Sad facts....

I am a dunce when it comes to economics, but there is one simple economic truth that has been on my mind lately: in a given market, economy, or planet, there are a limited number of resources, or capital. When one person has a lot of something, it means another person has little.

There are many arenas in which this simple fact becomes quite important. I recently read that Americans consume something like 30% of the world's resources. Clearly then, not everyone in the world can live like Americans, for the world simply cannot support it. Global inequality is spectacular; another fact I picked up is that American children under 13 have an average of $230 spending money per year, which is more than the 500 million poorest people in the world. (See Simpler Living, Compassionate Life by Michael Schut for more on this)

In light of staggering global inequality, many people overlook or forget about inequality that is closer to home. If you know me well, you know I rarely talk about inequality without bringing up racial inequality in the United States. One of my pet peeves is when white people claim that they aren't racist (it was just their ancestors), and they haven't profitted from racism. While we may not be racist, every white person has the distinct advantage of being white. This is a topic I will probably discuss more thoroughly in future blogs, but for now I want to talk solely about economics. The basic idea is this: white Americans today have vast holdings of wealth that have amassed over generations. White plantation owners profitted hugely from black slave labor, whites throughout the country benefited from cheap land as Indians were forced onto reservations, and whites generally enjoyed better access to jobs, property, loans, and home equity partially because discrimination limited competition and rewarded whites for being white.

Although the current generation might claim to be guiltless of racial exploitation to achieve that wealth, inheritance has left its legacy as whites have phenomenally more resources than blacks. Here are some handy facts from a book I read last weekend, called Black Wealth, White Wealth by Merlin Oliver and Thomas Shapiro. The authors did research that looked at racial inequality in wealth. Wealth is different than income; income is a rate you get paid per hour, month, or year, while wealth is the accumulation of your assets and property. Wealth is very important: a person with substantial wealth can weather a financial crisis (such as a layoff or big medical problems), while a person without wealth will probably fall into poverty.

Below is just one of their many charts illustrating the vast inequalities in wealth. Net wealth is calculated as the total of a persons assets and property (including house and car) minus their debt. NFA stands for Net Financial Assets, which simply do not include housing and car value. (And if you're not familir with it, a median is a kind of average).

Race Median Income Median Net Worth Median NFA
White $25,384 $43,800 $6,999
Black 15,630 3,700 0

And even comparing just those with college degrees...
Race Income Net Worth NFA
White $38,700 $74,922 $19,823
Black 29,440 17,437 175


The basic fact in the end is that there is limited wealth to be had in America. Those at the bottom will continue to suffer until those at the top give up some of their holdings. There are certainly other policies, programs, and approaches that will help and benefit the disadvantaged. For instance, many more black attain a college degree today and the income gap has closed considerably in recent years. The wealth gap, however, remains. Without some redistribution, other efforts and programs will all only put a band-aid on a gaping wound of racial injustice.