Economic Inequality (USA)

Kuznet’s curve,

Hypothesizes that industrializing nations experience a rise and subsequent decline in income inequality.

• gini coefficient rises, then drops -- 50s and 60s

• inequality declines as a welfare state takes hold.

• Inequalities necessary during industrialization

• Equality would undermine economic development

• If you want economic growth, need to reward ppl differentially (bigger risks bigger proceeds)

P.T. Bauer

Arguments re: the virtues of inequalities

• 1) Inequalities come from market forces, not unfair or exploitation

• 2) Harms of redistribution: Equalizing wealth results in hamstringing economic growth 

  • Taxing rich prevents the Bezos’ of the world; punishes creative, productive people

Piketty

• The Kuznets curve appeared to be consistent with experience at the time it was proposed. 

  • However, since the 1960s, inequality has risen in the US and other developed countries

• Inequality has now returned to the levels of the late 19th century

• Solutions?

  • Re-establish post WW2 tax structure (not 95% though)

  • Global tax on wealth

  • Abolish tax havens

  • Leverage natural catastrophes as opportunities (ww2)

1986

• CCA (now CoreCivic) becomes publicly traded

• Private prisons become a true investment opportunity

2000

• Viacom buys BET

  • Major media consolidation reduces Black control over Black culture.

  • Glorification of self-destruction, nihilism

  • Capitalism can co-opt a revolutionary mediu

• NOW: Paramount Global

Big Three - 80%

1. Universal: Def Jam (two chainz), Interscope (carti, durk), Republic, Cash Money, Motown, MISC (sexyred

2. Warner: Atlantic (carti b, kodak, luzi), 300 Entertainment (thug, meg), Warner Records

3. Sony: Columbia, RCA, Epic (future, 21), Arista

• Control access to major DSP playlists (Spotify, Apple, YouTube)

  • Controlled by Spotify’s editorial team/playlist curators

• Youtube: Labels pay to boost videos and place them in trending slots.

Real Income

the actual purchasing power of an individual's income, adjusted for inflation.

• Nominal Income = income without any adjustments for inflation.

• If someone's nominal income increases by 5% but inflation also increases by 5%, their real income remains the same.

• However, if their nominal income increases by 5% but inflation only increases by 2%, their real income increases by 3%.

Supply-side economics

Economic policies that focuses on producers (e.g. tax cuts)

• Lower costs for producers → Hire more workers, invest more

• Prosperity comes from producers, investors, and entrepreneurs.

Demand-Side Economics:

Economic politices that focuses on consumers (e.g. government spending, welfare programs, tax cuts for low/middle-income earners)

• If people have more money in their pockets → they will spend more

What percent of all wealth is Black? (USCB)

Blacks makes up 13.6% of all U.S. households but hold only 4.7% of all wealth.

Black-white wealth gap (USCB: 2021)

Black median wealth = $24,520 (1/10 of whites)

White median wealth = $250,400

• Median: half of white households have more than $250,400 in wealth, and half have less. It’s the middle point in the distribution—not the average.

• White median wealth is lower than white average (mean) wealth.

• Median gives a more accurate picture of the "typical" white household’s wealth, the average is inflated by the ultra-wealthy.

Wealth

Wealth refers to the total value of what a household owns (assets) minus what it owes (debts).

• This includes home equity, savings, investments, retirement accounts, etc

Median household wealth (USCB: 2022)

$176,500.

Poverty line (federal poverty guidelines)

$15,650 for a single person

$21,150 for a family of two

$26,650 for a family of three.

$32,150 for a family of four

Threshold to be in the top 0.1% income earners in the US

3.3 million annually

Threshold to be in the top 1% income earners in the US

$800,000 annually

1920s

Notable highpoint of economic inequality in American history

• Inequality reduced in the aftermath of the Great Depression, with wealth inequality falling through to the late 1970s.

Gilded Age

The period in American history from roughly 1870 to 1900 characterized by rapid industrialization and economic growth, but also by significant corruption and inequality.

• The term suggests a surface veneer of prosperity and progress masking underlying societal problems. (mark twain)

“Income Shares of Top 5% and Top 1%”

Shares of total income going to people in different economic strata

• For example, the top 5% of taxpayers accounted for 23% of total income in 1981, but almost 38% in 2014. The top 1% accounted for 10% of total income in 1981, but more than 21% in 2014; a

Different ways of measuring income inequality

• Share of Total US Wealth (shares of wealth held by…)

• Share of Total US (Income Shares of Top 1%)

• Top Incomes by Income Percentile

• Cumulative Income Growth by Income Percentile

• Family Incomes by Income Percentile

The share of wealth owned by the top 0.1% is almost the same as the bottom 90%

Share of total US wealth owned by the top 0.1% (2014)

22%

• 160,000 families with total net assets of more than $20m in 2012.

• increased from 7% (1984)

Share of total US wealth owned by the top 1% (2014)

42%

Share of total US wealth owned by the top 5% (2014)

65%

Share of total US wealth owned by the bottom 90%

23%

• Included 144 million families

• Was 36% in the mid-1980s

Economic argument in favor of economic inequality

• Hinges on the assumption that large fortunes/tax savings will be invested in productive economic activities (e.g. expanded jobs, increased wages)

  • Instead: jewelry, yachts, and caviar

  • tax savings not used to increase wages or expand jobs

Quintile

One of five values that divide a range of data into five equal parts, each being one fifth (20%) of the range.

• probability of any given family rising from the bottom quintile of the income distribution into the top quintile over the course of a decade increased slightly

Freedmen’s Bureau

Brotherhood of Sleeping Car Porters

Double V Campaign

Harriet Jacobs (1815 – 1897)

An American abolitionist and autobiographer who crafted her own experiences into Incidents in the Life of a Slave Girl, Written by Herself (1861), an eloquent and uncompromising slave narrative.

“Ballot or the Bullet” (1964)

Malcolm X advised African Americans to judiciously exercise their right to vote,

• cautioned that if the government continued to prevent African Americans from attaining full equality, it might be necessary for them to take up arms.

Black Reconstruction in America (1935)

Challenged the standard academic view of Reconstruction (i.e. the period was a failure and downplayed the contributions of African Americans.)

• Du Bois instead emphasized the agency of Black people and freed slaves

• Framed the period as one that held promise for a worker-ruled democracy to replace a slavery-based plantation economy.

Negro Factories Corporation (NFC)

• Existed: 1920-21

“Negro producers, Negro distributors, Negro consumers!”

• Black-owned factories, retailers, services and other businesses,

• Incorporate on January 30, 1920 by Garvey, William Ferris and John G. Bayne (insolvent in 1921 - roughly one year and nine months)

• Offered stock shares, at $5 each to provide loans to establish black-owned businesses

• Businesses included a chain of grocery stores, a restaurant, a steam laundry, a tailor and dressmaking shop, a millinery store and a publishing house.

• Cornerstone of Garvey's vision for Black economic independence / economic self-reliance

Harry Haywood

Colored Farmers' National Alliance and Cooperative Union

• 1886 to 1891

• Texas—> Entire South

• Producer cooperative

• membership of 1.2 million in 1891.

• The Alliance organized its members to pool resources, collectively purchase supplies, and market their crops cooperatively—core practices of producer co-ops.

• Members pooled money to buy tools, fertilizer, seed, and food at wholesale prices through Alliance-sponsored stores.

• This reduced individual expenses, allowing each farmer to retain more of their crop income.

Mandela Grocery Cooperative (OAKLAND)

• worker-owned grocery store in West Oakland

Cooperation Jackson (MISSISSIPI)

• A network of worker cooperatives in Jackson, Mississippi

• Heavily inspired by the Mondragon Corporation in Spain, which is also a federation of cooperatives

• These include the lawn care business The Green Team, the organic vegetable farm Freedom Farms, and the print shop The Center for Community Production, which also operates a 3D printer.

Freedom Farm Cooperative (FFC)

• 1967-1976

• Mississippi, founded by American civil rights activist Fannie Lou Hamer

• The FFC purchased land, which was then distributed among Black families for collective farming.

• Provided resources and training to help families grow their own food

• Hamer emphasized that the cooperative was for the poorest

OneUnited Bank

• 1968

Largest Black-owned bank in USA

Letter from Birmingham Jail

• 1963

• a defense of his involvement in the movement and a response to white clergymen whose open letter in a Birmingham newspaper asked blacks to end their demonstrations for the good of the city

• King asked the white clergy to take a moral stand, since “injustice anywhere is a threat to justice everywhere.”

• King’s letter explained that he was no “outside agitator,” as local segregationist reporters and city offi cials often labeled him

"The Ballot or the Bullet" speech

• 1964

• “A ballot is like a bullet. You don't throw your ballots until you see a target, and if that target is not within your reach, keep your ballot in your pocket.”

Harriet Jacobs

Blanche Bruce

• An American politician. Bruce represented Mississippi as a U.S. Senator from 1875 to 1881 and was the first black to serve a full term in the Senate.

Hiram Revels

Federal Housing Administration (FHA)

• FHA bears a greater responsibility for institutionalizing and encouraging the practice.

• The FHA explicitly practiced redlining from its inception by refusing to insure mortgages in or near African American neighborhoods, using color-coded maps to identify "safe" areas for lending.

• While private lenders followed the FHA's lead, the FHA's actions created a system where redlining became a widespread, federally-supported policy.

• The Federal Housing Administration (FHA), not the Home Owners' Loan Corporation (HOLC), is considered more responsible for perpetuating redlining practices.

• Encourage Lending: By insuring mortgages, the FHA reduces the risk for lenders, making them more willing to offer mortgages, particularly to borrowers who might otherwise be considered too risky.

• Expand Homeownership: This reduced risk for lenders, in turn, makes it easier for potential homeowners to qualify for mortgages, especially those with smaller down payments or less-than-perfect credit histories. This expands access to homeownership for many Americans who might not qualify for conventional mortgages. 

• Benefits for Homebuyers: FHA loans are particularly popular with first-time homebuyers and individuals with lower credit scores because they offer lower down payment requirements and less stringent credit history requirements compared to traditional loans.

Redlining

A process by which banks draw lines on a map and refuse to lend money to purchase or improve property within the boundaries.

• illegal discriminatory practice in which a mortgage lender denies loans or an insurance provider restricts services to certain areas of a community, often because of the racial characteristics of the applicant’s neighbourhood.

• Redlining practices also include unfair and abusive loan terms for borrowers, outright deception, and penalties for prepaying loans.

• Living in a redlined area meant banks would not approve home loans or mortgages for people living there—even if they were trying to buy a home elsewhere.

• The Federal Housing Administration (FHA), not the Home Owners' Loan Corporation (HOLC), is considered more responsible for perpetuating redlining practices.

Black Star Line

• Shipping line created by Marcus Garvey to get blacks back to Africa.

Universal Negro Improvement Association (UNIA)

Created: 1914

Apex: 1920

• Organization founded by Marcus Garvey in 1914 to promote black self-help, pan-Africanism, and racial separatism.

• An association that promoted black pride and black unity. It also encouraged African Americans to move permanently to Africa.

The Atlanta Compromise (1895)

Argument put forward by Booker T. Washington that African-Americans should not focus on civil rights or social equality but concentrate on economic self-improvement.

Poor People's Campaign

• Federal Job Guarantee (FJG)

New Negro Movement

- Political/Intellectual context for the Harlem Renaissance

- The literary and intellectual flowering that fostered a new black cultural identity in the 1920s and 30s

- Has been called the "spiritual coming of age" in which the black community was able to seize upon its "first chances for group expression and self-determination"

Brotherhood of Sleeping Car Porters

Created:1925

Apex: late 1930s/early 1940s

• Union founded by A.Philip Randolph in 1925 to help African Americans who worked for the Pullman Company.

• A prominent black trade union of railroad car porters working for the Pullman Company.

18,000 passenger railway workers

Trade Union

Labor Union

Sharecropping

(1865-1940s)

• An agricultural system where landowners allowed farmers (sharecroppers) to use their land in exchange for a portion of the crop yield, typically half

• Became the accepted labour system in most of the South after slavery

• Following the American Civil War and the abolition of slavery, most freed people lacked land or money and had to continue working for white plantation owners.

• Charges for the land, supplies, and housing were deducted from the sharecroppers’ portion of the harvest (ABOUT HALF), often leaving them with substantial debt to the landowners in bad years.

• Sharecroppers received what was left if they were able to pay back the owners—generally about half of what had been produced under decent arrangements.

• Shady practices

  • Debt if bad yield

  • Landowners also charged extremely high interest rates.

  • Landowners often weighed harvested crops themselves, which presented further opportunities to deceive or extort sharecroppers

  • Drive them away just before it was time to harvest the crops

Great Migration

(1916-1970)

Six Million

• From 1916 to 1970 an estimated six million Black Southerners relocated to the North and West in search of economic opportunities and an escape from racial violence.

• The movement of millions of African Americans from rural communities in the South to urban areas in Northern and Western states during the 20th century.

• In 1900 nearly eight million Black people—about 90 percent of all Black Americans—lived in the South

• Lynchings, sharecropping, and Black Codes locked Black Americans into poverty and disenfranchisement

• Immigration Act of 1924: Urban factories, foundries, and slaughterhouses that fueled Northern industries faced labor shortages.

• The bulk of this mass relocation happened between the 1940s—when World War II began and more jobs were being offered in the North and West—and 1970.

• Arguably spurred Black political action and the civil rights movement bc concentration of Black people in a place free of Jim Crow and lynchings

• CITIES: Chicago, Detroit, Cleveland, New York City, and Philadelphia.

  • Difficulties: redlining, segregated housing, segregated schools, poor working conditions and low pay,

Do all prisoners work (as slavery)?

Gen. William T. Sherman’s Special Field Order 15

• issued on January 16, 1865,

• 40 acres and a mule

• redistribute to newly freed Black families confiscated Confederate property

• Set aside confiscated land along the South Carolina, Georgia, and Florida coasts for settlement by newly freed Black families.

• The revocation of the order hindered efforts by African Americans to achieve economic independence after emancipation and forced many into sharecropping

Black Codes

(1865-1868)

the numerous laws adopted in the states of the former Confederacy after the American Civil War that were intended to maintain white supremacy in those places.

• Enacted in 1865 and 1866

• The Black Codes were all intended to secure a steady supply of cheap labor,

• Vagrancy laws: declared a Black person to be vagrant if unemployed and without permanent residence;

  • a person so defined could be arrested, fined, and bound out for a term of labor if unable to pay the fine.

  • ***Forced labor through vagrancy laws***

• Apprentice laws: provided for the “hiring out” of Black orphans and other young dependents to white people, who sometimes had previously been their enslavers.

• Property laws: Some states limited the type of property African Americans could own, and in other states Black people were excluded from certain businesses or from skilled trades.

• Mississippi and South Carolina enacted the first black codes (1865):

  • Mississippi’s law: required Black people to have written evidence of employment for the coming year each January; if they left before the end of the contract, they would be forced to forfeit earlier wages and were subject to arrest.

  • South Carolina: a law prohibited Black people from holding any occupation other than farmer or servant unless they paid an annual tax of $10 to $100. This provision hit free Black people already living in Charleston and former slave artisans especially hard

• Under black codes, many states required Black people to sign yearly labor contracts; if they refused, they risked being arrested, fined and forced into unpaid labor.

• Marriage laws: Legal marriage between African Americans was provided for, but interracial marriage was prohibited.

• Reconstruction did away with the Black Codes (e.g. Fourteenth and Fifteenth amendments)

Red Summer of 1919

a period in which racial violence spread throughout at least 26 cities, killing hundreds, injuring thousands, and causing mass displacement.

• Chicago Race Riot of 1919, in which 38 died (23 Black, 15 white), 537 were injured, and 1,000 Black families were left homeless. D

Jim crow in north as well?

The New Jim Crow: Mass Incarceration in the Age of Colorblindness

(2010)

• Conventional view: systemic racial discrimination mostly ended with the civil rights movement reforms of the 1960s

• Alexander posits that the U.S. criminal justice system uses the War on Drugs as a primary tool for enforcing traditional, as well as new, modes of discrimination and oppression

• This ultimately leads Alexander to argue that mass incarceration is "a stunningly comprehensive and well-disguised system of racialized social control that functions in a manner strikingly similar to Jim Crow".

• Its emergence, she believes, is a direct response to the civil rights movement.

  • mass incarceration is "the most damaging manifestation of the backlash against the Civil Rights Movement", a

• Alexander contends that in 1982 the Reagan administration began an escalation of the War on Drugs, purportedly as a response to a crack cocaine crisis in black ghettos, which was (she claims) announced well before crack cocaine arrived in most inner city neighborhoods.

• The current rate of incarceration in the US is six to ten times greater than in other industrialized nations,

• the Central Intelligence Agency (CIA) acknowledged that during the 1980s the Contra faction—covertly supported by the US in Nicaragua—had been involved in smuggling cocaine into the US and distributing it in US cities.

• Disparate sentencing policies (the crack cocaine vs. powdered cocaine penalty disparity was 100–1 by weight and remains 18–1 even after recent reform effort

  • a disproportionate number of inner city residents were charged with felonies and sentenced to long prison terms, because they tended to purchase the more affordable crack version of cocaine, rather than the powdered version commonly consumed in the suburbs

CAUSES OF INEQUALITY

CAUSES OF INEQUALITY

CONTRIBUTIONS TO EQUALITY

CONTRIBUTIONS TO EQUALITY

• Freedman’s Bureau: first welfare agency

Jim Crow law

laws that enforced racial segregation in the South between 1877 and 1950s.

• From the late 1870s, laws requiring the separation of whites from “persons of colour” in public transportation and schools.

• The segregation principle was extended to public accommodations (e.g. parks, cemeteries, theatres, and restaurants) in an effort to prevent any contact between Blacks and whites as equals. It was codified on local and state levels and most famously with the “separate but equal” decision of the U.S. Supreme Court in Plessy v. Ferguson (1896).

• From 1887 to 1892 nine states, including Louisiana, passed laws requiring separation on public conveyances, such as streetcars and railroads.

Home Owners’ Loan Corporation (HOLC)

(Est. 1933)

HOLC was a New Deal program designed to help homeowners avoid foreclosure during the Great Depression.

• established to encourage widespread home ownership and suburban development by making home loans and mortgages affordable.

• Created Residential Security Maps, which used a color-coded system (green, blue, yellow, and red) to assess the risk associated with lending in different neighborhoods, a practice now known as redlining.

  • However, neighbourhoods that were mixed-race or predominantly African American did not benefit from those programs, because their credit was considered high-risk.

Major civil rights organizations

• NAACP

  • Ideology: Legal equality

  • Tactics

  • Base: Middle class

• National Urban League

  • Ideology:

  • Tactics:

  • Base:

• SCLC: Southern Christian Leadership Conference

  • King

  • Ideology: Christian nonviolence

  • Tactics: Protests, marches

  • Base: Churchgoers

• CORE: Congress of Racial Equality

  • Ideology: Started integrationist → nationalist

  • Tactics: Freedom Rides

  • Base: Initially interracial

• SNCC: Student Nonviolent Coordinating Committee

  • Ideology: Grassroots radicalism

  • Tactics: Sit-ins, organizing

  • Base: Students, rural poor