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article imageOp-Ed: The fallacy of America's racial wealth gap

By Alexander Baron     Mar 27, 2013 in Lifestyle
A recent study by three academics has claimed there is a widening "racial wealth gap" in the United States. As usual, things are not that simple.
The Roots of the Widening Racial Wealth Gap: Explaining the Black-White Economic Divide credited to Thomas Shapiro, Tatjana Meschede and Sam Osoro, was published by the Institute on Assets And Social Policy of Brandeis University.
Although it may be rubber stamped uncritically by gay-friendly self-styled social activists from San Francisco's Bay Area, the map of America's racial wealth is more complex than that. More recently, another study has purported to show income disparity in the United States without factoring in race. These figures look and sound even more shocking, but are they, and if indeed they are, what is to be done about the situation? Let's begin with the race angle.
Firstly, there are not a few wealthy black Americans. The richest is someone oppressed not only by racism but by sexism: Oprah Winfrey. She weighs in at $2.7 billion, and is said to earn $225 million a year. Way behind in second place is Sean Combs. No, fortunately even American society isn't so braindead as to reward rap "music" with those kind of megabuck; Mr Combs is also an actor, fashion designer and businessman, and as far as the latter goes, obviously a talented one.
The last person on this list at number 18 is Ulysses Bridgeman, Jr, whose wealth is said to stem from construction and real estate; he also has investments in what might be described broadly as food.
The wealth of the people enumerated here is staggering, but is it the whole story? As Miss Winfrey is so dirty, filthy, stinking, rotten rich, perhaps we should redistribute (steal) her wealth and give it to the poor. Let's have a show of hands. Hmm, the gent from the Bay Area seems undecided, is it socialism to treat a sistah like this, or just plain racism?
The US population is now well over 300 million, but let's stay with this nice round number; it doesn't require any great arithmetic expertise to realise that if Miss Winfrey's annual income were divided between the US population it would put less than a dollar in Joe Sixpack's pocket. Dividing up her wealth would give every American $9 apiece. Doesn't sound quite so impressive now, does it? And there is more, because in the first place, Miss Winfrey could not cash in all her assets and walk away with a cheque (sorry, check) for $2.7 billion. That figure is her wealth on paper. In the second place, if she were to liquidate her assets so, what remained would be worth far less. Breaking up big companies sounds fine, but doing so results in losing economies of scale.
There are many supermarkets in the UK where you can buy a ready meal for £1 or less; doubtless there are many more in the US. Some of the bigger outlets can stock 40,000 or more product lines. Small may be beautiful, but how can it compete with that? Big companies also have big wage bills, which means they provide livelihoods for very many more people than their owners.
Returning to Oprah Winfrey, it is clear, or should be clear, that although doubtless she leads an extravagant lifestyle in comparison with most Americans, the great bulk of her wealth is not consumed but invested. As Ayn Rand points out: “The percentage which the rich spend on personal consumption is so small that it is of no significance to a country’s economy. The money of the rich is invested in production; it is an indispensable part of the stock seed that makes production possible.”
If you don't think investment is important, check out the cost of computing yesterday and today; and the cost of driving with an electric car today and tomorrow.
Of course, this is cold comfort to the poor sap - black or white - struggling from day to day on the minimum wage, or worse still trapped on welfare, but simply robbing the rich does not work. What then is the solution? Clearly we need a root and branch reform of the oppressive financial system, in particular banking. Usury, as it is properly called, sucks the lifeblood out of all nations and transfers wealth from the have-nots to the haves. Taking the power to create credit away from the banks must be the first step. We must also look to alternative methods of distributing purchasing power from wages, salaries and dividends. For the poor we have what was originally envisaged as a safety net: the benefits system in the UK; welfare in the United States. This safety net has now become a virtual prison, locking those at the bottom into a permanent poverty trap.
It is technology that enables the economy to produce services and especially consumer goods more cheaply and in greater quantity than ever before, but clearly the current financial system is incapable of distributing them, especially to the underclass and the unemployable. We don't need facile studies by overpaid academics to tell us that, whether or not they are bankrolled by the Ford Foundation. Nor do we need their ludicrous advocacy of the counterproductive minimum wage; and least of all do we need them to tell us that the blacks at the very top are doing very nicely, while those - and all the rest of us at the bottom of the food chain - are not.
This opinion article was written by an independent writer. The opinions and views expressed herein are those of the author and are not necessarily intended to reflect those of
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