Hirsch, Eric

Ruggiero, Josephine

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Clinical Sociology ReviewVolume 10 | Issue 1 Article 251-1-1992The Rich Get Richer: The Rise of IncomeInequality in the United States and the World /Assets and the Poor: a New American WelfarePolicyJosephine RuggieroProvidence CollegeEric HirschProvidence CollegeFollow this and additional works at: http://digitalcommons.wayne.edu/csrThis Book Review is brought to you for free and open access by DigitalCommons@WayneState. It has been accepted for inclusion in Clinical SociologyReview by an authorized administrator of DigitalCommons@WayneState.Recommended CitationRuggiero, Josephine and Hirsch, Eric (1992) "The Rich Get Richer: The Rise of Income Inequality in the United States and the World/ Assets and the Poor: a New American Welfare Policy," Clinical Sociology Review: Vol. 10: Iss. 1, Article 25.Available at: http://digitalcommons.wayne.edu/csr/vol10/iss1/25BOOK REVIEWS 233institutional and legislative initiatives that will result in greater responsivenessto family violence.Gondolf's book is a well thought out and researched documentation of thelimitations of the medical response to violence in human interaction. His book'sgreatest contribution is to encourage changes at the policy-making level and inthe training of medical professionals.The Rich Get Richer: The Rise of Income Inequality in the UnitedStates and the World, by Denny Braun. Chicago: Nelson Hall Publishers,l991.383 pp., $29.95, $19.95, paperAssets and the Poor: a New American Welfare Policy, by MichaelSherraden. Armonk, NY: M.E. Sharpe, Inc., 1991. 324 pp., $34.95Josephine Ruggiero and Eric HirschProvidence College, Rhode IslandBoth of these books deal with the problem of economic inequality, but invery different ways. The Rich Get Richer is a broad analysis of recent trendsin economic inequality and poverty rates in the U.S. and the world, while Assetsand the Poor prescribes an alternative to the current welfare system in order tocure poverty in the U.S.In his chapters on the U.S., Braun documents the oft-noted increase ininequality in the U.S. during the 1980s. He shows how basic features of oureconomic system—such as segmented labor markets, deindustrialization, andchief executive officer compensation programs—as well the Reagan adminis-tration's tax and spending policies created increased wealth and income dispar-ity. The strength of the book is a review of the many potential costs associatedwith extreme inequality, including an increase in political violence, economicstagnation, a variety of social problems for working and middle-class families,and the increased willingness of the super rich to engage in risky investments.Thus Braun shows how the current banking and savings and loan debacle canbe fruitfully viewed as a result of increasing income and wealth at the top ofthe U.S. class structure.In chapters on inequality around the world, Braun again describes the severeinequality which has the top 1 percent of income recipients gaining 15 percentof world income while the poorest 20 percent get 1 percent (p. 49). He offersa fine critique of development theory by marshalling evidence that shows howinvestment by multinational corporations and loans by the InternationalMonetary Fund actually lead to greater economic inequality. Multinational cor-porate investment leads to an initial increase in gross national product per per-son but slower economic growth in the long term due to the export of profits.234 CLINICAL SOCIOLOGY REVIEW/1992IMF loans increase inequality because IMF policy makers force reductions ingovernment programs that assist the poor in order to facilitate debt repayment.Braun's analysis is marred by a tendency to use lengthy quotes from otherauthors, an overuse of exclamation points, and a disorganized chapter on policysolutions to inequality. But this does not detract from the importance of his anal-ysis of increasing economic inequality and its social costs.If Braun defines the problem, Michael Sherraden, in Assets and the Poor,tries to articulate the solution. His thesis is that "asset accumulation and invest-ment, rather than income and consumption, are the keys to leaving poverty" (p.294). While income transfers provide for day-to-day needs, accumulation andinvestment have the potential to change the way people think and behave in thefuture. Welfare policy therefore ought to be redirected to recognize this fact.In Part I of his two-part book, Sherraden argues that, unlike Europeannations, the U.S. is ambivalent about being a welfare state and consequently lessgenerous with assistance and more judgmental about what the poor do with theirwelfare checks (Chapter 1). Still, he suggests there is a serious problem thatmust be solved: the rising proportion of children living in poverty (Chapter 2).His solution is to reduce the stigma associated with income transfers by empha-sizing incentives which encourage asset accumulation by the poor (Chapter 4).This policy would eliminate the current ban against savings by welfare recipi-ents; the poor, like the middle class, would be expected to have a mix of incomefrom assets, employment, family sources, and the government.In the last chapter in Part I, Sherraden concludes that". . . none of the majorviewpoints (conservative right, liberal middle, and radical left) pays attention toindividually held assets of the poor" (p. 89). Although the left raises questionscentral to the asset accumulation notion—such as "Can capital really be redis-tributed under capitalism? Can a more democratic capitalism be achieved?" (p.88)—their attention is wrongly focused on socially rather than individually con-trolled capital (Chapter 5).In Part II, Sherraden explores the issues related to and the possible dimen-sions of an asset-based welfare policy. He explains why blacks have generallybeen less able than whites to accumulate assets and argues that many of theproblems experienced by blacks will continue until they obtain a distribution ofassets more equal to that of whites (Chapter 8).Sherraden's asset-based approach to poverty policy utilizes IDAs (IndividualDevelopment Accounts), which work much like IRAs (Individual RetirementAccounts). Deposits would be linked to "positive" individual achievementswhich also benefit the nation as a whole; these could include completing gradesin school ($500 per grade completed), graduating from high school ($2500),receiving job training, getting a job, or engaging in national service activities.Withdrawals from the IDA could be made only for designated reasons, such asBOOK REVIEWS 235for the funding of a college education, and parents or guardians could pass onIDA funds to their children without penalty.The program would be funded through a variety of tax increases, includingfull taxation of Social Security benefits, the removal of 50 percent of tax defer-ment for pension contributions to earnings, taxation of employer contributionsto medical insurance premiums and other fringe benefits, the elimination of 50percent of home mortgage interest deductions, the elimination of 100 percent oftax deferments for capital gains on the sale of principal residences, and the elim-ination of 100 percent of the exclusion of capital gains at death (Chapter 10).Sherraden explores several promising applications of the IDA, offers a detailedexample of how they might work (Chapter 11), and considers how his policycontributes positively to the long-term economic goals of the United States.Given the current lack of substantive welfare policy proposals, the compre-hensive appraisal of the system that is provided by Sherraden's book is wel-come. Certainly the current welfare system is no solution to the povertyproblem; the average welfare family in the U.S. receives less than half of thepoverty line income in benefits. The fact that those on welfare are not allowedto accumulate economic assets makes it even more difficult to overcome ourpoverty problem.Sherraden's analysis raises several questions. Should the government dictateto the poor how they should allocate their assets when they have a pressing needto spend on necessities such as food, shelter, clothing, and health care? can edu-cating poor individuals solve the poverty problem, given Braun's documentationof the lack of enough well-paying jobs in our declining economy? Is it desir-able and politically feasible to fund a poverty program through proposals whichincrease taxes for the middle class?However, in any review of an area as complex as poverty and welfare pol-icy there are bound to be a few unanswered questions both of these books doc-ument the fact that economic inequality is caused by basic features of oureconomic and political systems, and they discuss what we ought to do aboutthose systems. We hope that future authors will do the same, rather than con-tinue to blame the victims of poverty for their plight.

The Rich Get Richer: The Rise of Income Inequality in the United States and the World / Assets and the Poor: a New American Welfare Policy

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