Why Asset Building in the Age of Inequality Didn't Go So Well


By: David Callahan
April 7, 2014

It's been 23 years since Michael Sherraden published his landmark book, Assets and the Poor, helping give birth to the asset building movement. Now, Reid Cramer of the New America Foundation is out with an edited volume, The Asset Perspective, that takes stock of how the idea of asset building has played out over two decades.
I've always been a fan of this idea for reasons I'll get to a minute, but I also find it hard to think of a policy movement that has failed so abysmally in its overall goal, despite huge amounts of foundation funding, intellectual firepower, and buzz. The bottom 20 percent of U.S. households actually have less wealth now than when Sherraden published his book. And African-Americans and Latinos got especially clobbered during the Great Recession. Blacks experienced a 53 percent decline in their net worth between 2005 and 2009, while Latinos saw a 66 percent drop in this period. Black Wealth, White Wealth, published in 1995, was another seminal book that spurred the asset building movement: But the racial wealth gap is wider now than when that book came out.

In 2012, the New York Times reported on Fed data that showed "the recent economic crisis left the median American family in 2010 with no more wealth than in the early 1990s, erasing almost two decades of accumulated prosperity."

So it's been back to square one for most Americans, and even worse for the poorest households that the asset building movement sought to help.

All this is ironic given the considerable juice behind asset building. The Ford Foundation made this a top priority starting in the mid-1990s, and other foundations also moved asset building near the top of their anti-poverty work. Smart policy entrepreneurs and think tanks pushed this idea, along with academics, and the elite media gave them plenty of play.

I was certainly sold on asset building, starting in the late 1990s, and remain a convert to Sherraden's most powerful point: That wealth ownership changes how people think about the future and behave in the present. And I've been even more influenced by the big takeaway of Black Wealth, White Wealth -- which is that intergenerational wealth fundamentally structures opportunity and that the legacy of racism on wealth accumulation has been crippling for African-Americans.

This is compelling stuff, along with many of the ancillary ideas of the asset building movement -- like that social welfare programs shouldn't discourage wealth accumulation with asset limits.

But while the asset building movement achieved notable successes in mainstreaming its concepts and some of its particular policy ideas, it basically missed the bigger picture -- namely, how incomes were stagnant or falling and debt was rising for most Americans, and particularly those in the bottom 40 percent. Even as the asset building movement labored away on wonky ideas like the Individual Development Account, America's economic elites were grabbing a larger share of the national income, gutting financial regulations, and disinvesting in the public sector -- while easing the pain of all these moves by showering Americans with easy debt (and cheap consumer goods) that allowed people to enjoy the illusion that things weren't so bad. In retrospect, it was naive to imagine that poorer Americans could make wealth gains against the backdrop of these trends. And, of course, they didn't. Quite the opposite.

In 1995, around the time the Ford Foundation was moving asset building front and center, I wrote an article in The Nation arguing that liberal foundations were destined to keep losing the fight for a fairer America because they focused on technocratic policy innovation as opposed to the broader ideological battle over the economy and role of government. Right-wing foundations did the exact opposite: They built a policy infrastructure that fought for conservative values first, and specific policies second. It seemed pretty obvious to me back then which side had the better strategy for influencing economic, fiscal, and regulatory policy. It's even more obvious today given what subsequently happened.

Imagine we could roll back the clock to the mid-1990s, when Susan Berresford took the helm of the Ford Foundation and announced its massive asset building program. Imagine if, instead, Ford had set out to build a progressive policy infrastructure that had the capacity to rival places like Heritage and Cato and push back against the rise of laissez-faire ideology? And if other foundations had joined them. Maybe today's intense conversation over low wages (which is an obvious impediment for building assets) would have gotten going a long time ago. Maybe today's focus on a predatory financial sector (which actively seeks to strip Americans of their assets) would have arisen a decade ago, in time to stop the subprime lending epidemic before it wiped out a generation of African-American wealth. Maybe the bolder proposals we're seeing today to address inequality through tax changes, like bolstering the EITC, would have been floated a long time ago. Maybe today's appreciation of how the wealthy stack the deck in their economic favor would have emerged sooner.

That's a lot of maybes, I know. But it's important to reflect on how things could have turned out differently with a different strategy.

My point is not to beat up on the asset building movement which had, and has, great insights and ideas. My point, rather, is that the broader ideological battle over government and the economy is all-important.

This isn't an either/or choice here. There's plenty of room continue to advance innovative ideas for asset building alongside a big and fiercer critique of how America's economy and political system is heavily tilted toward those who have wealth -- and against those trying to build it.


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This page contains a single entry by CFED published on April 8, 2014 3:26 PM.

Income Inequality a Growing Problem in America was the previous entry in this blog.

Pressing Obama's Agenda, Maryland Lawmakers Raise Minimum Wage is the next entry in this blog.

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