The Blackwell Companion to Sociology (43 page)

Poor people everywhere must manage a set of limited assets, among them

financial capital, human capital, natural capital, social capital, and cultural

capital. They are involved in a strategic use of thesè`bundles'' of assets in

which they substitute, trade off, and draw on these assets, accumulated indi-

vidually or collectively, toward three strategic goals: making a living, making

living meaningful, and challenging the structures under which one makes a living 172

Melvin L. Oliver and David M. Grant

(Bebbington, 1999. p. 5). While each of these five types of assets is important, many contemporary commentators give special attention to social capital. Social

capital refers tò`the norms and networks facilitating collective action for

mutual benefit'' (Woolcock, 1998, p. 155). Social capital is of unusual import-

ance because the collective actions that it underpins often are the means by

which people:

. gain access to or defend natural assets like trees or water;

. transform assets into income;

. connect with the market, state and civil society organizations that struc-

ture the ways in which assets are acquired, protected, and transformed

(Bebbington, 1999, p. 39).

Assets are distinguished from income by being a valuable stock that can be

conserved, expanded, or improved and drawn upon as needed. Many assets

have the important characteristic of being transferable from one generation to

the next. Poor people are characterized by their lack of these assets and thus are unable to take advantage of opportunities or to guard themselves from risks and

uncertainties that threaten their economic and social well-being. Moreover,

without these assets they also cannot create a sound legacy for future genera-

tions.

The asset building framework's message is that poverty is about more than

material well-being and that alleviating poverty requires gaining access to a

bundle of assets ± financial, natural, human, social, and cultural. Below we

provide two example of asset building strategies in the USA and India.

Building Assets: the African American Case

African Americans have not shared equally in the prosperity of the USA. They

earn less than whites, but most importantly they possess far less wealth. The data are both striking and consistent (see Oliver and Shapiro, 1995):

. whites possess nearly twelve times as much median net worth (all assets

minus liabilities) as blacks, or $43,800 versus $3,700;

. half of all white households have at least $6,999 in a net financial asset

nest egg (these are liquid assets that exclude homes and vehicles), whereas

nearly two-thirds of all black households have zero or negative net finan-

cial assets.

From an asset building perspective the general conclusion to be drawn from

these straightforward yet very revealing facts is that the long-term life prospects of black households are substantially poorer than those of whites, even when we

compare blacks and whites in similar income brackets. Sixty-one percent of all

African American households have zero or negative net financial assets. If they

were to lose an income stream, they would not be able to support their families

The Persistence of Poverty in a Changing World

173

without access to public support. Nearly eight out of ten African American

families would not be able to survive on poverty level consumption with their

level of net financial assets for three months. Comparable figures for whites are one-half those of African Americans. Thinking about the social welfare of

children, these figures take on more significance. Nine out of ten black children live in households that have less than three months of poverty level net financial assets (NFA); nearly two-thirds live in households with zero or negative NFA.

What are the sources of this enormous racial wealth disparity? A sociology of

wealth situates the social context in which wealth generation occurs. Racial

differences in wealth holding are a function of the unique and diverse social

circumstances that blacks and whites face. One result is that blacks and whites

also face different structures of investment opportunity, which have been

affected historically and contemporaneously by both class and race. These

different social situations have been structured by racialized state policy that has impaired the ability of many African Americans to accumulate wealth ± and

discouraged them from doing so ± from the beginning of slavery throughout

American history. This has included restrictions and laws that barred African

Americans from business participation, as well as violence that curtailed com-

munity economic development. The consequence is that in central ways the

cumulative effects of the past have seemingly cemented blacks to the bottom

of society's economic hierarchy. A history of low wages, poor schooling, and

segregation affected not one generation of blacks but practically all African

Americans well into the twentieth century. Wealth is the best indicator of the

material disparity that captures the historical legacy of low wages, personal and organizational discrimination, and institutionalized racism. The low level of

wealth accumulation evidenced by current generations of African Americans

best represents the economic status of blacks in the American social structure.

How do we link the opportunity structure to policies that promote financial

asset formation and begin to close the wealth gap? One idea revolves around the

concept of individual development accounts (IDAs). First promoted by Michael

Sherraden in the late 1980s, IDAs have captured the imagination of many federal

policy-makers, state legislators, foundations, and most importantly local com-

munities. In the words of Sherraden (1997), `Àn IDA is like an individual

retirement account (IRA) except that it can begin as early as birth; it can be

targeted to a specific population; savings can come from any source (i.e., not

limited to income); savings should be matched progressively (i.e., higher matches to those with less income and wealth); the matching partners can be public, nonprofit, or private; and the purpose of the account can include education, home

ownership, and business capitalization.''

The adaptability of IDAs to different contexts make them appealing to a

broad range of purposes and circumstances. Experiments have taken root in

places as different as Tupelo, Mississippi, and Chicago, Illinois, with small and large matches. Legislative initiatives are under way on the state and federal levels that encourage the use of IDAs in conjunction with welfare reform, and national

funding of IDAs is a topic of community-based agitation, public policy discus-

sions, and scholarly debate (Sherraden, 1997; Shapiro and Wolff, 2000).

174

Melvin L. Oliver and David M. Grant

In Indianapolis, Eastside Community Development Corporation's IDA pro-

gram has enabled people to leave welfare, to start a small business, or to

complete their education. It has created among many participants a different,

more long-term and strategic view of their lives. As one participant noted, `ÌDAs give people who don't think they have a chance for anything to do something. . . .

Before I got in [to the IDA program], I didn't figure on getting my high school

diploma, but now I have my diploma and eventually plan on going to college''

(Serafini, 1996, p. 935).

While IDAs will not solve the problem of low wealth and poverty in the

African American community, they are a potentially important instrument in

the policy toolbox to close the racial asset gap. It needs to be combined with

other asset based interventions, among them renewed attention to the systematic

discrimination of African Americans by the banking industry, workforce devel-

opment to link people with jobs, and community economic development.

Building Assets: the Women of Pilluseri

From this portrait of a marginalized minority in the USA, we now turn to India,

where we focus on women belonging to a scheduled caste in the small village of

Pilluseri, located in the state of Tamil Nadu. In 1997, the first author's visit to Pilluseri provided a firsthand account of the transformative potential of an asset building program. These women reflect some of the poorest of the poor in India.

Their village, which houses 92 households with a population of 327, is wracked

by caste distinctions. The families of the women in the scheduled caste own no

land, are only allowed to live on the edges of the village, and can only interact with other castes in functional roles. Clearly, the long shadow of subordination casts a dark pall on the lives of these villagers.

The scheduled caste women of Pilluseri are wage laborers, selling their labor

power to local villagers and those immediately outside Pilluseri. In this context, assets reflect a very narrow range of resources. Land to be sure is the most

important asset, but homes, farm animals, and farm and cooking utensils are

also assets. Important common resources that have important asset-like qualities are the natural resources that are central to the social and economic reproduction of the community. The resource focused on here is water.

In a region in which rainfall is no more than 850 millimeters (34 inches) a year, water harvesting has been an essential part of Southern India. For generations,

farmers in Tamil Nadu have depended on literally thousands of small and

medium-sized water tanks for their irrigation needs. Tanks are little more than

a natural, low lying area, which is dammed on one side by an earthen bund,

catching and storing run-off during the monsoon season. The tank is a crucial

source of irrigation for watering fields and feeding farm animals. It has tradi-

tionally been a sustainable water source for innumerable village communities for centuries (Ford Foundation, New Delhi Office, 1994).

A key issue for local social welfare and for the economic security of villagers

has been the ability of the tanks to meet the villager's needs. While tanks that can The Persistence of Poverty in a Changing World

175

serve areas of over 40 hectares (99 acres) are traditionally under the control of the Public Works Department, smaller tanks are left to the local villages for their upkeep. Since this system of irrigation can produce optimally only one crop a

year, to have a failed tank is to invite famine (Coleman, 1997).

We begin with the efforts of a developmental non-governmental organization

(NGO), Professional Assistance for Professional Action (PRADAN), to organize

more participation around the upkeep and maintenance of the tank in Pilluseri

by the villagers. PRADAN is a group of professionals trained in agriculture,

engineering, management, rural management, and social work who work with

the poor tòènhance people's capabilities to take care of their development

and lead a life of dignity'' (Martin, 1996). They are the hallmark of the new

interest in ``civil society'' and prime examples of the difference that NGOs

and people-centered activism and development can make. They are both com-

munity builders and asset builders. (See Martin, 1996, for a case study of

PRADAN.)

In India, a system of centralized banking, initially set up to aid the poor, has recently collapsed under its own administrative and bureaucratic weight and

given rise to a reprivatization of banking services. PRADAN's grassroots engage-

ment with the women of Pilluseri uncovered credit as one of the central needs of marginalized caste women. Paying exorbitant interest to local money lenders,

women found that they were in perpetual debt, working not for the consumptive

needs of their families, but for the money lender. Working with these village

women, PRADAN enabled the self-organization of borrowing groups, similar to

the Grameen model, where groups take responsibility for paying loans, thus

creating a strong incentive for individual repayment (Yunus, 1998). These

groups, with technical assistance from PRADAN, `àdminister the loan them-

selves, serving in effect, as account managers and loan officers for the group.''

Once the group perfects these technical skills it achieves financial and managerial independence from PRADAN.

By depositing only small amounts, women in Pilluseri managed to save con-

siderable sums. While many continued to be unable to completely pay back the

local moneylender (usually interest rates are over 100 percent), the idea of

savings became a powerful motivator for the women. These women were able

to build and manage their assets by using them both as collateral for more loans and as a cushion during the off-season, when many families go into debt with

local merchants for food. The capability to be and to act was clearly present for these women. With the security of savings, women were able to take on activities beyond their previous imagination.

One of the remarkable accomplishments of the scheduled caste women in

Pilluseri was their active involvement in terms of a conflict over access to the tanks. Traditionally, tank maintenance and access to the fish in them was

controlled by the dominant castes in the village. This usually meant exclusion

and further marginalization for the lower castes. When the government devolved

more authority for the tanks to the local level, they deemed the tanks ``common

property'' for the use and benefit of the whole population. When the lower castes of Pilluseri demanded these rights, the upper castes responded in an outraged