Racism has a cost for everyone

I am a public policy wonk.

I investigate data that points to problems
in the American economy.

Problems like rising household debt,

declining wages and benefits,

shortfalls in public revenue.

And I try to pinpoint solutions

to make our economy
more prosperous for more people.

I geek out about tax policy

and infrastructure investments,

and I get really excited

by a gracefully designed
regulatory regime.

(Laughter)

These are the kinds of topics
that I was talking about

on a public television
live call-in show, in August of 2016.

I was about half way through the program,

when a man called in,

identified as Gary from North Carolina,

and he said,

"I'm a white male and I'm prejudiced."

He then went on to detail his prejudice,

talking about black men and gangs,
and drugs and crime.

But then he said something
that I'll never forget.

He said, "But I want to change.

And I want to know what I can do
to become a better American."

Now, remember, my career
is about economic policy,

as translated into dollars and cents,

not personal thoughts and feelings.

But when I opened my mouth
to respond to this man on live television,

the most surprising words came out.

I said,

"Thank you."

I thanked him for admitting his prejudice,

for wanting to change.

and for knowing somehow that
that would make him a better American.

The exchange between Gary
and me went viral.

It's been viewed over eight million times,

and inspired waves
of social media commentary

and news coverage.

And I think people were surprised

that a black woman
would show such compassion

for a prejudiced white man,

and they were surprised
that a white man would admit his bias

on national television.

Not long after Gary and my viral moment,

we met in person.

He said that he had taken my advice.

He said that my words had been
like someone wiped the dust from a window

and let the light in.

Over the years,
Gary and I have become friends.

And Gary would tell you
that I've taught him a lot

about systemic racism in America,

and public policy.

But I've learned a lot from Gary too.

And the biggest lesson for me

has been that Gary's prejudice
has caused him to suffer.

Fear, anxiety, isolation.

And it's made me rethink

many of the economic problems
I've been focusing on

my entire career.

I wondered,

is it possible that our society's racism

has likewise been backfiring
on the very same people

set up to benefit prom privilege?

Driven by this question,

I've spent the past few years
traveling the country,

researching and writing a book.

My conclusion?

Racism leads to bad policy making.

It's making our economy worse.

And not just in ways
that disadvantage people of color.

It turns out it's not a zero-sum.

Racism is bad for white people too.

Take, for example,

America's underinvestment
in our public goods.

The things that we all need,
that we share in common,

our schools and roads and bridges.

Our infrastructure gets a D plus

from the American Society
of Civil Engineers,

and we invest less per capita
than almost every other advanced nation.

But it wasn't always this way.

I traveled to Montgomery, Alabama,

and there, I saw how racism
can destroy a public good

and the public will to support it.

In the 1930s and '40s,

the United States went on a nationwide
building boom of public amenities

funded by tax dollars,

which in Montgomery, Alabama,
included the Oak Park pool.

Which was the grandest one for miles.

You know, back then,
people didn't have air conditioners,

and so they spent their hot summer days

in a steady rotation
of sunning and splashing

and then cooling off
under a ring of nearby trees.

It was the meeting place for the town.

Except the Oak Park pool,

though it was funded
by all of Montgomery citizens,

was for whites only.

When a federal court
finally deemed this unconstitutional,

the reaction of the town
council was swift.

Effective January 1, 1959,

they decided

they would drain the public pool

rather than let black families swim too.

This destruction of public goods

was replicated across the country

in towns not just in the South.

Towns closed their public parks,
pools and schools,

all in response to desegregation orders,

all throughout the 1960s.

In Montgomery, they shut down
the entire Parks department

for a decade.

They closed the recreation centers,

they even sold off the animals in the zoo.

Today, you can walk
the grounds of Oak Park, as I did.

But very few people do.

They never rebuilt the pool.

Racism has a cost for everyone.

I remember having that same thought
on September 15, 2008,

when I learned the breaking news
that Lehman Brothers was collapsing.

Now Lehman was,

like the other financial firms
that would go under in the coming days,

done in by overexposure
to a toxic financial instrument,

based on something
that used to be simple and safe,

a 30-year fixed-rate home loan.

But the mortgages at the center
and the root of the financial crisis

had strange new terms.

And they were developed
and aggressively marketed for years

in black and brown
middle class communities,

like the one that I visited
when I met a home owner named Glenn.

Glenn had owned a home

on a leafy street in the Mount Pleasant
neighborhood of Cleveland

for over a decade.

But when I met him,
he was near foreclosure.

Like nearly all of his neighbors,

he'd received a knock on the door

from a broker promising
to refinance his mortgage.

But what the broker didn't tell him

was that this was a new kind of mortgage.

A mortgage with an inflated interest rate,

and a balloon payment,

and a prepayment penalty
if he tried to get out of it.

Now the common misperception,

then and still today,

is that people like Glenn were buying
properties they couldn't afford.

That they themselves were risky borrowers.

I saw how this stereotype
made it harder for policy makers

to see the crisis for what it was

back when we still had time to stop it.

But that's all it was.

A stereotype.

The majority of subprime mortgages
went to people who had good credit,

like Glenn.

And African Americans and Latinos

were three times as likely,

even if they had good credit,

than white people,
to get sold these toxic loans.

The problem wasn't the borrower.

The problem was the loan.

After the crash,

most of the nation's big lenders,

from Wells Fargo to Countrywide,

would go on to be fined
for racial discrimination.

But that realization came too late.

These loans, super profitable
for the lenders,

but designed to fail for the borrowers,

spread out past the confines

of black and brown
neighborhoods like Glenn's,

and into the wider,
whiter mortgage market.

All of the nation's big Wall Street firms

bet on these loans.

At its peak,

one out of every five mortgages
in the country was in this mold,

and the crisis,

the crisis that my colleagues
and I saw coming,

would go on to cost us all.

Nineteen trillion in lost wealth.

Pensions, home equity, savings.

Eight million jobs vanished.

A home ownership rate
that has never recovered.

My years of advocating in vain
for home owners like Glenn

left me convinced

we would not have had a financial crisis

if it weren't for racism.

In 2017, I traveled to Mississippi,

where a group of auto-factory workers

was trying to organize into a union.

Now, the benefits they were fighting for,

higher pay, better healthcare coverage,

a real pension,

they would have helped
everybody at the plant.

But in person after person
that I talked to,

white, black, for the union,
against the union,

race kept coming up.

A white man named Joey put it this way.

He said,

"White workers think I ain't voting yes
if the blacks are voting yes.

If the blacks are for it, I'm against it."

A white man named Chip told me,

the idea is that
if you uplift black people,

you're downing white people.

It's like the world's got this
crab in a barrel mentality.

Now the union vote failed.

Wages at the plant are still lower
than their unionized peers,

and people there still worry
about their health care.

You know, it's tempting perhaps,

to focus on the prejudiced attitudes

of the men and the workers
that I heard in Mississippi.

But I'm more interested
in holding accountable

the people who are selling
racist ideas for their profit,

than those who are desperate
enough to buy it.

My travels also took me to places

where I saw, however,
that it doesn't have to be this way.

I went to Maine,
the whitest state in the nation,

the oldest,

where there are more deaths
every year than births,

and I went to this dying
mill town called Lewiston,

that is being revitalized by new people,

mostly African, mostly Muslim,

immigrants and refugees.

There, I met a woman named Cecile,

whose parents had been part
of the last wave of new people

to come to Lewiston.

These are French Canadian mill workers
at the turn of the century.

Cecile is retired, but she had found
a new purpose in life,

by organizing Congolese refugees

to join with the white retirees
at the Franco Heritage Center.

(Laughter)

These men and women from the Congo

were helping these retirees
remember the French

that they hadn't spoken
since their childhoods.

And together, these two communities
helped each other feel at home.

You know, for all the political talk

about the newcomers
being a drain on the town,

a bipartisan think tank found
that the local refugee community there

created 40 million dollars in tax revenue,

and 130 million in income.

And I talked to the town administrator,

who was boasting about the fact
that Lewiston was building a new school,

when all the rest of towns
like theirs in Maine

was closing them.

You know, it costs us so much
to remain divided.

This zero-sum thinking,
that's what's good for one group

has to come at the expense of another,

it's what's gotten us into this mess.

I believe it's time to reject
that old paradigm

and realize that our fates are linked.

An injury to one is an injury to all.

You know, we have a choice.

Our nation was founded

on a belief in a hierarchy of human value.

But we are about to be a country
with no racial majority.

So we can keep pretending
like we're not all on the same team.

We can keep sabotaging our success

and hamstringing our own players.

Or we can let the proximity
of so much difference

reveal our common humanity.

And we can finally invest
in our greatest asset.

Our people.

All of our people.

Thank you.

(Applause)