A lesson in economic violence

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.

More about...Economics

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There are 15 comments to "A lesson in economic violence".

  1. Paul says 04 June 2020 at 11:09

    If you’re “open to discussing them from the conservative and liberal perspectives,” here’s a conservative perspective:

    In 2015, about 54% of black children lived with a single mother, while the share of white children living with a single mother was about 22%. In 1965, 24 percent of black infants and 3.1 percent of white infants were born to single mothers.

    Married-couple families have declined from 78 percent of all Black families in 1950 to 48 percent in 1991; comparable figures for Whites are 88 and 83 percent, respectively. At the same time, the percentage of Black families maintained by women with no husband present more than doubled. Much of this growth occurred between 1970 and 1980, when the proportion of such families climbed from 28 to 40 percent. High rates of marital separation and divorce, as well as a larger proportion of never-married women with children maintaining families are factors. As a consequence, fewer Black children under 18 years old live with two parents. In 1960, about 2 in 3 (67 percent) lived with two parents; a little over 1 in 3 (36 percent) did in 1991. The respective figures for White children are 91 and 79 percent. (census.gov)

    Yes, it is a conservative argument that marriage is a hedge (though not a guarantee) against poverty, and that marriage should be encouraged and supported as a way of building economic equity, whether you’re black or white. It is also statically more stable for children.

    I hope the redesign brings you in more readers inclined towards your particular vantage point. I’ve lost interest here. All the best. Paul

    • Adelanteyeducate says 04 June 2020 at 18:42

      I know Aaron touched on this below with his clear points about the exclusive and culturally relative nature of marriage (not gonna lie, was raised by a single mom so to hear my upbringing disparaged/weaponized in this way kinda hurts), but I think there’s some more to unpack here. First off, as a former Math teacher and a PhD student in a quant field – correlation does not imply causation! That’s not sound statistical inferencing! I think it might be worth reading Ibram X. Kendi’s Stamped from the Beginning and Michelle Alexander’s The New Jim Crow to explore how deeply rooted anti-Blackness is in American social policy.

    • Duane says 05 June 2020 at 08:03

      That’s a quick trigger, Paul. This is one article, “liberal” by your definition. How will your feelings change if J.D. publishes a “conservative” article on Monday? Would you expect the “liberals” to stop visiting this site?

      FWIW, not that it should matter, I’m an independent who split my vote 50/50 during the last major election. I don’t want politics to drive the topics of this site, but I appreciate acknowledging the inevitable influence it can have on personal finance.

    • Mike in NH says 06 June 2020 at 07:03

      Not a fan of politics in general, because I really dislike being pushed into an either/or scenario when most of society and our problems are way too complicated for that. There is plenty of reason for the personal finance crowd to be in favor of and willing to listen to conservative viewpoints, even the most liberal among us wouldn’t want to see our tax dollars wasted or spent inefficiently. This analysis is incomplete though, Paul. I think as humans we probably all have a tendency or a cognitive bias towards stopping once we get the answer that makes sense for us and lines up with our core beliefs. I can’t recall if Sakichi Toyoda’s 5 Why’s have ever been discussed on GRS, but it is an excellent method of getting to root cause. In this case, you only asked why once and it brought you to marriage/family structure. Gotta keep digging and asking for a few more levels.


    • G.E. Miller says 07 June 2020 at 09:46

      Your viewpoint is that black families struggle economically because black fathers abandon families. Your assumption is that this is a matter of choice – and therefore the fault of those who chose it. That assumption ignores the entire history of slavery, segregation, lesser-funded education, redlining, wealth gaps, increased rates of arresting and longer prison sentencing, and much more. Families are hard to maintain, on the aggregate, when more black men must dig their way out of the holes that they’ve been pushed in.

    • Richard says 07 June 2020 at 13:09

      You never had interest, other than in justifying rather than understanding the gap with the patented “negligent and undeserving” tropes which got you the affirmative nods of other snickering white folks unwilling to make America Whole (for the first time).

  2. Nancy says 04 June 2020 at 12:36

    I’m enjoying these posts. Nothing happens in isolation, even personal finance, and I’m enjoying these perspectives. Thanks.

  3. Alicia says 04 June 2020 at 12:36

    Thank you for using this platform to engage readers in thinking about the economics of race. The two are inextricably linked for many of the reasons outlined in this post. It isn’t political to acknowledge economic truths. Anyone who doesn’t wish to understand or admit this isn’t recognizing the full picture of systems that influence a person’s individual prosperity or access to resources.

  4. Aaron says 04 June 2020 at 12:51

    Great post from Lynnette. I’m glad you’ve come to realize J.D. that society and it’s policies cannot be separated from the individual, and thus the personal is political, even personal finance.

    And to Paul’s comment, nice try, but US policies disallowed interracial marriage for the first 300+ years since Europeans colonized, and gay marriage until this century. Yet another white-hetero privilege that people pretend is open to everyone. Rugged individualism is a myth. We’re all in this together and we’d do well to help others up instead of looking for reasons to blame them for why they’re down.

    • Duane says 05 June 2020 at 07:53

      Aaron – Excellent last sentence.

  5. Linda says 05 June 2020 at 01:34

    What I find astounding is that civilization proved to be a mere veneer, it only took a small scratch to let deeply buried primitive feelings ooze out. We always hear “Talk, communicate”, but that didn’t apply at society level due mainly to political correctness taken to ridiculous levels. Artificial pressure put on individuals will make them refrain from expressing their feelings and opinions, but won’t stifle them.

  6. Amy says 05 June 2020 at 10:51

    Thank you for another great article. Thanks for hosting these other people on your blog and educating us. It’s timely and appropriate and I love, love, LOVE that you are exploring different factors that affect each individual’s ability to succeed. Personal accountability is a good portion of the battle, most of it for the priviledged. It’s not all the battle for those the system has been designed to not benefit.

    This article is adroitly shows what “systemic racism” looks like in America, and how the result is that black people are more disadvantaged, despite the fact that their labor built and sustained large portions (All? The majority?) of America. The system needs to be changed so more people can thrive.

    Coates article was also published by the Atlantic if you prefer to read it (should come up via google). I highly recommend his books as well. He’s an incredible writer.

  7. Olivia says 05 June 2020 at 15:10

    Thank you for having the courage to venture into the political! As others have noted, there are basic economic and historic facts that must be acknowledged to understand the current economic reality of the United States. Systemic forces are already in play, whether or not we acknowledge them.

    I’m all for personal responsibility, and individual strategizing, but there’s no reason at all for that to be our ONLY approach to helping people improve their financial standing. We can work to solve problems at *both* a systemic level and an individual level.

    In fact, you could say it’s one more flavor of individual responsibility: we can choose to take action and change systemic forces, rather than just sitting back and assuming them to be immovable!

    • J.D. says 05 June 2020 at 15:17

      Yes, Olivia. Exactly. This is the conclusion I’ve reached too: “We can work to solve problems at BOTH a system and an individual level.”

  8. Kingston says 07 June 2020 at 13:14

    A couple of decades ago I was a copyeditor at a financial newswire in New York City and I occasionally had the task of editing stories by Lynnette Khalfani-Cox. Her work was a pleasure to read then, and it is now. More from Lynnette, please!

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