Posted on 06/27/2020 5:37:40 AM PDT by Kaslin
What gives urgency to debates about race in America today -- and what drives the reparations movement, are two basic facts," Walter Russell Mead writes in the Wall Street Journal.
The first, he says, is that "The median white household has a net worth of $171,000, roughly 10 times the median net worth of black households." The second is that the gap "is essentially unchanged from the levels of 1962." The persistence of this gap advances the case, advocates say, for racial reparations.
Like Mead, I find the case unpersuasive, and for reasons beyond those he mentions. For one thing, dollar measures of wealth, like Mead's and like those reported annually by the Federal Reserve, can be misleading.
That's because wealth accumulation is a lifelong process. A large majority of Americans in their 20s have zero wealth; with college loan and consumer debt, the median 20-something may have a negative net worth. This is a feature, not a bug, of a sensible economic system. We don't want young adults to start off with significant wealth.
Most Americans accumulate wealth over a working lifetime, and wealth accumulation tends to peak between ages 55 and 64. After 65, they tend to spend it down. So one way to gauge wealth accumulation is to look at the data for people in that age group. Another is to compare the progress toward wealth accumulation those in younger age groups have made compared with that of their counterparts in the past.
Overall figures are less helpful because they include all age groups and thus include many who have not yet accumulated significant wealth. They also tend to slightly overstate the racial gap in wealth accumulation, since Blacks are on average younger than whites. They are also less likely to live in married-couple households, which tend to accumulate wealth more than households headed by the single and divorced.
But let's assume that the white-Black wealth gap in the peak wealth-accumulation age group is basically the same 10-1 gap Mead mentions. Why should it be so great?
Most wealth is accumulated in one of two forms, residential real estate and financial instruments. In both areas, Blacks face significant difficulties in accumulating wealth.
It's easy to understand why Blacks tend to accumulate less in financial instruments than whites: Their income tends to be significantly lower, and it takes money -- money you don't have to spend immediately on necessities -- to purchase financial instruments.
As for residential real estate, despite open housing laws and the dispersion of many Blacks into non-majority-Black neighborhoods, most Black Americans still live in majority-Black neighborhoods. And those neighborhoods, to varying extents, tend to have much higher rates of violent crime than other neighborhoods.
And violent crime depresses housing values. How much? Not just marginally. The gap Mead cites -- $117,000 median wealth for whites, about 10 times the $17,100 for Blacks -- is not dissimilar to the gaps in housing values for similar structures in many Black neighborhoods in Detroit (to take one example) and one of its modest-income largely white suburbs, Roseville. Compare the Zillow values for Roseville in Macomb County ($119,331) to, just a couple miles away, those of the Detroit ZIP code 48234 ($27,541).
"Violence and crime are a confiscatory tax on what people would otherwise earn and accumulate over a lifetime," I wrote in a Washington Examiner column early this month. It is a fact, tragic and regrettable, that Blacks are much more likely than non-Blacks to commit violent crimes, and that violent crime rates in heavily Black neighborhoods tend to be much higher than average. Homebuyers are simply not willing to spend as much money (and to invest as much in what may be their greatest opportunity for wealth accumulation) on houses in neighborhoods with five to 10 to 15 times the violent crime rate of many alternatives.
The sharp reduction in violent crime rates since 1990 has increased the housing values in heavily Black neighborhoods and thus increased wealth accumulation by Black Americans over that time. Further reductions in violent crime rates could go some distance to enable Black Americans to accumulate wealth and perhaps narrow the wealth gap Walter Mead describes. Increasing violent crime rates -- one possible result of the Black Lives Matter protests and recent violent rioting -- could have the opposite effect, as it did after the violent rioting half a century ago.
None of the politicians want to admit that part of the problem is that they just let so many criminals out of jail.
You gotta work for years and years, be frugal not profligate with your purchases and save and invest. Just like the folks that win the lottery and are dead broke in two years, just handing someone a load of cash is not likely to change their overall financial condition.
What role does the breakdown of the family play in this?
This is the best explanation of how wealth is accumulated I have seen in a long time. Twenty-somethings exit their school years with debt and if they are prudent by the time they are looking at retirement they have a decent nest egg. There is nothing raciss about saving some of your money for later on in life.
In reality and once again it is the responsibility of the parent(s) to teach this simple concept.
I’m a 2%’er now. Age 64. I’ll never work again. The secret: no kids.
The reason for inequality of wealth is inequality.
Cultural analysis, not racist
The fact of inequality of wealth and income and the fact that it is persistent for blacks is not an excuse to bash capitalism. In a free, rational, proper capitalistic society, wealth accumulation is not a zero sum game. So, one man's gain is another man's gain, and as the rich get richer and the poor also get richer. This is so because one's gain in riches must come by mutual cooperation not by exploitation or force.
Violent Crime Is a Confiscatory Wealth Tax
The flip side is also true. Every time a law abiding, gun owning citizen shoots and kills a violent criminal, not only are taxpayers as a whole saved the cost of an expensive trial and extended incarceration, but this is also true:
When a violent criminal is killed, all the crimes he *would* have committed in the future simply “cease to be”.
Innocent people will no longer be hurt or killed by him. People freed from living for decades as victims.
Property will no longer be stolen or destroyed by him.
He will not be missed, no more than a rabid dog.
Each and every time a violent criminal dies, society gets a windfall benefit.
20” rims on the car you just stole is NOT a necessity!!!
An audio system that can be heard 50 miles away is NOT a necessity!!!
5 Cell phones to keep track of your drug dealing is NOT a Necessity!!!
Gold teeth filling up your face isn’t a necessity.
A necklace that weighs 22 pounds isn’t a necessity!!!
When you refuse to attend school...
When you refuse to do the homework...
When you refuse to take & pass the tests...
You don’t get any education that can help you create wealth.
When you think you can TAKE the wealth that WORKING whites have accumulated-—you will be rewarded with a hail of ammo.
THANK YOU for posting this...
More people should think about your comments-—they are mathematically true.
Two weeks after graduating high school, enlisted for five year in military. Used GI bill to attend school at night while working full time during day. All the people accusing me of privilege could have followed the exact same path. But it wasn’t quick or easy, so most would prefer to complain and skip to the reward at the end.
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