Posted:
Wednesday, August 21, 2013
by Unknown in
Labels:
African American,
Barak Obama,
Bill O'reilly,
minority,
poor,
President Obama,
racial,
redistribution,
wealth,
wealth gap
First of all, what is wealth? Wealth is what you own minus what you owe. Your wealth is the amount left over, which allows you to start a business, buy a home, send a child to college, or save towards your retirement. (I'm sure most of us already know this, but I simply want to do a quick brush-up for my readers that may need it.)
To be able to succeed in America, the possession of wealth is extremely important. Obviously, without wealth there is no way that families or even communities can become economically secure. Our government and nation recognize this, hence the policies which provide subsidies and incentives for asset building. However, because these rewards and opportunities provided by our nation are not distributed equally, there is an ever widening wealth gap in America. Reform is needed.
INCOME EQUALITY DOES NOT LEAD TO RACIAL EQUALITY
In a study done between the dates of 1984 and 2007, data shows the greatest wealth accrued during this period accrued primarily to high income whites. The average middle income white that had an accumulation of wealth of $25,000 in 1984 amassed wealth of approximately $74,000 by the year 2007. Contrarily, the average high income African American that had an accumulation of wealth of $25,000 in 1984 actually saw a decline of wealth by the year 2007. The decline for high income African Americans dropped from $25,000 to $18,000. So, between the years of 1984 - 2007 there is a wealth gap of $56,000 between high income African Americans and middle class whites. [here]
This study places high income individuals as earning more than $50,000 in 1984 and middle income individuals as earning $30,000 in 1984.
LACK OF WEALTH LEADS TO INCREASE IN DEBT
Both low wealth whites and low wealth African Americans experience economic decline and stagnation, meaning they are unable to increase their wealth. Unfortunately, African Americans are more likely to have very low levels of wealth. One in four African American families have no assets at all.
Families that have low and negative wealth become increasingly dependent on credit in order to make ends meet. If an individual wants to start a business, they now need to take out a loan. If an individual wants to send a child to college or go to college themselves, they need to take out a loan. If an individual wants to buy a home...well you get the picture.
Low and negative wealth individuals and families now have to use credit as an emergency resource and as a means to make ends meet. One in ten African Americans owe at least $3,600. Sadly, most African Americans have more debt than they do assets. [here]
THE LENDING MARKET PREYS ON THOSE IN DEBT
It is a fact that low income people pay more for accessing credit. Because many of the minority communities are laden with low and negative wealth families, this is open field for predatory lending to take place. This is the reason why there are so many payday lending and check cashing stores in inner city neighborhoods. Low income individuals also resort to more credit card debt as well. All of these sources of lending, of course, give astronomical interest rates, which in most cases is almost impossible for low income individuals to ever pay back in full.
The three factors that make up the middle class are a home, healthcare, and a college education. It can be said that the middle class is what defines the American Dream. The middle class is definitely the underlying force which drives this country. Without the purchasing power and the skilled workers that the middle class provides, the United States would by no means be a global power.
Many may not know that the middle class was actually created by the U.S. in the aftermath of World War II. After the second World War, demand for U.S. products rose to as high as it had ever been. New government programs enabled more individuals to obtain home loans. New programs also enacted reforms targeting discriminatory lending practices and made mortgage interest tax deductible. Minimum wage was raised to the highest than it had ever been in 1968. [here]
That was then and this is now.The structures that provided these opportunities have now either weakened or become obsolete over the last forty years. Because of this, a growing gap between the rich and the poor has emerged. The factors that make up the middle class, (a home, healthcare, and college education), have risen to extraordinary costs, outpacing growth in incomes. Because of this, the American people are finding it increasingly difficult to enter and remain in the middle class. [here]
WHY THERE IS A WEALTH GAP
Obviously, a lack of assets make it difficult to enter into or stay in the middle class. This means that securing a financial position is almost impossible for families, their children, their children's children, and so on. Each generation does not have the ability to pull themselves up. The idea of the middle class is, of course, that security and financial stability transfers across generations. This gives the future generations the head start that is often needed to succeed in life.
As we discussed in Part 1 of this series, low wealth individuals are predominantly African Americans. Also, most African Americans own more debt than they do assets. As long as there is more debt owed than assets owned, there will continue to be a large wealth gap.
Education is a definite way to eliminate the wealth gap. The question is, how will many low wealth individuals be able to afford education?
