Labor, Notable, Race, The Economy

Calpundit asks: is there any kind of rough consensus about what income it takes to reasonably label someone as rich” or poor” or middle class”? I have great respect for Kevin Drum, but the way he phrases this question (he basically lists a set of income brackets) reveals just how difficult it is for intelligent people to think about the issue of class in this country.

First of all, as Sam Jackson writes in his comments, we have to take into account the issue of wealth”:

I think having a measure of wealth in there will go a long way in explain why families making 150-200k a year feel that they are middle class. Without the wealth, it takes just a single adverse event to significantly affect your standard of living. With some amount of wealth you can ride out the ups and downs of the economy and feel more comfortable about your station in life.

Wealth often resides in property, and many of the differences between Whites and African American’s in areas such as education, divorce, etc. disappear when we adjust for differences in total wealth. But more importantly, after World War II there were massive government programs to provide low-interest mortgages to whites who wanted to buy homes in the suburbs, while Blacks were systematically excluded from access to this kind of wealth. What’s worse, the gap in wealth caused by past discrimination has grown over time:

In the United States, buying a home is the key to achieving the American Dream. Forty-two percent of the net worth of all households consists of equity in their homes — that means for most Americans, their homes are their single largest asset. Homeownership provides families with the means to invest in education, business opportunities, retirement and resources for the next generation.

When the federal government stepped in to make it possible for most Americans to finance the purchase of their own home, they essentially paved the way for millions of average white Americans to begin their own wealth-building. But the policies they endorsed made it very difficult for minorities to attain the same resources and opportunities, resulting in deeply segregated communities and an enormous wealth gap between whites and nonwhites that persists to this day. In 1995, the median white family had over 8 times the net worth of the median Black family. The gap is even greater for Latinos – the median white household has over 12 times the wealth of the median Latino family.

But beyond wealth and income, there are also many other important factors in thinking about class. One of the most important is what is often referred to as cultural capital:

The term cultural capital is used because, like money, our cultural inheritance can be translated into social resources (things like wealth, power and status) and the cultural capital we accumulate from birth can be spent” in the education system as we try to achieve things that are considered to be culturally important (mainly educational qualifications for the majority of children — but status can also be considered here when we think about the way the rich can educate their children privately at high status schools such as Eton and so forth).

Think about an artist. They might be poor, much poorer than a woman working a union job in a factory, but you might not want to ascribe her a lower class” status. After all, with her education, manners, and perhaps her race, she could probably get a better paying job if she was willing to sell out” and give up her alternative lifestyle.

But, ultimately, there is one overriding factor that shapes class which people tend to overlook, and that is power.” There are many well paid professionals who are definately middle class — but they feel angry and resentful because of how little power they have over their own lives. Although the orthodox Marxist division of the world into two classes is certainly overly simplistic, we do have to take seriously Marx’s discussion of ownership of the means of production” (and I would include property ownership as well, since rent is an important source of capital accumulation). (Marx, a student of Adam Smith, tended to be much more subtle about these issues than many of his followers.)

For a really good discussion of what makes someone belong to a given class.” I recommend reading some of the things sociologist Eric Olin Wright has written. There are a bunch of recent manuscripts available online at his personal web page.

UPDATE: This post was recently linked on Trish Wilson’s blog, where it was seen by Ampersand, leading to a comment by Seth Gordon, who provided an interesting link to a post by Daniel Davies …. which gets me to my point:

Writing from the UK, Davies says:

…the crusade against failure has to be seen in the context of a wider project that has been going on since the Thatcher-Reagan years; the attempt to load risks on to the working class which have historically been borne by the owner class.

He then goes on to provide an interesting analysis of class based on exposure to risk.” Although I think risk only captures part of a much more complex story, I think it is a much overlooked issue and one well worth thinking about. Just think about how CEOs from bankrupt companies receive a nice salary for the rest of their life, while ordinary workers loose their pensions …