Thoughts on the Persistence of Racial Inequality in America

A Lecture for the University of Minnesota’s Public Life Project, February 3, 2022
Glenn C. Loury, Professor of Economics, Brown University

Why I ask the success of the 20th century’s civil-rights movement notwithstanding
has blacks’ unequal status in American society persisted into the 21st century? To
think clearly about this difficult problem requires us to distinguish between the role
played by anti-black discrimination, past and present, and the role of behavioral
patterns to be found among some blacks. This, I admit, puts a very sensitive issue
rather starkly. I wish to chart a middle course – acknowledging anti-black biases
and insisting they be remedied, while urging that we also identify the behavioral
patterns that may prevent some people from seizing newly opened opportunities.

“Structural Racism” Is an Empty Category

I begin with a provocative claim: “Structural Racism” -- about which we hear so
much these days -- is an empty category. The phrase is used as both a bluff and a
bludgeon. It's a bluff because it explains nothing while, in effect, daring the listener
to notice. For example, when someone says, "structural racism is the reason why
there are so many blacks in prison..." a listener is being dared to reply: “No, it is
actually because there are so many black criminals.” And it is a bludgeon because
its use involves rhetorical intimidation. Having demonstrated few cause-and-effect
processes, it insinuates shadowy causes that are never fully specified. Everybody is
supposed to know that racial disparities are the fault of something called "structural
racism," abetted by an environment of “white privilege,” supported by that
ultimate bugaboo, “white supremacy.” George Orwell would have recognized this
kind of talk as a version of his "Newspeak,” that is, using of ambiguous and
euphemistic language as a subtle form of political propaganda.
History, I must say, is rather more complicated (and more interesting) than these
just so tales would have it. The outcomes of concern here – in the labor market, in
the schools and in the criminal justice system – have multiple interacting causes.
People who insist that "structural racism" explains these racial disparities do not
make arguments. Instead, they evince a disposition. They call us to solidarity while
soliciting our fealty. They seek to compel affirmation of their systems of belief. In
this lecture I will sketch an alternative account of enduring racial disparity.
Warning: I am an economic theorist, first and foremost. So, my focus here will be
conceptual, not empirical. We economists need to specify an appropriate “model”
for understanding long-enduring racial economic disparities. I aim to contribute to
that objective in the remarks to follow. As you will see, I do not mince words.

A Theory of Persisting Racial Economic Disparities

To begin, I wish to draw attention to a contrast between two causal narratives. The
“bias narrative” argues that the root cause of persisting disparity is found in anti-
black racism. Since racial discrimination causes racial inequality, we must reform
society to achieve a level playing field. The focus here is on the demand side of the
labor market, for instance. I think such reforms are necessary, but not sufficient. By
contrast, the “development narrative” is concerned with how people acquire the
skills, traits, habits, and orientations that foster their successful participation in our
society. Its focus is the supply side of the labor market, and its premise is that those
who lack the experiences, are not exposed to the influences, and do not have access
to the resources that foster and facilitate their human development will, in general,
fail to achieve their full potential. These two narratives – bias versus development
– need not be mutually exclusive, of course. What is clear, however, is that they
point in different directions in terms of intervention and remedy.
This tension between a focus on demand side versus supply side factors to account
for racial disparities – is a very old theme for me. It is what led me to coin the term
"social capital" in my doctoral dissertation at M.I.T. In doing so, I was contrasting
that concept, “social capital,” with the more familiar notion of “human capital.” As
you know, human capital theory studies inequality via a conceptual framework that
was initially developed to explain investment decisions by firms, and that focused
on formal economic transactions. I thought this framework was not adequate when
applied to explaining persistent racial economic disparities. I believe my concerns
then remain relevant today. I’ll use my time here to explore these ideas more fully.
My basic point was that associating business with human investments is merely an
analogy, and not so good an analogy at that when thinking about persistent racial
disparities. Business investments are transactional. Human investments are
essentially relational. So, important things were overlooked in the human capital
approach, things having to do with informal social relations. Conventional theory
was incomplete when accounting for racial disparities, and there were two central
aspects of this incompleteness. This led me to make the following two observations
– one about the dynamics of human development and the other about the nature of
racial identity. I reiterate these observations because they remain relevant today.
Observation #1
My first observation was that all human development is socially situated and
mediated. The development of human beings occurs inside of social institutions. It
is dialogic. It takes place as between people, by way of human interactions. The
family, community, school, peer group – it is inside of these cultural institutions of
human association where development is achieved. Resources essential to human
development – the attention that a parent gives to her child for instance – are not
alienable. Developmental resources, for the most part, are not “commodities.” The
development of human beings is not up for sale. Rather, networks of connections
between people create the context within which developmental resources come to
be allocated to individual persons. Opportunity travels along the synapses of these
social networks. People are not machines. Their productivity – that is, behavioral
and cognitive capacities bearing on their social and economic functioning – are not
merely the result of some mechanical infusion of material resources. Rather, these
capacities are the byproducts of social interactions mediated by human affiliation
and connectivity. This was fundamentally important, I thought and still think, for
understanding persistent racial disparities in America. That is the first point I was
making, all those years ago, about the incompleteness of human capital theory.

Observation #2
My second observation was that what we are calling “race” in America is mainly
a social, and only indirectly a biological, phenomenon. The persistence across
generations of racial differentiation between large groups, in an open society where
people live in close proximity to one another, provides irrefutable indirect evidence
of a profound separation between the racially defined networks of social affiliation
in that society. For there would be no “races” in the steady state of any dynamic
social system unless on a daily basis, and in regard to their most intimate affairs,
people paid assiduous attention to the boundaries separating themselves from
racially distinct others. This is so because, over time, "race" would cease to exist
unless people were acting so as biologically to reproduce the variety of phenotypic
expression that constitutes the substance of racial distinction.
I cannot over-emphasize this second, sociological point. We speak casually about
“racial” equality and “racial” justice. And yet "race" is not something simply given
in nature. Rather, it is socially produced; it is something we are making. That there
exist distinct races is an equilibrium outcome; it is endogenous. It follows that, if
the goal is to understand the roots of durable racial inequalities in any society, we
must examine in some detail those processes causing "race" to persist as a fact in
that society. Almost certainly, such processes will not be unrelated to the allocation
among individuals of human developmental resources.
Here then is my second observation in a nutshell. Economists need to recognize the
limits of our tools to account for durable economic disparities by race. The creation
and reproduction of such inequality ultimately rests on cultural conceptions people
hold about identity, about the desirability and legitimacy of conducting intimate
relations with racially distinct others. (Here I do not mean only sexual relations.)
Racial inequality is not just a disparity of material resources. Most fundamentally,
it is rooted in the decisions all of us are making about with whom to associate and
with whom to identify. Such, anyway, was the gist of my argument.
The contrast I drew in my doctoral thesis all those years ago – between human and
social capital – was grounded in my conviction that such decisions determine the
access people enjoy to the informal resources they require to develop their human
potential. My argument was that “social capital” is an essential prerequisite for the
acquisition of what economists referred to as “human capital.” And we know that
human capital – a person’s skills, education, work experience and social aptitudes
– is a key determinant of a person’s earnings power and of his or her capacity to
generate and to accumulate wealth.
The resources people need for their development are not all commodities acquired
through markets as a result of formal transactions. Access to some vital resources
are imbedded in a person's social situation: for instance, the resource of a mother's
attention to her health when her child is in the womb; or, the resource of peers with
whom one associates and internalizes the things they valorize, which then become
important things shaping the choices one make about the acquisition of skills; or,
the information one has about what is possible for one to achieve that derives from
connections to others who have explored those possibilities. These are also factors,
or inputs, into skills production. But these are not commodities. A financial deficit
does not fully reflect a deficit of these things. This was the idea that I wanted to
employ to give an account of durable racial inequality, even after eliminating most
discrimination. I wrote that dissertation in the mid-1970s, a decade beyond the big
civil rights laws and quite early in this era of relatively fair market opportunities
for people irrespective of race. Now the post-civil-rights era is more than a half-
century old. Obviously, perfect equality of treatment has not been achieved. But it
is a relatively level playing field now, in terms of the valuation of skills.
So, we can ask whether the racial disparities history has produced will necessarily
wither away under this new dispensation. My answer is, No, they needn't, because
the labor, credit, housing and product markets are not the whole show. Also
important are peers, neighborhoods and communities, the structure of families, the
nature of values and norms, the notions of identity, the social resources, who you're
connected to, who you can call upon, who influences you, who informs you. These
things matter: books in the home; whether the children are read-to; when does a
parent turns off the television set. I suggest that we use this “social capital” concept
as a tool for thinking about racial inequality and its remedies. Doing so disciplines
our thinking to appreciate the limits of regulatory control when the developmental
outcomes of interest are the byproducts of non-market processes. It shifts the
conversation somewhat away from a purely redistributive focus, to a relational
focus. Please understand: I am not saying that people without money have no need
of it. I am saying that money is not the only thing they need.
Talking in this way is NOT "blaming the victim." Oppressed groups, time and
again, evolve notions of identity that cut against the mainstream. A culture can
develop among them inhibiting youngsters from taking actions needed to develop
their talent. Now, I ask: Do kids in a segregated, dysfunctional peer group simply
have the wrong utility functions? It is a mistake to attribute the dysfunctional
behavior of an historically oppressed group of people to their simply having the
wrong preferences when those their “preferences” have emerged from a set of
historical experiences that reflect the larger society’s social structures and
activities. But, by the same token, it is a grievous error to ignore the consequences
of such behavior, or to pretend it doesn’t exist, as many anti-racism advocates are
now doing. Citing “structural racism” can't plausibly account for what's going on.
For, so long as race is a meaningful part of people’s identity in a society, and when
they reproduce those meanings via their patterns of association over time, then we
must expect to see differences in the network structures in which people are
embedded. Then, if network-mediated spillovers in the processes of human capital
development are important, you’re going to get persisting racial disparity.

Acknowledging Behavioral Differences by Race

The behavioral issues affecting black communities are real and must be faced
squarely if we are to grasp why racial disparities persist. The young men who are
killing each other on the mean street of Baltimore, Minneapolisl St. Louis and
Chicago are, self-evidently, behaving abominably. Those bearing the cost of such
behavior are mainly other black people. An ideology that ascribes this behavior to
racism cannot be taken seriously. Nobody really believes it, I maintain. Not really.
Or, consider educational test score data. Structural racism advocates are, in effect,
daring you to say that some groups are represented at elite universities in outsized
numbers compared to others because their academic preparation is magnitudes
higher and better and finer. They are daring you to credit such excellence is an
achievement. Yet, no one is born knowing these things; such knowledge must be
acquired through effort. Why some youngsters have acquired these skills while
others have not is a deep and interesting question, one which I am quite prepared to
entertain. But the simple retort, “racism”, is profoundly unserious – as though such
disparities have nothing to do with behavior, with cultural patterns, with the things
that communities and peer groups value, with how people choose to spend their
time, with what behaviors they identify as being critical to their own self-respect.
Asians are said, sardonically, to be a “model minority”. Well, as a matter of fact, a
pretty compelling case can be made that “culture” is critical to their success. Don’t
just take my word for it. Read Jennifer Lee and Min Zhou’s book, The Asian
American Achievement Paradox. They interviewed Asian families in Southern
California, trying to learn how these kids get into Dartmouth and Columbia and
Cornell with such high rates. What they find is that these families do, in fact,
exhibit cultural patterns, embrace values, adopt practices, engage in behavior, and
follow disciplines that orient them so as to facilitate the achievements of their
children. It defies commonsense, as well as the evidence, to assert that they do not
or, conversely, to assert that the paucity of African Americans performing at the
very top of the intellectual spectrum – I am talking here about excellence, and
about the low relative numbers of blacks who exhibit it – has nothing to do with
behavior of black people; that this outcome is due entirely to institutional forces.
That is an absurdity. Again, I maintain that nobody believes it.
Or, consider this: does anybody really believe that 70% of black American babies
being born to a woman without a husband is, (1) a good thing; or (2) is due to anti-
black racism. How could a serious person think so? People say it, but I doubt that
they believe it. In effect, they are bluffing – i.e., daring you to observe that the 21st
century failures of African Americans to take full advantage of the opportunities
created by the 20th century’s revolution of civil rights are palpable and damning.
Yet, these failures are being denied at every turn. This, I maintain, is not a tenable
position. The end of Jim Crow segregation and the advent of equal rights for blacks
were game-changers. That now, a half century down the line, we continue to face
these disparities, is shameful. The plain fact is that responsibility for this sorry state
of affairs lies in part with the behaviors of black people, ourselves. The “structural
racism” crusaders refuse to acknowledge this.

The Tacit Premise of “Black Fragility”

All of this is deeply problematic and, ultimately, contrary to the interest of black
people, rightly understood. When agency is taken away from people, they lose the
possibility of holding themselves to account and the capacity to maintain judgment
and standards by means of which they can evaluate what they do. If a youngster
who happens to be black has no choice about whether to join a gang, pick up a gun,
and become a criminal – because society has failed him by not providing adequate
housing, health care, income support, job opportunities, etc. – then, soon enough, it
will become impossible to discriminate as between those black youngsters who do
and do not behave in this way; it becomes impossible, that is, to maintain within
black American society the judgments of our fellows’ behavior needed in order to
affirm our own expectations of right-living -- because, so goes the narrative, we are
all victims of anti-black racism; we all suffer a common lack of agency, a lack of
control over our lives, a lack of accountability for what we do.
What is more, there is a deep irony in first declaring America to be systemically
and essentially racist and then mounting a campaign to demand that white America
acknowledge their racism and act so as to deliver us from its consequences. For if,
indeed, you are right that your oppressors are racist, why would you expect them to
respond to your moral appeals? You are, in effect, putting yourself on the mercy of
the court, while simultaneously decrying that this court is intrinsically biased.
Many "sructural racism” arguments have this quality -- preaching that American
society is so unrelentingly determined to deny the humanity of black people that
we must never lose sight of the fact that we are a hated, hunted species of humans.
Don’t believe in the American dream. Don’t drink the Kool-Aid. Don’t buy the
narrative. Don’t believe the hype. This is an extremely disempowering idea.

Some Thoughts on Affirmative Action and Reparations

I want now to talk about reparations to black Americans. It’s a big issue, and I’m
against it. I want to just give some flavor of what it is that I’m concerned about,
which will reveal something of my larger outlook. I’m against it for a couple of
reasons. First, I note that when the Japanese Americans who were interred by the
Roosevelt administration during the second World War were finally, in an act of
Congress signed into law by Ronald Reagan, officially acknowledged to have been
wrongly victimized and offered a token reparation payment, it was $20,000 a head
for 80,000 people. That’s $1.6 billion, paid out of the US Treasury as it should
have been paid. By contrast, there are 35 million or 40 million African Americans,
If we take 40 acres and a mule, and we bring it forward at a normal rate of return,
we are in the many tens of thousands of dollars. Call it $100,000 a head. So, that’s
$4 trillion. So, we have 40 million people receiving $4 trillion, as compared with
80,000 people receiving $1.6 billion.
Here's my point. To pay reparations to black Americans would require creating a
social security-magnitude fiscal social program in America that is to be based upon
racial identity. That’s a mistake for this society. It’s South Africa-esque. It would
mean classifying people, enacting statutes, laws and administrative practices based
upon a citizen’s race. America ought not go down that path, in my view. Of course
people are going to differ with that opinion, but such is the moral argument that I’d
make. But I also have a practical argument, which is that African Americans do
have problems in some of our communities, for sure. We could enumerate them.
I’ve already hinted at that. These problems are going to be with us for a while.
They won’t be going away overnight, and they appropriately deserve a sympathetic
engagement by the polity as a whole. Dealing with these problems, which I admit
are in part a consequence of our history of slavery and Jim Crow segregation, will
require an open-ended commitment. So, in my view, it would not be the smartest
thing in the world to cash that positin out, so to speak, via a transaction wherein
black people sit on one side of the metaphorical table with our moral capital, and
America is on the other side of that table, and a transaction is, in effect, negotiated
by means of which this "debt" is discharged. I do not want to commodify that tacit
obligation. Rather, I would argue, what we should do is is take your chips and put
them with larger political initiatives that are aimed at creating a decent society for
everyone -- whether that be on behalf of healthcare, or housing, or food security, or
employment, or preschool education, or old-age security, and so forth.

I’m talking here about building out the American welfare state. Were it sufficiently
robust on behalf of everybody, most of the concerns that we have about the racial
disparities would be ameliorated, and we blacks will have lent your moral capital
to a righteous cause -- not a racially defined reparation but, rather, a humanistically
defined improvement in the social contract broadly understood.

Now I want to say a word about affirmative action. We are by now 50 years down
the line with these policies. Racial preferences have been institutionalized. I have
a concern, and let me just voice it directly: equality of representation, in the most
rarified venues of competitive selection, is ultimately inconsistent with equality of
respect. I am talking about selection at the right tail, not talking about selection at
the median of the population. I’m talking about the 95th percentile. My point is
that there is going to be a post-selection difference in the performance of students
by race if one has used different pre-selection criteria when choosing them, so long
as the pre-selection criteria being used actually correlate with the post-admissions
performance. If these selection criteria – standardized test scores, earlier grades,
advance placement enrollment, quality of a writing and whatever other indicia of
qualifications one may want to use – if these are not correlated with performance,
then they should not be used when they have a disparate impact on a historically
disadvantaged group. Presumably, such criteria are being used precisely because
we all know that they are, in fact, correlated with post-admissions performance to
some degree. The context, if it’s graduate education and we’re talking about the
GREQ, it’s one thing. If it’s undergraduate education and we’re talking about the
SAT Verbal, it’s another thing. It’s not going to be the same thing everywhere, but
they are correlated. So they’re correlated.

Now you use different cut-offs. I invite you to look at the data produced by
discovery in the Harvard case, for example, to see the huge disparity in the indices
of academic preparation characteristic of applicant populations by race to Harvard
University. That’s just one window on this reality. It’s somewhat opaque because
institutions are not forthcoming with their data. We have different criteria of
selection. There’s going to be different post-selection performance if the criteria
are correlated with performance. These are large samples. That’s inescapable.

What’s the consequence of that? We’re in the right tail, remember. We’reselecting
elites. The consequence of using racial preferences to promote representation of
the disadvantage in venues of high selectivity I claim is that either we acknowledge
these difference in post-admissions performance, or we don’t. We cover them up
by flattening our assessment criteria. We pretend that they are not there. This
dishonesty can be stifling. My claim is that right-tail selection plus racially
preferential selection is, ultimately, inconsistent with true racial equality. It will
get you representation, but it will not get you to true equality, that is, to an equality
of dignity, standing and respect.

You need something a closely approximating parity of performance to get equality

of respect, but you’ve selected with racially differential standards into an activity
which is highly competitive and elite, where it is known in advance that the criteria
are correlated with post-selection performance. As a result you end up with racial
disparities in performance post-selection that you’re not owning up to.
Thus, consider academic economics. There are not enough black economists. I
agree. We should be diverse and inclusive. I agree. Of the 20 top departments in
the country, there should be at least two at every one of them. I agree. And there’s
not. We got to do better. Maybe I can agree with all of that, but if the way you’re
going to do better is to make criteria of selection into this rarified enterprise of
academic economics at the academic frontier, at the top departments, dependent
upon racial identity, you’re not going to get equality. You’re going to get black
mediocrity to some degree. I know that it’s unspeakable to say that there could be
racial differences in performance, but I get letters in my inbox all the time: "I’m a
partner at a big law firm in New York City. Here’s what I can’t say publicly.
Please don’t quote me. Many of our associates who are of color are not up to
snuff, but we hired them because, et cetera. Some of them are going to make
partner, and I shudder at that prospect.” I’ve heard people say that.

Now, here’s what we ought to do instead. We ought to devote your effort to

enhancing the development of African American prospects, such that when you
apply roughly equal criteria of selection at the right tail, the numbers you end up
selecting increase. We ought not to aim for population for parity. That is a huge
mistake. These numbers – various groups’ shares of available positions -- have to
add up to one. How can you expect population parity in an enterprise where some
groups are overrepresented by a factor of two or three relative to their population?
I don’t have to name the groups. We all know who they are. You can’t get
population parity with equal criteria of selection when all the populations are not
feeding in at the same rate in every activity. That’s a mistake. I conclude that the
permanent embrace of preferential selection by race in extremely competitive and
rarefied venues is a mistake. I can understand its transitional use, historically
speaking, but its institutionalization is inconsistent with genuine racial equality.
Indeed, I would go so far as to argue that achieving parity between identity-based
groups in society ought not to be a public policy goal.

Indeed, there is a fatal contradiction at the heart of the argument for group
equality of social outcomes. In my considered opinion we ought not to expect this,
and we ought not to make achieving it our goal. Equality of opportunity, not
equality of results, is the only defensible public policy goal in my view. The
dogged pursuit of equal results between racial groups across all venues of human
endeavor is a formula for tyranny and yet more racism. Here is why.
Identitarian arguments for group equality posit that we have different groups --
Jews, South Asians, East Asians, Blacks, Latinos, etc. -- and that these groups have
identities which deserve to be acknowledged and respected. When someone tells
me, “I identify as a member of group X,” I am given to understand that this is a
part of their personhood which warrants to be respected and given credence. So,
groups are fundamental building blocks of society in this identity-focused view of
the world. It is not a matter of indifference. We are in these various boxes. Groups
matter. A group’s culture and heritage matter to its members – the music they listen
to, the food they eat, the literature they read, the stories they tell their children – all
these things for the identitarians are important and they all vary across groups.
On the other hand, group-egalitarians presuppose that – absent injustice – there
would be equality of groups across every human enterprise. But how can that be?
Because if groups matter, some people are going to bounce a basketball 100,000
times a month and other people are going to bounce it 10,000 times a month. Some
people are going to be drawn to books as a way of experiencing human culture and
other people are going to be more verbal or more spontaneous or whatever it might
be. There are differences between groups. Groups matter after all. They’re not all
the same. They don’t do the same things, they don’t believe the same things, they
don’t think the same things, they don’t spend their time in the same ways. So now I
have population groups that have their own integrity, expressing themselves in how
they live their lives, how they raise their children, how they spend their time. This
will inevitably result in different representations of the groups’ members across
various human activities. The various groups’ members will not all be involved in
academic pursuits, in the business world, in the professions, or in sports and
entertainment to the same extent. They will not all have the same occupational or
professional profiles. If “groupness” matters for the identitarians, then this
groupness must be reflected to some degree in how people choose to live their
lives. How, then, can egalitarians insist that society is unfair unless it yields an
equal proportionate representation of these groups in every human enterprise? That
is simply a logical contradiction. Acting in a determined way on that
contradiction can only to lead to tyranny, to disappointment, to conflict and to
more racism.

For, if we try to erase those cultural and behavioral distinctions that constitute the
substance of groupness – putting everybody into one social milieu, overriding the
autonomy of parents, socializing child-rearing, and so on – then we might be able
to flatten the social terrain enough to achieve group equality. But to do this would
be tyrannical. It would extinguish our freedom as individual persons to associate
with each other, to believe and to live as we please. And, should such a draconian
policy fail to produce group equality – as seems more than likely – we would end-
up with the question: How come there are so many Jews (or Asians, or “whites” or
whatever) in medical school, with PhDs in electrical engineering, at the top of the
income distribution? That is where identity-based group egalitarianism ultimately
leads. There is no end to the quest for group equality if, indeed, group identities are
meaningful and persistent. The presumption of group equality in the face of group
distinctions of social organization, culture and values leads either to the tyrannical
imposition of uniform standards in an vain attempt to tamp down the authentic
expression of groupness, or to endless finger-pointing and suspicion whenever
some group of people moves ahead of or falls behind the pack in this or that arena
of achievement. A treacherous presumption will haunt society: that any group
disparity must reflect some systemic unfairness . That is a formula for perpetual
conflict, not for “social justice”. And it is a temptation which should be resisted.

Yes, we black Americans have been dealth a bad hand by history. However, that
undeniable fact does not tell us how to move forward. Life is full of tragedy and
atrocity and barbarity, and so on. Life is not fair. The hard truth of the matter, I
have argued here, is that we black Americans have no alternative but to take-up
responsibility for our lives and to embrace the burdens of our freedom. No one is
coming to save us. This is not fair, but it true nonetheless. If we want to walk with
dignity, if we want to be truly equal we must realize that white people cannot give
us equality. We actually must earn equal status. Please don’t get angry with me,
because I’m on the side of black people here. Still, I must insist that equality of
dignity, standing and respect, of security in our position within society, of the
ability to command the recognition of others -- these are not things that can be
handed over to a group of people in response to political protests. These things
must be wrested with one's bare hands from a cruel and indifferent world. We have
to make ourselves equal. No one can do it for us.

Thank You.