Median Wealth Of Black And Latino Families Could Hit Zero By The Middle Of The Century

racial-wealth-gap

Income inequality has been getting worse, which suggests that the wealthiest, typically meaning Whites, are getting wealthier. According to a new study, the imbalance will shift so far that median Black and Latino households will lose the little relative wealth they have by about the time people of color form a majority of households in the U.S.

By 2053, Black households will have a median wealth of zero. It will take Latino households another 20 years to drop to the same level, according to an analysis by non-profits Prosperity Now (formerly CFED) and the Institute for Policy Studies.

As I’ve mentioned before, income inequality often captures attention, but wealth inequality is even more insidious.

That wealth becomes the head start in a race, like setting putting someone on the putative starting line and another, on the 90 meter mark in a 100-meter dash. By talking almost completely about income inequality, the country essentially pretends that a problem made over decades can be addressed on a single year’s scale. It can’t mathematically work.

Talking of wealth inequality in terms of a footrace is unfair. The race is over in a matter of seconds; only a few if someone is that far down the line. Wealth inequality lasts generations — forever, for all practical considerations.

One problem is that when wealth inequality increases much faster than the economy, the extra wealth has to come from somewhere. Someone loses it. I understand people don’t like hearing this, but it comes down to basic arithmetic. If the economy grows at 2%, for example, and someone’s share grows at 5%, the extra is something that otherwise would have gone to another.

The two factors — wealth transfer and the advantages wealth provides — come together in ugly ways. We typically describe middle class status in terms of income. But, if you change the definition to wealth, meaning you’d need between $68,000 and $204,000 in household wealth — middle quintile White households have nearly 8 times as much wealth as median Black households and 10 times as much as Latino households. Black and Latino families now have to earn two to three times as much as White families to catch up.

And then the time value of wealth comes into play:

Between 1983 and 2013, the wealth of median Black and Latino households decreased by 75% (from $6,800 to $1,700) and 50% (from $4,000 to $2,000), respectively, while median White household wealth rose by 14% (from $102,200 to $116,800). If current trends continue, by 2020 median Black and Latino households stand to lose nearly 18% and 12%, respectively, of the wealth they held in 2013. In that same timeframe, median White household wealth would see an increase of 3%. Put differently, in just under four years from now, median White households are projected to own 86 and 68 times more wealth than Black and Latino households, respectively.

These trends over time show the power of compound interest, whether positive or negative. Should the trends continue as they are, in absence of anything to reduce their power or even increase it, Black and Latino households will have nothing other than current income to call their own.

A number of practices contribute to and support these trends. One is the tax code. Many popular practices, like deductions for mortgage interest and lower taxes on capital gains, benefit Whites far more than Blacks and Latinos.

Another has been allowing predatory practices, like usurious interest rates by payday loan companies that make it difficult to impossible for people to get ahead. Again, these practices, focusing on the poor, have an outsized impact on Blacks and Latinos. The Consumer Financial Protection Bureau has begun to address these issues, but many want to kill off the agency.

Without programs specifically targeting people who don’t have wealth and need to build it, the country could become even more polarized by wealth inequality. Aside from its obvious inherent issues, such a direction could undermine the economy. If the median wealth of a majority of Americans is zero, there will be little to drive the economy as a whole, and that is a bad prospect for everyone.

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Dem. Presidential Candidate Calls for $100B in Slavery Reparations

“We need a moral and spiritual awakening in the country.”

Obama-Lincoln-slavery

Marianne Williamson, a best-selling author. spiritual teacher and activist, announced her bid for the 2020 Democratic presidential nomination on Monday. On Thursday, she sat down on CNN’s New Day, where she said the United States needs to pay African-Americans reparations for slavery.

“We need a moral and spiritual awakening in the country,” the candidate stated. “Nothing short of that is adequate to really fundamentally change the patterns of our political dysfunction.”

Her platform includes proposal for free public college, universal health care, Medicare for all, a green new deal and $10 billion per year for slavery reparations to be paid over the course of a decade.

“I believe $100 billion given to a council to apply this money to economic projects and educational projects of renewal for that population is simply a debt to be paid,” Williamson said.

Watch the full interview below to hear what she believes to be the “deeper truths” about what has failed the American people.

Bernie Sanders Appears Irritated After Being Pressed About Reparations!

Sen. Bernie Sanders Introduces Medicare For All Act Of 2017U.S. Sen. Kamala Harris (D-CA) (C) speaks on health care as Sen. Bernie Sanders (I-VT) (2nd L) listens during an event September 13, 2017 on Capitol Hill in Washington, DC.

 

When Vermont Senator Bernie Sanders was asked whether he endorsed reparations for the descendants of slaves in the U.S. during a CNN town hall earlier this week, he responded with another question: “What does that mean?”

The Democratic presidential hopeful wasn’t soliciting moderator Wolf Blitzer for a quick dictionary break—although the Associated Press notes that the Democratic candidates have been trying to “embrace a new meaning” of the word.

“I’m not sure anyone’s very clear,” Sanders, who didn’t support reparations during his unsuccessful 2016 presidential bid, continued.

While several other 2020 Democratic hopefuls, including Elizabeth Warren and Kamala Harris, have recently voiced support slavery reparations, what form those reparations would take is unclear.

Should reparations involve the literal payment of damages to the families of slaves? Or should those reparations be made, not through direct monetary compensation, but through policies that benefit black Americans to close opportunity gaps?

It depends on who you ask.

“‘Race-conscious policies’ are not a substitute for reparations, because they treat a symptom without acknowledging the cause,” Democratic hopeful Marianne Williamson—lesser known in the political realm, although well-known as a best-selling author and as a spiritual adviser to Oprah—tells Fortune. “As a consequence they don’t have the kind of psychological or emotional force that fundamentally impacts a culture. In fact, they can actually increase the problem if Americans don’t have a deep understanding of why the policies are appropriate.”

Thus far, Williamson is the only official 2020 candidate to openly support giving direct monetary compensation to the descendants of slaves. Naming reparations a key issue on her campaign website, she suggests dispersing $200 billion to $500 billion to the ancestors of slaves over the course of 20 years.

“It’s not enough to just say there’s an economic gap between black and white America and we need to treat it; we have to acknowledge why there is a gap,” Williamson says. Although she acknowledged that progress has been made in years since the Civil War, in spite of recent setbacks in voter suppression, she says, “What was never done, and what remains to be done, is economic restitution.”

Although fellow candidate Julián Castro, the former mayor of San Antonio and Obama administration official, hasn’t gone so far as to state he would definitively endorse monetary reparations, he has said that they should be considered a viable option and promised to create a task force that would analyze how reparations could be made.

“It is interesting to me that, under our Constitution and otherwise, that we compensate people if we take their property,” Castro told Hardball on Wednesday. “Shouldn’t we compensate people if they were property, sanctioned by the state?”

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Hardball

@hardball

“It is interesting to me that under our Constitution and otherwise, that we compensate people if we take their property. Shouldn’t we compensate people if they were property sanctioned by the state?” @juliancastro on reparations.

The American government has previously paid reparations to descendants of Japanese-Americans who were interned during World War II, as well as to victims of state-mandated sterilizations and of the Public Health Service’s 1932 Tuskegee experiment that purposely infected, and failed to treat, black men with syphilis.

Despite these precedents, Hardball reported that 68% of Americans are opposed to reparations for the descendants of slaves. In fact, reparations have been outright dismissed by otherwise progressive politicians—President Barack Obama didn’t endorse them—or have been “redefined” to mean policies that lower the opportunity gap.

Although Senator Harris and Senator Warren told the New York Times that they “support” slavery reparations, they declined to give specific details about what they meant.

After giving her statement of support to the Times, Harris told the Grio that she would address reparations in economic policies including tax breaks for low- to middle-class Americans, which includes black families who had been negatively impacted by slavery.

But when reporter Natasha Alfred directly asked if Harris had a “particular policy for African-Americans that [she] would explore”—rather than policies that would “by default affect black families”—the California Democrat said that she didn’t.

“I’m not going to sit here and say I’m going to do something that’s only going to benefit black people. No,” Harris said. “Because whatever benefits that black family will benefit that community and society as a whole and the country.”

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Natasha S. Alford 🇺🇸+🇵🇷✊🏾👩🏾‍💻🎥

@NatashaSAlford

I had just a few seconds left before my interview with Sen. Kamala Harris was about to wrap, so I asked about reparations for Black Americans (the context of the interview was her proposed policy agenda for Black America).

🎥 @theGrio