for inflation, grew from $105,300 to $140,500. The median White family has 41 times more wealth than the median Black family and 22 times more wealth than the median Latino family.

The wealth gap has gotten wider as wealth in America has become extremely concentrated.The median American family of any color has seen its wealth drop 3 percent between 1983 and 2016–a period of time in which the richest 0.1 percent have seen their wealth jump 133 percent. The three wealthiest families–the Waltons, the Kochs and the Mars–have seen their wealth increase by nearly 6,000 percent.

Wealth held by members of the Forbes 400 equals that of all Blacks plus a quarter of Latinos.

The  report takes issue with analyses that treat the racial wealth divide and the growth of economic inequality as two separate issues; instead, it finds that they are mutually reinforcing outcomes of larger economic issues–issues that result from public policies that have favored–and continue to favor–both White Americans and the very wealthy.

Just one example: As this is being written, Mitch McConnell and the Senate GOP are proposing to eliminate what they like to call the “death tax,” and the rest of us call the estate tax.

The estate tax raises $20 billion dollars a year, which is a lot of money, but a pretty insignificant part of the federal budget. It applies only to estates worth more than $5.5 million dollars, and people with lots of money can pretty easily structure their wills to avoid it.

As the Atlantic points out, however, there’s more than money involved in this debate.

The tax code is more than a ledger. It is a national statement of values. And so this little law inspires a great commotion during each tax debate. To its opponents, it is the ultimate (literally) punishment on success and an affront to the family legacy that each striving individual hopes to leave. To its supporters, it is a necessary bulwark against inherited plutocracy, which offends the national virtue of merit over privilege.

The article goes through the arguments advanced in favor of repeal and in favor of retention of the estate tax, and is worth reading for a quick review of the debate. But the argument for retention most relevant to policy’s role in worsening inequality is that, in a period defined by the rising gap between rich and poor, we need to recognize the enormous role played by inheritance.

According to analysis byMatt Bruenig, a writer and the founder of the advocacy group People’s Policy Project, four out of 10 members of the wealthiest 1 percent inherited some money, with an average inheritance in the millions of dollars….

In the last half century, the average wealth of the bottom half has gone from about nothing to about $1,000 in debt. Meanwhile, the returns at the top have accelerated. In the 1960s, families in the top 1 percent were six times wealthier than families in the middle, according to the Urban Institute. By 2016, the 1 percent was 12 times wealthier than the typical family. As wealth inequality has soared, the estate tax has been diminished, with the number of estate tax returns declining by 76 percent between 2006 and 2015. There is little doubt that 21st-century tax policy has assisted the concentration of wealth.

When ostensibly color-blind tax policy benefits “haves,” that policy inevitably benefits Whites.

And let’s face facts: money is power.

It’s Complicated

The usual reason economists oppose monopolies is that when a business effectively dominates a particular market, it is able to raise prices. A monopoly has effectively eliminated the competition that keeps prices low. The higher prices harm consumers, and allow the company to rake in more profit than it would otherwise be able to generate.

One of the criticisms of the current administration (a criticism that tends to get lost among the mountain of others) is that enforcement of anti-trust laws has been somewhere between lax and non-existent.

Despite their almost-universal support for vigorous anti-trust enforcement, however, few economists identified a relationship between monopolies and the growth of  inequality. As a post from Inequality.org informs us, that may change.

Andrew Leigh is both a member of the Australian Parliament and an economist, and his recent research is making waves.

Working with a team of Australian, Canadian, and American analysts, he’s been studying how much the prices corporate monopolies charge impact inequality.

The conventional wisdom has a simple answer: not much. Yes, the reasoning goes, prices do go up when a few large corporations start to dominate an economic sector. But those same higher prices translate into higher returns for corporate shareholders.

Thanks to 401(k)s and the like, the argument continues, the ranks of these corporate shareholders include millions of average families. So we end up with a wash. As consumers, families pay more in prices. As shareholders, they pocket higher dividends.

But this nonchalance about the impact of monopolies, Andrew Leigh and his colleagues counter, obscures “the relative distribution of consumption and corporate equity ownership.” Average families do hold some shares of stock, but not many. In the United States, for instance, the most affluent 20 percent of households own 13 times more stock than the bottom 60 percent.

In other words, when prices rise, low- and middle-class families pay and wealthy families profit. According to Leigh and his fellow researchers, this redistribution from the less affluent to the wealthy via corporate concentration has shifted 3 percent of national income out of the pockets of poor and middle-class families and into the wallets of the affluent.

The research also shows that corporations grow large because there are incentives to growth to which their executives respond.

Indeed, firm size determines how much executives make more than any other factor, as research has shown repeatedly over the years. Executives don’t have to “perform”— make their enterprises more efficient and effective — to make bigger bucks. They just to need to make their enterprises bigger.

Executives, in short, have a powerful incentive to grow their companies, and that powerful incentive, as the latest research from Andrew Leigh and his colleagues shows, isn’t just making these executives richer. It’s leaving our societies much more unequal.

An obvious lesson from this research is that we need much more robust anti-trust enforcement. Another remedy, just now being tried, is a requirement that corporations publish the  pay ratio between their CEOs and their workers. (Portland, Oregon imposes an “inequality tax” on companies reporting too wide a disparity.)

Evidently, size does matter–at least, in corporate America.

Connect The Dots!

It’s not just easy access to guns–although that access certainly facilitates rising American homicide rates.

As the Guardian recently reports, there is a strong–if surprising– connection between income inequality, respect, and increases in violence.

A 17-year-old boy shoots a 15-year-old stranger to death, apparently believing that the victim had given him a dirty look. A Chicago man stabs his stepfather in a fight over whether his entry into his parents’ house without knocking was disrespectful. A San Francisco UPS employee guns down three of his co-workers, then turns his weapon on himself, seemingly as a response to minor slights.

These killings may seem unrelated – but they are only a few recent examples of the kind of crime that demonstrates a surprising link between homicide and inequality.

The article cites emerging research that strongly suggests that inequality plays a pivotal role in escalating passions in encounters that might otherwise end with some profanity and fisticuffs–that it raises the stakes of fights for status among men.

The connection is so strong that, according to the World Bank, a simple measure of inequality predicts about half of the variance in murder rates between American states and between countries around the world. When inequality is high and strips large numbers of men of the usual markers of status – like a good job and the ability to support a family – matters of respect and disrespect loom disproportionately.

Inequality predicts homicide rates “better than any other variable”, says Martin Daly, professor emeritus of psychology and neuroscience at McMaster University in Ontario and author of Killing the Competition: Economic Inequality and Homicide.

Other studies show that rates of gun ownership rise when inequality does. Rising inequality also predicts the re-emergence of cultural traits like placing more emphasis on “honor.”

“About 60 [academic] papers show that a very common result of greater inequality is more violence, usually measured by homicide rates,” says Richard Wilkinson, author of The Spirit Level and co-founder of the Equality Trust.

Why would financial inequality lead to a renewed emphasis on status and respect? Researchers explain:

When someone bumps into someone on the dance floor, looks too long at someone else’s girlfriend or makes an insulting remark, it doesn’t threaten the self-respect of people who have other types of status the way it can when you feel this is your only source of value.

“If your social reputation in that milieu is all you’ve got, you’ve got to defend it,” says Daly. “Inequality makes these confrontations more fraught because there’s much more at stake when there are winners and losers and you can see that you are on track to be one of the losers.”

Social science is methodically enumerating the negative social consequences of extreme inequality. Most reasonably well-educated people recognize that inequality produces social instability–history teaches us that growing anger from those with nothing to lose leads to riots, even revolutions–but most of us are less familiar with other ancillary effects.

There is ample evidence that large gaps between the rich and poor retard economic growth, depress marriage rates, and raise crime and homicide rates. (Ignoring the 41 million Americans who live in abject poverty in order to gift your already obscenely wealthy donors with a tax cut also implicates that pesky little thing called morality.) Historical precedent suggests that these effects–left unaddressed– ultimately destroy societies.

None of that evidence, evidently, is persuasive to the Paul Ryans and Mitch McConnells of this world. Or perhaps they know and just don’t care. They are perfect examples of what Hannah Arendt called “the banality of evil.”