The Sum of Us: What Racism Costs Everyone and How We Can Prosper Together (One World Essentials)

by Heather McGhee

Over the next decade, the New Deal–era social contract that existed between white power-brokers in government, business, and labor came to a painful end. It had never been a peaceful one, but over the 1940s, ’50s, and ’60s, its signatories had generally seen a mutual benefit in ensuring better and better standards of living for white men and their families as they moved up from the tenement and the factory to the suburb and the office.

I often picture it literally—three white men seated in a room, signing a contract: Walter Reuther of the United Automobile Workers; Charles Wilson, the General Motors chief executive; and President Dwight Eisenhower. Their handshakes seal the deal for a broad, white middle class. Then, in the mid-sixties, there’s a commotion at the door. Women and people of color are demanding a seat at the table, ready to join the contract for shared prosperity. But no longer able to see themselves reflected in the other signatories, the leaders of government and big business walk out, leaving workers on their own—and the Inequality Era was born.

The Reagan campaign’s insight was that northern white people could be sold the same explicitly antigovernment, implicitly pro-white story, with the protagonists as white taxpayers seeking defense from a government that wanted to give their money to undeserving and lazy people of color in the ghettos. (The fact that government policy created the ghettos and stripped the wealth and job opportunities from their residents was not part of the story. Nor was the fact that people of color pay taxes, too, often a larger share of their incomes due to regressive sales, property, and payroll taxes.)

(An emblematic line from President Reagan, “We’re in danger of creating a permanent culture of poverty as inescapable as any chain or bond,” deftly suggests that Black people are no longer enslaved by white action, but by their own culture.)

Even though welfare was a sliver of the federal budget and served at least as many white people as Black, the rhetorical weight of the welfare stereotype—the idea of a Black person getting for free what white people had to work for—helped sink white support for all government.

the idea that Black people are the “takers” in society while white people are the hardworking taxpayers—the “makers”—has become a core part of the zero-sum story preached by wealthy political elites.

It’s a government and politics lesson, and the girl next to me announces that she and her family are “fiscally conservative but socially liberal.” The phrase is new to me, but all around me, white kids’ heads bob in knowing approval, as if she’s given the right answer to a quiz. There’s something so morally sanitized about the idea of fiscal restraint, even when the upshot is that tens of millions of people, including one out of six children, struggle needlessly with poverty and hunger. The fact of their suffering is a shame, but not a reason to vote differently to allow government to do something about it.

(We could eliminate all poverty in the United States by spending just 12 percent more than the cost of the 2017 Republican tax cuts.)

they were missing how political race-craft works. There is such a strong cultural prohibition on being racist (particularly during the color-blind triumphalism in the wake of Obama’s election) that it’s important to look at what voters feel and perceive, not just what they say. Race isn’t a static state; it’s better understood as an action, and one of its chief functions is to distance white people from people who are “raced” differently.

When race is introduced in this fashion to white voters, it activates seemingly race-neutral reactions such as demonization, distrust, zero-sum thinking, resistance to change, and resource hoarding.

race is an "action" that elicits a reaction.

Then there are the increasing numbers of white Americans who are aware of the influence of racism and yet do not acknowledge it—further still, they claim that it’s the liberals and the people of color who are the racists. This is the narrative they receive from millionaire right-wing media personalities, and hysteria over Obama’s secret plan for racial vengeance was one of their mainstay narratives during his presidency.

the racial polarization of our two-party system has forced a choice between class interest and perceived racial interest, and in every presidential election since the Civil Rights Act, the majority of white people chose the party of their race. That choice keeps a conservative faction in power that blocks progress on the modest economic agenda they could support.

“We compute that voter racism reduced the income tax rate by 11–18 percentage points.” They conclude, “Absent race as an issue in American politics, the fiscal policy in the USA would look quite similar to fiscal policies in Northern Europe.”

For generations, college-going white Americans could count on public money from their governments, whether federal or state, to pay most if not all of their costs of higher education. The novel idea of flourishing public colleges—at least one in every state—took shape in the 1860s, when the U.S. government offered the states over ten million acres of land taken from Indigenous people to build on or to sell for institutions of higher education for their citizens. More free federal money for higher education came with the GI Bill,

Over this period of growth among students of color, ensuring college affordability fell out of favor with lawmakers.

More and more Americans enrolled nonetheless, because other policy decisions in the labor market made a college degree necessary to compete for a middle-class job. By 2017, the majority of state colleges were relying on student tuition dollars for the majority of their expenses. The average public college tuition has nearly tripled since 1991, helping bring its counterpart, skyrocketing student debt,

The rising cost of college feels to most Americans like so many aspects of our economy: unexplained and unavoidable.

The new “debt-for-diploma system,” as my former Demos colleague Tamara Draut called it, has impacted Black students most acutely, as generations of racist policies have left our families with less wealth to draw on to pay for college.

Because wealth is largely shaped by how much money your parents and grandparents had, Black young adults’ efforts at higher education and higher earnings aren’t putting much of a dent in the racial wealth gap. This generation was born too late for the free ride, and student loan repayment is making it even harder for Black graduates’ savings and assets to catch up. In fact, white high school dropouts have higher average household wealth than Black people who’ve graduated from college.

how is it fair or smart to create a new source of debt for a generation when that debt makes it harder for us to achieve the hallmarks of middle-class security: a house, marriage, and retirement savings?

Other countries learned from the midcentury American investment in higher education and have now raced ahead. A third of developed countries offer free tuition, and another third keep tuition lower than $2,600.

The most fiercely opposed? Among the very people who benefited the most from the largely whites-only free college model and who now want to pull the ladder up behind them: older, college-educated (white) Republicans.

the story of how America drained the pool of our public college system,

By 2016, eighteen states were spending more on jails and prisons than they were on colleges and universities.

Seniors with student loans are more likely to report rationing medical care, and the government garnishes Social Security payments for seniors in default.

Whether we’re talking about insurance or drug trials or vaccines or practice improvements, in health, the key is getting everybody in. Healthcare works best as a collective endeavor, and that’s at the heart of why America’s system performs so poorly.

We’ve resisted universal solutions because when it comes to healthcare, from President Truman’s first national proposal in 1943 to the present-day battles over Medicaid expansion, racism has stopped us from ever filling the pool in the first place.

"risk pool"

To be clear, the beneficiaries of Truman’s universal coverage would have been overwhelmingly white, as white people at the time made up 90 percent of the U.S. population. Few Americans, Black or white, had private insurance plans, and the recent notion that employers would provide it had yet to solidify into a nationwide expectation. The pool of national health insurance would have been mainly for white Americans, but the threat of sharing it with even a small number of Black and brown Americans helped to doom the entire plan from the start.

President Johnson created a generous federal healthcare program for the elderly (an even whiter population than the overall population) in Medicare and a less generous patchwork for low-income people and children, Medicaid.

One thing that all of the states with the highest hospital closures have in common is that their legislatures have all refused to expand Medicaid under Obamacare.

if you make as little as four thousand dollars a year, you’re considered too rich to qualify for Medicaid in Texas,

an average income eligibility cap of just $8,532 for a family of three, well below the minimum wage for one earner.

$4K income cap in TX; refused obmacare medicaid expanion

Stable Medicaid funding has allowed rural medical clinics in expansion states to thrive financially. In Arkansas, the first southern state to accept expanded Medicaid, a health clinic in one of the poorest towns in the country has constructed a new building, created jobs, and served more patients, creating measurable improvements in the community’s health.

‘We can’t have Obama having any success, even if it makes perfect sense, economic sense and healthcare sense, for the state.

It was the weight of the history, the scale of the theft, and how powerless we had proven to change any of it. These were properties that meant everything to people whose ancestors—grandparents, in some cases—had been sold as property.

There’s so much shame involved in being in debt. In my experience with the bankers on the other end, however, shame is hard to find, even over their discriminatory and deceptive practices.

“We think of the New Deal and all the great things that came out of it—and there were many—but what we don’t talk about nearly as often is the extent to which those great things were structured in ways that made sure people of color didn’t have access to them,”

In 2016, the most recent available authoritative data, the typical white family in America had about $171,000 in wealth, mostly from homeownership—that’s about ten times that of Black families ($17,600) and eight times that of Latinx families ($20,700). That kind of wealth is self-perpetuating.

The government agencies most responsible for the vast increase in home ownership—from about 40 percent of Americans in 1920 to about 62 percent in 1960—were also responsible for the exclusion of people of color from this life-changing economic opportunity.

It is little wonder, then, that a fringe lending market flourished to offer credit and reap profits from people of color who were excluded from the mainstream financial system.

By the mid-1990s, the financial sector had become the component of the economy that produced the most profits, supplanting manufacturing. The financial sector also became the biggest spender in politics, contributing more than one hundred million dollars per election cycle since 1990 to federal candidates and political parties, on both sides of the aisle.

The deregulatory revolution in financial services was also spurred by antigovernment, pro-market libertarian and neoliberal economic thinking that gained a popular common sense, particularly among white people, with rising distrust of an activist government.

This is where the age-old stereotypes equating Black people with risk—an association explicitly drawn in red ink around America’s Black neighborhoods for most of the twentieth century—obscured the plain and simple truth: what was risky wasn’t the borrower; it was the loan.

What is racism without greed? It operates on multiple levels. Individual racism, whether conscious or unconscious, gives greedy people the moral permission to exploit others in ways they never would with people with whom they empathized.

Institutional racism of the kind that kept the management ranks of lenders and regulators mostly white furthered this social distance. And then structural racism both made it easy to prey on people of color due to segregation and eliminated the accountability when disparate impacts went unheeded.

Lenders, brokers, and investors targeted people of color because they thought they could get away with it....

We’ve had so much practice justifying racial inequality with well-worn stereotypes that the narrative about this entirely new kind of financial havoc immediately slipped into that groove.

blaming borrowers for bad credit; when in fact they qualified for better and were lured into subprime refi's

After the crash, conservatives were quick to blame the meltdown on people of color and on the government for being too solicitous of them.

Ronald Utt of the Heritage Foundation claimed that “some portion of the problem—perhaps a significant portion—may stem from ‘predatory borrowing,’ defined as a transaction in which the borrower convinces the lender to lend too much.” With this banker-as-victim tale, the casting was familiar: undeserving and criminal people of color aided and abetted by an untrustworthy government.

“A whole bunch of Obama administration folks let that incredibly racialized story and their fear of the story—even if they didn’t believe the story themselves—give us the recovery that we got. Which was one that increased inequality and economic vulnerability.”