Home England Income Tax Racial justice requires an end to political discrimination that thwarted economic justice

Racial justice requires an end to political discrimination that thwarted economic justice


The basic American ideal is that everyone should be entitled to “life, freedom, and the pursuit of happiness.” But the plenitude of the American dream has remained tenacious for generations of black Americans.

Recent events show the devaluation of black life by our institutions, from law enforcement to the healthcare system. Calls for police reform are an important part of our response to structural racism, but they are nowhere near enough. To fight racism and achieve justice, we need to address more fundamental economic injustices.

The history of racial discrimination in our country stretches for 400 years, beginning long before the Republic was founded, and has extended to every government since then. The current income disparities closely match the areas where 1860 cotton plantations were most frequently operated by enslaved people. Areas with more residential segregation in 1880 still have lower intergenerational mobility rates. And the wealth gap between black and white households is the same today as it was in 1968, half a century after the breakthrough civil rights laws were passed.

We must face the amazing breadth and breadth of racism in order to achieve economic justice. But the barriers that keep black Americans from accessing the American dream are not insurmountable.

This process will be painful and will require deliberate conversations at all levels – personal and professional, community and corporate, neighborhood and national – to uproot racist beliefs and practices. We must also commit to immediate policies appropriate to the challenge of restorative racial justice, including:

Expand capital access for companies in black communities

Hundreds of thousands of black companies lacked the cash reserves to weather the economic downturn caused by the pandemic, and the number of black business owners fell 41 percent between February and April this year. Robust capital access initiatives must include credit enhancement programs that allow companies to borrow more from banks, diversify the wealth management industry, and expand the personal savings of black Americans – a vital source of seed capital for most entrepreneurs.

Proposals for solving the savings problem include revitalizing the post banking system, but have not yet been widely tested and require a reassessment of black assets. In the meantime, the federal government needs to reconsider its recent decision to deregulate the payday loan industry – especially given these lenders are creating debt traps in low-income communities by charging annualized interest rates in excess of 300 percent.

Promote full employment in black communities

The unemployment rate among black Americans rose ten percentage points between March and April this year, and even rose in May when the national unemployment rate fell. A commitment to employment guarantees means that state and local governments can experiment with different approaches. Subsidized recruitment programs are often underutilized and evaluating additional pilot programs would help us identify measures that have the potential to increase job creation in response to economic downturns. Whatever approach state and local governments take, they must also ensure that school funding mechanisms enable the equitable development of skilled workers in low-income communities. And the federal government must abolish penal labor obligations for social assistance, which have proven to be ineffective.

Targeted housing investments in and for black communities

Home ownership is a cornerstone of wealth creation that generations of black Americans have been denied. In addition, tenants are more prone to housing instability and rent-burdened households face higher eviction rates. A commitment to housing black Americans must be comprehensive. These include expanding small area rental voucher programs to improve access to jobs, investing in capital improvement programs for black neighborhoods, and tightening enforcement of Community Reinvestment Act requirements to increase investment in black communities.

We also need to expand programs that help with down payments and risk mitigation, allowing black Americans to buy homes without relying on subprime mortgages. There is promising evidence that adjustments to credit scoring models could greatly expand access to mortgage credit, and these options, too, warrant further investigation.

We must end the 400 year old practice of systematically denying the future of blacks and devaluing black lives. That begins with research into reparations for descendants of enslaved people, such as direct payments, student loan waivers, or tuition waiver. For now, the measures outlined here can initiate the process of justice.

James Baldwin once wrote that “the American future is as bright or as dark as it is” [Black man’s]. “We must reckon with these injustices if we want to create a better future and live our nation’s creed.

Eugene Cornelius is a Senior Director at the Milken Institute Center for Regional Economics.

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