Black Wealth/White Wealth: A New Perspective on Racial Inequality.

Anyone who picks up Black Wealth/White Wealth will have their expectations raised by the numerous quotes of praise that adorn the dust-jacket and face plate of this volume. "A must read!", ". . . a landmark study . . .", ". . . an important contribution to our public debate . . .", ". . . stunningly original . . .", and ". . . a tour de force that will revolutionize our thinking . . ." are just a few of the quotes offered by notables such as Senator Bill Bradley, Barry Bluestone, and Sheldon Danziger among others. It would be hard for any empirical social commentary to live up to these words, but this book does come close.

Oliver and Shapiro are two academic sociologists, one black and one white, who investigate American racial inequality from the perspective of private household wealth. Their underlying basic hypothesis is that racial inequality has been structured through systematic barriers, institutionalized in American society and public policy over generations, which limit the accumulation of black wealth. According to the authors, these barriers include; the legacy of slavery and the reconstruction era, limited educational opportunities, redlining practices that limit access to capital, and the development of the modern suburb. Each of these, and many others, have of course been previously identified as impediments to black economic success. However, Oliver and Shapiro put a "spin" on these 'factors by tracing their effects on household wealth, and how wealth, in turn, shapes the daily lives of black Americans. The important distinction between income and wealth is evident throughout their analysis. Although this distinction is not "new" (as the subtitle would like you to believe), the focus on wealth provides an abundance of important insights into the racial divide.

Oliver and Shapiro's analysis of racial differences in wealth is based on data taken from the 1987 panel of the Census Department's Survey of Income and Program Participation (SIPP). These data are cut-up and examined in numerous ways. Alternative measures of wealth are examined across race according to numerous other factors such as marital status, level of education, type of occupation, and home-owner status. In all cases, two things are obviously clear - there is a significant gap between white and black wealth and most blacks have precariously little financial wealth to draw upon. It is reported that in the aggregate 60% of black households have zero or negative net financial assets. Furthermore, the black middle class, as defined by income or occupation, possess about 15 cents of wealth for every dollar of wealth held by the white middle class. Oliver and Shapiro punctuate their analysis of the statistical evidence with case study interviews of "representative" black families. These "real world" stories are a fascinating way to illustrate the points raised by the authors. Although one may question how representative these households are of black America (they were picked through informal networks of the authors' friends in Los Angeles and Boston), the authors have found a unique way to make panel study data more enlightening.

Based on their findings, the authors posit that three layers of inequality have generated the observed racial differences in financial wealth. The first layer of inequality is created by social distinctions in human capital accumulation and labor market operations. The second layer is comprised of institutional and policy factors, including limited access to mortgage and housing markets and artificial barriers surrounding other credit markets. The third layer of inequality is the intergenerational transmission of wealth. Disparities in inheritances and bequests from one generation to another compound the racial differences in wealth over time. Oliver and Shapiro conclude the volume with a series of recommendations and suggestions for policy change offered as avenues to create greater opportunities for the accumulation of black wealth in America.

Black Wealth/White Wealth is an interesting and fascinating book to read. Much of the empirical analysis is very basic, but the story is so consistent that it is convincing. Economists need to pay attention to this book and to follow up with more rigorous investigations in this area of racial inequality. Does the book live up to its dust-jacket? Read it to make your own determination.

Paul W. Grimes Mississippi State University