02 July 2016

Race and Wealth Distribution

Today, a friend asked me how a more even distribution of wealth could make any difference to people of any specific race.  This made me realize that many people legitimately don't understand this, and maybe part of the problem with racial inequity in the U.S. is that a vast majority of people do not even realize that there is a problem.  I want to break down the statistics and math so that they are easier to understand, and maybe this will help people to see the issue better.

Pretty much all of this data is in percentages, but this may be a poor way of representing valuable human lives, as it is easy to see percentages as meaningless data that is not associated with actual people.  So, I am going to present this as a representative sample of 100 Americans.

If we have a perfectly representative sample of Americans with 100 people in the group, here is what you might expect.  In this group, there is one filthy rich person, making at least $450,000 a year.  There are 6 regular rich people making over $200,000 a year.  There are around 20 upper middle class people, making more than $100,000 a year.  There are maybe 36 middle class people making more than $50,000 a year.  There are 16 lower middle class and upper lower class people making $30,000 or more a year.  There are 21 people in various degrees of poverty.  Grouping these a little more broadly, there is one filthy rich person, 6 upper class people, around 72 middle and lower class people, and around 21 people living in poverty.

Now, another way to look at these 100 people is by race.  61 of these 100 people are white.  13 of these people are black. 1 is Native American.  5 are Asian.  17 are Hispanic.  The other 3 people are mixed race.  White people dramatically outnumber any other specific race, but only a bit over half of the people are white.

This next bit of information, linking the two above data sets, is much harder to find, but we will do our best with what we have.  On average, the black people are making $35,000 a year.  This puts a vast majority of them into the poverty category, with maybe only one or two in a higher category.  White people are averaging $60,000 a year, putting them squarely in the middle of the middle class category, but it is important to understand that the 1 filthy rich guy and the 6 rich people are all white.  Yes, there are non-white people in the $200,000+ a year category, but the number is not statistically significant, especially when talking in percentages.  The thing to keep in mind here is, there are only 13 black people in our sample.  Well under 1% of Americans are both rich and black, or for that matter, rich and any race but white, despite the fact that 39% of Americans are not white.  Our 5 Asians are actually the only group to beat white people, at $74,000 a year, but with such a small percentage, we would have to see a lot of Asians making more than $200,000 a year to have a footprint above the middle class, and if that were the case, they would be averaging significantly more than $74,000 a year.  Hispanics are making around $41,000 a year, putting them mostly in the high end of the lower class, but again, a lot of them are spread through the poverty section as well as the middle class section.  The point here is, if you look at these numbers, you will find that probably 6 or 7 of the black people are in poverty and probably the same number of Hispanic people are there as well.  Asians don't make up much of the population, but their mean income is high enough that it would be reasonable to assume most of them are not in poverty, and white people are making up most of the middle and upper class, so most of them are also not in poverty.  Broken down, you will probably find that of the 21 people in poverty, around 14 are black or Hispanic, 1 is Native American, and the other 6 are white.

So, here is what this means: About 1/3 of Americans in poverty are black, 1/3 are Hispanic, and 1/3 are white.  If the racial distribution of the U.S. was 1/3, 1/3, and 1/3 like that, this is what we would expect.  This is not the case though.  Over 60% of Americans are white, which means that half as many whites are in poverty as the country's racial distribution suggests.  In the above breakdown, we have maybe 7 white people in poverty, when we should be seeing more like 13.  Only 13% of Americans are black, while around 30% of people in poverty are black.  What we are seeing is about twice as many black people in poverty as the numbers suggest.  In our breakdown, we have 7 black people in poverty, when we should have only 3.  Hispanics are in about the same boat.  We are seeing 30% when we should be seeing about half that.  In the breakdown, we would be expecting to see about 4 Hispanic people in poverty, while we are actually seeing 7.

So, the numbers have gotten complicated at this point, and honestly there is no way to avoid that entirely.  We can still manage though.  Here is what we have so far:
  • 7 rich or extremely rich people
    • 7 White (yes, that is all of them)
  • 72 middle and lower class people
    •  48 White
    • 6 Black
    • 10 Hispanic
    • 5 Asian
  • 21 people in poverty
    • 6 White
    • 7 Black
    • 7 Hispanic
We are missing 2 middle or lower class people of mixed race, because there is not sufficient statistics on them.  We are also missing 1% Native American from the poverty section, because of lack of information and the fact that it does not make a big difference to the math.  Because most mixed race people are mostly white with a little bit of Hispanic though, it is reasonable to assume that they are part of the middle or lower class.  That said, this makes no difference, as it is only 2 people.

Here is what we can see from the above numbers.  White Americans are massively over represented in the upper class.  They are over represented by 4% in the middle and lower classes.  They are massively under represented, by around 28% in the poverty class.  Black and Hispanic Americans are massively under represented in the upper class (statistically, there there should be at least one of each).  They are under represented by 2% for black people and 3% for Hispanics in the middle and lower class.  In the poverty class though, the are massively over represented, by 20% for black people and 16% for Hispanics.  In short, we are not seeing enough black and Hispanic people in the upper, middle, and lower classes, and we are seeing way too many in the poverty class.  The spots that are left are taken up by white people.

What about redistribution of wealth then?  Does this really show that it would help specific races of people?  It does, and I will show you how.  Consider if we take a significant amount of income from the 7 people at the top.  This affects only white people, because that is all there is up there.  The middle class won't really be affected much, so a vast majority of white people will actually not be affected at all.  The poverty class, on the other hand, has a dramatically different racial distribution, and this is where it makes a difference.  If we give the money from the upper class to the 21 people in poverty, we are helping equal numbers of black, Hispanic, and white people, while the national racial distribution is not equal.  In fact, breaking down the numbers specifically per race shows the big picture very well.

The number of black people in poverty is close to the same as the number who are not in poverty.  So, we are giving more than half of the black population significant amounts of money.  The Hispanic population is not quite as evenly divided, but we are still giving 41% of them money.  The white people in poverty, however, only make up 10% of the white population.  In other words, not only would redistribution of wealth benefit more black and Hispanic people by relative measure (54% of black people and 41% of Hispanics, compared to only 10% of white people), it also benefits black and Hispanic people in larger absolute quantity, because far more of our black and Hispanic populations are in poverty than our white population.

Let's put this into absolute numbers.  In 2015 (where most of my data is from), the U.S. population was about 320 million people.  According to the racial distribution above, that means we had about 195.2 million white people, 41.6 million black people, and 54.4 million Hispanic people.  Out of these numbers, a redistribution of wealth primarily funded by our 7% (or 22.4 million) upper class white people (making more than $200,000 a year, including the 1%, or 3.2 million making more than $450,000 a year) would cost only 22.4 million white people (I say "cost" instead of "hurt" because these people could sacrifice half of the incomes without any real suffering).  At the same time, it would help 19.2 million white people, 22.4 million black people, and 22.4 million Hispanic people.  The total number of people helped is 67.2 million.  The fact is, while only 19.2 million while people would be helped, 44.8 million black and Hispanic people would be helped.  In other words, a redistribution of wealth would help racial minorities far more than it would help white people, and it would help almost 3 times as many people as it mildly inconvenienced.


Now, there is another question that goes with this: Would a redistribution of wealth only help the poverty class and maybe the lower class?  The evidence seems to indicate that it would not.  Research consistently shows that racially diverse schools produce better results for everyone, not just those of minority races.  When schools that are exclusively white get some poor black and Hispanic students mixed in (and by "some" I mean, a significant number, not just a token black guy here or there), not only do the poor black and Hispanic students grades improve, the grades of the upper and middle class white students also improve.  An effective redistribution of wealth would give black and Hispanic families some of the same mobility as middle and upper class white families, which would give them more choice in what schools to send their children to.  We would quickly start to see more black and Hispanic kids in traditionally all middle and upper class white schools, not only helping these minorities to get out of poverty, and also helping the isolated white kids to learn more effectively as well.

It goes further though.  While this may not have quite the same level of evidence (the period of time directly after desegregation in the U.S. provided tons of data on school environments and student scores), there is still significant speculation backed by math and some evidence that redistribution of wealth would stimulate the U.S. economy, possibly on a level never before seen in the history of the planet.  This could result in the 7% of white upper class Americans ultimately coming away with more than they contributed, and it would certainly help pretty much all of the rest of the people in the U.S.

In short, redistribution of wealth would, at the least, help around 3 times as many people as it costs.  It would help the black and Hispanic American populations far more than the white population.  It would almost eliminate poverty.  It would significantly improve U.S. education, as black and Hispanic Americans take advantage of their new mobility.  It would most likely also dramatically improve the U.S. economy, and it might even improve the economy enough to ultimately pay back those who funded it, with interest.  (And honestly, even if it didn't, it would not actually hurt anyone, and it would help right some wrongs which have plagued our country for centuries.)

Anyhow, this is how redistribution of wealth would help racial minorities in the U.S.  I hope this helps you to see that there is indeed a problem.  I hope this helps you to see how redistribution of wealth would help solve this problem.  I also hope this helps you see that redistribution of wealth is not just "stealing from the rich to give to the poor," and how it is far more and far better than that.  The fact is, the money that would be redistributed should be regarded as compensating people for hundreds of years of theft from them and their ancestors.  Overt racism might be illegal, but racism is still causing not only the victims but also the perpetrators a great deal of harm.  If we would fix this and right this wrong, our nation could be so much better.  As our Pledge of Allegiance says, "United we stand, divided we fall."  We might be united as states, but if we are not united as people, our nation will ultimately be crushed under its own weight.



References:
https://www.census.gov/content/dam/Census/library/publications/2015/demo/p60-252.pdf
http://money.cnn.com/calculator/pf/income-rank/
https://twitter.com/conradhackett/status/674703885357867009
https://www.census.gov/quickfacts/table/RHI125215/00

No comments:

Post a Comment