How Bridging the Racial Wealth Divide Will Help All Americans

May 17, 2019

The racial wealth gap has grown in the last three decades—Dedrick Muhammad puts solutions on the table that help all Americans

The racial wealth gap has grown in the last three decades—Dedrick Muhammad puts solutions on the table that help all Americans


How Bridging the Racial Wealth Divide Will Help All Americans

Story Transcript

MARC STEINER Welcome to The Real News Network. I’m Mark Steiner. It’s great to have you all with us. It seems almost counterintuitive, but the reality is that over the last three decades, the racial wealth gap in our country has grown larger. Why is this happening when higher education attainment levels in the black community and most other communities of color have grown? That question is one of those that we will explore, that gets to the heart of the question. In a world of diminishing wealth for the majority of Americans, that means that if you are black or a person of color, you will always be treated more poorly when it comes to the economy, no matter what your education or job skill level is. The question is, what to do about it. Well, the Institute for Policy Studies and the Community Reinvestment Coalition, along with others, produced a report called “Ten Solutions to Bridge the Racial Wealth Divide.” One of its principal authors is Dedrick Asante-Muhammad, who is Director of Bridging the Divide Project-IPS and Chief of Equity and Inclusion and the Community Reinvestment Coalition, who joins us once again. Welcome back, Dedrick. Always great to have you with us.

DEDRICK ASANTE-MUHAMMAD It’s good to be on.

MARC STEINER Good to see you, man. So let’s start this way. I’m curious, what I opened up with— it does seem counterintuitive. I mean, you have in the black community and other communities of color, education levels are higher, things are changing clearly over 30 years, but the wealth gap has grown. So, what’s at the heart of this?

DEDRICK ASANTE-MUHAMMAD Yeah, I think it’s also counterintuitive to the story we tell ourselves, right? We used to tell ourselves a story about race that well, we’re might not where we want to be with race relations, but at least we’re getting there, or at least that was what was being said before Trump came to office. That was the general idea, but when you look at the economic indicators, you see we’re not even getting there. We’re going on to actually greater disparities, ongoing disparities. I think what this is showing is yes, there is increases for African Americans and Latinos in educational levels, even in diversifying different types of higher income jobs, but what you’re seeing is you had a regressive economy for the last 30 going on 40 years. Trying to advance racial equity in a regressive economy, where the middle-class, middle-income, lower-income are seeing less and less of the returns of economic growth, kind of really leads you into a situation that we’re in today where blacks and Latinos, particularly as it relates to wealth, who are in such dire asset poverty, they’re seeing very little to no gains. Actually, for African-Americans, it seemed to decrease since 1983 in terms of wealth.

MARC STEINER So when you look at this, to me, we’re at a point where it’s very difficult, it seems, to take a report like this, which we’ll get into a bit in terms of its detail, and make the argument to the majority of Americans who are not black or people of color to say look, something special has to be done here. Because throughout the history of the United States, whether it was the Irish and African American workers on the docks of New York fighting for jobs in the 1850s and the 1840s and throughout our history, there’s always been this fight for just the crumbs at the bottom. In some ways, we have that scenario played out in a very different way in the 21st century, which makes these kinds of discussions difficult to have for many people, for many people.

DEDRICK ASANTE-MUHAMMAD Yeah. I think it’s difficult to have for people, but I think if they look at the solutions put forth by this report, we’ll see the policies that this report are advocating for or highlighting, would actually help rebuild the American middle class and not just for blacks and Latinos, but also for whites as well. Again, the American middle class, as it becomes more and more diverse, we clearly will not remain a predominately middle-class economy or society if we continue having median wealth levels for blacks at less than $4,000 and median wealth levels for Latinos at less than $7,000. So actually, I think our report is highlighting policies that will be good for all of America. It’s so hard for people to see that something that would specifically address racial inequality, actually is also addressing economic inequality, overall.

MARC STEINER Right. One of the things I thought about as I was reading your report and wrote a little note to myself in the margins here, is that the fight for racial equity actually lifts all boats.

DEDRICK ASANTE-MUHAMMAD Yes. Yeah. I mean, that’s right. In particular in a country that is quickly becoming majority-minority, investment—You know, the way the American middle class became the American middle class— it was the American white middle class— was investments in lower-income people.

MARC STEINER Right.

DEDRICK ASANTE-MUHAMMAD And that allowed them to develop some sustainable wealth. We had a middle class for the first time. For 21st century America, we can’t do that in a racially exclusive way and soon hit most Americans. It has to be racially inclusive, a new reinvestment to create an American 21st century middle class.

MARC STEINER So let’s talk about some of the specifics of this and how that kind of fits in. I’m going to go through them. There’s baby bonds, guaranteed employment, investments in affordable housing, higher minimum wage— those issues that cover everyone in this country, let’s talk about what they mean. So what do we talk about when we talk about baby bonds— how you fund it, where it comes from, and what it does?

DEDRICK ASANTE-MUHAMMAD Well, I just want to note, one of the reasons I am excited about this report is, what’s interesting to me is, for the first time that I can remember, we’re hearing national policy conversations with people running for president mentioning all of these types of policies, and that’s really exciting. Oftentimes, there might be a small academic group that gets together to talk about, theoretically we would love to get this on the national agenda, but the exciting thing about pretty much all of these policies is that they’re already on the national agenda. Something like baby bonds, it’s this idea that recognizes that capitalism doesn’t work if you don’t have capital. And so, there’s been an increasing amount of Americans that are being born with little to no capital.

What we need to do is it’s not a free handout, but actually give capital to all Americans as they’re born so that they can actually more fully participate and better contribute to our capitalist economy. The idea is you give some starting fund, and then over time this fund would grow and then the person would grow up to be 18 or 21, whenever that baby bond actualizes, and then they would have by that time if you start off with $5,000, it could be $30,000-40,000 to utilize for homeownership, entrepreneurship, to help pay for school. It helps deal with those who are coming from a community or household that’s in complete asset poverty. It allows that all Americans would not start off with nothing, but something to contribute and utilize to help them advance in our socioeconomic system.

MARC STEINER So, is there an idea about how much each child would get when they’re born?

DEDRICK ASANTE-MUHAMMAD Oh, yes. There are several different ideas and usually, it is some type of progressive frame. The idea is that everyone might get $5,000 at first, and then after each year, the person would continue to get another thousand dollars that’s invested into an account that would appreciate over time. But if you’re over a certain type of income, you wouldn’t get any additional money, or if you’re at a middle level, you would get less money than say, someone who comes from a very low-income household because the idea is that we don’t need to further concentrate wealth. You know, Donald Trump’s kids— or to be nonpolitical about it, even Barack Obama’s kids— don’t need continued investment into a baby bond because their economic future is pretty set. But for middle-class, working-class Americans, we do need serious investing.

MARC STEINER So what do we mean by guaranteed employment? And how is that different than a guaranteed wage?  How does that fit into this argument and what are you suggesting?

DEDRICK ASANTE-MUHAMMAD Yeah. Well, another thing that’s being amazingly discussed— actually, it’s not amazingly. I mean, this idea of guaranteed full employment has been something that’s been discussed since at least the 1930s. I’m sure previous to that, but in a serious policy discussion and recognizing that for African Americans, African Americans have had twice the unemployment rate of whites for the last over 50 years. It’s really impossible to have strong economic security without ensuring that all Americans have the ability to work. I think, again, many of the authors like Darrick Hamilton and others, aren’t against a guaranteed wage, but I think the difference with guaranteed work is it provides an opportunity for— because I think work is more than just the income you make. It also gives you an opportunity to contribute to society.

And so, I think we kind of had something similar to this in the 30s and 40s where you had massive investment projects in the United States and there was— what was it? The Workers Conservation Corps where there were all of these public jobs that if there were not jobs available in the private market, you could work in the public market, oftentimes building different types of infrastructure or supporting society in that way. I think more and more people were recognizing that actually, there’s all this talk about infrastructure. We need people in these spaces and we need to make sure that, even with our technology developing, that there is plenty of places and spaces for people to work and if not always in the private sector, create a stronger space in the public sector.

MARC STEINER So whether it would be possible, the report talks about investing in affordable housing, higher minimum wage, and issues like that. And then you get to this question of power. The question, which is a big question for most Americans, when you debate this and Medicare for All, which is also in this study, it says you should raise taxes on the wealthy and turn tax expenditures upside down. Let’s explore what that means for a minute because the big bogey in this argument is, how do you pay for this?

DEDRICK ASANTE-MUHAMMAD That’s right and that’s why you need some conversation around our taxation system because, again, these things do have to be paid for. Elizabeth Warren and many people are putting out bold policy proposals with understandings that by raising the estate tax, raising things that affect really only multimillionaires, could provide sufficient funds that could support some of these programs. So we do two things— raise taxes on the wealthiest of Americans, but also, turn right-side up our upside-down tax system. A lot of people don’t understand that we spend almost $700 billion a year on wealth development. We already do that every year. The problem is, most of that wealth development is going to the wealthy. And so, we’re massively investing, you know, getting close to a trillion dollars in wealth development for the wealthy. If we just took that and invested that into lower-income, middle-income Americans, we could do a lot to turn right-side up our upside-down tax system, to make our regressive economy a much more progressive economy.

MARC STEINER So clearly that means the battle would be on. I mean, whether you’re talking about Medicare for All, which if you’re taking how doctors are compensated or how hospitals are compensated, questions like this, there’s going to be a huge amount of resistance saying, you can’t take our money away.

DEDRICK ASANTE-MUHAMMAD Yeah. I mean, the wealthy will be saying no, we want our continued subsidies to be even further wealthy. I think it is time that the American public stand up and say no, we do believe in investing in America and we believe we should invest in middle-class and working-class America, for America that has really been disinvested for the last 30 or 40 years. You know, it’s not that rich people just all of a sudden have worked a lot harder for the last 30-40 years and that’s why the wealth is concentrated at the top. It’s that we have concentrated the wealth at the top and made all the economic, or most of the economic gains, near all the economic gains, go to the wealthiest Americans. We recognize that in order to address this issue of racial wealth inequality, that we have to address the regressive economy that we’ve been in for the last 30-40 years. It speaks to, again, why even with maybe personal relations we’ve made progress with race. If we structurally have a regressive economy, the personal better relations doesn’t change the economics of inequality.

MARC STEINER Absolutely. Most Americans, if you talk to them, they work their asses off and have little in return.

DEDRICK ASANTE-MUHAMMAD That’s right. White or black, you know.

MARC STEINER So let’s get to this one part here. We have to wrap this up in a second, but you also mentioned reparations and the famous H.R. 40 bill in the House. I wish that when Bernie Sanders was asked this question, he got it right. He didn’t when he responded to it, which was a shame. But, I mean, talk a bit about how this fits into this, which obviously it does.

DEDRICK ASANTE-MUHAMMAD Yeah. And I think, oftentimes too there’s confusion about progressive inclusive economic policy, which we highlight, and reparations. People feel like one can substitute the other and those are different things. There should be reparations. There should be reparations for African Americans. There should be reparations for Native Americans and reparations would be probably a large, comprehensive program— not just giving money, but also recognizing wrong, doing public education, doing investments into these communities and institutions to ensure that, to help deal with some of the scars that we still continue today. We still see the socioeconomic disenfranchisement. It should be targeted reparations for different communities, but we also need an economy that overall is a progressive economy and is pushing for those who are lower-income and middle-income. Even if you got reparations in a regressive economy, I think it would have a much-limited effect because the money’s still just floating to the top. We need a progressive economy and reparations. We can help heal the racial inequality that we’ve had in this country and, again, as I’ve noted in the beginning, really put forward for the first time an inclusive 21st century American middle-class economy that hopefully can go into the 22nd century.

MARC STEINER Right. I think that’s why it’s important your report seems to call for setting up a congressional committee to really get to the heart of whatever reparations means, and get out of this divide, and really think about why we’re talking about it. That’s, I think, an important discussion for America to have with ourselves, right?

DEDRICK ASANTE-MUHAMMAD No. The [inaudible] part of H.R. 40 is we don’t try to determine what reparations is. This would be a kind of complicated, comprehensive space. We want a congressional committee to do those types of hearings and help develop that.

MARC STEINER So finally, where does this report go now? So what do you do with this? It’s out there so politically, what happens with this?

DEDRICK ASANTE-MUHAMMAD Well, I think one of the great things is the first day it came out, we heard Kirsten Gillibrand give support to the report, overall. I think one of the exciting things is that several of the policy proposals—some come from Elizabeth Warren. Some come from Cory Booker. Many different presidential candidates are talking about different aspects of it. We wanted to collect some of the solutions that we didn’t necessarily create, we just brought together. So as we’re having conversations around the presidential elections and around policy, we can say look, here are ten policies that will help address these issues. Let’s advance this in the national discussion, and then hopefully help make this part of a legislative agenda for 2020.

MARC STEINER Dedrick Asante-Muhammad, it is always good talking with you. I deeply appreciate you taking the time and for this work you all have done. It’s a really critical piece.

DEDRICK ASANTE-MUHAMMAD No. Thank you so much, Marc, and thanks for The Real News for giving us this outlet.

MARC STEINER All right. Take care. We’ll be talking real soon.

DEDRICK ASANTE-MUHAMMAD Yes.

MARC STEINER And I’m Mark Steiner here for The Real News Network. Thanks for joining us. Take care.