Monday, July 6, 2020


Systemic racism doesn't just hurt individuals and limit their opportunities — it also creates a lasting drag on the economy, writes Atlanta Fed chief Raphael Bostic, the first Black president to lead a regional Fed bank.
Fed examines racism's economic toll
Unfortunately, it's not much of an examination. While A Moral and Economic Imperative to End Racism does note that racism means that people impacted by it contribute less to the economy than they could have otherwise, that simple observation seems fairly straightforward. It's fairly easy for anyone to claim that someone languishing in long-term unemployment would be contributing more in a well-paying job.

But it seems unlikely that if the United States actually needed greater economic contributions "in the form of work product and innovation" from it's citizenry, that it wouldn't have found a way to put its currently excess labor force to work and realize those contributions. The problem that racism causes for a national economy isn't that it lowers GDP. If anything, it's that the discontent that a skewed distribution of poverty creates siphons resources away from more productive uses. Between police overtime and insurance claims for burned-out vehicles and buildings, there are clear expenditures that would have been better spent on more productive activities. But while the Glazier's Fallacy might state that the money spent replacing cars is poorly spent overall, the simplest answer to that is that if the protestors would simply accept their lot, there would be no need for added expense. And even so, it's a shift of economic activity, rather than a straightforward drain. And so the idea that systemic racism is a drag on the economy is not as clear-cut an idea as it might seem.

Because the demand for labor, goods and services is not infinite, racism doesn't have to mean that a society is willfully leaving money on the table, simply to spite some or another sector of the populace. If there is a presumption of rationality, then growing the demand for people to contribute work product and innovation is how one defeats racism. And if there isn't a presumption of rationality, then pointing out a hit to GDP is unlikely to work in the first place.

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