Interview: Brookings Scholar Andre Perry on Race Inequality, Defunding Police, and How to Effect Change
Dr. Andre M. Perry (pictured) is a prominent scholar and fellow at The Brookings Institution’s Metropolitan Policy Program. He is also a scholar-in-residence at American University and a columnist for the Hechinger Report. His work tends to focus on race, structural inequality, and education, and his writing has been featured in MSNBC, The New York Times, The Nation, The Washington Post, and CNN among others. He is also the author of the new book “Know Your Price: Valuing Black Lives and Property in America’s Black Cities”. That book focuses on the devaluation of assets in black neighborhoods and highlights findings he produced in a Brookings study and presented before Congress.
I am excited to share this interview with Andre Perry, who is a prominent scholar at The Brookings Institution. The interview focuses on race inequality, the movement to defund the police, reconciling class-based movements with race-based movements, political strategies to enact progressive legislation, and whether or not change should come from outside the system.
With this interview, I am also happy to announce that “The Difference Principle” is receiving some new support and moving out of its “pilot” stage. It will be undergoing a rebranding process as well as a launch in the form of a podcast.
You can now listen to this interview and subscribe to The Difference Principle on Spotify and on other platforms by clicking this link to the Anchor page
Thanks for listening!
—Julian, writing from New York City
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Personal Essay: What A Fulbright in Belgium Taught Me About American Progressivism and Racial Justice
Recently, I returned to the US after finishing up a Fulbright in Belgium. It was a wonderful experience that taught me a great deal about how best to study economic inequality. The below piece is being published by Fulbright online, and it deals with Belgium’s experience with colonialism and racism and the question of how racial justice intersects with economic progressivism.
If you would like to hear more about my research or discuss these experiences, please reach out.
For those interested, here is a photo album from my time abroad:
—Julian, writing from a rainy New York City
It is an interesting time to be writing and pursuing research on economic inequality. Like most of the rest of the world, the US is currently reckoning with a global pandemic that is widening inequalities—between higher-wage workers who can do remote work and those who can’t, for example—, and the murder of George Floyd triggered a global conversation about white supremacy’s historical role in a particular kind of racial inequality.
Yet income and wealth inequity has been endemic in the United States, particularly since the 1970s. This is partly why I moved to Belgium to study the impact of technological shocks (e.g. artificial intelligence) on the gap between the rich and poor as part of a Fulbright grant. And I was excited to learn more about Europe’s experience with progressivism from a Belgian perspective. As many in the US continue to push for policies like universal health care and higher tax rates for the wealthiest households, parts of Europe are often heralded as positive models.
Until recently, I was based in Ghent, Belgium—a Flemish city with canals and medieval-style buildings often rebuilt after the Second World War (pictured). And the presence of government policy and an approach to statecraft that favors greater inclusion and a higher standard of living for the most vulnerable people can be seen very apparently. Public transportation is robust, cheap, and flexibly priced for younger people; bike paths are ubiquitous; universal health care is taken as a given; college is cheap; there are very few homeless people. And despite the presence of some sections of Ghent that were more accessible to wealthier residents, most people have access to an affordable baseline and high quality of life.
And yet, my time living in Ghent showed me that this wasn’t a complete story. Belgium’s history with race, in particular, tells a more nuanced tale about the conditions in which European progressivism often exists as well as an even broader lesson about the relationship between racism and movements in economic progressivism.
Put simply, though Belgium has managed to excel relative to the US in its ability to maintain a strong quality of life for most people, national conversations about racism seemed often underdeveloped. And the resurgence of the far-right Vlaams Belang party has ushered in a wave of xenophobia and nationalism directly into Flemish politics. The particular brand of old-school racism the party espouses stood in startling contrast to the impressive standard of living and quality of life provided by Belgian’s otherwise progressive institutions. It was a type of racism resembling the euro-nationalist and often white supremacist rhetoric of the identarian movements present in many European countries. That is to say, it was centered around a nucleus of ethnic and cultural “purity” as well as the expulsion of foreigners and any inkling of multiculturalism. A leader of the party stated, for example, that women wearing the hijab had "effectively signed their contract for deportation."
Anti-Islam sentiment and opposition to “political correctness” are clearly present in parts of the American right. Yet the specific rhetoric used by the Flemish far-right seems more overt and less thinly disguised in its racist subtexts and advocacy of cultural purity. The problem of racism in Flanders, however, extends beyond this into the center of Belgium’s institutions. This is apparent in, for example, the case of the African Museum in Brussels. For years the museum was criticized for not providing a sufficient depiction of the atrocities that occurred in the Belgian Congo. In recent years, the museum has admirably attempted to address this problem. And yet, as Fulbright program participants saw on a group visit to the museum, there remains a stupefying lack of recognition of how bad King Leopold’s colonial effort was and the scale of the human rights abuses that he committed.
How can we reconcile the presence of robust social safety nets and systems of progressive policy on the one hand with the classical xenophobia in pockets of Belgian life and institutions on the other? The answer, I believe, comes down to demography. And it is something that I believe can tell us a considerable amount about America’s experience in attempting to facilitate a national conversation on racial justice.
Put simply the US is on track to be a minority white country by 2045, and the presence of Black and Hispanic minorities has always been a central component of the American political and cultural experience. It would be inconceivable for a modern Presidential election cycle to not address questions of racial justice and inequality. This has created, if nothing else, the beginnings of language that can be used to describe concepts of systemic racism. And in places like the African American History Museum in Washington DC, there is a broad, powerful, and growing movement to reconcile and understand the vehicles of white supremacy that allow for racism to manifest in the violent forms that it does.
And yet, the same multiculturalism and diversity that has allowed the US to undergo the process of constructive conflict and conversation about racism has also created a culture that is more antagonistic to progressive economic change, such as universal health care and redistribution. A study by The Brookings Institution found that, despite the resurgence of a desire to provide a greater social safety net after the “unifying experiences” of the Great Depression and Second World War, those feelings were superseded by a decline in support for those progressive programs as the US reached high levels of immigration (as high as 1 million a year) in the second half of the 20th century. Just as America’s diversity demanded a greater emphasis on questions of racial inclusion in future discourse, it also kindled underlying racist resentment and eroded national comradery and the desire for redistribution.
Belgium, by contrast, and like much of the rest of Europe, is far more racially homogenous than the US. And so, the power of racial and ethnic minorities to enter into conversations and create spaces to engage in national discussions of racism is considerably weakened. Yet it is possible that this homogeneity has also been a condition that allowed for progressive policy and redistribution to flourish.
There are clearly many reasons for America’s embrace of free-market capitalism and antagonism to “socialist” ideas (e.g. the Cold War). Yet it also seems clear that historical moments in favor of progressive shifts toward universal health care were suppressed by a subsequent backlash to welfare brought on by racial animus in an increasingly multicultural country. And in recent years, right-wing parties in Europe such as the Vlaams Belang too have responded to the rise in multiculturalism and an increase in migrants with a shift toward narrowing the size of welfare or the scope of who qualifies.
This underscores a major lesson I learned from my time in Belgium, and it’s one that I continue to think about as I research inequality. As the effort for greater egalitarianism and social progress took hold in Europe, seemingly antithetical subtexts of free-market capitalism and rugged individualism took hold in the US. And yet, the same multiculturalism and diversity that eroded American unity and impulses for redistribution created the conditions that also made conversations about race inevitable. By contrast, Belgium and European inclinations for redistribution were at least partially a consequence of a feeling of greater unity. This was in turn contingent on a racial and cultural homogeneity that allowed questions of colonialism and racism to persist in a more unchecked form.
Welcome to this July edition of “The Difference Principle”.
In this month’s “Spotlight” section, we highlight a report on how the decline of worker unionization impacted the Black middle class. We also summarize eight recent studies that, among other things, give us new insights into how this pandemic and recession are interacting with inequality generally and along lines of race and gender. In the “From the Book Shelf Section”, I discuss a book by Adair Turner (former chairman of the UK Financial Services Authority) on how the rise of US private debt and credit has produced higher inequality.
First, it is worth taking note of how the past month’s media coverage of the “economic recovery” paints a salient portrait of inequity and power in the US.
As a significant part of the country grapples with systemic inequities baked into a bifurcated economic system, a considerable amount of media coverage is being dedicated to signs of revitalized financial markets.
And there is no doubt that a sense of buoyancy struck Wall Street in June. Amidst a recession that many economists believe is worse than the Great Depression, stock markets yesterday wrapped up their best quarter in more than 20 years. Just three months ago, the stock market had lost about 35 percent of its value in less than six weeks.
Yet as Paul Krugman reminded us in a column this month, the stock market is not the same thing as the “real economy”. And sometimes what is good for the stock market can be bad for the economy. Indeed, the stock market rally contrasts with trends in economic output—the quarter is expected to be worst since the Second World War. And the recovery of small business employment has been sluggish and stalling. Some executives have said this is among the most overvalued stock markets they’ve ever seen.
There are signs that April might have been the worst of it. A monthly Wall Street Journal survey found that more than two-thirds of economists (68.4 percent) expect the recovery to start in the third quarter. Just over a fifth (22.8 percent) said it already began in the current second quarter. Yet failed coronavirus containment policies in many states have rekindled fears of a bad second wave. Studies have directly linked the ability of a country to limit the spread of the virus with the effort to reduce job losses. This is why it is perhaps unsurprising that the US experienced the largest rise in its unemployment rate.
Amidst considerable uncertainty, one point seems eminently clear: we would have been much worse off had it not been for the CARES Act (and Paycheck Protection Program, in particular). The stimulus has been essential to preventing low-income individuals and small businesses from reaching economic catastrophe, and a study out of Columbia University found that the rise in the poverty rate during the pandemic has been almost imperceptible. It would have risen by about 4 percent (12 million people), however, had it not been for the CARES Act. And that increase would have been concentrated mostly in Hispanic and Black households, where members have been six times more likely to die than white people of the same age demographic.
This month’s newsletter provides useful resources to help understand all of the above topics and more. And as with previous months, I would like to pass along a list of ways you can help out during this pandemic as well as a link to anti-racist resources for non-Black people that I hope will be helpful.
Thanks for reading. See you in August.
—Julian, writing to you from New York City
(In “Spotlight”, we highlight one report or story from the past month that deserves particular attention.)
The Decline of Unionization Destroyed the Black Middle Class(MIT; NBER; Financial Times; Wall Street Journal.) This working paper out of the Institute for New Economic Thinking is an introductory chapter for an upcoming book titled “Fifty Years After: Black Employment in the United States Under the Equal Employment Opportunity Commission”.
Unions provide an opportunity for workers to consolidate power and bargain for higher wages and greater protections. This is why the decline of unionization in the US has been a component of the rise of inequality since the 1970s. Countries with more egalitarian streaks tend to see higher rates of union membership—Denmark, for example, has a 67 percent unionization rate. This paper tells a fascinating story about how the decline of unionization in favor of a more financialized economy eroded the Black middle class. During the 1960s and 1970s, Black Americans gained significant access to well-paid unionized employment opportunities. Upward mobility for Black people was occurring in the context of greater demand for blue-collar work and the anti-discrimination laws of Title VII of the Civil Rights Act.
This piece shows that things changed in the 1970s when global competition resulted in the offshoring of manufacturing jobs and the consequent decline of a strong middle-class sector. Moreover, seniority rules prevented Black Americans from acceding in unions and also meant that they tended to be the last hired and first fired. Black people were consequently more vulnerable to downward mobility. Meanwhile, the emphasis on downsizing labor forces operated in tandem with an emphasis on distributing profits to shareholders to create the beginnings of a new economy that privileged a smaller share of well-paid individuals. Meanwhile, Black and Hispanic people saw economic access wane in comparison with white and Asian people. Read
If you’re interested in hearing more about this, I have a long-form feature on this topic coming out in a national magazine in the next few months. You can sign up to receive that piece here.
(“Big Ideas” showcases particularly interesting stories and reports from the past month—organized by subject.)
~Business and Finance~
Small businesses were hit hard by the recession. Black and Hispanic ones even more so. (Robert W. Fairlie, The National Bureau of Economic Research) The number of active small businesses in the US fell by 22 percent from February to April. This was the largest drop on record, and those losses were felt hard across all industries but particularly among businesses owned by Black and Hispanic people. The former saw a decline of 41 percent while the latter saw a drop of 32 percent. Immigrant owned businesses saw losses of 35 percent. These findings show that it is important to considering inequality even among small businesses when assessing future stimulus policy. Read
Barring employers from viewing an applicant’s wage history can help decrease gender and race inequality. (James E. Bessen et al, Boston University School of Law) Pay gaps for women and minorities continue to persist even when they are performing the same work as other demographics. Why? This study shows that if employers can access applicants’ salary histories while bargaining over wages, they can take advantage of historical inequities and offer less money. Recently, a dozen US states have banned employer access to salary histories. The authors of this piece show that this policy resulted in an increase of pay for job changers by about five percent, with larger increases for women (eight percent) and Black people (13 percent). This shows that employers’ access to salary history was partly responsible for wage inequality within professions. Read.
A larger number of college graduates does not necessarily guarantee a larger and more stable middle class. (Bradley Hardy and Dave Marcotte, The Brookings Institution) Access to education often correlates with the strength of the middle class and opportunities for economic mobility. In the early 20th century, increased access to high school education seems to have played a part in building the robust middle class that followed. This study shows that the rise in the number of college graduates over the past couple of decades has not produced greater middle-class stability. On the contrary, from 2011 to 2017 only about half of middle-class families stayed in the middle class. Some lost their incomes while others climbed up. Households with college graduates were more likely to be middle class or higher, but this study shows that a rise in the aggregate number of college graduates has not correlated with a larger or enduring middle class. Read.
Restoring regional public universities is an important step to economic recovery in the Great Lakes. (Robert Maxim and Mark Muro, The Brookings Institution) This study looks at the role that regional public universities can play in fostering an economic recovery in the Great Lakes region. It finds that such institutions fill a vital role, educate more in-state and transfer students than public flagships and R1s, help close university attainment and completion gaps for underrepresented students, and produce many business, healthcare, and education professionals. These schools have struggled, however, and required revitalization even before the coronavirus. Read.
Low-income groups tend to be hurt most by recessions, indicating downturns may themselves be a source of inequality. (Jonathan Heathcote, Fabrizio Perri, and Giovanni L. Violante, The National Bureau of Economic Research) This report shows that declining hours of work have been a primary driver of widening inequality for the bottom half of working men in the US over the past 52 years. This decline happens most during recessions, when hours and earnings fall sharply, especially at the bottom of the income distribution. The authors show that a combination of skills-biased technological change has coupled alongside recessions to produce greater inequality, as wages and earnings at the bottom stagnate and fail to completely recover. Read.
~People and Places~
Recessions and anti-Black racism. (Mark Anderson et al., Journal of Economic Behavior & Organization) Do recessions spur a spike in racist incidents? This study attempts to estimate the effects of economic conditions during the Great Recession on racism. They measure racism through the use of anti-Black racial slurs and hate crimes against Black people. And the authors focus on two sectors particularly impacted by the recession: manufacturing and real estate. The report finds that the states hit hardest by the economic meltdown also saw the largest increase in racist internet searches and also the largest spikes in hate crimes against Black people. Read.
~Social Security and Taxation~
The US social security system is failing older women. (Ian Burn et al., The National Bureau of Economic Research) This report offers an overview of research that shows the unique challenges older women face in work, retirement, social security, and age discrimination law. The authors find that older women see higher rates of poverty due to the prevalence of older women outliving their spouses and becoming widowed. Women consequently benefit more than men from working longer; however, age and gender discrimination can make this difficult later on, which causes some older women to “fall between the cracks”. Read.
How new technologies spread through an economy. (Nicholas Bloom et al., The Institute for New Economic Thinking) How do novel technologies spread? This study looks at the rollout of 20 new technologies across firms and labor markets in the US and finds that new technologies 1.) create new positions related to them but reduce the education requirements and wage levels of those positions; 2.) have a diffuse impact across the whole US that is initially felt first in local hubs and educated cities; 3.) the initial hubs that saw the advent of a new technology continue to disproportionately retain a high share of employment in that technology for some time. This consequently can tell us a considerable amount about the architecture and mechanics of geographic inequality caused by new technologies. Read.
What Else I’m Reading
(“What Else I’m Reading” is a very brief rundown of other noteworthy reports and stories.)
A piece on the stark racial inequity of personal finances— at nearly every stage of their lives, Black Americans have less than whites (New York Times)
Black customers risk being racially profiled on everyday visits to bank branches. Under federal laws, there is little recourse as long as the banks ultimately complete their transactions (New York Times)
Black workers face two of the most lethal preexisting conditions for coronavirus--racism and economic inequality (Economic Policy Institute)
A majority of workers are fearful of coronavirus infections at work, especially Black, Hispanic, and low- and middle-income workers (Economic Policy Institute)
Anne Case and Angus Deaton: America finds itself in the grips of two epidemics, each of which has exposed deep inequalities across races and levels of educational attainment. Between rising "deaths of despair" among working-class whites and higher COVID-19 mortality rates among Black people, the stunning decline in US life expectancy will continue (Project Syndicate)
Poverty rose by a very small amount between 2019 and 2020. But without CARES, it would have risen to 16.3 percent, resulting in almost 12 million more people being in poverty (Center on Poverty and Social Policy)
The US unemployment rate is higher than it looks, and it would still be high if all furloughed workers returned (Peterson Institution for International Economics)
Daron Acemoglu: Now that the COVID-19 pandemic has ushered in a steep economic downturn, highly indebted emerging markets and developing countries are facing potentially ruinous fiscal crises, the costs of which will fall on ordinary citizens (Project Syndicate)
A new survey by Just Capital finds that just 25 percent of the surveyed think capitalism, as it stands, is good for society (Just Capital)
ITIF argues that, despite the measured rise in market concentration in some industries, monopolization in most markets is well below the levels that would normally trigger antitrust concerns (Information Technology and Innovation Fund)
An Obamacare repeal lawsuit would cut taxes for top 0.1 percent by an average of $198,000 (Center on Budget and Policy Priorities)
The Urban Institute conducted a case study of Iowa’s successful youth apprenticeship programs. It provides lessons that can be useful as policymakers and leaders begin to think through developing retraining programs (The Urban Institute)
A theoretical model shows that a universal basic income could serve as an effective transitional tool to provide social security as automation renders certain skills obsolete and retraining takes place (National Bureau of Economic Research)
It’s not just the US. Capital income growth and increasing savings have also been responsible for rising inequality in Germany (International Monetary Fund)
Climate change may spur extreme heat that reduces agricultural productivity, creating significant welfare costs for the global poor (National Bureau of Economic Research)
From the Bookshelf
(Each month, we highlight one older text that offers valuable insights into inequality.)
“Between Debt and the Devil”, Adair Turner (2015)
This book by Adair Turner looks at how the rise of debt and credit in the US and UK economies have been sources of destabilization and inequality. Among other findings, Turner shows that access to credit and rise of private (i.e. household) debt has had a self-reinforcing impact on inequality because the rise in the income and wealth gap since the 1970s—on account of technology, trade, policy, and financialization—has increased demand for credit. Meanwhile, the extension of credit in real estate markets where housing is scarce—e.g. urban centers— led to higher home prices and increased demand for credit further. The resulting spike in leverage (credit divided by GDP) led to higher private debt and further transferred ownership to a more rarified group of individuals. And this, in turn, makes inequality worse, which necessitates more credit as low-income individuals struggle to stay afloat. And the process repeats. Buy.
What I’ve Been Working On
(A brief summary of projects that I have been working on in the past month.)
Quote of the Month
“Economic disasters are almost always preceded by a large increase in household debt. In fact, the correlation is so robust that it is as close to an empirical law as it gets in macroeconomics.”
—Atif Mian and Amir Sufi, “House of Debt” (2014)
Thanks for reading! See you in August.
That’s a wrap on this edition of “The Difference Principle”
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