Naked Capitalism on Social Immobility

Race and the Wealth Gap

Posted on September 11, 2014 by

This Real News Network segment with law professor John Powell, Director of the Haas Institute for a Fair and Inclusive Society at Berkeley, discussed the widening wealth gap between whites and other races and the underlying forces producing these shifts. Powell describes the pre-Nixon era policies and institutions that helped give the poor and minorities upward mobility and flattened income disparity. But new Fed data shows that the top 10% of whites possess over 65% of all US wealth.

Powell argues that institutional arrangements play a big role in discrimination:

POWELL: So schools today are as segregated as they were in the 1960s. Elite schools–I teach at Berkeley. We have a very small number of African-American students. And it’s the elite schools in many ways that was the ladder to higher opportunity. And so all across the country we see a retrenchment for blacks, for Latinos, certainly for Native Americans. Asians are mixed. And the country simply is not doing anything about it. In fact, it’s trying very hard not to notice. And we now have racial segregation in schools. We have racial segregation in neighborhoods. And neighborhoods are the hub of opportunity. What neighborhood you live in determines what kind of park you have, if you have someplace to shop for food, where you go to school, is it safe. So the neighborhoods have been vastly retrenching in terms of segregation. And we had redlining. And so this whole mechanism of reproducing inequality is done largely through neighborhoods. There’s a saying that says in India they have the caste system, in England they have class. In the United States, they have zoning. And so when we look at what happened with the housing crisis, it was unevenly distributed, largely because of the segregated patterns throughout the neighborhoods.

PERIES: And also ownership. Particularly, if you own a house, then your ability for social mobility moves up as you become more eligible for loans because of the equity in your house. And so this kind of social mobility requires, under this capitalist system, a certain financial base which African Americans and people of color, Latinos, lack. And so can you elaborate a bit more about this particular issue of how inequity grows because of your race?

POWELL: Sure. So, in the United States we tend to be very individualistic, and so we think racial discrimination or unequal racial distribution is mainly a function of personal prejudice, one person to another. What we found, certainly since 1970, is two things, that a lot of the dynamics of inequality is driven through structures and systems and policies, not necessarily through individuals. So it may or may not be a prejudiced or biased individual at the heart of that, but the way we actually construct neighborhoods, the way we actually construct credit, the way we construct businesses. Those things matter, to some extent, more and more.

The other, of course, is we’re finding that a lot of things that affect our behavior, that affect policy, happens at an unconscious level. So there’s been an explosion in the mind science, and what we find is that America, Americans are very biased racially, even Americans who have egalitarian conscious values. So it’s those two phenomenas that are president.

The third thing that’s present is that a lot of inequality is inherited.

One indicator of the reversal of economic progress by minorities: the frequency of the use of the word “privilege” to refer to racial or class advantage. It was almost never invoked when I was a kid, and it is commonplace now.


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