Racism is One of The Main Causes of Macroeconomic Market Failure In America
I am an economist, so I can’t help it. I always try to see things from an economic point of view. I have realized that the intersection of racially discriminatory laws and macroeconomic market failure is complex and multi-faceted. Like environmental pollution, racism has led to various market failures, including unequal access to resources and opportunities, inefficiencies in the labor market, and a persistent wealth gap between white and black households.
One of the most significant ways racism causes macroeconomic market failure is through housing discrimination. Redlining and other discriminatory practices have prevented black people from accessing affordable housing and building wealth through generational homeownership. This practice has created a housing market failure, with black families unable to move into desirable neighborhoods and take advantage of the benefits of homeownership, such as building equity and accessing better schools and job opportunities. When mortgage and business loans interest rates are higher for black people, that’s a misallocation of resources, this case being credit.
Another way in which racism causes market failure is through labor market discrimination. Discrimination in hiring, pay, and promotion have led to inefficiencies in the labor market. Hiring managers and recruiters exclude talented black workers from well-paying jobs and opportunities for advancement. This inefficient behavior has resulted in a loss of human capital, with the economy failing to fully utilize black workers’ talents and skills. As I mentioned in my book, one of my white bosses told me I would be qualified for a leadership role for about ten years. He had just rejected me for a promotion. I had more experience and qualifications than he did.
Furthermore, racism has created a persistent wealth gap between white and black households, with black families having significantly less wealth than their white counterparts. These discriminatory traditions have developed a market failure in which black households cannot fully participate in the economy, with limited access to credit and investment opportunities. The results leave a ripple effect towards deprivation. This convention has also led to a lack of economic mobility, with black households unable to accumulate wealth over generations and break the cycle of poverty.
Racism has significant macroeconomic consequences, creating market failures in the housing market, labor market, and wealth accumulation. These market failures have high economic costs, leading to inefficiencies and limiting the full participation of black households in the economy. Addressing racism and its economic consequences is essential for creating a more just and equitable society and promoting sustainable economic growth.
If you want to start learning about racism, its origin, and what you can do about it, grab a copy of my book from this Amazon link. For other excellent books on racism, check out this Amazon link.
