Imagine If We Were Able to Analyze What’s Really Going on With Inequality!

It took a whole day of intermittent exchanges and brought me to the point that I thanked him for the conversation and wished him a happy New Year, but Bill Prady finally told me what, specifically, his argument was.  I’m glad he did, because if one party to a discussion simply insists that the other party should already know what is meant, they’ll keep talking past each other, which pretty well describes the condition of political discourse these days.

Unfortunately, Prady’s case came in the form of a segment from John Oliver, who wraps his argument in sneering condescension.  The gag is that he pretends he’s explaining something to people who aren’t watching so those who are watching can feel superior because they already know they’ll agree.  That this sort of sneering affirmation has a mainstream audience puts on stark display why we’re such a divided country.  Oliver presents everything as if it’s obvious, and if you don’t see it, you’re just one of the bad people.  Simple as that.  You can either be on the delivering side of the sneer or on the receiving side.  And on the good side, you don’t have to worry about consistency; even as he presumes moral superiority for identifying the evils of bigotry, he pauses to make mob jokes about an Italian mayor.

Nonetheless, it’s worth hearing alternative arguments, even when delivered in the form of an extended insult, because if you pay attention, you can start to see where the real differences are and where the hope for cooperation is.

After making clear which ideological stage he’s on, Oliver presents about the most clear-cut example one could find of a government entity depriving a black family of its property a century ago, at a probable long-term cost to them of millions of dollars.  He then describes the racism built into federal government housing policy in the 1930s and 1940s and ties it to the present with anecdotes about racial discrimination among real estate agents and appraisers.  This history, per Oliver and Prady, has prevented black Americans from gaining net worth alongside their white countrymen and proves the existence of “systemic racism.”

The setup is a motte and bailey.  The defensible motte that could gain wide acceptance is that families like the Bruces of California, whose property in Manhattan Beach was wrested from them a century ago, have a real claim to compensation.  Notions of “systemic racism” are the bailey that they hope to capture alongside the motte.

Real estate appraisers’ offering dramatically different results based solely on the race of the property owner is straightforward racism.  The claim of “systemic racism” is more like saying the entire enterprise of buying and selling property is intrinsically racist.  Thus, in that view, it isn’t enough to live life differently from the racist appraiser; you have to actively work to “dismantle racist systems,” and those who control the bailey will tell you which systems those are because obviously you can’t see them for yourself.

Perhaps our inability to see the racism in the system, however, is an indication that the claims of social justice warriors don’t follow from their premises.  For example, Oliver and Prady would have us believe that “systemic racism” prevented black families from building wealth in suburban housing, and yet when “anti-racism” becomes a call to action, activists like Mike Araujo insist that moving to the suburbs is “white supremacy,” and that everybody must “reject their whiteness” or be “complicit in the murder of black bodies.”

How they get from one claim to the other is worth understanding, and the subject of home loans provides a useful structure.  Even if it was long ago, they suggest, government loan programs with racism baked in set black and white Americans on different paths, with effects that have become so pervasive that the entire system is premised on the racism.  True, the fact that somebody’s grandfather was denied a federally backed loan does not mean that the grandchild is not, in fact, a credit risk.  But (the argument goes) the grandchild’s poor credit is a result of the original racism, so objective lending standards — and even the idea of credit worthiness, itself — are racist notions perpetuating white supremacy.

The problem is, as we move farther from actual properties and actionable claims, the indefinables of human life play more of a role, the focus on material transfers does less to address those now-systemic problems, and imposing a repair becomes more difficult without compounding injustices and doing more harm.  After a century, causes and effects become tangled up with the choices and behavior of individuals, so truly addressing inequity can require healthy changes in how people make their choices.  (Wokism explicitly rejects this sort of claim; in fact, Prady called me racist for suggesting it.)

Here’s where the topic returns to data and where the lens of race proves itself harmful.  The “anti-racists” have no problem believing that our entire society is built to funnel privilege to the powerful, but they wholly disregard the possibility that the response to their race-based demands will leave the powerful untouched, causing greater injustice to other disadvantaged people who happen to be white.

If Oliver’s claims were really as obvious as he sneeringly insists, how does one explain the notable lack of progress in black median wealth since 1989 (see Figure 1 at the link), a half-century after the ’40s?  I know, I know… “systemic racism.”  OK.  Fine.  But what form did it take?  In the context of housing, Oliver tries to bring us up to the current day with claims about racist appraisers and real estate agents’ sneakily steering white families away from black neighborhoods, but that’s not proof of anything “systemic.”  Systemic shows up in data.

Toward that end, look at Figure 1 at that last link.  White wealth rocketed up starting during the Clinton presidency, in 1995, and then cratered back to its earlier state with the housing crash.  Meanwhile, black wealth kind of arched a bit and then sunk back down.  What was going on, then?

Well, a big part of it was a shift in both mortgage and banking regulations during the Clinton Presidency providing implicitly government-backed loans to underqualified borrowers, sold in some degree as a reversal of infamously racist redlining that Oliver maligns, and then packaging those bad debts into fancy instruments for the profit of investors. At the time, and then again when the federal government began to reconsider the initiative under President Bush, the debate had a distinctly racial element.

Although presented as the beneficiaries of such policies, lower-income households (including minorities) didn’t benefit much, because they never built equity in the homes they bought, while the investment-class got rich and the values of non-subprime properties rode the upward wave.  The federal government’s policies ever since seem to have focused on rebuilding that boon for the investors, again with minimal benefit to minorities.

This dynamic is visible, as well, if we dig into the data on net worth at a more-granular level.  Yes, home ownership is an important part of wealth accumulation, but it is arguably not the area with the greatest discrepancies.  The median value of the primary residences of white homeowners is only about 53% greater than that of black homeowners (“only” as compared with the overall gap in net worth), with white families having about 17% more mortgage debt, reducing that “value” gap.

As we move down this line of thought, we begin to see that race has become incidentally, and blaming all white people for “systemic racism” is not the proper lens.

According to this 2011 U.S. Bureau of Labor Statistics working paper on “Inheritances and the Distribution of Wealth,” only about 29% of all families receive any kind of inheritance (as gifts or after wills) over their lifetimes at all.  That’s a good chunk of Americans, of course, and the numbers are racially disproportionate no matter how you slice them, but it does show that a big majority of people of all races are not conveying generational wealth, and what is conveyed concentrates at the top.

Go back to the “financial assets” chart on Fed’s net worth tool.  On first glance, at the median, it looks like the “typical” white household has ten times the assets of the typical black family, even though almost all people of every race have some kind of holdings.  But now click on the button to view the data as the mean (or average), not the median.  Whites’ $50,000 median financial assets shoots up to a $481,000 mean.  That shows that most of the wealth is in the hands of just those at the top.  Check out the chart for average financial assets by income group.  The top 10% by income have average financial assets of $2,320,410.  All the other deciles are clustered under $500,000.  The mean/median comparison, here, continues to show the wealth concentrated even higher up the scale.

This applies to net worth, too.  The average of the top decile is $4,786,630, and everybody else is below $834,770.

Oliver and Prady are making the case that racism prevented black families from participating in the great wealth accumulation of the past eighty years.  They also suggest that the game is essentially over, and simply insisting on race-neutral rules from here on will leave black families permanently behind.  The last two charts I linked, however, tell a different story.  In 1995, the top 10% of all households took off, and the project of government policy ever since increasingly seems to be keeping them from coming back to Earth.

The way to accomplish that feat, however, while not destroying our civilization, is to stop protecting the privileged and start allowing everybody else to draw wealth toward themselves.  This is a project of freedom, not of redistribution, most especially because giving anybody the power to make nationwide decisions and impose restrictions provides an opening for the powerful to ensure the money doesn’t flow from them.  They’ve got plenty of lawyers, accountants, politicians, lobbyists, and (yes) activists to figure out how to accomplish that.  Will we learn nothing from the racist home loans of the mid-1900s and the disproportionate gains following Clinton’s housing and banking changes?

Indeed, one wonders whether the entire woke, “anti-racism,” “white supremacy” push (which the elites and big businesses love these days) is a ploy to keep the rest of us at each other’s throats over race when, really, we’ve mostly passed out of racism.  As long as the elites can point to disproportionately negative outcomes for minorities, they can rope the 90-something percent of the rest of us who aren’t benefiting from their privilege into the definition of the problem so that any payoff can come from us.

It’s the elites taking advantage of all of us and making the most of the fact that minorities are disproportionately affected.  For a laugh, take a look at the “racial equality counterfactual” section of this Federal Reserve study, which purports to show “how far our world is from racial equality.”  In other words, Table 1 shows what the change in households’ net worth would look like if we had perfect racial equity and the races were evenly distributed across the wealth spectrum.

Yes, the biggest increase in net worth, 117%, would go to blacks in the top quintile.  The biggest losses of net worth?  That would come from “others” (read, “Asians”) and whites in the bottom quintile, at -51% and -13%, respectively.

There you go.  “Racial equity” means taking from the poor to give to the rich. Take special note, by the way, of the fact that the smallest group of changes is between whites and blacks in the middle classes, which gets us back to the claims made for home ownership.

The discouraging thing about my exchanges with Bill Prady is that he’s intent on declaring me a racist when there’s a very clear path by which we could get on the same side.  It’s a shame.  Rather than focusing on racial differences and calling each other names, we should be working together to spread the wealth around naturally, through our ingenuity and hard work.  All of us would benefit.

Oh, well.  Maybe in 2022.


Featured image by Tyler Nix on Unsplash.

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16 days ago

[…] online conversation in which I’ve been engaged over the past day has had a similar feel.  In a post on inequality, I recalled a progressive activist who claimed that moving to the suburbs was […]

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