Wealth and Ethnic Disparities

According to the Economic Policy Institute, median wealth for black families in 2009 was a mere $2,200, compared to $97,900 for white families. With respect to median financial wealth (such as stocks), the EPI found that it was $200 for blacks, compared to $36,100 for whites — an indisputably massive disparity  (by comparison, overall median household wealth is around $50,000, due largely to there being multiple individuals working per household). 

The Pew Research Center reported slightly different, although still very unequal, median wealth: $5,677 for blacks versus $113,149 for whites.

To make matters worse, since the recession, the wealth of blacks and Hispanic families has dropped further, by 30 to 40 percent, compared to 11 percent for whites. So while all Americans are suffering, some clearly have it worse than others.

It’s also worth pointing out that the high median income for whites is partly the result of a small number of exceptionally wealthy (and overwhelmingly white) fraction of the population that skews the numbers upwards. Most whites are making far less than $97,000. 

Why Won’t Businesses Hire?

Supposedly, it’s because the US business environment is unfriendly. Corporations want to place all the blame for our economic problems on the government. It is certainly true that the state has not been guiltless in this mess. But neither have business elites. Let us analyze the facts.

Contrary to popular belief, the United States still remains among the top ten countries in the world in terms of economic freedom, business friendliness, and competitiveness (sources include the Freedom of the World Index , the Index of Economic Freedom, the Ease of Doing Business Index, and the Global Competitiveness Report ; note that many of the countries that surpass us in these areas are what we would otherwise call “socialist” – they have higher wages, universal healthcare, more state intervention, and so on).

Yet companies are firing people, freezing wages, slashing benefits, and refusing to hire, citing the business climate as too unpredictable, unfriendly, and oppressive to facilitate investing in the economy. Really? If that is the case, how have companies managed to gather a total of $2 trillion in cash reserves, continue to pay their CEOs millions in bonuses, and consistently make profits throughout the recession (in some cases even breaking records)? By just about every measure, most businesses are clearly doing well.

The government has screwed a lot of things up, but it has little to do with business leaders deciding they want to pocket more money for themselves while pretending, despite all the evidence, that they can’t afford to do their part.

 

Prosperity and Economic Freedom

I know I just finished challenging another report by the Heritage Foundation, but I couldn’t help myself in addressing this interesting contradiction in other one of their argument (which I stumbled upon while searching for material for my first rebuttal).  Consider the info-graphic below, taken directly from their site (and available here, in other formats).

Though the data is a bit old, it presents a salient point that is still relevant: many of the countries that are at or near our level of economic freedom are often considered – by American standards –  as being either “socialist” or otherwise less friendly to individual liberty (particularly business). All of them have universal healthcare in some form or another, and most of them have far higher taxes, again, relative to American norms. Indeed, most developed countries generally have more generous social programs and higher rates of public spending.

(Note that Hong Kong and Singapore are the exceptions with respect to taxation and government expenditure, although they’re each city-states, which may account for this; they also have more government presence in public life and/or the economy).

I’d be very curious to see all the countries that composed this index and where they lie. The report mentions that 30 countries were among the most free, and given that the majority of wealthy democracies have “bigger” government  and collectivist social policies, it stands to reason that they retain around the same level of freedom – if not more – than the US.

So though the Heritage Foundation, as a right-wing think tank, is opposed to progressivist policies, high taxation, and other elements of social democracies, it’s own data bears out the fact that these factors don’t necessarily limit overall freedom. Indeed, a ranking of economic global competitiveness reveals that most of the top ten countries are big government social democracies (the US, at number 5 as of 2011, is beat out by Sweden, Switzerland, and Finland, with Germany, the Netherlands, and Denmark not far behind).

This isn’t necessarily meant to be a repudiation of  progressive policy. I’m simply noting that there is more to the economic and civil freedoms of a society – and whether or not it is prospering overall – than whether or not taxes are low or government is small. Strong social services and a collectivist culture  are not, in and of themselves, incompatible with liberty – it just depends on how one goes about it. The big states of Greece, Spain, Italy, and others might be failing, but the “middle-ground” between them and the US – governments in nations like Australia, Canada, and Germany – are doing far better in terms of economic growth, poverty, and other metrics of good standard of living.