The Wall Street Journal’s home page this morning inadvertently highlighted with stark clarity America’s wealth divide. Regardless of who wins the election, the chasm will most definitely widen.
The Journal reported that things are looking good for the stock market, as investors expect that former Vice President Joe Biden will win a decisive victory and that a “robust fiscal stimulus plan” is in the cards. Amy Wu Silverman, a managing director at RBC Capital Markets, said investors also are expecting good news about a vaccine.
This is great news for half the country, particularly the one percent which has accumulated much of America’s wealth. Only about 55% of Americans own stock, either directly or through retirement or mutual funds, and that exposure is falling. According to an April Gallup poll, 67% of Americans had some exposure to the stock market in 2002.
More alarming is that the one percent owns most of the stocks. According to Federal Reserve Data previously cited by the Journal, the top 10% of Americans by wealth owned 87% of all stock outstanding in the first quarter. That’s up from 82.4% in 2009, when President Obama assumed power.
Prevailing market wisdom is that a public company’s foremost obligation is to maximize the value of shareholders’ stock. Put another way, the primary function of American corporations is to make the rich even richer.
The Journal also reported this morning that America is on the cusp of a housing crisis the likes of which will make the one in 2008 seem like a walk in the park. Beginning in January, if not sooner, federal, state, and local bans on evictions will end, and renters will have to cough up their unpaid rents or risk being thrown out of their homes. Some 30 million to 40 million people across the country face potential eviction once the moratoriums expire.
Women and people of color are disproportionately more likely to owe rent, the Journal reported, citing census data. In California, Black and Latinos were twice as likely as their white counterparts to face rent insecurity amid the pandemic, according to a UCLA analysis.
Compounding the issue is the dramatic surge of renters using their credit cards to pay minimal rental amounts, thereby dramatically increasing their outstanding debt. The Journal reported that some landlords are charging punitive late fees on top of what is already owed, making the debt higher than just the face value of the rent. The burden can cripple a renter’s credit rating, making it more difficult and costly to find alternative housing.
According to credit specialists quoted by the Journal, the financial consequences of falling months behind on rent can linger for years, and most landlords are unlikely to forgive these debts. “If you don’t pay it back that can escalate to things like judgements, potential garnishments against your wages,” financial counselor Kate Bulger told the Journal.
Landlords catering to minorities and low-income tenants are particularly aggressive and adept extracting every last penny from their tenants. Among the most notorious is the Kushner Companies, which is controlled by the family of Jared Kushner, President Trump’s son-in-law and advisor. ProPublica in 2017 published this story about how Kushner’s family business humiliates late-paying renters and often sues them when they try to move out. And this was before the pandemic.
The credit card industry is no friend of Blacks or the economically disadvantaged. Lending rates are based on FICO credit scores, which don’t make allowances for financial setbacks like a pandemic. As stores increasingly go cashless, Blacks and the economically disadvantaged sustain another blow because they can’t get credit at reasonable rates or maintain the minimum balances increasingly required to open a checking account and get a debit card. Effectively, that keeps Blacks from frequenting a growing number of stores.
Biden historically been best buddies with the credit card industry, so much so that for years he was known as Senator MBNA, a reference to the credit card company that was headquartered in his home state of Delaware. (Bank of America acquired MBNA in 2006.) Most of the media prefers not to mention Biden’s tightness with the credit card industry, but Mother Jones last December broke ranks and highlighted the issue.
As for the stock market, a movement is all the rage that allows investors to buy the top performing growth stocks and make believe they are supporting companies that are doing good for the world. It’s called ESG investing, which awards companies with brownie points if they’re deemed progressive on the environmental, social, and governance front. There are self-appointed arbiters who make the ESG determinations.
The third biggest holding in Vanguard’s ESG fund is Amazon. According to the Better Government Association, a nonprofit watchdog on Illinois politics, Amazon exploits Black communities that don’t have the resources and expertise to properly analyze the tax breaks the company demands of them. BGA said Amazon is also contributing “to an already dire environmental burden, often in lower-income communities already bearing the brunt of congestion and air pollution. The environmental impact of (Amazon’s) warehouses has drawn criticism and protest around the world.”
Amazon’s general counsel earlier this year wanted to smear a Black warehouse worker as “not smart or articulate” for calling attention to allegedly unsafe work conditions because of the pandemic. Tim Bray, a former Amazon VP resigned and forfeited $1 million in stock options because remaining at the company “would have meant, in effect, signing off on actions I despised.” In his resignation letter, Bray facetiously noted a commonality among activists that Amazon had fired. “I’m sure it’s a coincidence that every one of (the fired activists) is a person of color, a woman, or both. Right?”
Amazon is one of the top performing stocks this year, and ESG allows the company’s stockholders to feel especially good about themselves for owning it. Residents of Black communities have good reason to view Amazon as a corporate oppressor. They can’t profit from Amazon stock because they can’t afford to buy it.