Professor john a. powell is Director of the Haas Institute for a Fair and Inclusive Society (HIFIS) and the Robert D. Haas Chancellor’s Chair in Equity and Inclusion at the University of California, Berkeley. Formerly, he directed the Kirwan Institute for the Study of Race and Ethnicity at The Ohio State University and the Institute for Race and Poverty at the University of Minnesota. He led the development of an “opportunity-based” model that connects affordable housing to racialized spaces in education, health, health care, and employment. He is the author of Racing to Justice: Transforming our Concepts of Self and Other to Build an Inclusive Society.
SHARMINI PERIES, EXEC. PRODUCER, TRNN: Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore.
Last week, the Federal Reserve released its 2013 Survey of Consumer Finances. While this report by the Fed was noted by many media outlets for showing the growing disparity in wealth by class, an analysis by Matt Bruenig of Demos titled “The Top 10% of White Families Own Almost Everything” brought the racial disparities of wealth to the forefront of the analysis. His analysis showed a continuation of racial disparities in mean family wealth, median family wealth, and national family wealth share. His analysis also showed a major concentration of white wealth in the top 10 percent of white families, which concludes the top 10 percent of white families own 65.1 percent of all the wealth in the nation.
Joining us now from Berkeley, California, to give us his take on this new data and Bruenig’s report is john a. powell. John is a professor of law and professor of African-American studies and ethnic studies at the University of California, Berkeley. Professor powell is also director of the Haas Institute for a Fair and Inclusive Society.
Thanks for joining us, Professor powell.
JOHN A. POWELL, DIR., HAAS INSTIT. FOR A FAIR AND INCLUSIVE SOCIETY: Thanks for having me.
PERIES: We also invited Matt Bruenig, who was unable to join us for this interview, but we’ll be talking about his analysis today.
But let’s start off by getting your reaction, Professor powell, to this new data and what it reflects about the conditions of people of color in the United States.
POWELL: Well, it’s actually very important, because there are a number of reports coming out almost weekly about the growing inequality in income, in wealth, in mobility and social well-being. But usually they are aggregated; they don’t actually break out what’s happening based on race. We could break it out further on gender or on geography. So it’s a national problem. In fact, one might even say it’s a global problem. But it’s not evenly distributed.
And there are different mechanisms that are pushing people further behind. And, therefore, if we’re going to be an inclusive society where no one’s left behind, no group’s left behind, we have to, one, have data showing how different groups are doing, and then, two, have policies directed toward those groups.
PERIES: Professor powell, what is the historical context of this kind of wealth/power inequality in the United States?
POWELL: Well, the United States prided itself from its very beginning on being a country based on equality. It was in our Declaration of Independence. We as a country distinguished ourselves from England, where they had a very clear class system. And there was a sense that for white men in particular you could actually make anything of yourself. You could move, you could go get land. Now, there was the small problem that the land belonged to Native Americans, but still you could go get land. You could start a business. And to some extent that was true for white Americans. So the Horatio Algers story, which all of us has heard, although the person who wrote the story was born modest and died modestly, so he didn’t actually live it out, but the myth that we actually was a mobile society had some reality to it, up until about World War I, that we were more mobile than most of Europe, certainly more mobile than England. Now social mobility in the United States is probably near the bottom for developed countries. And that’s been true and growing since about 1970. So we still hold on to the myth, but it’s no longer reality.
And part of it is a function of our social policies. So the big thing is education and investing in people and making education really open for all. Education is supposed to be the great equalizer. Well, today, education is actually producing inequality. It’s not producing equality.
PERIES: How is that? Can you explain that a bit more?
POWELL: Well, two ways. First of all, as I said early, the myth was true for white men from after the New Deal. And then, after World War II, we had an effort to actually educate millions of servicemen, the G.I. Bill. Now, this actually didn’t say servicemen, but 90 percent of them were men, I think 98 percent. And so you got a chance to go to college, you got a chance to get a loan, you got a chance to be part of the American dream. And the American middle class exploded. But it was racially coded. It was largely for white men. Blacks and women were locked out.
And then, over the 1950s, blacks, women, Latinos, other groups started coming in as well. The reach of education, the reach of some of those programs, through fighting, through civil rights, through struggle. So it wasn’t that America just opened up. It started opening up. We had Brown v. Board of Education, we had sort of a crumbling of Jim Crow, which wasn’t simply about isolating people based on race; it was about isolating people from opportunity. So those opportunities became open or started opening up.
In the late ’60s, with the election of President Nixon, those opportunities closed. 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. So, since we inherit—and this is Piketty’s book—we inherit a lot of wealth. Well, if you start off, as in my family, there’s very little for me to inherit from my mother and father except the inequality that they experienced as sharecroppers, whereas when the housing boom started in the 1940s, if you’re white, you can move to the suburbs. Your parents bought a house for, you know, twenty, thirty thousand dollars. In many suburbs those homes are now worth three hundred, four hundred thousand dollars. They pass that on to their children. The house that my father bought he recently sold for $5,000. So it’s actually deeply entrenched in our structure. Now, it’s not saying that people who inherited a three or four hundred thousand dollar house is necessarily harboring racial bias, but they’re benefiting from a racial spoils system that we never disestablished.
Then you take modern day, in terms of the subprime crisis. What happened in the world is that we have a global credit system. We have credit moving all around the globe looking for someplace to land. Well, Alan Greenspan actually directed a lot of that credit to the housing market. Whites actually had a mature housing market because they were invited to the housing market in the 1940s and ’50s. It was blacks and Latinos that had underdeveloped housing markets. And so this new credit coming online globally was directed to this market, but not on equal terms. They got what was called subprime loans, or predatory loans, which made the loans more expensive. And many of those loans should have been prime loans. And when a crisis happened in the housing bubble burst, people were left with homes and loans they couldn’t afford to pay.
And the banks actually rigged this. The banks actually prefer subprime loans, because you got more fees on them. So there was an aggressive, incentived effort to actually get these loans into the black and Latino community because these were underdeveloped communities. And a lot of this caused the inequality between whites and blacks and between Latinos and whites to double. So under President Obama’s watch, by some accounts, you’ve gone from nine to one in terms of wealth in the Latino community to 18 to one. We’ve gone from ten to one between blacks and whites to 20 to one.
And there’s no serious social policy to do anything about it. I mean, whites are hurting, too, but they’re not hurting nearly as bad as blacks or as Latinos.
PERIES: Professor, you’ve studied this inequity for a very long time. What are some of the policies you would recommend that could clearly address this head-on?
POWELL: Well, there are a number of things. Senator Bernie Sanders actually just came out with a piece arguing for inheritance tax. Inheritance tax is actually interesting. It used to be quite high, because you’re actually passing on privilege to the next generation. And we talk about merit, but when you inherit $1 billion or $100 million, you didn’t do anything to make that money. Someone else did. And, of course, we know—and Bill Gates said this—no individual makes money on his or her own. It’s all socially created. Wealth is always socially created. So part of it is to basically stop this accumulation of wealth, because wealth also buys our political system. We have a political system for sale. As someone says, we have the best democracy money can buy, which means literally—I think it’s the bottom 20 percent of the country have, on a national level, zero political influence. So one would be taking money out of politics. Two would be to actually start creating some inheritance tax.
And more important than anything is to say, we’re going to create a society where people really can have social mobility. We’ve watched social mobility slip in this country for the last 40 years, and we’ve done nothing about it. We blame it on globalization. We blame it on technology. That’s simply not the case, because other countries that still have much more mobility and much more equality than we do are in the same global system. It’s the policies we put in place in the 1970s that accelerated under Reagan, that accelerated again under Bush, that was tolerated largely by Clinton, tolerated even more by Obama.
So we need to actually make this a national problem. But in doing so, we need to know that while the vast majority of America is hurting under this system, blacks, Latino, Southeast Asian, Native Americans, they’re hurting even more. So we need to actually pay especial attention to those groups while we pay attention to the entire country.
PERIES: Professor powell, the inheritance tax, which is really—some economist was peddling that as a solution also to address the deficit when the deficit reduction was the big debate in Washington, but this is really a way to get at creating money for social programs, as well as reducing the deficit. Has there been clear recommendations to Washington about this?
POWELL: Well, there have been. And I’m headed to Washington tomorrow to talk about this. It’s a political choice. One of the things that Piketty says in his book Capital in the 21st Century is that this is—we’re talking about economic issues, but we’re really talking about political issues. We made political choices to become more unequal. It’s not driven by, quote-unquote, the market; it’s driven by our political policies. So we can make choices to be more inclusive.
Right now, though, it’s hard to do, because it costs a lot of money to run for any national office, and it’s paid for by the very elite that we’re trying to harness. And so they’re making the rules of the game, and they’re making rules of the game that favor them. The economy has been growing. In the last several years, the economy has started to grow again. But all the growth has gone to the top 10 percent. The bottom 90 percent is not growing. And we actually see that for blacks, not only do we have a lack of social mobility; the next generation of black middle-income children are probably going to do worse than their parents. And that’s one of the—other than a major catastrophe of war, that almost never happens.
So, yes, we could definitely do something about it. It’s not framed, it’s not talked about much in politics. A lot of people then make reference to the market. A lot of people claim you’re going to destroy the market. But, again, there’s a number of studies out, including by the IMF, showing that inequality is a drag on the market and a drag on mobility. So if you care about the economy, if you care about our democracy, if you care about civil rights, if you care about being an inclusive society, all these issues are being undermined by the growing inequality and how it’s distributed across our country.
PERIES: Professor powell, thank you so much for joining us today. And I wish you all the best in Washington on behalf of all of us.
POWELL: Thanks for having me. And thanks for doing the story.
PERIES: And thank you for joining us on The Real News Network.