J.D.’s note: Last September, I wrote that I didn’t believe the world of personal finance needed more politics. I acknowledged that there were vast systemic issues that hold people back, but I argued that personal finance is personal.
While I still believe that individual action is (and always will be) the primary driver of financial success, my “no politics” stance has softened. No, that doesn’t mean that Get Rich Slowly is suddenly going to change into a politics blog. That’s not who I am. But it does mean that I’m willing to address political issues that affect our finances. (And, to be clear, I’m open to addressing these from both liberal and conservative perspectives.)
Right now, at this moment in time, it’s important to talk about the issues black Americans face. It’s important to talk about why there’s so much anger — and how a huge portion of our population has been disadvantaged for so long. (And continues to be disadvantaged!)
To that end, here’s the amazing Lynnette Khalfani-Cox — The Money Coach — with a lesson on economic violence in the United States. (This originally appeared as a post in Lynnette’s Facebook feed.)
The tragic murder of George Floyd highlighted the heinous reality of racism, police brutality, and the legacy of racial violence in America. But if we’re going to truly address this country’s ills, we must name, condemn and fix economic violence too.
First, a definition.
Economic violence occurs when one party disenfranchises, subjugates, or financially abuses another party. Any person or entity in power can commit economic violence. This includes individuals, companies, organizations, governments, institutions, or systems.
Clearly, many individuals and groups may be subjected to economic violence, such as LGBTQ people, immigrants, or women.
But today I want to talk specifically about the economic violence that African-Americans have endured for more than 400 years in these United States.
A History of Economic Violence
Since 1619, Blacks have faced non-stop economic violence.
For approximately 250 years, under slavery, Blacks provided the free forced labor that made America an economic powerhouse. (Reminder: Cotton was the world’s number-one commodity and crucial to the first Industrial Revolution and the Civil War.
Now, imagine being born in 1866 as a “free” Black person.
For generations, your ancestors worked for others and received nothing for their labor.
- Your parents worked for others and received nothing.
- Your grandparents worked for others and received nothing.
- Your great-grandparents worked for others and received nothing.
- Your great-great-grandparents worked for others and received nothing.
- And so on.
And you, born in 1866 as a “free” Black person, start with nothing while a White child born at the same time enjoys the fruits of your ancestors’ labor. Would that depress you? Anger you? Motivate you?
Now, imagine you’re a determined, smart, hard-working, and positive-thinking Black person. Instead of these qualities benefiting you, you’re labelled “uppity”.
Then, after slavery and through Reconstruction (1865-1877), you’re hit with “Black Codes” — racist laws designed to help Whites and completely hold you back economically and socially. Black Codes inflicted massive economic violence — too much to name.
African-Americans could not:
- own certain property,
- rent or lease land,
- sell any farm products,
- work where they wanted, or
- have more than one job.
Eventually, Black Codes led to Jim Crow laws, enacted from 1877 to the 1950s, which fostered generations of Black poverty.
Racist Jim Crow laws didn’t just mean segregation in all aspects of American life. They also codified disparate treatment and resources for Blacks. In education. In the workplace. In the tax code. And especially in housing.
The Lasting Legacy of Economic Violence
Why the emphasis on housing? Housing makes up the majority of Americans’ wealth.
So, housing discrimination was the law and was a core feature (not an accident or a byproduct) of city, state, and federal policy.
Here are just two examples of economic violence prevalent in housing back then:
- Blatant Redlining, when bank and insurers refused to provide financial services to Blacks, or did so only at much higher rates.
- The Federal Government flat out refused to insure home loans for Blacks. Yet from the 1930s to the 1960s, 98% of loans approved by the feds were for Whites, doubling their homeownership rate (from 30% to 60%) and creating the White middle class.
What about legislation that ended such discrimination, you ask?
Yes, there were some laws: The 1968 Fair Housing Act. The 1974 Equal Credit Opportunity Act. The 1977 Community Reinvestment Act. But each of these was a partial fix and incomplete. So, economic violence remained.
What is the result today of a long legacy of economic and labor market inequality? Things are exactly as planned and designed.
White wealth is ten times Blacks: $171,000 vs. $17,600 (Source: Federal Reserve Bank). The White median income is about $71,000. It’s $41,361 for Blacks (Source: Census Bureau). The White homeownership rate is 74%. It’s 44% for Blacks (Source: National Assoc. of Realtors).
Even now, in 2020, Blacks face discrimination in mortgage lending, studies from the Federal Reserve, Stanford, and UC Berkeley researchers show. For African-Americans with the same assets, income, and credit scores as White borrowers, Blacks still get higher home loan rates or denied more often.
Searching for Answers
Look, I don’t have all the answers. I don’t have a comprehensive plan for how to fix all this. But here’s what I do know: As a society, we must address these issues at a systemic and structural level.
After slavery, there was a systematic, strategic, intentional effort to maintain White supremacy, to give Whites economic advantages and keep Blacks financially disenfranchised.
We need to be equally strategic and intentional in undoing that legacy of oppression, injustice and economic violence. Laws have to be changed. Practices, policies, and procedures must be revamped. Systems have to be dismantled and/or re-fashioned.
Some advocate for reparations. I agree. That’s the least America can and should do.
Maybe hearts and minds are changing too right now, with the videotaped murder of George Floyd (RIP) sparking protests in all 50 states and internationally as well.
People of all races are now saying: “Enough is enough” and #BlackLivesMatter.
If that’s genuine and that sentiment holds, then yes, let’s end police brutality and racial violence.
But let’s not forget that what sustains it all is economic violence. That must come crashing down too.
