Worse Than Apartheid: Black in Obama’s America

Worse Than Apartheid: Black in Obama’s America

by Jon Jeter

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Tue, 10/29/2013

 

The U.S. Black-white wealth gap is larger than in South Africa at the height of apartheid. The statistic is all the more remarkable when considering that South Africa virtually mandated gross inequality by law, while in the U.S. the great chasm exists “within a political economy that is at least nominally democratic” and packed with Black elected officials, including “the sitting head of state.”

The wealth gap narrowed to a ratio of 7 to 1 in 1995 before ballooning to 22 to 1 following a housing market collapse five years ago.”

For every dollar in assets owned by whites in the United States, blacks own less than a nickel, a racial divide that is wider than South Africa’s at any point during the apartheid era.

The median net worth for black households is $4,955, or about 4.5 percent of whites’ median household wealth, which was $110, 729 in 2010, according to Census data. Racial inequality in apartheid South Africa reached its zenith in 1970 when black households’ median net worth represented 6.8 percent of whites’, according to an analysis of government data by Sampie Terreblanche, professor emeritus of economics at Stellenbosch University.

Widely recognized as an expert on inequality, Terreblanche described the racial wealth gap in the U.S. as “shocking,” in an email, and noted that it would exceed apartheid’s by an even larger margin had the white-minority not categorized mixed-race South Africans as “coloured” during the white-minority’s 46-year rule.

Household wealth is the accumulated sum of assets – houses, cars, bank, investment, and retirement accounts – minus the aggregate value of debt, including mortgages, auto loans, and credit card balances. It’s more comprehensive than income, which measures the year-to-year earnings from wages, dividends, and profits. Since the US Census began publishing the figures nearly a quarter century ago, the chasm in wealth between whites and blacks has always yawned far wider than disparities in income, but narrowed to a ratio of 7 to 1 in 1995 before ballooning to 22 to 1 following a housing market collapse five years ago. African-descended people account for about 14 percent of the population in the US but only 1.4 percent of the wealthiest 1 percent.

Inflated largely by speculators’ frenzied investments in usurious mortgage loans, the real-estate bubble’s inevitable implosion triggered the worst economic downturn since the Great Depression and, the most profound dispossession of African Americans’ material wealth since the slave trade.

Here in the US, redlining, gentrification and foreclosure have been just as potent as South African bulldozers.”

To be sure, virtually no American who works for a living has emerged from the financial crisis unscathed. But for blacks, today’s political and economic climate is tantamount to a perfect storm: persistent unemployment, low wages, and a growing dependency on household debt have conspired with a restructured postwar economy to weaken every rung on the ladder – labor unions, the manufacturing sector, education, public sector employment, homeownership and marriage – that blacks have historically relied on to climb out of the muck of poverty.

What’s most astonishing about America’s yawning racial chasm is that the U.S. has eclipsed apartheid-like levels of inequality within a political economy that is at least nominally democratic, and a generation of black post-civil rights elected officials that includes the sitting head of state. Conversely, apartheid brought the hammer; until voters of all races went to the polls for the first time in 1994, the law of the land prohibited blacks from voting, holding public office, owning property, joining progressive political movements, and miscegenation.

But on a molecular level, apartheid shares with monopoly capital the same genetic markers, cultural narratives, and immutable identity. To annex land coveted by whites, the apartheid state simply razed entire black neighborhoods to the ground, and rebuilt them as sprawling gated communities. Here in the US, redlining, gentrification and foreclosure have been just as potent as South African bulldozers. Fifty-three percent of all black homebuyers in 2006 were saddled with subprime mortgages, compared to 49 percent of Latinos and 26 percent of whites.

Treating black South Africans as essentially guest workers, apartheid “pass laws” required blacks to produce employment documents for any white person – gendarme and 11-year-old white girls alike – who demanded it. You need not be a Marxist to see the clear parallels between that Draconian measure and the stop-and-frisk policies employed by the New York City Police Department, or the wide berth afforded white vigilantes such as George Zimmerman. Similarly, payday loan stores began to materialize in the inner cities of Chicago, Detroit, Atlanta and New York at roughly the same time they began to open for business in Johannesburg, Durban, Port Elizabeth and Cape Town. The result is that South Africa’s blacks, wanting the good life that was denied to them by apartheid, are today sinking in consumer debt just as are blacks are in this country.

For blacks, today’s political and economic climate is tantamount to a perfect storm.”

Much like the ubiquitous payday loan shops, racial inequality in the US is so profound that it has become unremarkable, almost banal.

There is seldom a single white passenger on the weekday 295 bus that leaves the Menlo Park train station at 7:32 am, dropping off mostly Latinas who clean million dollar homes in the Silicon Valley neighborhood. At the New Orleans airport, the jazz trio that greets passengers appears phenotypically all white men, while all the employees at the Copeland’s Gourmet Kitchen are African American, save one, the shift manager. Similarly, if you ride the uptown 5 train and get off at 51st and Lexington Avenue in midtown Manhattan during the afternoon rush hour, you will see a study in contrasts: the mostly black and brown homeless people in tattered clothing huddled, still and silent, in the soup line at St. Bart’s Episcopal Church, while across the street, the chatty white employees pour from the Bank of America office tower, dressed to the nines.

“Our nation is moving toward two societies,” the Kerner Commission concluded in its 1968 report on the causes of the nationwide civil disturbances that had begun three years earlier in Los Angeles, “one black, one white— separate and unequal.”

Forty-five years later, it’s a wrap.

Jon Jeter was the Washington Post bureau chief for southern Africa from 1999 to 2003, and is the author of Flat Broke in the Free Market: How Globalization Fleeced Working People.  He can be reached atjeterjon@gmail.com.

NEW IASP STUDY OFFERS NEW UNDERSTANDING OF FACTORS DRIVING RACIAL WEALTH GAP l THE HELLER SCHOOL FOR SOCIAL POLICY AND MANAGEMENT

 

The Institute on Assets and Social Policy (IASP) develops strategies, processes, and policy alternatives that enable vulnerable populations to build resources and access opportunities to live securely and participate fully in all aspects of social and economic life.

NEW IASP STUDY OFFERS NEW UNDERSTANDING OF FACTORS DRIVING RACIAL WEALTH GAP 

The dramatic gap in household wealth that now exists along racial lines in the United States cannot be attributed to personal ambition and behavioral choices, but rather reflects policies and institutional practices that create different opportunities for whites and African-Americans, new research shows.

So powerful are these government policies and institutional practices that for typical families, a $1 increase in average income over the 25-year study period generates just $0.69 in additional wealth for an African-American household compared with $5.19 for a white household, in part because black households have  fewer opportunities to grow their savings beyond what’s needed for emergencies.

This groundbreaking study, The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide, statistically validates five “fundamental factors” that together largely explain why white households accumulate wealth so much faster over time than African-American households.

On February 27, 2013 there was a webinar hosted by the Insight Center’s Closing the Racial Wealth Gap InitiativePolicyLink, and Tom Shapiro, Director of the Institute on Assets and Social Policy at Brandeis University.  This webinar presented breakthrough research on what has been fueling our country’s growing racial wealth divide for the past 25 years.  Click here to listen to the playback.

As America continues to become more diverse, the nation’s ability to achieve sustained growth and prosperity hinges on how quickly we can erase lingering racial and class divides and fully apply everyone’s talents and creativity to building the next economy.

Featured Projects

IASP Partners with Compass Working Capital’s Financial Stability and Savings Program

Compass Working Capital, a small innovative CBO, was selected for funding by Strategic Grant Partners, Boston, MA, to implement an experimental asset-building approach to the HUD Family Self-Sufficiency (FSS) program for recipients of housing vouchers in Lynn, MA. IASP is developing and implementing the process and outcome evaluations and the preliminary cost/benefit analysis for this pilot FSS program. The multi-year evaluation focuses on how families use this opportunity to move toward economic stability, positive impacts sustained after program graduation, and the cost-effectiveness of taking the program to scale.

Senior Economic Security

Image of elderly woman

IASP examines the long-term economic stability and risk of senior citizens. The “Living Longer on Less” series, released in collaboration with Dēmos, includes:

Rising Economic Insecurity among Senior Single Women, October 2011 •  This most recent report in the series reveals that nearly half (47%) of all senior single women in America do not have adequate retirement resources to meet even their most basic needs for the remainder of their lives, and this number is rising.

The Crisis of Economic Insecurity for African-American and Latino Seniors, September 2011 •  This report reveals crisis levels of economic insecurity among current African-American and Latino seniors—52% of African-American and 56% of Latino seniors do not have adequate retirement resources to meet their basic needs throughout their expected life-spans. Driven by extremely low levels of asset wealth and high housing costs, most seniors of color are struggling financially during their elder years.

From Bad to Worse: Senior Economic Insecurity on the Rise, July 2011   The first in a series of four research briefs, this report shows a troublesome trend of increased economic insecurity among senior households in just four years (2004-2008). Economic insecurity among seniors increased by one-third during this period, from 27% to 36%.

Previous reports in the “Living Longer on Less” series include: