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No. of Recommendations: 8
“Born on Third Base: A One Percenter Makes the Case for Tackling Inequality, Bringing Wealth Home, and Committing to the Common Good,” by Chuck Collins, Chelsea Green Publishing, White River Junction, VT, 2016. This 267-page paperback addresses the issue of the wealth divide from the point of view of the wealthy. The author is best known for “99 to 1: How Wealth Inequality is Wrecking the World and What We Should Do About it.” He is the great-grandson of Oscar Mayer, of hot dog fame. He gave away his half-million dollar trust fund. This book encourages others of wealth to address the wealth divide.

Collins co-authored a book with Bill Gates Sr opposing the elimination of estate or death taxes. Many people earned their wealth with assistance from the GI Bill, mortgage assistance from VA, FHA, small business loans, etc. He reasons the wealthy owe something to the government in return. The GI Bill was passed in 1944 over the objections of those who thought it was too costly and would promote sloth among vets. Between 1945 and 1955, 7.8 million received college or vocational educations, 4.3 million purchased homes. Unemployed vets could get $20/week for up to a year.

Stagnant and falling wages cause families to work longer hours, take on more debt, and spend less time with family. Real wages have been stagnant for three decades, even as productivity gains have surged. The middle class standard of living is imploding. Each day that inequalities deepen, so does hopelessness, deprivation, and the injuries of poverty.

Capitalism is built on fear. In the working classes, one job loss, illness, or other misfortune can leave one destitute. The wealthy fear pitchforks and race riots. The French Revolution when the wealthy were beheaded isn’t mentioned.

The author expands on the classifications of wealth developed by Robert Frank in Richistan: A Journey Through Wealth Boom to define those most likely to assist in improved equality. Affluentville includes the top 10% of the wealthy, about 11MM households with assets in the range $680K to $3MM. They use their wealth to open doors for their children and oppose efforts to reduce inequality. They cluster in about 100 zip codes mostly on the East and West coast. They fly commercial and own a luxury car.

Lower Richistan: $3MM to $10MM. 3MM households. Top 3% of households. Wealth from business, salaries, stock investments, and inheritance. They populate upscale restaurants, country clubs, and luxury vacation destinations. They own second homes, fly commercial, but often first class. These next-door millionaires are not flashy. Many still live in their first homes and lead relatively thrifty lives.

Middle Richistan: $10MM to $100MM. 1.6MM households. Top 1% of wealth holders. 0.1% of households. Recipients of over 90% of wealth gains since 2008. Business owners, investments, and some earned income. Upper end fly private jets or own fractional interests in jet services like Netjet. Tend to distance themselves from humanity but engage through their children to cities, colleges, institutions, non-profits, and concerns about inequality.

Upper Richistan: Over $100MM. Top 0.01%. Ultra high net worth. Multigenerational wealth dynasties, first generation entrepreneurs, hedge fund managers, and CEOs. Own and fly private jets. Managing wealth and property is major activity. Properties and residences have caretakers, trained staff, and servants. Family offices or private law firms administer investments, trusts, and philanthropic foundations. They can’t spend all their wealth. They think long term and buy timberland, oil rigs, and office towers. Disconnected from working people except for foundations. Some address wealth inequality and support fair taxation.

Racism is a significant source of the wealth divide. Many black veterans returned to Jim Crow laws with separate but unequal education and non-existent higher education opportunities. Federal mortgage programs discriminated. Home ownership and appreciation in home value is a major source of middle class wealth. When blacks obtained mortgages they were restricted by restrictive covenants to areas where price appreciation was limited.

Home ownership rates illustrate discrimination. Home ownership has declined steadily since 2004. From 69% to 64.4% overall, 74.5% to 72.6% for whites and 45.6 to 42.9% for blacks. For Latinos the rate fell from 48.5% to 45.6%.

The racial wealth gap is attributed to a persistent culture of poverty, lack of education, inability to delay gratification and save money, absence of working men, and single mothers. Inability to delay gratification refers to having children before establishing steady income. Multiple sources endorse this concept implying consensus. Single mothers alone does not account for the wealth gap. The median net worth of a married black couple remains significantly below that of whites.

Since 1989, a bill to study the impact of slavery and explore reparations has been introduced in Congress repeatedly by Congressman John Conyers as HR 40. The number 40 refers to the unfulfilled promise to former slaves of “40 acres and a mule.”

The benefits of living in an affluent home compound with time. Affluent children are raised in a book filled, conversation rich home. Parents have leisure and vacation time to spend with family. There is access to recreation, health care, healthy food and a larger vocabulary. By age 6, wealthier kids spent 1300 more hours in child enrichment as travel, music lessons, museums, and summer camp. They have better school readiness. Working class children develop fewer soft skills useful in net working and workplaces. Pre-K programs like Head Start can do much to close the gap in school readiness.

Collins illustrates the different outcomes in the story of four strong students recently graduated from better public high schools. One from a wealthy family graduated from college debt free, with time for summer internships, and assistance from family for a first car and an apartment. Family can provide professional contacts to begin the career. Parents will assist with down payment on a home purchase. The family safety net is there if any problem arises.

A second student graduated with $85K in college debt, and a maxed credit card. He worked part time for spending money and had little time for study or professional internships. He has no professional work experience and will find job opportunities limited. Poor credit rating will limit choices and block home ownership. He will continue to rent and debt will increase.

A third took classes at a local university but no degree limited job opportunities. He saved money by living with his parents. They provided free room and board, cable and internet access. And assistance buying a truck and getting a trade license.

A fourth worked in a kitchen. Her parents were not college graduates. Her friends did not attend college and she did not apply. She received little advice on college choice, admissions, SAT, or scholarship options. She attended local community college. Health issues compounded due to lack of insurance. She will have a steady low wage job and will help support less fortunate family members.

All four were strong students but other factors resulted in different outcomes.

Collins ends with examples of the affluent who have learned to apply empathy and interact successfully with others.

Eliminate student debt with a GI Bill providing debt free college education to first generation college students and first time home buying assistance for teachers, nurses, firefighters and scientists as well as veterans. Collins would use progressive estate taxes for funding. Tax deductibility of contributions to private schools and colleges should be capped unless funds provide scholarships to the disadvantaged.

Raising the minimum wage is often suggested as a solution to the wealth divide. Collins mentions it several times, but it is little discussed in this volume.

Because philanthropy fails to address the right issues reform is needed. Some foundations are mere shams to avoid taxes. Funds given to private schools often preserve legacy admissions. Foundations compensate their trustees, sometimes generously. Tax incentives should reward better choices for their funds.

Funding education with property taxes gives best funding to the areas with the highest property values and starves those with low property values. Charitable educational foundations divert funds from public institutions. Private giving to public schools widens the gap between rich and poor.

Wealthy families living in gated communities create exclusive glide paths for their children in private schools, tutors, enrichment classes, summer camps, music, and arts. They lose interest in public services, opt out of paying taxes and favor budget cuts. Many public services need support including libraries, parks, art, beaches, swimming pools, building inspectors, police, trash collection, and more.

No charitable foundation can fund infrastructure investment such as that required in Flint, MI. Government action is required. Only government can use taxes and make long term investments.
Canada offers a better version of the American Dream due to its early childhood education, health care, and debt free education through college. Other countries have learned that health, education and family well being can offset the advantages of wealth. Universal preschool programs found in France and Denmark partially close the gap. Raise the floor with stronger safety nets. Level the playing field with fair taxes for the wealthy and corporations. Enact campaign finance reform without loopholes.

Pay your taxes.

This is a comprehensive discussion of the wealth divide problem and possible solutions. Many aspects are cited including student debt, racism, inadequate pre-K education, health, nutrition, etc. His solution is asking corporations and the wealthy to pay their fair share of taxes. References, index.
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