This works out the real subtleties of inheritance as an economic enterprise. It is also a reminder that only a handful make the leap into the ranks of the so called elite every generation. Education serves to create three tiers of citizens and nothing else.
In every generation a talented few will leap into the top tier from any other level while anther handful of the advantaged will slip away. What is central is that the established wealth must attract that leaper talent in order to preserve their own strength.
The southern dynasties still held the land and dealt in access to the land for those who had capital. Losing your Rolls Royce never eliminates the cash flow supporting that toy. Today the banks allow them to sell condos to the earners...
What Southern dynasties’ post-Civil War resurgence tell us about how wealth is really handed down
Emancipation
should have laid waste to the Southern aristocracy. The economy was
built on the forced labor of enslaved Africans, and almost half the
Confederacy’s wealth was invested in owning humans. Once people could no
longer be treated as chattel, that wealth evaporated.
But
less than two decades after the Civil War, Southern slave-owning
dynasties were back on top of the economic ladder, according to an ambitious new analysis
from Leah Boustan of Princeton University, Katherine Eriksson of the
University of California at Davis and Philipp Ager of the University of
Southern Denmark.
Their
research upends the conventional wisdom that slave owners struggled
after they lost access to their wealth. Yes, some fell behind
economically in the war’s aftermath. But by 1880, the sons of slave
owners were better off than the sons of nearby Southern whites who
started with equal wealth but were not as invested in enslaved people.
The
sons of formerly enslaved people never caught up, of course. By 1880
more than 90 percent of them were still in the South, and most still
worked as farm laborers, tenant farmers or sharecroppers. In the 120
years that followed, they consistently saw lower pay and less upward
mobility than similar white men, according to a separate 2017 working paper by economists Marianne Wanamaker of the University of Tennessee and William Collins of Vanderbilt University.
The
gulf in economic status between slave and owner is incalculably large,
and slave ownership was widespread. More than 1 in 5 white households
owned slaves. About 1 in 200 owned 50 or more enslaved people. But there
also were income differences among whites in the prewar South. Boustan
found that folks at the 90th percentile were about 14 times as wealthy
as a typical white household.
The
findings by Boustan and her colleagues indicate generational inequality
in the United States isn’t just about the money. Even after the
enslaved people on whom their wealth was built were freed, Southern
elites passed their advantages to their children through personal
networks and social capital.
Boustan
says she first conceived of the project when she was a naive, newlywed
graduate student. Fifteen years, a couple of jobs and three children
later, the final analysis was circulated this week as a working paper from the National Bureau of Economic Research.
Along
the way, she helped create a branch of economic history designed to
answer huge, historical questions. With collaborators such as Stanford
University’s Ran Abramitzky, she uses advanced analytical techniques to
uncover people and trends in the wild and woolly data sets of the 19th
and early 20th centuries. These linked data sets are historians’ version
of the databases big tech companies use today to track and target
users.
“The
very first people I ever thought about linking over time were these
slaveholders,” Boustan said. “My whole career has been built on creating
these large, linked data sets.”
Big, historical data
The
current version of the project wouldn’t have been possible even a year
ago. Methods evolve, and academics and genealogists unearth and digitize
new data, such as the 1860 Census and federal records
that help identify slaves and slave owners. Each source has limitations
— and the records are nowhere near comprehensive enough to allow a
similar project tracing the economic outcomes for formerly enslaved
people and their descendants. But economists have developed increasingly
inventive methods for linking data sets.
“I’ve
been working for probably 10 years on some of the proper matching
technology,” Boustan said. “I honestly had no idea when I got started
with this kind of work that the proper approach to linking people was
going to be a large side project of my life.”
To
follow families across generations and data sets, Boustan, Eriksson and
Ager used first names, last names, ages and birthplaces. They’re not
much on their own, but together such data points contain a surprising
amount of information, as companies such as Facebook and Google have
shown.
Consider records of slave ownership and
wealth: They come from different data sets, and 20,000 of the records
are clear matches. But those matches allowed the economists to estimate
slave ownership in the larger population. One of the most effective data
points for doing so was surnames.
The
average number of enslaved people recorded as the property of men with
the last name Higgins in Lowndes County, Alabama, in 1860, was, for
example, a strong predictor of the number of people enslaved by any
Higgins household in that county. In many cases, it’s a perfect match.
By
applying such methods to counties across the Confederacy, they
estimated wealth and slave ownership for about 300,000 households and
captured broad trends that might otherwise be invisible.
Their
techniques can seem complex, but in the end, Boustan said, their work
is guided by, and consistent with, the findings of historians who
specialize in the fate of the South’s white aristocracy.
Economic shock
How
does the loss of wealth affect elite dynasties? The answer is critical
for wealth-tax advocates and others concerned about inequality, but it’s
rare to find a wealth disruption that’s swift and deep enough to allow
for large-scale analysis.
Emancipation in the American South qualifies, as do revolution-era China and Russia. Weimar Germany, too.
In
1870, at the height of Reconstruction, former slave-owning families had
about 15 percent less wealth than equivalent families who owned fewer
people. But by 1880, the sons of slave owners were back atop the
Southern socioeconomic hierarchy.
The typical American white family had 10 times as much wealth
as the typical black one as of 2016, the most recent year of available
data from the Federal Reserve’s Survey of Consumer Finances.
A thread summarizing Boustan’s findings has spread far and wide on Twitter,
where her enthusiasm, good humor and emoji exemplify a new breed of
academics who switch fluently between the language of professional and
popular audiences.
How did slave-owning dynasties recover?
It probably wasn’t just white privilege or that these wealthy lineages thrived based solely on their intelligence, talent or entrepreneurial instinct.
The
researchers controlled for these factors by focusing on situations
where wealth and location were similar in 1860 yet families still
differed in the number of black people they enslaved. Presumably, any
attributes linked to economic success would be shared by all wealthy
white households in the area.
We
can rule out the generational effect of slave owners’ estates and other
resources. It’s not as straightforward as going from plantations built
on slavery to plantations built on sharecropping. The whites with whom
former slave owners are compared will have had similar stockpiles of
land and property. The economists help confirm this by analyzing the
swath of destruction left by Gen. William Tecumseh Sherman.
Unlike
in much of the rest of the South, wealthy white families in Sherman’s
path often had their land appropriated, seized or destroyed by Union
forces. By 1870, affected families had a staggering 40 percent less
wealth than similar folks in nearby counties.
“Yet,
even in this extreme case, we find that elite sons completely caught up
with or even surpassed the sons of comparably wealthy families in
neighboring counties,” Boustan, Eriksson and Ager write.
These white families seem to have drawn upon exceptional social connections, the economists find.
Most
notably, they married up. Boustan and her colleagues analyzed
sociological indicators such as birth year and name choice to
demonstrate that sons of slave owners tended to marry women from
families with even more prewar wealth — probably at least in part
because of their father-in-law’s network and influence.
Compared
with sons from families who owned fewer enslaved people, they were also
more likely to make the leap into white-collar jobs, a move that other
researchers have shown is often greased by a family’s political and
social networks.
The success of slave owners’
sons after emancipation hints that reducing wealth inequality isn’t just
a matter of redistributing wealth, Boustan said. It’s a matter of
reducing other barriers as well, such as elite personal and professional
networks and other intangible privileges.
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