[jthomas1600]

New data shows soaring wealth gap among races - CBS News

That's an article discussing a little bit the gap in wealth that has grown between the races. There's actually been a ton of articles on this over the last couple of days. Basically not long ago the wealth gap had closed to a point where the wealth of white house holds on average was 7 times that of blacks. Now it has grown to 20 times. Hispanic household wealth is historically pretty even with blacks.

So I have two questions:

1. Do you believe this is an accurate picture?

2. What is the governments role in providing a solution?

I'll answer my own questions...

1. I'm very suspicious that this is not an accurate picture of the situation. I wonder if you threw out the Kennedy, Gates, Paul Allen, Warren Buffet, types if this would change the ratio. The top 5% of US wealth holders are worth probably worth 100 times more than the rest of us and they're probably 99% white. When I worked in La. I worked in a pretty racially diverse environment and while there was a disparity in wealth, there's no way the white guys were worth even 2-3 times what the blacks where....let alone 7 times or more.

2. I'm not a fan of setting policy to favor any racial group. Even if it is to right previous wrongs. So I don't think we need affirmative action or that sort of thing. I think the key is to ensure that everyone has the same educational opportunities. Part of this is to improve K-12 schools in substandard education and part is to make secondary education more affordable.

So CGR community, what say you?

[slap_j]

Originally Posted by jthomas1600

1. I'm very suspicious that this is not an accurate picture of the situation. I wonder if you threw out the Kennedy, Gates, Paul Allen, Warren Buffet, types if this would change the ratio. The top 5% of US wealth holders are worth probably worth 100 times more than the rest of us and they're probably 99% white.

The reason the study is focusing on the median and not the average is that huge incomes like the ones you mention would skew the average toward a higher number (and vice versa for tiny incomes). So, not only do non-whites have practically no representation among the most elite, they're mostly relegated to the lowest classes.

2. I'm not a fan of setting policy to favor any racial group.

The people who are the most vulnerable need the most care. How does that look in terms of the US government? I need to think about it.

[Rainer.]

Originally Posted by slap_j

So, not only do non-whites have practically no representation among the most elite,

Except for a disproportionate number of Asians.

(In 2000, 6.46% of the top 5% of wage earners in america were Asian, Asians made up 3.65% of the US population)

[Rainer.]

Originally Posted by slap_j

The reason the study is focusing on the median and not the average is that huge incomes like the ones you mention would skew the average toward a higher number (and vice versa for tiny incomes). So, not only do non-whites have practically no representation among the most elite, they're mostly relegated to the lowest classes.

Actually, I poked around the actual study and found an interesting factoid:

Asians: In 2005 median Asian household wealth had been greater than the median for white households, but by 2009 Asians lost their place at the top of the wealth hierarchy. Their net worth fell from $168,103 in 2005 to $78,066 in 2009, a drop of 54%. Like Hispanics, they are geographically concentrated in places such as California that were hit hard by the housing market meltdown. The arrival of new Asian immigrants since 2004 also contributed significantly to the estimated decline in the overall wealth of this racial group. Absent the immigrants who arrived during this period, the median wealth of Asian households is estimated to have dropped 31% from 2005 to 2009. Asians account for about 5% of the U.S. population.

So Asians seem to no longer have the financial edge on Whites like in the past...

[slap_j]

Originally Posted by Rainer.

So Asians seem to no longer have the financial edge on Whites like in the past...

Check out the race/sex makeup of the wealthiest Americans: The Richest People in America 2010 - Forbes.com

White men dominate.

[Rainer.]

Well, yes, but that list of the wealthiest Americans makes up a tiny fraction of the general population...

I don't know if I have a point...

[+Donny]

This is really interesting. Thanks.

I need to read in more detail, but it looks like the report is saying that income levels didn't become much more disparate than before, but that unemployment and debt problems caused a lot of it (as well as some other factors, like a rebounding stock market).

So is point here that hispanics and african-americans were hit hardest with job loss and consequent defaulting on their houses? Does the report have any stats on whether more hispanics and blacks defaulted than whites? It mentioned that there are more hispanics in the areas hit by the housing crisis, but I haven't read enough to get numbers.

Also, the 25 year look showed a jump in disparity for blacks in the late-90s, early 2000's (7 to 1 ratio to 11 to 1 ratio), comparable to the recent jump (11 to 1 ratio to 19 to 1 ratio). There wasn't a similar jump in disparity for hispanics. I wonder why.

[Epaphras]

These figures are a direct result in the disparity between the achievement of minority students and white students in K-12 education (the "achievement gap").

Differences in educational opportunity lead to differences (for the worse) in occupational and work opportunities. Sustained over time and over generations, this leads to disproportionate accumulation of wealth.

In terms of government response, I'm a big believer in equal opportunity. I believe every person, regardless of racial or economic background, should have an equal opportunity to receive a quality education. This is why I am proud to work for an organization that manages a national network of charter schools. There is a lot of misinformation about charters out there, and yes: poorly-managed charters suck just as bad as poorly-managed traditional schools. But well-managed schools (charters and traditional, although charters have much more flexibility to implement needed changes) serve children (mostly traditionally under-served) in a manner they deserve and that sets them up for lifelong success.

I'm also a big believer in free enterprise and competition. Anyone should, with enough knowlege, hard work, and a little luck, be able to succeed in establishing, growing, and maintaining a business. Efforts to restrict, unduly regulate, and excessively tax the free enterprise system will actually harm minorities worse, because they will be prevented from entering the market as producers and job-creators, or as employees if new firms are kept from entering due to high entry barriers. It is within this construct that the "Old Boys Club" is actually perpetuated -- the same (often inefficient) firms will continue to operate with impunity, while more innovative and lean firms (likely founded and run by inorities, including women) are prevented or discouraged from entering.

I'm not a believer in entitlement. I believe everyone should have the opportunity to work to earn a living to have the kind of standard of living that many Americans enjoy and that is the envy of the world: I do not believe everyone should automatically be given that standard of living. Equal access is fair; equal results is not. Someone who scrimped and sacrifice to be successful in business should not have the fruits of his or her labor stolen and given to those who did not avail themselves to the opportunities available to everyone. The old fable of the ants and the grasshopper is full of truth. If you are too lazy to work, you shouldn't get fed. Disability is one thing, but perpetual unemployment and unwillingness to be retrained or receive an education is no excuse, and should not be subsidized by the hard working.

In a perverse way, unintended consequenses of seemingly compassionate welfare actions by government have actually proven to be fatal to the communities that were initially targeted. A fundamental truth of the universe is that people respond to incentives. If people are incentivized not to work, not to save (to in fact, when you factor advertising and media, consume much more than their means allow and thus be eternally dependent on the state), and not to remain in two-parent families, then it is no surprise that they will respond to incentives that lead them to remain unemployed or living paycheck-to-paycheck, and experiencing a breakdown of community, of which the two-parent family is the cornerstone.

I also abhor class warfare rhetoric, and discussions on wealth gaps or wage disparities (and taxes) tend to disintegrate quickly into class warfare. I find it ironic that the "have nots" are constantly lambasting "the rich" for their "greed" -- is not the definition of greed wanting to possess something that someone else has that you don't have? Who in this scenario is truly greedy? It is not greedy to enjoy the fruits of your labor, provided they were not gained by exploiting others. This is a subject of debate, but on the whole I do not believe (as Marx would) that the employer-employee relationship is inherently exploitative. It's mutually beneficial: both parties get more than in partnership than what they would otherwise get (or not get) alone. Maybe it's a glass-half-full, glass-half-empty thing, and yes there are examples of exploitation, but I look at it from a positive perspective.

To summarize, I think the solution is not to focus on the outcomes (wage disparity) but on the causes (unequal opportunity, especially disparate educational opportunity for children of color).

[mulletman]

A few thoughts:


First of all, I'd like to be referred to as 'Northern European American.' The term 'White' seems demeaning.

Secondly, it seems fairly irrelevant to examine the races of the 10 or 100 or 1% of the richest people. It would be akin to me doing a race study of the 10 highest-paid basketball players.

[+Donny]

To summarize, I think the solution is not to focus on the outcomes (wage disparity) but on the causes (unequal opportunity, especially disparate educational opportunity for children of color).

But that division can get fairly arbitrary. Wealth/wage disparity (they are distinct, as the report shows) is just as much a cause as an effect, is it not?

[Ax]

Originally Posted by slap_j

Check out the race/sex makeup of the wealthiest Americans: The Richest People in America 2010 - Forbes.com

White men dominate.

If you look at most of them, most are inherited or entrepreneurs. You can't really say the system is set up so that only white men are going to inherit money or start successful businesses. I mean... for inheritance, most of the ones who inherited their money were sons/daughters of entrepreneurs, and as for entrepreneurs, not all of them had a ton of money to start out with, anybody has the opportunity to start a business and be successful if their idea is original/good or they offer a good product and have good business sense.

Then when they die, their children will inherit that money, and you have now created more of the inherited wealthy people.

[slap_j]

Originally Posted by mulletman

It seems fairly irrelevant to examine the races of the 10 or 100 or 1% of the richest people.

Originally Posted by Ax

IYou can't really say the system is set up so that only white men are going to inherit money or start successful businesses.

It's relevant to ask why white men are disproportionately represented among the super-rich. Just as valid as asking why minorities are disproportionately represented among those in poverty.

[Chrysostom]

Originally Posted by +Donny

But that division can get fairly arbitrary. Wealth/wage disparity (they are distinct, as the report shows) is just as much a cause as an effect, is it not?

True to some extent but the question is still live. True that to start a business you need capital. True that if you learned prudent financial planning and saving you've got the kinds of habits to have more wealth and train your children to do likewise, but that if you never learned from someone who had/kept enough money around to manage prudently then you've got a barrier to overcome. True that if you are born and raised with a good network of people with money then you've got a leg up on getting a job, finding investors, or locating potential clients. This is what capital is all about. This is why Kennedys and Buffetts are basically all white and male here: power concentration is where the capital comes from that can be parlayed into massive fortunes. And that shapes the middle class every bit as much as outliers with great wealth and power, if in an exponentially smaller way.

But a notable example where you've got to locate this within a bigger picture: Any race with lots of immigrants will have skewed demographics. If, say, half the members of one race in a country is first-generation then it's not that country that determined their lot; it's the country from which they emigrated. As I'm sure you're aware, this is a crucial factor in understanding racial demographics in TX.

[Chrysostom]

Originally Posted by slap_j

Check out the race/sex makeup of the wealthiest Americans: The Richest People in America 2010 - Forbes.com

White men dominate.

The first non-white male I found on the list was #87 Victor Fung, who as I recall didn't even make his money in the US. Both the first woman who made her own money (rather than inheriting it) and the first non-white person whose fortune was amassed in the US was Oprah at #130, so far as I saw.

[Rainer.]

Originally Posted by Chrysostom

The first non-white male I found on the list was #87 Victor Fung,

Patrick Soon-Shiong is #46.