Adjusted Net Worth by Race

The Hard Road We Hoe?

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 I know, you think I bring this up too often.  That economic inequality is going to destroy our nation.

Except, the data (via Pew Research) demonstrate that American and European citizens consider inequality the biggest menace to their (our) lives.  That exceeds terrorism, nuclear weapons, pollution, and bigotry. Oh, sure there are differences among the other world’s regions.  Not surprisingly, those living in Africa worry more about infectious diseases (including HIV); in the Middle East, it’s religious (and ethnic) hatred; and Japan’s biggest concerns are around nuclear issues.

But, in America, it’s the Democrats and the Independents (who comprise the majority of the US population) that worry about inequality.   Not surprising.

After all, in the US,  corporate profits increased by 14% last year,  yet wages only rose by 2.5%- which conveniently matches the change in the cost of living.  That difference obtains despite the fact that unemployment is down to 4.4%.  Back in 2009, unemployment was 10%- and still , our wage growth was still 2.5%.  Oh- and the corporations have not increased their dividend payouts either.  They’re just hoarding their profits- earned from their employees’ efforts.

Now, the Republicans, the minority of the US population, declare their primary worry is about religious strife. (I am sure that the Christian Right is always worried that it won’t prevail over the rest of the US citizenry.)

What is amazing (to me, at least) is that while most Americans worry about inequality, those same folks have no clue how really unequal the distribution of wealth really is.  Drs. Michael Norton and Dan Ariely surveyed some 5500 folks.  Those surveyed were certain that the bottom 40% of Americans controlled 9% of the wealth, while the top 20% controlled 59%.  Except the facts demonstrate the top 20% has amassed 84% of the wealth in the US- and that’s 2800X the wealth controlled by the bottom 40% (who control all of 0.3%).

And, what did the surveyed consider to be the perfect distribution?   The top 20% should not control more than thrice the wealth of the bottom 20%.  (Clearly, the US has a L-O-N-G way to go to achieve that ideal!)

You see, we consider inequality to be antithetical to fairness.  Which, is by and large, true.  Most of us- from kids to adults- actually choose fair but unequal distributions over equal distributions for all.  Should someone work harder or do more than others, we feel that individual deserves more.  (The true American Dream; it’s not what one inherits, steals, or appropriates by lobbying Congress- it’s what one’s effort achieves.)

Which brings up the differences between Republicans and Democrats/Independents.  While both sides agree that we each deserve only one vote, the Republicans are more willing to deprive others of a vote if they are poor.  And, then there’s access to health care or education- where our definitions of fairness become even more frayed.

Part of the problem is that we view fairness from an interesting (biased) viewpoint.  Most of us recall all the obstacles we encountered to achieve what we considered to be our goals or our lot in life.  Few of us recount the tailwinds- the advantages we employed or utilized- that enabled us to reach those goals.  (This is reported by Drs. Shai Davidai [New School for Social Research] and Thomas Gilovich [Cornell University] in their publication, The headwinds/tailwinds asymmetry).

Is that because we spend our energies trying to overcome the problems we see in front of us?  Yet, at the same time, we fail to recognize or develop gratitude for the benefits we accrue that help us along the way.  Davidai and Gilovich have discerned that we overplay the obstacles we surmount, completely neglecting the tailwinds that helped us jump over them.

(It’s also why I always state that we learn more from our failures than our successes.  Because we are CERTAIN our success is achieved via our superlative efforts and planning.  But, when we fail, we study the reasons to assure that we won’t fall short again.)

College, Debt, Race

Now, back to why this affects inequality.  I’ve reported many times that our children are cursed or blessed to a large degree by who we are.  Children of the poor are more likely to perform more poorly in school.  That manifests despite the quality of the school they attend.  (Of course, when the rich decide to send their kids to private school, the parents complain about the cost for public education and lobby to pay less- leaving the poorer folks even more at risk.)

We also know that – as opposed to the American Dream- our country is now exhibiting downward mobility.  1/3 of the folks who grew up as part of the middle class are now members of the lower classes. And, it still affects minorities more than the White (soon-to-be non-majority) folks.

A recent survey (Atlantic Magazine) found that among the White working class (defined as those without college degrees and paid hourly wages, even if they were now retired), fewer than half of them believe that working hard will help them get ahead.  And, almost 2/3 of them believed that America was on a great decline.  (They specifically said that the best days for America reside in the past.)

The Federal Reserve of St. Louis reported that college educated White folks (in the two decades between 1992 and 2013) augmented their wealth by 86%.  And if one was lucky enough to be a college-educated Black person- their wealth increased by…. Oh, wait- their wealth decreased by 55%.  Of course, you did recognize that Black folks need to rely more on loans than White folks. That debt (due to obtaining their college degree) also delayed their home purchases, retirement savings- even from getting married.  (These are the three primary methods where wealth is augmented.)

Adjusted Net Worth by Race

So, maybe now it time to have our government start creating tailwinds- instead of spending time trying to eradicate any roadblocks.  Except that the most recent bill passed by Congress only created tailwinds for the rich- and increased the headwinds for the poor, disadvantaged, those of middle age.  Of course, I am talking about the so-called American Health Care Act.

(That’s the topic for a post coming very soon.)

Roy A. Ackerman, Ph.D., E.A.

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