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  • Carolyn L. Baker

Economic Apartheid

There was a time when Americans, specifically white Americans such as myself, eagerly supported government entitlement programs and had relatively no issue having a social safety net in place. Many of us from the suburbs like to think we got to where we are today by virtue of our merit, hard work, intelligence, pluck, and maybe a little luck. But it was America’s investment after World War II that created FHA home programs and later the Veterans Administration (VA), which backed $120 billion of home loans between 1934 and 1962. It insured long term mortgage loans by private lenders for home construction and sale. It allowed for a repayment period of 25-30 years. If the person with the mortgage defaulted, the FHA would indemnify (pay) the bank. Thus there was a loan guarantee for the bank, making it possible for millions of average white Americans, such as my family, to own a home for the first time.

Of the 350,000 new homes built with federal support in Northern California between 1946 and 1960, fewer than 100 went to African Americans. My family and I were the recipients of life-changing white welfare. This example, along with the creation of public schools, state colleges, and gigantic programs such as rural electrification, and assistance from the G.I.Bill, was one of the largest wealth-creation and intergenerational wealth-transfer programs in history. In short, even when we were a much poorer nation, we made huge national investments and made it a priority to help disadvantaged white Americans, while African Americans and other people of color were, for the most part, denied access. Today’s extreme racial wealth gap is the most obvious result of the distribution of these entitlements. Thus, as white American’s moved into a burgeoning middle-class, poverty became racialized.

In 1965, President Lyndon B. Johnson envisioned a "Great Society" and declared a "War on Poverty”, the centerpiece of the Economic Opportunity Act of 1964, which created an Office of Economic Opportunity (OEO) to oversee a variety of community-based anti-poverty programs. Then, the immense cost of the Vietnam War diverted much of the national resources needed to fund these programs. The social safety net has continued to be whittled away as the "bootstraps" phrase is evoked to argue against welfare and other social programs, using racist stereotypes such as corrupt, undeserving “welfare queens” who take money from hardworking taxpayers. In this narrative, white people are seen as the only hardworking taxpayers in the country.

The resulting safety net cutbacks, due to this bootstrap policy, has made it especially hard for low-income individuals to access food stamps and health benefits and has diminished our social safety net. Strikingly, about 13 million white people living in poverty are in dire need of help, but are so antagonistic about benefits programs they would share with people of color that they refuse to apply for government assistance. And all the while the regulatory practices, labor and wage policies, and tax structure ensure the distinct winners and losers remain perpetually the same.

In 2020, COVID-19 is helping us understand the depth of the racial and class divide in American society. The spread of the coronavirus in America is exposing the vulnerability of a social safety net supposedly designed to aid and protect all Americans from hunger, poverty, and economic hardship. COVID-19 crisis is affecting the working class, low-wage, and the poor the worst, many of whom aren’t paid if they miss work and are least able to afford it. According to a 2019 Federal Reserve study, 40 percent of Americans could not come up with $400 to cover an emergency. Given the occupational segregation, the economic apartheid, in this country, these low-wage workers are more likely to be women, immigrants, black and Latino workers.

Racism and classism has broken the country’s social compact and stunted the development of nearly every institution crucial for a healthy society. This includes organized labor, public education, wage and hour standards, job-based health and retirement security, as well as our social safety net, which should be available for all Americans, regardless of race, class, or ethnicity.

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