The Road to Zero Wealth

Prosperity Now’s Dedrick Asante Mohammed says the racial wealth gap is growing, and if unaddressed, it will lead to zero wealth for communities of color in the next four decades

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Story Transcript

JAISAL NOOR: This is The Real News Network and I’m your host, Jaisal Noor.

Not only is America’s racial wealth gap increasing, if unaddressed, it’s actually gonna wipe out wealth for communities of color in less than four decades. That’s the finding of a shocking new report called “Road To Zero Wealth: How the Racial Wealth Divide is Hollowing Out America’s Middle Class.” Now joining us is one of the study’s co-authors Dedrick Asante-Muhammad. He’s a Senior Fellow at Prosperity Now where he heads up the racial wealth divide initiative.

Thank you so much for joining us today.

D. MUHAMMAD: Thank you for having me.

JAISAL NOOR: You really have to be blind to not see that America has a tremendous racial wealth gap, but talk about how you came to this conclusion that there will be zero wealth in communities of color in 2053 if things aren’t addressed.

D. MUHAMMAD: Let me first just comment on your first statement, that you have to be blind to not recognize racial wealth and equality because that is true that it’s apparent that a good portion of the population is blind. There’s been some recent reports from Yale in covering New York Times and Washington Post, how white Americans feel that African Americans and Latinos are doing much better as relates to economic equality than they really are. So that’s part of the reason the report is put forward is just to help give the true stats and highlight the reality of the great inequality that exists.

In 2013, we have some of the most recent wealth data: White Americans have a median wealth of $117,000.00, Blacks have a median wealth of $1,700.00 and Latinos have a median wealth of $2,000.00. A big crisis, a big concern is that Black wealth has been going down since 2001, Latino wealth has been going down rapidly with the Great Recession. Then, if we look over the last 30 years from 1983 to 2013, we see that there’s actually a steady degrade of Black and Latino wealth. If things keep going from the same way it has been from 1983 to 2013, we see that black wealth will, we’ll see a median of Black wealth of zero by 2053 and a median Latino wealth of zero by 2073. During those time periods, white wealth will continue to increase, though not quickly, but will continue to increase if things keep going the way they have been between 1983 to 2013.

JAISAL NOOR: Your first comment sort of touches upon how this racial wealth gap was created. How much of wealth in middle class white communities was created through government housing policies that resulted in segregation and advancement for white communities that African American and other communities of color didn’t have access to. That sort of resulted, one of the byproducts of that, or one of the not even byproducts, one of the intentional results of that is this dramatic segregation we see in our society. So that people really don’t have insight on how other communities are doing.

D. MUHAMMAD: Yes.

JAISAL NOOR: Can you talk a little bit about that as well?

D. MUHAMMAD: Yeah, I think there’s a lot of myths out there that lead us to having a wrong understanding of how the world functions. I think most people don’t understand that the country hasn’t historically always been a predominantly Middle Class country. That really arose building off of the New Deal following the Great Depression and with the development of GI Bill, and a very, very strong economy in the late 40’s and 50’s post World War II. It wasn’t until after these programs had been implemented and there was massive investment into a Middle Class that you see whites becoming majority homeowners for the first time and creating this broad, fairly prosperous middle class which was a white middle class. Obviously, when you’re having policies in the 40’s and 50’s, even if at the Federal level, they didn’t say that African Americans or people of color couldn’t participate. They were implemented in a very segregationist manner where you had outright racial discrimination in the law through the 60’s.

So, we had this massive investment in a time of legal segregation, legal racial disenfranchisement, which meant that the resources, it’s been estimated that more money went into the creation of the American Middle Class during this time period than went into the rebuilding of Europe after World War II. So, we’re talking about massive amounts of funds that went to the, and it was very successful, it created a very strong, white, middle class.

The challenge today is that as the population of the country increases to include more and more people of color, we’re finding that the largest groups in these people of color; Latinos, African Americans, a smaller group, Native Americans, have never attained that financial security, which is wealth, which allows you to be in the American Middle Class. That’s where we are today with great disparities. Even among African Americans and Whites who are making the same amount of income. We see massive amounts of wealth disparity.

One other thing I’ll highlight is that even in terms of education, we see that whites with a high school degree make more wealth than blacks with a four year college degree. They have more wealth. So again, the disparities go up and down the economic chain for African Americans, Latinos, as well as the educational ladder.

JAISAL NOOR: Talk about some of the institutions and factors that continue to drive this increasing racial wealth gap today. We know obviously, mass incarceration, unequal access to education, there’s lots of different systems in play here. But, what do you think are the biggest drivers of this?

D. MUHAMMAD: Sure. I think one thing, it’s important to note is that the economy over the last 30 years has been much more of a regressive economy. Even for whites, you see a greater concentration among the top. Part of the challenge is though, that even low income whites have more wealth than the median wealth African Americans. So, even in regressive economy, the white middle class is managing to hold on while kind of emerging Black, Latino middle class in terms of income, is not finding that wealth stability.

So, there’s an overall regressive economy that’s happening, then I also put forward that we spend over 650 billion dollars a year in wealth and asset development. That’s a lot of money, so we would think this should be helping those who are low wealth attain more of a middle class status. But the challenge with that $650 billion dollars, is most of that proportionately goes to the wealthy. We are actually investing in further concentration of wealth and we’re investing in maintaining and creating a larger racial wealth divide every year with the numbers of over $650 billion dollars. So, we could turn right side up this upside down tax system and make sure that wealth and asset development goes to low wealth communities instead of high wealth communities.

JAISAL NOOR: We know that the Trump administration is the wealthiest administration in history. Heading these different cabinet positions are millionaires and billionaires that have made their fortunes sort of plundering the middle class, what you’re talking about now. So knowing this, knowing that extracting demands from them are gonna be difficult. What should these demands be that people should be organizing around now to address this?

D. MUHAMMAD: Yeah. Well, I think one important piece I would note is that the Great Recession allowed for a mass of deregulation that kind of took advantage of a Middle Class that was being left behind. That people wanted to become homeowners for the first time, and put in to mortgages that they couldn’t afford and then were leveraged over and over again by Wall Street to make much money off of these loans that were not created to actually sustain themselves. So, one thing we gotta make sure we do is that we don’t deregulate again and go back to this kind of predatory economy where Wall Street can make a quick buck but then get bailed out by the government. But, the people who lose their homes are just left with massive wealth deficits.

So, I think that’s one important piece. Then again, we’ll point to the tax code. I think one thing that was interesting in the last election cycle was that both Trump and Bernie Sanders were talking about the need for raising the taxes on the wealthy and that the American economy has gotten away from this idyllic idea of a strong middle class economy that supported all people. I think the disappointing thing, a disappointing thing is that when President Trump has gotten into office, his rhetoric is not matching what is being discussed in the White House for reforms in the tax policy. It is looking like it’ll just go further down this path where right now, the average millionaire is getting over $160,000.00 of value off of the current asset development policies but the working class families only getting $200.00. So, we have to be willing to fight that and be willing to fight for a much more progressive tax structure to make sure we maintain a strong middle class economy.

JAISAL NOOR: Finally, the Trump administration has also set its sights on the estate tax, which taxes wealth that is passed down, which is a lot of, which also helps perpetuate this wealth gap. Can you talk about the importance of maintaining or expanding that?

D. MUHAMMAD: Yeah, the estate tax, I believe sometimes people call it the death tax, conservatives call it the death tax. I think it’s important to note that it is that wealth that is transferred from one generation when they pass to the next would be taxed and they want to cut that. But, there’s already, I think a ceiling of none of this is being taxed unless it’s over five million dollars if it’s from a couple. So, that’s only the wealthiest of Americans that have over five million dollars and then are going to pass it on to the next generation that will face this tax. I think we have to really be strong in saying, we’re not gonna worry about taxing the wealthiest Americans who are most benefiting from our society, we’re going to actually work to make sure that we still create a society where we have a strong economy, which means we need investments in low wealth communities and of course, that investment’s gonna, should disportionately come from the wealthiest Americans.

JAISAL NOOR: Alright. Well, we want to thank you so much for joining us, Dedrick Asante-Muhammad. The new report is called “The Road to Zero Wealth.” We’ll link to that on our website therealnews.com.

Thank you so much for joining us.

D. MUHAMMAD: Thanks again.

JAISAL NOOR: Thank you for joining us at The Real News.