Customer Reviews

The Hidden Cost of Being African American: How Wealth Perpetuates Inequality

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Make no mistake about it. The snide comment by Washington Post reviewer Michael Hout above indicates a fundamental inability to comprehend what Shapiro is saying. Why would Hout choose to write this in his review?:

"Families and generations are at the core of Shapiro's analysis. So I was surprised that he did not directly address how marriage and family structure fit into the cycles of accumulation, inheritance and investment. Married couples accumulate more wealth than single parents do, according to other researchers. That suggests to me that African-American family issues must play a role in the wealth gap."

Hout obviously is attempting to make a point about the high rate of single parent families within Black America, and is implying that if only Black women chose to marry the fathers of their babies that they would not suffer many of the consequences Shapiro lays out in his book. There is but one problem: Shapiro addresses this lame-ass "culture of poverty" nonsense repeatedly in his book, and convincingly shows that even if Black marriage rates were equal to white rates that African-Americans would STILL have less wealth, educational opportunities, and transformative assets. Moreover, Shapiro does a good job of pointing out the motivations behind WHY whites like Mr. Houst consistenly resort to the same trite culturalist arguments of Black pathology when confronted with the troubling facts: they can't bring themselves to admit that their white privilege was constructed and is maintained at the expense of people of color, especially Blacks, because it shatters their deep-seated need to believe that they "earned" everything that they have instead of having been bequeathed it as a result of generations of racial prejudice and institutional racism.

Perhaps the sublety of Mr. Shapiro's argument was a tad too much for Mr. Houst and his editors at the Washington Post.

If anything, Shapiro's argument can be argued from a left perspective to be an insufficient "liberal" formulation that refuses to engage and critique the structural inequalities of capitalism head-on, substituting a Ford Foundation-esque "asset accumulation" prescription for maladies that require far more radical measures. As authors such as Manning Marable have noted for years, much of American capitalism was structurally DESIGNED to UNDERDEVELOP Black America and continues to operate in this fashion. Thus arguing that Blacks simply need "more" wealth in order to achieve racial parity overlooks many sociological and anthropological insights about race developed over the past thirty years, as well as many Marxian insights about race that have been floating around for years as well.

Still, even as a half-measure, this is a highly enlightening and challenging read. It is sure to make many white families uncomfortable because they will probably see themselves in much of what Shapiro writes. Which is the point.

Black people are bringing home bigger paychecks than ever. They face less overt racism on a day-to-day basis. Everything's copacetic, right? WRONG. This book is so important because it shows why African Americans pass along inequality from generation to generation. Most white people who "make it on their own" it turns out, tend to have a little help from their parents in buying their first house. $10,000, $20,000, or more, this means that they can put more money down, get a lower interst rate, move into a better neighborhood, with better schools, so their kids get better educations and all of the priveleges that access to such schools brings. And it all happens again in the next generation.

Shapiro brings this to life by talking to black and white people about how they have made their way in the world. Inherited assets, it turns out, have a lot to do with it.

This is a book that will force black and white people alike to think about how racial inequality is passed down from generation to generation. I myself would argue that it makes the case for at least a more serious discussion of reparations in the form of home buying grants or something of that kind, and an INCREASE in the so-called "death tax".

Read it and think about it!

Thomas M. Shapiro's _The Hidden Cost of Being African American_ (2004) is a powerful book that offers a unique look at economic inequality across racial lines. His discussion is not yet part of the mainstream discussion of race and government policy, but it should be, and his book makes an important contribution. His analysis is convincing, and the solutions he offers are worth serious consideration.

Shapiro's methodology is engaging. He uses statistical data aggregated from the longitudinal Panel Study of Income Dynamics (PSID)-an ongoing government funded study begun in 1968 that examines the finances of approximately 8,000 American families. In addition, he and his research team interviewed approximately 200 families in Boston, St. Louis, and Los Angeles, half of whom were black, half were white, with a subset of latino families. Shapiro blends statistical data with the voices of the families he has interviewed. People discuss their salaries, their financial assets, their reasoning for buying and selling homes, and their thoughts about money. This approach makes for a highly readable book.

Based on PSID data and the interviews, Shapiro focuses on the imbalance in asset-share between African Americans and white Americans, and its repercussions. He shifts the discussion from one focused on salaries, where in the last two decades there has been progress toward greater parity between whites' and blacks' wages, to a study of real assets. From an asset perspective, Shapiro argues, the nation's economic picture is very problematic.

Shapiro shows that in general, African Americans' accumulated financial assets are considerably smaller than whites', leading to fewer economic opportunities, greater economic hardship, and less access to wealth creation opportunities. The diminished asset share stems directly from the nation's history of racial oppression when African Americans did not have the same opportunities to amass wealth over generations. Shapiro outlines the real consequences of this difference in assets.

A financial asset perspective offers a global picture of economic wellbeing that includes a family's savings accounts, stocks and other investments, home equity, and inherited wealth through gifts and bequests. One of Shapiro's main points is that white families, in general, have much greater access to "transformative assets"-wealth and gifts inherited from previous generations-which enable families to enjoy opportunities that they have inherited from previous generations but have not earned themselves through merit. Shapiro looks at the types of advantages that come with these "transformative assets" and generational wealth, including down payments on homes and college educations paid for by parents and grandparents, as well as inheritable legacies from grandparents and parents. These "transformative assets" lead to considerable (and often profound) differences in social and economic opportunity and quality of life, even when wages are comparable.

Shapiro offers an illuminating discussion of schools and the housing market, showing connections between race and economics. He looks at how people's individual choices often entrench economic and social inequality, wittingly and unwittingly. At the end of the book, he offers a number of remedies, both market and government-incentive based, to create a "stakeholder" society where asset growth is promoted for the working poor and the middle class.

For example, one proposal is for Children Savings Accounts. Shapiro points out that if a child had an initial bank account of $1,000 and $500 were contributed annually, by the time the child reached 18 years old, he or she would have about $40,000. This is one way to provide transformative assets-for a down payment on a house, education, etc-to all Americans.

This is an excellent book with many important insights.

I really learned why real estate in communities of color so often is worth less money than when the exact same housing or real estate is available in white communities. What a terrible price people of color pay for our nation's social cancer of racism. Our collective racism cloaks our underlying issues of pretending there is no classism in the USA. I appreciate Dr. Shapiro's honest assessment of the situation and his clarity in analyzing the actual numbers and statistics underneath the money and educational disparities that can keep some African American families from achieving the wealth levels they would otherwise easily be able to enjoy. Great reading and a fair minded resource for all Americans of any heritage.

Shapiro writes an analysis of how wealth -- more than income -- shapes residential and economic segregation. He makes a STRONG case that racism shapes decisions of where to buy a home, and shows how inherited wealth (not just post-mortem inheritance, but gifts, loans and other wealth transfers) aids in the process.

BUT he offers little historical context on how we got here. He assumes the reader knows. And while it's quite likely that those who read the book will know, not everyone will. That context is key to understanding Shapiro's ultimate point.

I agree with Mr. Shapiro. He took my understanding of how tax policy and wealth transfers have widened the gap to a new level. His arguments are highly persuasive. However, I have an alternative view of why the value of homes in AA communities do not appreciate as fast. There is validity to his view but I believe another reason is because of the way AA's maintain their communities and not because they are segregated. I grew-up in an all black neighborhood but my father cut our grass; we didn't have broken down cars in the drive way, or couches on the front porch. Everyone worked together and we were proud of our homes. The way I see it, I don't care if the neighborhood is black, white, hispanic, or asian, if the people do not keep that community clean and well-maintained, the property values will stagnate or decline, inevitably. So let's not go too far to one side and say that "Because neighborhoods are racially segregated, African Americans' homes do not grow in value as fast as whites' homes do." There are other factors at play as well.

A must read for all interested in reducing poverty in the USA. The reader gains an improved understainting of the structual components of captialism that create inequality, without blaming the economic disenfranchised as perpetrator of the condition that are forced upon them

This book and its description of the power of transformative assets is must reading for all Americans, espeically those who are descendents of slaves, like myself. If you want the boiled down pop version of this argument, peep Chris Rock's perceptive sketch on how black folks confuse the relationship between income and wealth from his latest HBO special "Never Scared." Highly relevant stuff within these pages.

The typical minority household in the United States now owns less than one-tenth the wealth of a typical white household. Even worse, this gap is actually growing, an increase that's confounding America's mainstream public policy analysts.

These analysts treat racial inequality as purely a function of unequal access to jobs, skills, and education. The more access, the less inequality.

That certainly sounds reasonable. But if this analysis were correct, then racial inequalities ought to be narrowing, since Americans of color today have far more access to jobs, skills, and education than they did just a generation ago.

So why is racial inequality, as measured by net worth, expanding? Thomas Shapiro has an answer in his insightful new Hidden Cost of Being African American. Racial inequalities are widening, he argues, because Americans continue to ignore our nation's incredibly unequal distribution of wealth.

That maldistribution, Shapiro contends, has essentially trumped the expanded access to jobs, skills, and education won through years of civil rights struggles.

Consider two young people. Both study hard in high school. Both go on to attend college. One has parents with enough wealth to foot the bill for college tuition. The other graduates with thousands of dollars in student loan debt.

These two young people get hired by the same company. Both make the same income, and both look to buy their first home at the same time. But only one has parents who can help with the downpayment. The other, still burdened with student debts, gets dirty looks from lenders -- and ends up with a mortgage at a higher monthly rate.

Our lucky young person, buoyed by abundant parental help, can afford to buy a home in a nice neighborhood with good schools. Our unlucky young person can only afford a home in a considerably less desirable neighborhood.

Fifteen years later, the home in the nice neighborhood has appreciated nicely. The other home has not. Our two now-no-longer-young people still make the same income. But they are not equally wealthy. Only one lives in financial security. One is white, the other black.

How can we begin to turn this dynamic around? Shapiro sees "no means of seriously moving toward racial equality without positive asset policies to address the racial wealth gap." And Shapiro also emphasizes the importance of leveling down privilege at the top of America's economic ladder.

"What is really at stake," he writes, "is the power of very wealthy individuals to assure succeeding generations economic success and material comfort through unearned advantages, regardless of any achievements or contributions they may make."

[Excerpted from a review that appeared in Too Much, the online weekly newsletter.]

Finally, a book that acknowledges the historical inequalities of any people, in this instance, African Americans. Thomas M. Shapiro gives a very well written and researched treatise of how historical disadvantages perpetuates inequality today for the people who were held back the longest in the United States.

This is a must read for people who really care about humanity and the diminishing middle class in this country. I hope this book is not seen as some mere racial rant, but rather as a substative tool for remediating some of the ills of our common past.