Persistent racial inequality in the United States
2 Understanding persistent racial inequality
- structural racism
- A societal structure (laws, public policies, social norms, common beliefs) that have the effect of disadvantaging a particular racial group (also termed institutional racism). Also known as: institutional racism.
- institutional racism
- Also known as: structural racism.
Because of slavery, American ideas about race today still center on the Black–White dichotomy, even though the racial composition of the U.S. has always included other groups, such as Asians, Hispanics, and indigenous populations. For this reason, this Insight mainly focuses on the persistent inequality between Black and White Americans. Also, this Insight primarily concentrates on structural or institutional racism rather than the racial beliefs or prejudices that any individual might hold. Institutional racism is how the durable features of a social system—such as its laws, culture, norms, and organizations—systematically privilege some racial groups over others. We will explore three key mechanisms which create and allow persistent racial inequality: discrimination, segregation, and political inequality.
- discrimination
- The practice of treating people differently based on their membership, or perceived membership, in a group, such as race, class, gender, religion, or national origin.
Discrimination occurs when people from different groups are treated differently by laws and social norms. Racial discrimination can occur explicitly, when laws or rules are different for people of different groups, or implicitly, as the result of an unequal application of a formally equal rule or norm. One example of implicit discrimination is racial bias of officiating in professional sports. The rules of these sports are racially neutral, but many studies of multiple sports have shown that Black players are more likely to be penalized than White players for the same infraction.
Segregation occurs when different groups are associated with different residential locations, public spaces, and social networks. The racial segregation which characterizes U.S. regions, cities, and towns remains a key mechanism limiting Black economic mobility and opportunity.
- political inequality
- Restrictions on access of some groups to voting, political office, fair legal proceedings and other violations of the democratic idea of political equality whereby all citizens have an equal voice in decisions affecting everyone.
The final mechanism we analyze is political inequality: the deprivation of political rights and unequal protection under the law for Black individuals and communities. Without political power, it is exceedingly difficult for marginalized groups to influence the institutions needed to secure access to public goods and protect any economic gains, especially if they are starting from an already weak economic position.
Persistent group inequality: A vicious circle
- positive feedback (process)
- A process whereby some initial change sets in motion a process that magnifies the initial change.
In his 1944 book, An American Dilemma, the Swedish economist, sociologist, and Nobel Laureate Gunnar Myrdal argued that “cumulative causation”—a similar concept to “vicious circles”—was a key explanation for persistent racial inequality. Discrimination, segregation, and political exclusion, alongside other factors, operate as positive feedback processes in generating persistent racial inequality. Myrdal emphasized that addressing one of these without addressing the others would not make a sustained dent in racial inequality.
Figure 2 models the underlying idea as a “vicious circle,” along with a “virtuous circle” that characterizes the position of many White families.
Figure 2 Myrdal’s vicious circle of racial inequality.
We return to these positive feedback processes in Section 7, where we build a more detailed model of persistent racial inequality.
Find out more What’s wrong with racial inequality?
- substantive judgements of fairness
- Judgements based on the characteristics of the allocation itself, not how it was determined. See also: procedural judgements of fairness.
- procedural judgements of fairness
- An evaluation of an outcome based on how the allocation came about, and not on the characteristics of the outcome itself, (for example, how unequal it is). See also: substantive judgements of fairness.
We are interested in racial inequality not simply out of scientific curiosity, but also out of moral and political concern. But what makes racial inequality wrong? In Unit 5 of The Economy 1.0, we explained how to use efficiency and fairness as criteria for evaluating allocations, and learned the difference between substantive and procedural judgments of fairness. We can use those concepts to explore this question.
Racism and racial inequality limit the basic freedoms and assault the dignity of people, making it exceedingly difficult for everyone to interact on a basis of mutual respect.
Seen through an economic lens, racial inequality also can be seen as both inefficient and unfair.
In this Economist in Action video, Lisa Cook analyzes patents of Black and White inventors in the late nineteenth century in the U.S., and explains how different institutions can promote or kill innovation.
- Efficiency: By limiting Black people’s access to critical resources, the structure of U.S. society is limiting Black innovation and entrepreneurship (see video to the side) and failing to fully develop the talents and capacities of Black people to contribute to the economy. Racial inequality is thus a Pareto-inefficient outcome: both White people and non-White people could benefit if racial inequality were reduced.
- Fairness: Racial inequalities violate the principle of equality of opportunity, which holds that one’s religion, national origin, gender, race, parental wealth or poverty, and sexual preference ought not to matter for a person’s success in life.
Further, many people think that large inequalities in outcomes are unfair, including those between racial groups. The studies discussed in this Insight suggest that the U.S. fails to produce equality of outcomes in addition to equality of opportunity.
