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Race & Reality, Pt. 2

When the jobs-focused plenary panel at America's Future Now convenes— with Angela Glover-Blackwell, Rich Trumka, Jared Bernstein, and Bob Herbert — it's likely they will continue a discussion America desperately needs, and that tea party conservatives  wants desperately not to hear. It's time, past time, to address the black and brown "canaries" in our economic coal mine, by protecting the social safety net and taking direct action to create jobs.

Less than six months ago, leaders of six progressive groups came together to warn that the country's jobs crisis could cause severe and lasting damage to generations of Americans — especially people of color — unless immediate action was taken. That warning came with a notice that the African American and Latino canaries in our economic coal mine were in poor shape.

Janet Murguia, president and CEO of National Council of La Raza, and Benjamin Todd Jealous, president and CEO of the NAACP, echoed this concern about many minority groups already seeing Depression-level rates of joblessness, but also cautioned against viewing the problems of black and Hispanic communities in isolation.

“Black people in the U.S. are the canaries in the coal mine,” said Jealous. “What we get tends to hit everybody later.”

Last month I noted that the complaints of the overwhelmingly conservative white, male, well-off and well-educated tea party members weren't that different from the 82% of the country, many of whom are worse off. That post started off with a question: What if the tea party was black? There are many ways to answer that question, but in this post I want to offer just two.

If the tea partiers were black:

  1. They'd be eve worse off than they are.

  2. If they're as consistent as their star candidate from Kentucky, the wouldn't want anyone to care or do anything about it.

On the first point, they'd definitely be worse off in this economy, because they'd be a lot poorer. This week, a Brandies University study proved Jealous right, finding that years of deregulation and an increase in high-cost loans quadrupled the wealth gap between white and black Americans.

A disturbing new study shows African American families have fewer economic resources to fall back on during this economic crisis than do white families, mainly due to discrimination and tax policies that favor the rich.

The study by the Institute on Assets and Social Policy at Brandeis University reveals that the wealth gap between blacks and whites has more than quadrupled over the course of a generation from $20,000 to $95,000. The researchers studied the same set of families over 23 years (1984-2007) and found that white families were able to build assets-what you own minus what you owe, excluding home equity-while blacks essentially lost assets. In fact, a typical white family is now five times richer than its African-American counterpart of the same class.

That means blacks had little or no money to start businesses, send children to college or ensure a secure retirement, the authors say. In fact, because many low-wealth families are forced to turn to high-interest rate credit for emergencies, about 25 percent of all African Americans owe more than they own. Read the entire study here.

Many minority families end up turning to predatory lenders because they have no other option, the study says. Also African Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes, the study says.

The reason is directly related to 30+ years of conservative policymaking.

The big question, of course, is why? Shapiro concludes that the main fault lies in discrimination and the economic policies of the last quarter century. Here is a look at some of the forces that contributed to the wealth disparity.

    * Predatory lending. We already know those sub-prime mortgages created a problem for the credit markets and the entire economy when it all came crashing down in 2008. But those loans were disproportionately pushed on African-American families — even those who could qualify for and afford better mortgages with lower interest rates.

    * Wealth-begets-wealth policies. Families that start with more money have access to better financial products, including tax-favored savings vehicles and less expensive credit. Furthermore, they have more opportunities to make money on their money. White families that started with more assets could afford to save more, invest more, and earn more.

    * Bank deregulation. The study’s authors say bank deregulation led to more payday lenders, check cashing stores and other expensive ways to access credit, and fewer consumer-protection controls. African-American families, starting with fewer emergency assets, were more driven to high cost loans in times of emergency. That problem is even worse now, the study’s authors suggest, concluding that more consumer protections are needed. Coincidentally, isn’t the Senate debating that financial reform bill this week? Just sayin’.

In fact, the study's author says that even the highest-income African Americans have suffered deline

Not only would the conservative, white, male, wealthy tea party members be worse off, but they have a longstanding historic disadvantage to overcome, before they could even reach their "bootstraps."

The report attributes part of the cause to the "powerful role of persistent discrimination in housing, credit and labour markets. African-Americans and Hispanics were at least twice as likely to receive high-cost home mortgages as whites with similar incomes," the report says.

Although many black families have moved up to better-paying jobs, they begin with fewer assets, such as inheritance, on which to build wealth. They are also more likely to have gone into debt to pay for university loans.

"African-Americans, before the 1960s, first by law and then by custom, were not really allowed to own businesses. They had very little access to credit. There was a very low artificial ceiling on the wealth that could be accumulated. Hence there was very little, if anything, that could be passed along to help their children get to college, to help their children buy their first homes, or as an inheritance when they die," said Shapiro.

...There were also social factors, the study found. "In African-American families there is a much larger extended network of kin as well as other obligations. From other work we've done we know that there's more call on the resources of relatively well-off African-American families; that they lend money that's not given back; they help cousins go to school. They help brothers and sisters, aunts and uncles, with all kinds of legal and family problems," said Shapiro.

If the conservative, white, male tea partiers were black men, they would face the reality of a 17.9% unemployment rate. Not only is that a close to double the 9.1% rate of white males, and higher than the 11.2% (Figures c/o the Bureau of Labor Statistics), but more than the 25-year high unemployment rate of 17.2% projected for African-Americans in general this year. 

Their unemployment rate would be driven in part by the kind of "persistent discrimination" even a college degree can't overcome. In fact, the the educated white men of the tea party were educated black men, they would still face an unemployment rate of 8.4%, compared to 4.4% for their white counterparts. Even having a name that "sounds black" could hinder job prospects.

The same New York Times/CBS poll that revealed the homogeneous demographics of the tea party also suggested that they think too much has been made of all of the above.

Tea Party supporters’ fierce animosity toward Washington, and the president in particular, is rooted in deep pessimism about the direction of the country and the conviction that the policies of the Obama administration are disproportionately directed at helping the poor rather than the middle class or the rich.

The overwhelming majority of supporters say Mr. Obama does not share the values most Americans live by and that he does not understand the problems of people like themselves. More than half say the policies of the administration favor the poor, and 25 percent think that the administration favors blacks over whites — compared with 11 percent of the general public.

They are more likely than the general public, and Republicans, to say that too much has been made of the problems facing black people.

So, if they were black, they'd face the reality that tea partiers who are much better off think all of the above requires little in the way of action or attention.

Similar to the health care debate, complete with similar racial disparities, if the tea partiers were black they'd face the political reality that a segment of white Americans with media disproportionate to their numbers oppose any reform or government action that helps, well, the "wrong" people. That is, people who aren't like them.

So, whites either think that only non-whites are poor and uninsured, or they just assume that that health care reform is going to benefit the non-whites regardless of whether whites are uninsured and poor. Either way, it's a little weird, don't you think?

...The unusual populist crossfire isn't actually unusual at all. It's called right wing populism and it goes like this: Obama has stolen the tax dollars of hard working white people (Real Americans) and given it to the blacks, Mexicans and rich "cosmopolitan" elites on Wall Street. Nothing unusual about that in the least. It's as old as the hills.

Brownstein doesn't seem to know that because he goes on and talking about how odd this whole thing is for the Democrats caught in a crossfire as working class whites rebel against the government bail outs and health care (which they believe is going to benefit people who don't deserve it.) ...

And as with health care, it's likely that all of the above (along with a conservative disdain for government, and the political debate over the role of government) is at least part of the reason why job creation agencies remain off the table in negotiating our way to a recovery — even though agencies like the Civilian Conservation Corps (CCC) were part of the government's strategy for unemployment during the Great Depression.

The problem then may have been worse, but today the fundamental imbalance — too many workers, too few jobs — is essentially the same. The economy is recovering, but the employment hasn’t come back. And in a couple of scattered corners, on the Internet and in academia, this has prompted a question born out of the Great Depression’s legacy of public employment.

“So why aren’t we doing this?” economist and liberal columnist Paul Krugman asked on his New York Times blog last fall.

If we’re going to spend $787 billion on a stimulus bill — and another $18 billion on the latest jobs bill just passed by Congress — trying to prod the private sector to hire, creating infrastructure orders in need of labor and promising tax breaks to anyone who can connect the two, wouldn’t it be better to just spend all that money hiring people directly?

And why isn’t anyone in Washington talking about this?

...Krugman answered his own question in a single word: Politics.

“The Obama administration is fearful of turning to the New Deal as a model for getting out of this recession,” Maher said. “I think they’re very weary of being painted as being even more liberal than they are.”

And that fear, and the distracting discourse on the deficit, is probably responsible for the lack of political will get put Americans back to work, and why thus far job creation strategies thus far have been largely focused on corporate tax cuts (and increased taxes on the rest of us via the "value added tax").

The problem is, the "cut-taxes-and-hope-for-the-best" approach is a conservatives strategy that has yet to work for anyone but the wealthiest. It won't work for job creation, because you can cut corporate taxes, but you can't make invest that windfall in job creation.

Franklin Delano Roosevelt’s understanding, though — in a Keynesian argument often repeated today — was that the private sector could only do so much if people had no money in their pockets. You can offer tax breaks to encourage business to produce goods, but if no one will buy them, what incentive is there to hire workers in the first place?

“You can’t force capitalism,” Rose said. “You can’t force individual businesses to produce something. They do production for profit, and if they’re not going to be able to realize a profit, if they can’t sell what they’re producing, they’re not going to produce it.”

Is the way to get people back to work in the long and short term is direct job creation? It's worked before, and could work again, if there's sufficient political will.

There's hope for a new direction. This Congress and this White House have passed, in just one year, have passed two sweeping reforms —health care reform and financial reform — bigger than any passed in a generation. And though neither is everything Americans needed it to be, both are better than they would have been without progressive activism and engagement.

The canaries in our too-long-deregulate economic mineshaft are gasping for air. We need to act quickly an decisively to get them and us out of the hole we're in, before we're all to weak to make the climb.

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