chapter  9
24 Pages

The White plutocracy system

As we reconsider the U.S. economy over the past quarter century, two widely divergent periods become apparent. From 1989 to 2007, the U.S. experienced an era of substantial economic growth and relative prosperity. Over this period, the economy suffered two mild recessions, experienced modest inflation, and generated steady employment growth. Families were able to save some portion of their income, invest in new assets, and reap the benefits of rising asset values amidst this prosperity. Indeed, as Figure 9.1 shows, average real wealth nearly doubled, from $340,000 per household to over $620,000 in 2007. Even median household wealth grew substantially, from almost $85,000 to over $135,000. Then came the financial crisis and the onset of the Great Recession. Spiraling unemployment and plunging asset values ravaged whatever gains earned by households since 1989. Under financial duress, families liquidated their real assets, drained their bank and retirement accounts, and even sold their homes to mitigate the financial damage. From 2007 to 2010, average household wealth fell by 15 percent. Three years later, that figure remained largely unchanged, suggesting the financial carnage wreaked by the Great Recession had subsided. In 2013, median household wealth had returned to levels experienced a generation earlier. While this might suggest that the Great Recession simply wiped out the gains earned by the typical family over the prior generation, the situation is more complex. Although these two periods affected household net worth in vastly different

ways, they share one consequence. Throughout the last quarter century, there has been a relentless march toward increased wealth concentration. The growing gap between average and median household wealth as depicted in Figure 9.1 offers witness to this trend. Figure 9.2 makes the point even more convincingly. Whether one examines the

relative wealth shares of the top wealth quintile or subsets of that group, the

wealthy have continued to capture rising shares of available household wealth. The share of total wealth earned by the wealthiest quintile rose from 80 percent to 87 percent while that of the wealthiest 2 percent rose from 39 to almost 50 percent. Although the trend is relentless, the underlying causes vary from period to period. In Chapter 5, I discuss the various facets of the Wealth Privilege model that benefit the wealthy during times of expanding economic growth and appreciating assets. In Chapter 7, I show how household wealth blunted the worst damage generated by the Great Recession and spared the wealthiest households from making detrimental decisions. While the wealthy suffered substantial injury, most of this was reversible paper losses. In contrast, many households suffered unemployment, home foreclosure, business failure, and personal bankruptcy among other maladies. As first the stock market and later the housing market rebounded, only the affluent were well positioned to benefit. Not only do we see this bump in the figures in Figure 9.2, but the 2013 values measure levels of wealth concentration that haven’t been seen in 80 years (Piketty and Goldhammer, 2014; Shammas, 1993). Of course, this trend toward increased wealth concentration has racial implica-

tions. Throughout the period, White households have held over 90 percent of the household wealth, even as their share of the population has declined significantly.1

As such, the share of wealth in White hands relative to their share of the