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February 16, 2006
Book Review: Economic Apartheid in America: A Primer on Economic Inequality & Insecurity
    by Bill Baue

The revised and updated edition of this text (originally published in 2000) examines how excessive executive compensation contributes to the widening gulf between rich and poor.


While the spotlight is currently shining on executive compensation, with SEC regulation and Congressional legislation proposals on the table, this attention may obscure the flip-side of this economic equation--namely the increasing disparity between rich and poor. The revised and updated edition of Economic Apartheid in America: A Primer on Economic Inequality & Insecurity (The New Press, 2005) seeks to illuminate understanding of this broader social context.

The book's title harnesses significant power by applying the term "apartheid"--the system of racial segregation (with profound economic impacts) associated with South Africa--to the current situation in the US. In so doing, authors Felice Yeskel and Chuck Collins (who co-founded United for a Fair Economy, or UFE) draw on the moral authority of the anti-apartheid movement that effectively toppled the racist and classist regime in South Africa in the 1990s.

This victory did not happen overnight, however, and victory in the struggle against economic apartheid is receding instead of nearing.

"Since the first edition of Economic Apartheid in America was published in 2000, a lot has changed--but a lot has stayed the same," write Dr. Yeskel and Mr. Collins. "The problem of growing wage and wealth inequality has only worsened after a slight improvement at the end of the 1990s."

Perhaps the most important statistical analysis in the book illustrates disparity in real family income growth by quintiles (or 20 percent segments of the population) from 1979 to 2003. The lowest quintile (those earning under $24,100 a year) decreased two percent and the highest (earning $98,200 and up) gained more than 50 percent, according to US Census Bureau statistics.

The book presents this information to provoke further contemplation, analysis, and action, but does not presume to assess these issues exhaustively. In calling the book a "primer," Dr. Yeskel and Mr. Collins acknowledge the limitations of the text, noting the availability of numerous in-depth studies on economic inequality.

"This book attempts to consolidate and summarize many of them; we attempt to explain economics in an understandable and user-friendly way," they write, and later admit other limitations. "Because this book looks primarily at problems through the lens of class, it is limited in its explanation of the fundamental intersection between race, gender, and economic inequality."

That said, the book by no means ignores the overlapping dynamics of race, gender, and class as they are impacted by economic inequality. Case in point: Dr. Yeskel and Mr. Collins break down the impacts by race and gender as well.

"For example, the lowest fifth of black income earners saw their incomes fall 9.5 percent between 1979 and 1997," they write. "Meanwhile, the wealthiest fifth of black income earners saw their incomes go up 21.4 percent . . . ."

"As sociologist William Julius Wilson points out, '. . . while income inequality has widened generally in America . . ., the divide is even more dramatic among African Americans,'" the book states, and then addresses issues on the gap between male and female income.

The book not only identifies its own limitations, but also readers can extrapolate from its implications to identify limitations in the broader struggle against economic inequality. For example, while the socially responsible investing (SRI) community played an important role in the anti-apartheid movement and continues to advocate for economic equality (for example through pay disparity resolutions such as the one filed at Wal-Mart), the book reveals how investment is largely inaccessible to those on the lower half of the economic ladder. A stark graph shows how the top ten percent in terms of household wealth in the US owns 84 percent of stocks and mutual funds, while the bottom 50 percent in household wealth own a mere one percent of stocks and mutual funds--an exceedingly thin slice of the pie!

In other words, the majority of American households--those at the bottom of the economic ladder--effectively have no access to wealth-building through the stock market. Neither do they have access to using shareownership to advocate for the advancement of economic equality, leaving it up to those on the upper half of the economic ladder to promote it for the benefit of those further down. And of course SRI practitioners represent only a small slice of the investment community.

In addition to identifying the root causes of the problem of economic inequality, the book also identifies potential solutions. For example, a section of the final chapter focuses on "reining in corporate power," and lists shareholder actions, SRI, and democratizing corporations, as well as structural changes such as eliminating the legal status of corporate personhood.

 

 
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