Racism has a cost for everyone Heather C. McGhee
I am a public policy wonk.
I investigate data that points to problems
in the American economy –
problems like rising household debt,
declining wages and benefits,
shortfalls in public revenue.
And I try to pinpoint solutions
to make our economy
more prosperous for more people.
I geek out about tax policy
and infrastructure investments,
and I get really excited
by a gracefully designed
regulatory regime.
(Laughter)
These are the kinds of topics
that I was talking about
on a public television
live call-in show in August of 2016.
I was about halfway through the program
when a man called in,
identified as Gary from North Carolina
and he said …
“I’m a white male, and I’m prejudiced.”
He then went on to detail his prejudice,
talking about black men and gangs
and drugs and crime.
But then he said something
that I’ll never forget.
He said, “But I want to change.
And I want to know what I can do
to become a better American.”
Now remember, my career
is about economic policy,
as translated into dollars and cents
not personal thoughts and feelings.
But when I opened my mouth
to respond to this man on live television,
the most surprising words came out.
I said …
“Thank you.”
I thanked him for admitting his prejudice,
for wanting to change
and for knowing, somehow,
that that would make him
a better American.
The exchange between Gary
and me went viral.
It’s been viewed over eight million times
and inspired waves
of social media commentary
and news coverage.
And I think people were surprised
that a black woman
would show such compassion
for a prejudiced white man,
and they were surprised
that a white man would admit his bias
on national television.
Not long after Gary and my viral moment,
we met in person.
He said that he had taken my advice.
He said that my words had been
like someone wiped the dust from a window
and let the light in.
Over the years,
Gary and I have become friends.
And Gary would tell you
that I’ve taught him a lot
about systemic racism in America
and public policy.
But I’ve learned a lot from Gary, too.
And the biggest lesson for me
has been that Gary’s prejudice
has caused him to suffer.
Fear, anxiety, isolation.
And it’s made me rethink
many of the economic problems
I’ve been focusing on
my entire career.
I wondered,
is it possible that our society’s racism
has likewise been backfiring
on the very same people
set up to benefit from privilege?
Driven by this question,
I’ve spent the past few years
traveling the country,
researching and writing a book.
My conclusion?
Racism leads to bad policymaking.
It’s making our economy worse.
And not just in ways
that disadvantage people of color.
It turns out it’s not a zero sum.
Racism is bad for white people, too.
Take, for example,
America’s underinvestment
in our public goods,
the things that we all need,
that we share in common –
our schools and roads and bridges.
Our infrastructure gets a D plus
from the American Society
of Civil Engineers,
and we invest less per capita
than almost every other advanced nation.
But it wasn’t always this way.
I traveled to Montgomery, Alabama,
and there, I saw how racism
can destroy a public good
and the public will to support it.
In the 1930s and ’40s,
the United States went on a nationwide
building boom of public amenities
funded by tax dollars,
which in Montgomery, Alabama,
included the Oak Park pool,
which was the grandest one for miles.
You know, back then,
people didn’t have air conditioners,
and so they spent their hot summer days
in a steady rotation
of sunning and splashing
and then cooling off
under a ring of nearby trees.
It was the meeting place for the town.
Except the Oak Park pool,
though it was funded
by all of Montgomery citizens,
was for whites only.
When a federal court
finally deemed this unconstitutional,
the reaction of the town
council was swift.
Effective January 1, 1959,
they decided they would
drain the public pool
rather than let black families swim, too.
This destruction of public goods
was replicated across the country
in towns not just in the South.
Towns closed their public parks,
pools and schools,
all in response to desegregation orders,
all throughout the 1960s.
In Montgomery, they shut down
the entire Parks Department
for a decade.
They closed the recreation centers,
they even sold off the animals in the zoo.
Today, you can walk
the grounds of Oak Park, as I did,
but very few people do.
They never rebuilt the pool.
Racism has a cost for everyone.
I remember having that same thought
on September 15, 2008,
when I learned the breaking news
that Lehman Brothers was collapsing.
Now Lehman was,
like the other financial firms
that would go under in the coming days,
done in by overexposure
to a toxic financial instrument
based on something
that used to be simple and safe –
a 30-year fixed-rate home loan.
But the mortgages at the center
and the root of the financial crisis
had strange new terms.
And they were developed
and aggressively marketed for years
in black and brown
middle-class communities,
like the one that I visited
when I met a homeowner named Glenn.
Glenn had owned a home
on a leafy street in the Mount Pleasant
neighborhood of Cleveland
for over a decade.
But when I met him,
he was near foreclosure.
Like nearly all of his neighbors,
he’d received a knock on the door
from a broker promising
to refinance his mortgage.
But what the broker didn’t tell him
was that this was a new kind of mortgage.
A mortgage with an inflated interest rate,
and a balloon payment
and a prepayment penalty
if he tried to get out of it.
Now, the common misperception,
then and still today,
is that people like Glenn were buying
properties they couldn’t afford.
That they themselves were risky borrowers.
I saw how this stereotype
made it harder for policymakers
to see the crisis for what it was
back when we still had time to stop it.
But that’s all it was.
A stereotype.
The majority of subprime mortgages
went to people who had good credit,
like Glenn.
And African Americans and Latinos
were three times as likely –
even if they had good credit –
than white people,
to get sold these toxic loans.
The problem wasn’t the borrower –
the problem was the loan.
After the crash,
most of the nation’s big lenders,
from Wells Fargo to Countrywide,
would go on to be fined
for racial discrimination.
But that realization came too late.
These loans, superprofitable
for the lenders
but designed to fail for the borrowers,
spread out past the confines
of black and brown
neighborhoods like Glenn’s
and into the wider,
whiter mortgage market.
All of the nation’s big Wall Street firms
bet on these loans.
At its peak,
one out of every five mortgages
in the country was in this mold,
and the crisis,
the crisis that my colleagues
and I saw coming …
would go on to cost us all.
Nineteen trillion in lost wealth.
Pensions, home equity, savings.
Eight million jobs vanished.
A home-ownership rate
that has never recovered.
My years of advocating in vain
for homeowners like Glenn
left me convinced:
we would not have had a financial crisis
if it weren’t for racism.
In 2017, I traveled to Mississippi,
where a group of auto-factory workers
was trying to organize into a union.
Now the benefits they were fighting for –
higher pay, better health care coverage,
a real pension –
they would have helped
everybody at the plant.
But in person after person
that I talked to –
white, black, for the union,
against the union –
race kept coming up.
A white man named Joey put it this way.
He said,
“White workers think I ain’t voting yes
if the blacks are voting yes.
If the blacks are for it, I’m against it.”
A white man named Chip told me,
“The idea is that if you
uplift black people,
you’re downing white people.”
It’s like the world’s got
this crab-in-a-barrel mentality.
Now, the union vote failed.
Wages at the plant are still lower
than their unionized peers',
and people there still worry
about their health care.
You know, it’s tempting, perhaps,
to focus on the prejudiced attitudes
of the men and the workers
that I heard in Mississippi.
But I’m more interested
in holding accountable
the people who are selling
racist ideas for their profit
than those who are desperate
enough to buy it.
My travels also took me to places
where I saw, however,
that it doesn’t have to be this way.
I went to Maine,
the whitest state in the nation,
the oldest,
where there are more deaths
every year than births,
and I went to this dying
mill town called Lewiston
that is being revitalized by new people –
mostly African, mostly Muslim,
immigrants and refugees.
There, I met a woman named Cecile,
whose parents had been part
of the last wave of new people
to come to Lewiston.
These are French-Canadian millworkers
at the turn of the century.
Cecile is retired, but she had found
a new purpose in life,
by organizing Congolese refugees
to join with the white retirees
at the Franco Heritage Center.
(Laughter)
These men and women from the Congo
were helping these retirees
remember the French
that they hadn’t spoken
since their childhoods.
And together, these two communities
helped each other feel at home.
You know, for all the political talk
about the newcomers
being a drain on the town,
a bipartisan think tank found
that the local refugee community there
created 40 million dollars in tax revenue,
and 130 million in income.
And I talked to the town administrator,
who was boasting about the fact
that Lewiston was building a new school,
when all the rest of towns
like theirs in Maine
was closing them.
You know, it costs us so much
to remain divided.
This zero-sum thinking,
that’s what’s good for one group
has to come at the expense of another,
it’s what’s gotten us into this mess.
I believe it’s time to reject
that old paradigm
and realize that our fates are linked.
An injury to one is an injury to all.
You know, we have a choice.
Our nation was founded
on a belief in a hierarchy of human value.
But we are about to be a country
with no racial majority.
So we can keep pretending
like we’re not all on the same team.
We can keep sabotaging our success
and hamstringing our own players.
Or we can let the proximity
of so much difference
reveal our common humanity.
And we can finally invest
in our greatest asset.
Our people.
All of our people.
Thank you.
(Applause)