The Great Recession and the Web of Inequality

The following is an adapted excerpt from Ronald Formisano’s Plutocracy in America: How Increasing Inequality Destroys the Middle Class and Exploits the Poor as a part of our Black History Month blog series.

Unequal access to health care is but one example of how income inequality creates a proliferating range of consequences not often discussed in relation to one another. None of these subjects has been ignored or unreported somewhere, either in print or on the Internet. But by drawing many of these topics together and showing interconnections, I highlight the widespread consequences of inequality as it washes through society like a noxious flood. This approach rejects arguments that downplay the effects of governmental or corporate policies and instead invoke the role of impersonal forces, such as globalization, as mainly being responsible for inequality in income and wealth. The OECD finds that “the evidence as to the role of globalization in growing inequality is mixed.” Whatever globalization has contributed to inequality as an independent cause, corporations have set the rules in global markets that virtually eliminate workers’ bargaining power, while environmental and other standards have been ignored.

It is too easy to blame impersonal forces like globalization. Moretti’s assertion that Wall Street is not “guilty” of killing blue-collar America— rather, “history did it”—sets aside decisions by governments, financial institutions, and corporations. Wall Street alone did not displace workers from manufacturing jobs, but Moretti’s claim neglects the process by which, beginning in the 1970s, the United States “traded manufacturing for finance,” as well as the campaigns of business-interest groups, their think tanks, and conservative Republicans to do everything in their power to weaken and discredit unions.

During his second term, President Obama finally focused on economic inequality, beginning with a wide-ranging interview in July 2013 in which he stated that long-standing and growing inequality, along with the lingering effects of the financial crisis, were eroding the nation’s social fabric and undermining equality of opportunity. Upward mobility, he said, was what defined Americans, “and that’s what’s been eroding over the last 20, 30 years, well before the financial crisis.”

Near the end of that forty-minute interview, Obama briefly addressed race in relation to inequality, predicting that if inequality continued, “racial tensions won’t get better; they may get worse, because people will feel as if they’ve got to compete with some other group to get scraps from a shrinking pot.” Obama couched his brief remarks in race-neutral terms, rhetoric that, as the nation’s first African-American president, he has (perhaps understandably) employed often. He did not dwell on poverty or the greater degree of inequality experienced by African Americans and Hispanics, especially since the Great Recession. Nor did he address (again perhaps understandably) the nation’s staggering rate of incarceration, particularly of black males. With 5 percent of the world’s population, the United States has imprisoned almost a quarter of all of the globe’s inmates— around 2.2 million in 2012—and spends over $80 billion a year on jails and prisons. While African Americans compose approximately 12–13 percent of the nation’s population, they make up just over 40 percent of the prison population. Yet the scandal of the United States as a “prison nation” encapsulates the many ways that inequality, combined with discrimination against blacks and poor whites, “frays the social fabric.” Although incarceration rates for blacks, especially black women, fell between the years 2000 and 2009 (with rates for white men and women increasing), the effects of imprisoning African Americans in hugely disproportionate numbers after the 1970s is still reflected in the population of the nation’s almost 4,600 prisons (Russia has 1,029).

Several results flow from this long-standing unequal application of criminal laws, reaching back to the post-Emancipation South and Jim Crow laws that allowed sheriffs to seize black men for “vagrancy” and then force them to work in privately owned mines, factories, and labor camps. Currently, imprisoned black men are not figured into data regarding the progress of African Americans, which thus overstates the advances of blacks; black incarceration distorts unemployment numbers, a phenomenon the New York Times labeled “How Prisoners Make Us Look Good”; and imprisoned black men not only cannot vote, but many states deprive former felons of their right to vote after they have served their time. Overall, almost 6 million people, black and white, cannot vote because they are incarcerated, but blacks constitute the largest proportion of those in or out of jail that are banned from political participation.

The surge in the imprisonment of blacks that began in the late 1970s coincided with increased economic deprivation in poor neighborhoods that already were at risk for crime. From 1980 to 2006, the rate of imprisonment for blacks increased four times as much as that for whites. States and the federal government embraced harsh punitive policies in an overheated climate of opinion demanding “law and order.” An economic downturn that disproportionately impacted blacks came together with racially punitive policies and became self-reinforcing. The heightened “war on drugs” during the Reagan administration bore down particularly hard on poor black men who lived in inner cities. As historian David Courtwright has put it, “mass incarceration meant, for all practical purposes, the institutional resegregation of surplus black laborers made idle by agricultural mechanization and industrial decline, unemployable by poor education and self-defeating attitudes, and dangerous by worsening ghetto conditions.”

Because one in three black men has had a felony conviction, his chances of finding a stable, good-paying job are much lower than those for white men, including white males who also have had felony convictions. In 1987, the Equal Employment Opportunity Commission issued guidelines declaring that not hiring people with criminal records violated the Civil Rights Act, because it had the effect of reinforcing racial disparities. But after 9/11, Congress undermined the EEOC by banning former felons from working in many transportation jobs; then most states, concerned about drug theft and health-care issues (among many others), made it difficult for ex-felons to find jobs in education, government, the postal service, and occupations requiring licenses issued by the state. While some states are relaxing such restrictions, the 650,000 people released from prison every year who face starkly diminished opportunities are disproportionately African American and Hispanic. The consequences spread far beyond these groups’ already impoverished neighborhoods: “billions of dollars in lost productivity, forfeited tax revenue for cities, rampant exploitation by employers, and a cascading series of bans and exclusions from civic life that make it almost impossible for these [potential] workers to achieve a stable economic existence.”

Do Americans care about their prisons and ex-felons, not to mention their inner cities? The answer seems to be no. In the current climate of opinion and gridlock in Washington, D.C., the plight of inner cities and the growth of a prison-industrial complex seem to be off the radar, absent from the nation’s political agenda.


Ronald P. Formisano is the William T. Bryan Chair of American History and professor emeritus of history at the University of Kentucky. He is the author of The Tea Party: A Brief History, For the People: American Populist Movements from the Revolution to the 1850s, and Plutocracy in America: How Increasing Inequality Destroys the Middle Class and Exploits the Poor.