Happy Martin Luther King Jr. day. In honor of the man with a dream I think it’s time to talk about what is, for many people who follow politics only casually, the most uncomfortable issue in the United States. But, it needs to be talked about. Despite the dream of MLK, minorities in the United States are still treated as less than. This is unacceptable, and it’s an issue I spend a lot of time addressing in my day job as an economist.
I expect that you have, or will read several things today about the moral miscarriage of race in the United States. This is probably the more important issue. But, if I can, I’d like to focus on the knock on effects of that moral miscarriage. This is a policy newsletter, and most people are desperately unaware of just how much race still impacts policy and markets. The effect is still so pervasive that I made this one of the 10 founding principles of The Constituent.
All people are created equal
This point cannot and will not be debated. It was the foremost self-evident truth on which this great nation was founded. Because all people are equal, they should all be treated equally under the law, and in the market. When they are not, both the law and the market cannot provide the optimal outcomes for the nation.
Before I get started I want to make a distinction. As I mentioned, I spend a lot of time addressing the economic issues of race, which means I spend a lot of time talking with people about racism. I’ve come to the conclusion that labeling things as racist is often counterproductive. Not that it is inaccurate, just that using words like “racist” and “racism” usually prevent the opportunity for learning. For most older white people, especially those in the suburban or rural areas, racism does not mean unequal treatment based on race.
For these people, racism is an active, purposeful hatred to anyone whose skin is different than their own. To be clear, this still exists, and remains one of the worst parts of modern society. But, it is also—thankfully—far less frequent than it used to be. Today, most racism stems from treating people differently not out of malice or prejudice, but out of ignorance. In my discussions over the years, I have found that if I treat these two concepts differently, the results improve. So, I’ve started to distinguish between racism, and what I call racial inequity. There is no doubt that past racism is what leads to current racial inequity, but it is also true that so many people with racially inequitable views are not hostile bigots who want to see Americans of color back in the plantation fields.
This is probably gonna be a longer post anyway (it’s a holiday, you have free time) so I’ll give you an example to help solidify the concept. When my wife and I were first starting out we lived in a complex of townhomes with two small kids. The townhomes were 60ish percent nonwhite. The minorities were a beautiful mix of black, hispanic, and immigrant peoples. The immigrant community itself was incredibly diverse—I met people from Eastern Europe, the Middle East, Sub Saharan Africa, Northern Africa, and Southern Asia. It was a wonderful place to live, and I miss many things about that community.
A family friend came to visit, and we were playing with the kids out at the playground. I should emphasize (and the fact that I feel the need to emphasize this is disappointing) that the people were amazing. They were kinder, sweeter, gentler, more considerate, and less judgemental than any white suburban community we’ve lived in since then, and they were peaceful. Very peaceful. While playing with the kids, our family friend looked around and saw that of the 15 or so kids playing at that time, only 4 or 5 were white—ours included. They turned to me with a concerned face and asked, “is it…safe here?” It was, without a doubt, safe.
This happened back before I made the distinction between racism and racial inequity. I tried to have a conversation about racism, and it—predictably—got nowhere.
I need to stress that this friend is a wonderful person. I’ve known them for many years, and have never seen anything remotely close to hostility toward minorities. Quite the opposite; individually, they had always treated minorities as equals. This person was simply brought up in a home that thought every racial or ethnic stereotype (whether about people of color or not) was considered to be true. I knew this person, and knew they were not racist. So, having a conversation about racism, in which I only somewhat subtly called them racist for asking if my neighborhood was safe, was 100 percent useless. This person had zero actual malice toward minorities, but that was what they understood to be the issue in the discussion.
But, they were also completely unaware that their own behavior might change because they believed racially inequitable things—like a community that is majority minority must be less safe. Experiences like this are why I began to distinguish between racism and racial inequity, and I am happy to tell you that using this distinction I have made quite a bit of progress in discussing race with this friend, and others too.
I hope you’re enjoying this letter so far. You can subscribe to make sure to catch every edition of The Constituent. It’s completely free!
I bring this distinction up because, thankfully, racial inequity is a far more common problem in the United States than is racism. The discussion about Critical Race Theory is ignored by most white Americans because they don’t see very much racism today. But, if they were aware of the racial inequity that exists, they might see just how important ideas like Critical Race Theory are.
Now, as a political matter, CRT is a sunk ship. Christopher Rufo and the conservative media/propaganda wing have so thoroughly diluted the concept that it has no colloquial meaning anymore—anything white conservatives don’t like is CRT, and this was actually the goal.
But CRT is a specific and complex legal theory. I’m gonna massively oversimplify here, because I’m an economist and not a lawyer, but CRT can loosely be defined like this: laws written as race neutral can often end up being racially inequitable in practice because of the United States’ racist history. This is unambiguously true, and often racist people design race neutral laws with the goal of creating racial inequity.
I’ll give just two high profile examples. During the early 90’s it was assumed that crack distribution and use was associated with more violence than cocaine. Based on this assumption legal penalties for crack were far higher than for cocaine. One can argue that it was a feature, not a bug, of the law to target minorities with harsher sentences. But, the law itself was written as race neutral. Because black and hispanic defendants are punished more harshly, even for the same crime1, this led to the infamous 100-1 sentencing disparity that locked up far more black men, for far longer, for similar crimes.
The history of redlining in the United States has led to identical homes being valued at 23 percent less simply for being owned in black neighborhoods.2 This creates a host of other issues for laws written to be race neutral. If the location of a school, library, or park has is determined in any way be property values, black families lose out. I am a tax economist, and the tax system as it currently exists in the United States prefers wealth (of which real property is the largest source). This being the case, devaluing black homes results in the tax code disproportionately burdening minority families. It may also create higher recidivism for black men.3
Please, don’t forget that poll tax, grandfather clause, and literacy test laws were all written using race-neutral language.
The racial history of the United States means this all happens despite a law being 100 percent neutral on race. My lawyer friends—particularly those who are more progressive—argue that many times this happens not despite, but because the law is race neutral. And, they may have a point. Think about voter ID laws. There is nothing inherently racist or racially inequitable about showing an ID before voting. If we are worried about fraud (different subject for a different time, but the data says we really don’t need to be) then a voter ID seems like a common sense way to help secure elections. Show an ID, then vote—the government could even provide free IDs if fraud is that big of an issue.
The racial inequity comes from how the laws are designed. When gun permits count, but college IDs don’t, the law is written to favor white people. In fact, even a law written with complete race neutrality (as in, nowhere does it mention race) can, as a judge found, target minorities with surgical precision. In fact, the fact that race isn’t mentioned in laws that disproportionately target minorities is part of the reason the Supreme Court recently said there is no legal issue with this practice.
This is the essence of Critical Race Theory—the real theory, not the racially charged nonsense you hear about in the media. On this MLK holiday, I can’t think of any better message than to demonstrate that color of skin, rather than content of character, is still used against minorities.
Many conservatives hostile to minority equality have found it fashionable to use the 35 most famous words of Dr. King to justify their racial inequity. Dr. King, they argue, would not want us to focus on race but on character. It’s a cheap excuse to essentially say that if we write laws in a race neutral way (we aren’t judging by the color of skin!!!!) then we are truly fulfilling the heart Dr. King’s message.
It’s complete garbage.
MLK wrote a lot more than that one sentence. If those who misuse his message really wanted to serve the essence of Dr. King’s vision, they’d take it into account in its entirety—not just the one sentence that fits their narrative. Dr. King fought for racially equitable economic treatment, which we are still leaps and bounds from today. Something often overlooked in the tragic assassination of MLK is the fact that it occurred several years after 1964 Civil Rights Act and the 1965 Voting Rights Act became law. When did it occur? After Dr. King had started to focus his efforts on economic equality for minorities. He was in Memphis to support striking sanitation workers, and had, more broadly, shifted his activism toward ending economic racism. I cannot emphasize enough that this is what his mission had been for several years at the time he was murdered.
Dr. King’s dream is still so far from a reality. Writing laws in race neutral ways without regard for the past racism in the United States has led to deep racial inequity in economic outcomes. I wrote this in a Facebook post almost two years ago, and it’s still spot on today.
The research is clear and convincing that in identical situations black and white people are still treated unequally. Just a few of the most meaningful examples proven in research are:
-Given equal income and credit scores, black people are less likely to get approved for a mortgage;4 pay higher interest rates when the are approved;5 and are more likely to be forced into predatory loans.6
-Black owned homes do not appreciate in value equally to white owned homes, the average difference is $48,000 for the same home.7
-Per capita investments in majority black schools are far below white schools.8
-Busing programs, which created investment and learning equality,9 and improved minority outcomes without hurting white outcomes,10 were systematically rolled back. That effort began immediately after busing became a practice.
-Equal educations pay off less for blacks then for whites in wages and income.11
-Owning a business pays off less for black Americans.12
-Equal Investments pay off less for black Americans.13
-Black Americans don't get access to the same types of investments.14
-White applicants with a felony conviction are more likely to get a job interview than black applicants with a clean record and a degree.15
-Black tenants are told rental vacancies don't exist, then white tenants who ask the same landlord minutes later are given units.16
-The best data suggests less than 100 lynchings per year prior to the Civil Rights Era. Now, several hundred black men are killed by police each year.
-For equal crimes black people are far more likely to be arrested; far more likely to be prosecuted if they are arrested; far less likely to be given a plea deal if they are prosecuted; far more likely to be found guilty if there is a trial; and serve far longer sentences when they are found guilty.17
There were a lot more sham trials that resulted in the death penalty back then, but there is not good data on those. I would think there would be thousands, but I also would have thought there'd be thousands of lynchings per year too, so I can't think of any way to try to assess that. Black people today still insist sham trials take place all the time, and now they just get decades in prison since most states don't use the death penalty like they used to.
Even beyond that, the improvements from the 60s have been fought against for decades. The Civil Rights Act and the Voting Rights Act have both been attacked and diminished significantly.
Both George Floyd and the protests demonstrate the clear differences. When white people pay with counterfeit bills, and I've watched this firsthand when I worked in retail, police and retail workers laugh it off. The person says they didn't know it was counterfeit, and don't know where they got it. Everyone smiles, they use a different bill, and everyone goes their merry way. This is not the case with black people, and in Floyd's case, it got him killed.
I was also blown away by the unequal reactions to the protests. White people who wanted to re-open the economy from coronavirus lockdown, or not have to wear a mask, went to state capitals across the country carrying assault rifles and dressed in paramilitary gear. They brandished their weapons in the balconies of state legislative chambers, and yelled at and threatened both lawmakers and police. In Kentucky they even hung Governor Beshear in effigy. Not a single thing happened.
In Minneapolis and Louisville, where the protests started, they were initially peaceful gatherings. In Minneapolis protestors gathered where Floyd was killed, and the police showed up in riot gear and started tear gassing them. Witnesses and their videos show nothing more than throwing a water bottle happened prior to tear gas and beatings; certainly nothing close to carrying weapons and issue threats like the white corona protesters did.
It wasn't until after the riot squat was sent out and the protestors were tear gassed that they went to the 3rd police precinct and broke windows and graffitied, and things escalated from there. Pretty much this same thing happened in Louisville on that first night.
Maybe what we see now are slight improvements over the 60s, but certainly nothing Dr. King would be satisfied with.
Maybe there have been cultural improvements; as an economist I'm not really trained to evaluate that, but in quality of life aspect, it seems like we've barely budged.
If the best improvements we have made in FIFTY years are that "we don't serve your kind here" has moved from retail registers and lunch counters to mortgage loans and investments, and lynchings have moved from mobs to police officers, that makes me even more angry.
In my mind, things were much worse in the 60s, but then I actually think about all the bad things I learned about the 60s, and I still see them today. Emmett Till still happens when police kill black people where they wouldn't kill white people. Edmund Pettus bridge still happens where protestors face riot squads and tear gas where white protestors do not. Separate but "equal" still happens in housing, education, and healthcare, it's just not enforced by law.
I wonder if, 50 years from now, people will still look at what we see today, and think of it as being as bad as what we see when we look at the 60s.
I think things are better now. The Civil Right Act forced Jim Crow to live in the shadows, and the right to vote has to be attacked tangentially through tropes like "voter fraud" rather than poll taxes and literacy tests; but then I look around and I can't help but wonder if I'm wrong.
If you find this interesting, or have learned something new, start a discussion with your friends.
Racial equity was the baseline for Dr. King’s dream. Selectively emphasizing only one sentence from his entire life’s work to send a message counter to his own is tragic.
The very fact that the United States focuses on Dr. King’s history and not many other Civil Rights leaders, is in and of itself because white conservative leaders thought they could use the perception of Dr. King to distract from the reality of his message. Before his death, even Dr. King was worried his dream had turned into a nightmare.
In the United States, the legacy of slavery is still a large and significant statistical predictor of racial inequality in multiple aspects of life.18 The birth penalty for skin color did not vanish; prejudice and malice did not vanish; inequity and disparity did not vanish; and discrimination in court, business, housing, banking, voting, education, and medicine did not vanish just because the Civil Rights and Voting Rights acts were signed into law. A true capitalist economy is not possible when racial discrimination exists. We have so much more work to do.
The data is clear, and can only be denied by sticking one’s head in the sand, that despite gains since Dr. King’s death, there is still so far yet to go before his dream is a reality. Pretending like we, as a society, should not talk about these issues because of one line from one speech, isolated out of a decades long career, embarasses me when I talk to my non-American friends.
Racial inequitability still plagues the United States. Dr. King was killed after his message shifted from Civil Rights to economic rights, and the progress on economic rights has been stalled for decades. That is what CRT is really about. That is what MLK’s message was really about.
But, like I said, CRT is already a lost cause. The messaging is too far developed to make the concept actually mean what it was intended to mean, and nobody will have a serious discussion if they think they are being called racist.
But, if on this MLK day, you want to help push his dream forward, think about racial inequity in the way we design our society. Calmly (so much emphasis on calmly) discuss racial inequity with friends and family—just don’t use the phrase Critical Race Theory—and consider how our collective history can make race neutrality lead to more racial inequity. And, for the love of all things holy, read more of Dr. King’s work—not just one sentence from one speech.
If we improve just a small amount every day, we won’t make Dr. King wait another five decades for his dream to come true.
Thanks for reading The Constituent. If you’d like to support the newsletter, here are a few options.
-Thanks,
Hartley, Richard D., Sean Maddan, and Cassia C. Spohn. "Prosecutorial discretion: An examination of substantial assistance departures in federal crack‐cocaine and powder‐cocaine cases." Justice Quarterly 24, no. 3 (2007): 382-407.
Perry, Andre, Jonathan Rothwell, and David Harshbarger. "The devaluation of assets in black neighborhoods." Library Catalog: www. brookings. edu (2018).
Reisig, Michael D., William D. Bales, Carter Hay, and Xia Wang. "The effect of racial inequality on black male recidivism." Justice Quarterly 24, no. 3 (2007): 408-434.
White, Alan M. "Borrowing while Black: Applying fair lending laws to risk-based mortgage pricing." ScL REv. 60 (2008): 677.
Ravina, Enrichetta. "Love & loans: The effect of beauty and personal characteristics in credit markets." Available at SSRN 1107307 (2019).
Rugh, Jacob S., Len Albright, and Douglas S. Massey. "Race, space, and cumulative disadvantage: A case study of the subprime lending collapse." Social Problems 62, no. 2 (2015): 186-218.
Flippen, Chenoa. "Unequal returns to housing investments? A study of real housing appreciation among black, white, and Hispanic households." Social Forces 82, no. 4 (2004): 1523-1551.
Baker, Bruce D., David G. Sciarra, and Danielle Farrie. "Is school funding fair? A national report card." Education Law Center (2014).
Armor, David J. "White flight and the future of school desegregation." School desegregation, pp. 187-226. Springer, Boston, MA, 1980.
Zimmer, Ron W., and Eugenia F. Toma. "Peer effects in private and public schools across countries." Journal of Policy Analysis and Management: The Journal of the Association for Public Policy Analysis and Management 19, no. 1 (2000): 75-92.
Herring, Cedric, and Loren Henderson. "Wealth inequality in Black and White: Cultural and structural sources of the racial wealth gap." Race and Social Problems 8, no. 1 (2016): 4-17.
Ibid.
Keister, Lisa A. "Race and wealth inequality: The impact of racial differences in asset ownership on the distribution of household wealth." Social Science Research 29, no. 4 (2000): 477-502.
Gutter, Michael S., and Angela Fontes. "Racial differences in risky asset ownership: A two-stage model of the investment decision-making process." Financial Counseling and Planning 17, no. 2 (2006): 64-78.
Pager, Devah, Bart Bonikowski, and Bruce Western. "Discrimination in a low-wage labor market: A field experiment." American sociological review 74, no. 5 (2009): 777-799.
Turner, Margery Austin, Stephen L. Ross, George C Galster, and John Yinger. “Discrimination in Metropolitan Housing Markets: National Results from Phase I HDS 2000.†The Urban Institute Metropolitan Housing and Communities Policy Center | United States Department of Housing and Urban Development. Nov, 2002.
Sabol, William J., Thaddeus L. Johnson, and Alexander Caccavale. "Trends in correctional control by race and sex." Federal Sentencing Reporter 32, no. 3 (2020): 157-177.
O'Connell, Heather A. "The impact of slavery on racial inequality in poverty in the contemporary US South." Social Forces 90, no. 3 (2012): 713-734.