Thomas Shapiro, the Pokross professor of law and social policy at Brandeis University and a leading scholar of wealth accumulation disparities, addressed a small audience Wednesday about economic disparities.
Shapiro was brought to campus as part of the 2008-2009 Provost's Lecture Series, "Policy Visions for a New Presidency." His remarks largely centered around economic inequality rooted in the past and issues due to the current economic downturn.
A scholar who has written many books concerning race, class and how government policies promote economic disparities between different groups, Shapiro's background qualifies him to discuss these issues as they relate to President Barack Obama's administration, Provost Peter Lange said while introducing Shapiro.
"There are many important issues facing President Obama as he begins his new administration," he said. "But, we decided to focus on issues that are just as important, but less well covered, including income and wealth disparities."
Although the current economic crisis is not considered a depression-and Shapiro noted that he is hesitant to use the word himself-Shapiro said the amount of wealth families are losing has never been seen before.
"Among the differences between the Great Depression and what we face now is that this is the first period in American history where the American middle class had wealth and saw that wealth de-accumulate," Shapiro said.
Shapiro noted that the middle class had always been defined in the United Sates by the labor market, but that the current recession has eliminated the security commonly associated with achieving middle-class status.
This shift in reality about how people come upon hard times and fall out of the middle class is leading to a reevaluation of how society views issues involving poverty, he added.
"The dominant narrative of poverty in the United States has evolved around individual characteristics and cultural explanations," Shapiro said, adding that in the past, discourses included the idea that being poor was the result of character flaws, often tied to racial stereotypes, in which "people are not willing to do what they need to do."
Some students in the audience said the lecture made them reevaluate their views of race and how it relates to wealth accumulation.
"I think it is interesting the way the policies in this country are enforced affect not only the income gap, but also the way we view minorities," freshman Kenneth Strickland said.
In an interview with The Chronicle before the lecture, Shapiro discussed which government programs and policies in particular have lead to wealth disparities and whether or not the Obama administration is doing enough to correct those inequalities.
Shapiro said one government program that has had the greatest impact on promoting wealth inequality is the Federal Housing Administration. The program was started under President Franklin Roosevelt in order to encourage home-ownership during the Great Depression.
Before the FHA, Shapiro said that in order to buy a home, potential buyers would need to provide 90 to 95 percent of the home's value in cash as a down payment. Then, they would have five years to pay off the remaining amount. With the creation of the FHA, buyers were able to pay only 5 to 10 percent as a down payment and pay the remaining value over the course of 30 years.
As a result of the new housing loans backed by the federal government, suburban housing communities sprung up across the United States creating a boom in home ownership.
"That was a game changer," he said. "That's a primary mechanism by which American families created wealth and wealth was created for them throughout their lifetime. It's a great case study and a great policy success around home ownership with one huge, major exception-African-Americans, among others, were not allowed."
Shapiro said he hopes the Obama administration's new policies will help to correct some of the injustices of the past and increase access to home ownership, which is where he said middle-class families have their greatest amount of wealth.
"I think it is very clear that we are in the process of restructuring," Shapiro said. "What we don't know is wether there is going to be a disparate impact. Wether that restructuring is going to work to create the same set of inequalities that have existed before, or whether Fannie Mae, Freddie Mac and the FHA will have their feet held to the fire to really enforce fair housing laws, which in my estimation they have not."
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