The foundational metaphor of neoliberalism is that a rising tide lifts all boats. But, like many other assumptions in economic thought, that idea willfully ignores racism. Economist Joelle Gamble joins Jessyn and Nick to explain that when economists fail to scrutinize theories through the lens of race, they perpetuate racist outcomes. Plus, The Sadie Collective co-founder Fanta Traore describes how the economics field can take deliberate measures to address the exclusion of Black economists.
Joelle Gamble is a principal with the reimagining capitalism team at Omidyar Network, where she focuses on topics related to building the power of working people and shaping a new economic paradigm. Joelle writes on topics of race, labor, and technology, and sits on the board of directors of the Roosevelt Institute.
Twitter: @joelle_gamble
Fanta Traore is a Senior Research Assistant at the Federal Reserve Board of Governors and the co-founder and COO of The Sadie Collective.
Twitter: @TheFantaTraore
Further reading:
How economic assumptions uphold racist systems: https://www.dissentmagazine.org/online_articles/how-economic-assumptions-uphold-racist-systems
An Open Letter to Economic Institutions In The Face of #BlackLivesMatter: https://medium.com/@sadiecollective/open-letter-to-economics-blm-5b38100e59b5
What the Big New Study About Race and Mobility Doesn’t Tell Us: https://www.thenation.com/article/archive/what-the-big-new-study-about-race-and-mobility-doesnt-tell-us/
Neoliberalism and Race: https://democracyjournal.org/magazine/53/neoliberalism-and-race/
Website: https://pitchforkeconomics.com/
Twitter: @PitchforkEcon
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Nick’s twitter: @NickHanauer
Producer:
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Joelle Gamble:
A rising tide can’t lift all boats if there are structures in the way keeping people from succeeding.
Jessyn Farrell:
These neoliberal myths uphold and perpetuate racial inequities in our economic system.
NIck Hanauer:
GDP becomes essentially a racist instrument. It’s this way of teaching people that everyone is doing well when in fact, most people are not, in particular, Black and brown Americans.
Speaker 1:
From the offices of Civic Ventures in downtown Seattle, this is Pitchfork Economics with Nick Hanauer, where we explore everything they forgot to teach you in Econ 101.
NIck Hanauer:
I’m Nick Hanauer, founder of Civic Ventures.
Jessyn Farrell:
I’m Jessyn Farrell, and I’m senior vice president at Civic Ventures and a former state legislator. In today’s episode, we’re going to explore the intersection of economics and race and that racism shapes how economics is taught and practiced. And in particular, we’re going to be looking at several myths that are familiar to all of us who have studied neoliberalism and talk about how these neoliberal myths uphold and perpetuate racial inequities in our economic system.
NIck Hanauer:
Yeah, myths like a rising tide lifts all boats.
Speaker 1:
Exactly. [crosstalk 00:01:55] That’s a really good one. Clearly, there is a myth embedded in that that is quite frankly wrong and the way it plays out in particular for Black Americans is especially pernicious because when you look at say, aggregate data around how you know how the economy is doing, you look at broad GDP numbers, those masks, what is actually happening on the ground for Black employment, for example,
NIck Hanauer:
Right. I think that this notion, this metaphor that a rising tide lifts all boats is deeply linked to the aggregate measure GDP and it’s so interesting when you think more carefully about this, particularly in the context of race, how much that masks and what frankly, what bullshit it is. Because in fact, over the last 40 years, we have had a rising tide. GDP has gone up every year for the last 40 years, or maybe it didn’t in some recessions, but largely GDP has gone up every year for the last 40 years. And in fact, it only lifted the boats of the top 1%, the next 9% largely stayed the same. All the other deciles of Americans, the bottom 90% of Americans largely did not participate in any of that tide lifting. They got no benefits of economic growth.
Again, the aggregate numbers tell the story that things are getting better, but if you disaggregate the data, what you find is a few people are doing better and almost everybody is doing worse. Especially if you use the lens of race, you can see that Black people, it’s certainly Black men disproportionately are doing even way, way, way worse than the generalized picture would lead you to believe. In this really weird way, GDP then becomes essentially a racist instrument. It’s this way of teaching people that everyone is doing well when in fact, most people are not, in particular, Black and Brown Americans. I think it’s really clear that a lot of these systems of thought that we have utilized over the last 40 years have asymmetrically disadvantaged people of color.
Jessyn Farrell:
And today, I’m looking forward to exploring that with our guest, Joelle Gamble, who recently published an article unpacking how economic assumptions uphold racist systems.
Joelle Gamble:
My name is Joelle Gamble. I’m a principal on the re-imagining capitalism team at Omidyar Network. I just try to invest in ways to build power for working people and change how we think about the economy.
Jessyn Farrell:
Can you tell us a little bit about your background and what got you to this place that the Omidyar Network?
Joelle Gamble:
Yes. I started off as a student organizer in California during the financial crisis. So I started undergrad in fall 2008, and I say that because it was a moment of great political hope. We elected president Obama at the time and at the same time, tuition was skyrocketing and I could not afford higher education. That just got me interested in tax policy and budgets and structural economic problems like inequality, which eventually led me to go work at the Roosevelt Institute for five years before going to graduate school, which I finished about a year ago and joined Omidyar Network Just as the leadership was thinking about how to make big, big change in the economy, not just one change in one company in one market.
Jessyn Farrell:
That is really excellent. Well, we’re so glad you’re here with us today. You just wrote this article that is how economic assumptions uphold racist systems. I was hoping that we could really dig into that today and talk about some of the myths that are really embedded in neoliberalism, sometimes we call them lies, let’s face it, that really undergird this economic system that has created both massive inequality, but also really, really racist outcomes for Black and brown Americans. So there are a few myths that I thought we could explore together, including this idea that a rising tide lifts all boats, that value equals price and that human behavior is fundamentally rational. So I would love for you to just unpack those for us. Why don’t we start with a rising tide lifts all boats and maybe you can talk a little bit about how systemic racism is really intertwined with that kind of thinking.
Joelle Gamble:
Happy to, I think what you said about neoliberalism is incredibly important. Neo-liberalism kind of hides the ball. It assumes that free markets rule all when in reality. our economy is shaped by institutions, norms and policies, and we have to be upfront about that, especially if we don’t want economic policies to perpetuate racist systems because racism is also not just about individual behaviors, it’s about institutions, norms and policies that lead to the marginalization of specific racialized groups, especially Black people in the United States. That gets to this idea that a rising tide can lift all boats, that we can just expand opportunity and it’ll reach everyone, which is just not true. So when I wrote this article, it was right after the May employment numbers came out and folks were excited that there was a slight decline in the unemployment rate, but in reality, it actually ticked up slightly for Black people.
There’s been this persistent gap in unemployment between white workers and Black workers for decades at this point. We just assume that if unemployment is going down, it’s affecting everyone equally, as the same time, even know that Black workers are much more likely to be in jobs that don’t actually match their education level. So even, it’s not just an educational attainment issue either, even at the same education level, Black workers have more difficulty in the labor market than white workers and are often underemployed, essentially working in jobs that don’t actually match the skills that they have. So you have to ask yourself this question, if it’s not just education or age or marital status, which there are a bunch of studies about, what is the problem? It’s actually institutional. It’s structural reasons like labor market discrimination or mass incarceration, for instance, that leads to this disparate impact between white workers and Black workers. So a rising tide can’t lift all boats if there are structures in the way keeping people from succeeding.
Jessyn Farrell:
Yeah, that’s a really important point. Not only is that myth and that belief system obscuring the racist outcomes that are part of our built economy, but also the way we measure things. You mentioned this idea that aggregate numbers don’t really describe the whole very well, and you’re really getting into that as you’re talking about the May employment numbers and what’s happening. Can you talk a little bit more about that idea?
Joelle Gamble:
Essentially, what I’m getting at is, is that there’s this assumption when we look at indicators, whether it’s unemployment rates, whether it’s GDP, whether it’s even the implements of population ratio, which a lot of economists will argue, and I think for good reason, that it’s a better measure of the actual state of labor markets for a population, there’s still this gap. And yet, you’ll see headline after headline, or even how we target policy. For instance, the Federal Reserve will target the overall unemployment rate. Whereas Jerry Bernstein and Janelle Jones have a great proposal where the fed should target the Black unemployment rate because it’s actually a better indicator of whether or not the economy is working better for everyone. But at the same time, that’s not what we do. We just look at these top level numbers and opine about whether or not the economy is actually working.
Jessyn Farrell:
Yeah. Exactly. It makes me think one of my colleagues here at Civic Ventures, Paul Constant, described the stock market is the mood ring for the rich and that when think about how well we’re doing, we measure the stock market. When in reality, most Americans don’t have stock. Those who do, it’s massively concentrated in the hands of the EU. So you really are making an important point that these big, broad, macro economic numbers both perpetuate this story that neoliberalism tells ourselves that rising tide lifts all boats and that how we’re doing at these very top lines is really a picture of how we’re doing. When in reality, we need to be much more granular and look at how our economic policies and choices are impacting different people in our community. So there’s another one that you bring up, another myth that I think is really important to unpack. it’s this idea that value equals price, that we get paid for what we’re worth and that there are highly skilled jobs and lower skilled jobs and how that also perpetuates racist outcomes.
Joelle Gamble:
Yes, this is an issue that bothered me even in my first econ class in undergrad. It doesn’t match with a lot of our lived experiences and yet, it’s so pervasive in how we talk about the state of the labor market or how we talk about product markets too. The example I gave in the article I wrote was actually around wages though, because I think that’s a really illustrative example. Wages are essentially the labor market’s version of prices. So we assume that there are competitive markets and the value that a worker adds to the firm is actually what the worker is paid, which conversations around CEO pay I think are a great example of how that is not true. But even more so when we talk about wages, we actually fail to account for the ways in which we’ve actually invested, via government, into specific work that is done by specific communities through the creation of unions, through essentially breaking up market power in a way that actually allows for jobs to be good jobs.
Good jobs don’t just materialize from the free market, they are built and the manufacturing sector in the United States is a great example of it. I think as people are digging more and more to labor history these days paralleling the strikes and work actions today, so what’s happened in the early 20th century, we’ve learned a lot about the UAW strikes for instance, and the ways in which worker action was actually able to build better poly jobs in what many politicians hold up as one of the strongest opportunities for building the American middle class in the last century, which is manufacturing, especially in the car manufacturing sector. And yet, we haven’t done that for every type of work. We classify some work as low skill and some work as high skill, not necessarily by how much value they add, but by whether or not we’ve invested in them, in those jobs. So an example that I think is really important is care work in which Black workers are overrepresented. It’s one of the fastest growing sectors in the country, but the median hourly wages are around $11.37 cents.
Jessyn Farrell:
Wow.
Joelle Gamble:
And yet, we’re saying because they’re low skilled jobs and Black workers and women of color sorting into low skilled jobs, that’s not true. One, these are not low skilled jobs. In some states, they even require an occupational license. There’s a high level of emotional intelligence, hours of training. With the US having an aging population that would like to be cared for, I think it’s one of the most highly valued areas of work that we have. And yet, we have not invested in better standards for those workers. There are ways in which we can build public sector jobs for this kinds of work that can actually make markets more competitive and make sure that there’s actual increased access for this kind of working and we are not doing that. It’s a lack of institutional investment, not some free-flowing market that will just tell us to value care workers more. I think that’s the problem.
Jessyn Farrell:
Yeah, that’s so true. I think that idea of you get paid what you’re worth and the value of different kinds of jobs has really been laid bare in the COVID-19 pandemic and economic crisis, and this whole conversation around who are essential workers? And the fact that what we previously would have characterized this as so-called low skill work like being a grocery worker, a delivery person. These are jobs that are essential in this moment. Can you talk a little bit about that and how the world might look different if we were able to undo this belief that somehow the free market allows us to properly value a person’s worth through work?
Joelle Gamble:
Yes. I think we would at least have hazard pay as an immediate solution in this crisis. There’ll be much less debate around this because we would recognize that the work that’s the most valuable is not actually being compensated, but on a larger scale, we would have fewer debates around minimum wage and unionization in these key industries. So grocery store workers have been trying to unionize, UFCW for instance, is a union that’s been organizing grocery store workers. They’re on the front lines. They have every right to labor law protections and the ability to have a voice in the workplace since they’re risking their lives in this pandemic and on a regular basis are an important part of the supply chain that gets food from a farm across a country, or sometimes around the globe to a grocery store to your table. This is important work.
On top of that, I think we would also have frankly, some sectors that are either purely publicly provided or have a public option. So when it comes to a lot of work around healthcare, for instance, I mentioned care work. If this is work that matters and it’s not being valued, that’s where public provision comes into play versus the government just saying, “Let’s let the private firms figure it out.” Government can actually invest and on top of that, we would be paying, for instance, teachers more. Teachers would have unions. Yes, and also, it would be paid to represent the level of productivity that they actually produce in the economy. Teachers not only help our children become more productive workers, I think a lot of parents are now realizing now that their kids are at home, that the fact that their kids are in school actually helps their own productivity when they go to to work-
Jessyn Farrell:
For sure.
Joelle Gamble:
I know we would have essentially higher wages, more union representation, and frankly, more public options for the kind of work that we really value.
Jessyn Farrell:
I have to also think about childcare workers too, and how we have this industry that was very fragile going into the crisis and now, it’s really on the verge of collapse and how utterly important childcare workers are not just because they’re so important in providing meaningful early learning situations for kids, but also because it’s so hard to be able to work without having really great, safe childcare options. And again, this was something that was certainly part of the picture of before COVID and has just, there’s a really glaring spotlight on that.
Joelle Gamble:
Yes, exactly. It’s incredibly important. I’m seeing more and more calls for universal childcare because it’s clear that when childcare work is work, it’s work that’s been unpaid for a very long time.
Jessyn Farrell:
For sure.
Joelle Gamble:
And on top of that, when people do not have access to it, it affects the ability of other workers to be able to do their jobs. So it’s just clearly a part of the infrastructure that makes our economy effective.
Jessyn Farrell:
Right, and left to the free market, this is a problem that just hasn’t been solved. So we need to be a lot more interventionist in our thinking about how we invest in that particular sector and support it, which kind of gets to this last myth that I want us to talk a little bit about, which is this idea that really undergirds classical economics, which is that human behavior is rational. So can you talk a little bit about how that idea has really perpetuated racist outcomes and deep injustice in our society?
Joelle Gamble:
Yes, and I think I would frame it somewhat differently, which is that actually racism can become rational, but not in the way economics teaches us. Earlier, I talked about how labor market discrimination leads to disparate outcomes for Black workers. There’s this idea that this discrimination is just someone’s hyper irrational individual preference for one racial group over another. Gary Becker, a very famous economist, had this theory around racial discrimination and labor markets around the idea that racism is irrational and that the free market will just compete it away because all of the irrational racists will miss out on hyper productive workers, which is clearly not what’s happening because the rationality in racism isn’t actually about individuals. It’s actually about a way in which racism can uphold institutional arrangements that essentially preserve white wealth and economic power.
This is where insights from stratification economics that center race and economic analyses, instead of treating race and exoticness variable, it puts it in the model. It’s saying that this group identity actually plays a major role in how we make decisions, how institutions are wielded to produce positive or negative economic outcomes for people. And in that way, it’s rational because it’s designed to uphold an institution that is inherently racist versus being rational from the standpoint of an individual. So I think that that’s where neoliberalism and these neoclassical assumptions get things wrong because they assume that you can just ascribe most actions in the economy to the ideas of some hyper rational individuals’ preferences versus considering the ways in which individuals’ actions and beliefs actually help uphold institutions and uphold norms that they think are in their larger group interest.
Jessyn Farrell:
If you were able to wave a wand, sometimes we say, if you were a benevolent dictator, what would the world look like? What might you do first, or what suite of things might you do to really get to this place where we are re-imagining capitalism and the economy?
Joelle Gamble:
I believe that democracy is one of the biggest enemies of neoliberalism. Also, I would ought to say this as a benevolent dictator to say, I would make things more democratic, but that’s essentially what I would want to do. When more folks have access to the ballot box, when there’s less influence of money in politics, when we have know public agendas that are accountable, the people they’re meant to serve, we’re going to get better outcomes and neo-liberalism will not be maintained because neoliberalism is essentially designed to uphold the interests of capital. And in addition to some of the more traditional democracy reform policies that I think are really, really important to making any public agenda around economics work, I also would make sure that frankly, every worker has access to representation and a way to build power because worker power and worker voice is about democracy fundamentally. So I would want to make sure that every worker has a union or access to some other organization at their work site.
I think we should be thinking a lot more about sector and industry wide bargaining considering how much the economy has changed. We have some of that infrastructure already with some states having wage boards that they could activate. We can also think about how the recovery itself is being dealt with sector by sector with the airline industry being a great example in which union leaders, particularly Sarah Nelson, did a great job of getting worker voice baked into that relief package. Then on top of that, making sure people have the right to strike, they have the ability to use their power collectively to leverage their power against their employers because that is an important, I think, a very important point that democracy isn’t just about voice in the traditional sense of saying, “This is my opinion. This is my preference.” It’s also about having power to influence economic and political outcomes. Voice without bite doesn’t get you very far, so I think that-
Jessyn Farrell:
Organizing, organizing, organizing.
Joelle Gamble:
Exactly. Exactly.
Jessyn Farrell:
That is really right. Well, is there anything else that we should touch on that’s been on your mind in these last couple of months of crisis that we should be thinking about?
Joelle Gamble:
I think that that there is one other thing that’s really important, which is so much of policymaking, I live in DC, so much of policymaking today does focus on the marginal changes or the incremental policies that can help improve lives. It’s really, really important. But as we’re seeing from movements and from the frustration of many, many people across the United States, we need to have bolder longterm visions.
Essentially, we need to extend our view of what’s possible both as far forward as we can to build some towards something transformative and also, hold our history as we do it to also make sure that we look backwards to understand what did not work well and what actually has led to some of the disparate outcomes that we see today, especially for Black and brown communities, so that we’re actually making these changes with history in mind and with this longterm vision we want to have in mind so that we can eventually get to some more transformative work. The compromise that we make today may not always be satisfactory, but if they’re done with the goal of setting up a more transformative set of debates in the future, then they can be a good thing.
Jessyn Farrell:
Joelle, that seems like such a great roadmap. I really appreciate the way you articulated that, both with respect to kind of the incremental work and setting up the right debates, but then also being able to do the big, bold, tough things that really, people across the country are demanding right now. So I really appreciate that.
Joelle Gamble:
Thank you so much for having me. This was such a thoughtful conversation. I’m just glad to be a part of it.
NIck Hanauer:
In that discussion, Jessyn, value equals price. Wow. We’ve hit on that a lot on the podcast and how evil that idea is, but Joelle really hit that hard. It is such a pervasive, powerful and evil idea and goes a long ways towards reinforcing racism because if most low wage jobs are held, or if a disproportionate number of low wage jobs are held by people of color and you’re only paid what you’re worth, then people of color are worth less than white people, right? It’s a terribly corrosive set of interconnected ideas that the economics profession has been at the heart of perpetuating and-
Jessyn Farrell:
Right.
NIck Hanauer:
… needs to need to change. I think that one of the things that has to be true, and Joelle I know is sort of part of leading charge on, is trying to get people to recognize it’s just not enough to try to scrub racism from our economics. You actually have to affirmatively build it up again to be inherently anti-racist.
Jessyn Farrell:
Absolutely. There’s been a lot of discussion in the profession recently about how to do that. One of the leading voices that has emerged is an organization called the Sadie Collective, which is the first and only nonprofit organization dedicated to building the pipeline and pathway for Black women in economics. They recently published an open letter to institutions in the face of Black Lives Matter calling for economic institutions to commit to meaningful action. One of the cofounders will tell you more about it.
Fanta Traore:
My name is Fanta Traore and I am a cofounder of the Sadie Collective. I work full time currently at the Federal Reserve as a senior research assistant. We’re in a very unique being in a pandemic, which Black people are disproportionately dying, experiencing the highest rates of unemployment since the great depression and we’re also dealing with the resurgence of the Black Lives Matter movement. Of course, the movement has been going on for a while, but it has really grabbed public consciousness. The reason why I mentioned all of that is because our letter to economic institutions is now about putting the onus on those in power to make a change. So I think it’s really ridiculous that we have people advocating for their own lives because of the racist systems that we live in. In our call to economic institutions, addressing the federal reserve system, addressing the National Bureau for Economic Research, as well as the American Economic Association, we’re asking them to take a stance, to choose to be anti-racist. Otherwise, their institutions are pretty much keeping everything as the status quo, which is racist.
There’s a huge emphasis on action. To even make it easier for the institutions, we list all of that out in our open letter. That includes normalizing conversations about feminist economics, stratification economics and a nuanced approach to how we teach and learn economics. We’re also asking for Black women to be at these institutions, to be in these spaces. In order for policy to be progressive, to be meaningful and to actually create change that improves quality of life for everyone, diversity is absolutely essential and we’re lacking that. Some of the ways that individuals can contribute to making a change include citing Black woman economists, citing economists of color. In general, Black economists are undecided and under acknowledged. I recently wrote a piece with Fortune Magazine highlighting 19 Black economists to know, that economists are doing incredible work, but they’re not being recognized for it. When we look at the data regarding Black economists and their experiences, which my cofounder, Anna Gifty, speaks about, she finds that about 62% of Black women have experienced some kind of discrimination within the profession.
So citing Black economists is a recommendation I’d make for individuals who work at research institutions who are undergraduate students and the likes. Another recommendation is to be mindful about disaggregating data. The unemployment rate currently is 13.3% for the larger population, but when you disaggregate that data and you look closer, it’s 16.8%, which is almost one in five people unemployed, and that tells a different story. So I think that it’s very important that institutions are mindful about what stories they are telling and disaggregating data can do a better job at capturing the nuances of people’s experiences. As far as individuals who are leaders of economic institutions, I recommend that they collaborate with organizations who are doing the work around diversity, equity and inclusion. For instance, Howard University graduates the most Black PhD’s on an annual basis. It’s actually the only HBCU that has a PhD in economics program.
There’s also the National Economic Association, which is the only organization dedicated to Black economists in the United States and several different initiatives, such as the review of Black political economy, which highlights the work of Black economists and subsets of the American Economic Association that prioritize the status of women in the profession and also, minorities in the profession. But I do still think that there is a lot of work to be done and we need drastic change. Institutions really need to step up in order for this reckoning, as some people have been calling it, to be sustainable and for there to be longer term change.
So the onus and where this problem is created does not lie within the Black community or in the communities that have been historically marginalized and disenfranchised; it’s with powerful institutions. So while we are grateful for some of the feedback that we’ve gotten, and some of these partnerships that we are brokering, there’s still a lot of work to be done.
Jessyn Farrell:
So in the Sadie Collective open letter, there’s a list of actions and required reading that we can all do. So we are going to include that in the show notes, and we suggest that you take a look.
NIck Hanauer:
Next week on Pitchfork Economics, we are going to talk about the economic connection between revolutions with the amazing Nancy McLean.
Speaker 1:
Pitchfork Economics is produced by Civic Ventures. If you like the show, make sure to subscribe, rate and review us wherever you get your podcasts. Find us on Twitter and Facebook at Civic Action and Nick Hanauer. Follow our writing on Medium at Civic Skunk Works and peek behind the podcast scenes on Instagram @PitchforkEconomics. As always from our team at Civic Ventures, thanks for listening. See you next week.