The Pew Research Center has just released a new study on the wealth gap between whites, Blacks and Latinos. The study, the Wall Street Journal reports, found that the wealth gap between each of the nations’ two largest minorities, blacks and Latinos, (the WSJ uses the term Hispanics and I have no idea if this is different than Latinos) and whites has “widened to unprecedented levels.”.
The study’s findings revel that the median net worth of white households is 20 times greater than that of blacks and 18 times more than Latinos. This is twice as wide as it was in the 20 years prior to the recession the study reveals.
There is no doubt that the economic crisis, as capitalist crisis always does, hits the poor and low waged the hardest. In a society in which racial and gender discrimination is institutionalized, is built in to it, it is expected that the worst affected will belong to these groups as well. The collapse of the subprime housing market had a devastating effect on the low waged, the disabled and blacks and Latino’s in particular. From 2005 to 2009, inflation adjusted median wealth fell 66% among Latino households, 53% among blacks and 15% among whites according to the study.
The credit boom boosted the home ownership rate in the US to 69% in 2009 up from 64% in 2004 and as much of this cheap money was lent to the low waged as sub prime loans, when the subprime market collapsed it devastated the poor and particularly black folks. The subrime market was mostly poor people, senior citizens, and the disabled; people with weak credit history’s, in other words, they’d already been bled dry by the moneylenders. But a major section of this market was African American and other people of color. “The effect of this crisis will be devastating for them” I wrote back in March of 2007. John Gapper commented in the Financial Times that, in those communities, “…something very nasty is going down.” He continued, “Some 52 percent of loans made to black people in 2005 were subprime and 80 percent of these subprime loans were exploding Arms.” (Adjustable Rate Mortgage) (1)
I pointed out at the time that, Martin Eakes, a credit union CEO claim estimated that 2.2 million families could lose their homes to foreclosure. I referred to it as a catastrophe as Eakes, suggested it could become “the largest loss of African-American wealth in American history.” (2)
The findings of this study is the result of the rampant speculation and thievery that led to an economic crisis of historical proportions, one in which the working class on a world scale had to step in and rescue capitalism from the edge of the abyss. Our reward for saving the system from itself is increased austerity and poverty from Greece to Detroit, Bangladesh to Nigeria.
One of the victims of these wasters was Gertrude Johnson, an 89-year-old black woman still working as a health aide. Her mortgage, at more than $3000 was more than she could handle: "I just wanted to be able to eat and sleep in my house and have a roof over my head", says 89 year old Gertrude Robertson, "Every day at midnight when I go to sleep, I think maybe when I wake in the morning they'll tell me to get out." (3)
There is no other word for this than “terrorism” This woman, who should not have to be working at 89 in the first place, and millions like her of all ages have been and are still being terrorized not by Islamic terrorism but by capitalist terrorism, the most rapacious and successful of all the terrorisms.
The housing collapse was particularly brutal for people of color as they derive more wealth from home equity than whites do. But we should not underestimate the savagery that this, entirely avoidable crisis has inflicted on workers of all colors, religions and backgrounds. The hatred and anger among the US population toward bankers and the rich was initially so great that the US Chamber of Commerce could not use the word “capitalism” in its national campaign to restore faith in the system.
The Chamber’s focus groups found that most people equated the word “capitalism” with the strong devouring the weak. Not long after the collapse, polls revealed that some 36% of the US population responded favorably to the idea of socialism. The refusal of the heads of organized Labor to take advantage of such a favorable objective situation and launch an austerity program of our own against the bankers and the rich is criminal. But that’s another issue.
Lastly, the effects of the loss of wealth as opposed to simply income important in that wealth includes possessions such as homes, cars retirement accounts etc. (minus debt) whereas income is “wages, interest, profits and other earnings”. They are both important indicators according to the “experts” but wealth can be passed on which means the children and families are more likely to be affected negatively. It’s a bigger hole out of which to climb. One figure in the study that is mind-boggling is that as a result of the housing declines,, by 2009 median black household wealth was $ 5, 677, Latino, $6325 and whites $113,149.
There is one issue that confounds me a bit in all this. There is a very successful ideological war waged by US capitalism to obscure the fact that there are classes in US society. This war is supported by the Labor hierarchy that gives credence to this view that rather than workers, we are all “middle class”. I was totally insulted when I first came to this country and someone referred to me as “middle class”. Why would he say that? Who would want to have that sort of mentality? And if I’m middle class, whose in the lower class? And where’s the working class at?
In order to obscure the class question in the US, race dominates everything, or more accurately, color. I want to emphasize that this does not mean color, race or any other form of special oppression is not an issue that requires special attention and a special approach. But it encourages people to think of belonging to this or that race or this or that color with no connection to class; it weakens us in the struggle against capital. I just read a piece about Chicago and how the Latino’s are edging out the blacks as the city’s largest minority but they have no “Latino” voice that speaks for all of them due to the gerrymandering of electoral districts. As if a Latino billionaire or business person has the same interests as Latino workers.
Anyway, I was thinking about this study. During the boom there was trillions of dollars made by the wasters in the hedge fund and other speculative industries. Business Week mentioned the other day that KKR and the Carlyle group “amassed” $1.6 trillion in this period. We read about the billions that individuals earned in a year. In 2006, 25 men earned $15 billion between them. I’ll bet they were all white. Two white men, Warren Buffet and Bill Gates have over $100 billion between them. Think of all the Wall Street traders and Hollywood millionaires. So my point is this: a relatively small group of white men (and a person of color and a woman or two) made most of the cash plundering the wealth of society in this period. If you throw those guys in with the white worker, or Michael Jordan with the black worker, doesn’t this skew these type of studies somewhat? Are they really a clear assessment of things?
And one thing I noticed when I first came to this country although it’s changed a lot by now, was that there was a general strategy aimed at convincing the world that everyone has a house and a white picket fence in the US except the blacks have got a problem and obviously its their fault; if you’re poor in America its always your fault, after all, everything’s out there if you’re willing to work for it, right? If you mention to people that the overwhelming majority of poor people in this country are white, they’re shocked. But there’s more of them. If you compare whites to all people of color this might not be so, I haven’t researched that.
Anyway, I am being a bit lazy here as I am hoping one of our readers who studies these sort of things or knows about demographics might offer some insight in to how comparing poverty rates and other such details, even health issues, between racial/color groups as opposed to socio economic or class layers might not give accurate pictures.
(1) Financial Times 3-19-07
(2) Ibid
(3) WSJ 3-12-07
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