Racism

Racism is Very Expensive

JM Ashby
Written by JM Ashby

The primary and most important cost of racism is the human cost, of course, but we can also assign an extraordinarily high dollar value to the cost of racism according to Citigroup, one of the largest commercial banks in the world.

A Citigroup study found that systemic racism and all it entails, from discrimination in housing to wages and the bank's own lending practices, cost the economy about $16 trillion over the last 20 years.

From CNBC:

“Racial inequality has always had an outsized cost, one that was thought to be paid only by underrepresented groups,” said Raymond McGuire, vice chairman of Citigroup and one of the report’s authors. “What this report underscores is that this tariff is levied on us all, and particularly in the U.S., that cost has a real and tangible impact on our country’s economic output.” [...]

The bulk of the lost $16 trillion is based on a lack of lending to Black entrepreneurs, which Citi estimates has cost the U.S. $13 trillion in business revenue and 6.1 million new jobs per year. Another $2.7 trillion in income has been lost due to the racial wage gap for Black Americans, while the lack of access to higher education for Black students could have added $90 billion to $113 billion in lifetime income. Finally, a lack of equality in access to housing credit, which could have led to an additional 770,000 Black homeowners, has cost $218 billion.

Furthermore, the study found that if racial inequality gaps were addressed today, $5 trillion could be added to the economy over the next five years.

When Trump hits the campaign trail and claims the Biden administration is going to unleash hordes of black men on suburban white women, he's contributing to this cost. What he's saying is surface level racism, but it's also what drives systemic racism; what drives discrimination in housing policy among other things. Trump is actively costing the country economic activity in numerous ways and this is one of them.

Conversely, the Biden campaign platform that calls for more equitable policy across the board is a platform for increased economic growth. Conservatives and Republicans see it as merely a racial and social justice platform, and it is those things, but it will also lead to a more resilient economy that generates far more economic activity than white supremacy does.

Citigroup recently pledged to become an anti-racist company and this is probably why. Their own study found that it's likely costing the company money.

It's unfortunate that this is what it takes. The Citigroup chairman saying this was a cost "thought to be paid only by underrepresented groups" is accurate and revealing. It tells us the bank would not be changing their policies if their study had found they could safely ignore the human cost of racism without a fiscal cost.

  • Republicans NEVER understand what would be good for their precious baby, the economy. They always take positions that hurt economic growth, be it tax cuts for the rich, discrimination, or fighting against switching America over to a carbon-free, green energy economy. The fight against climate change represents one of the biggest potential economic booms in history (if not the biggest) and they can’t see it.

  • muselet

    On the one hand, good for Citigroup for following the data where they led, and they led somewhere uncomfortable.

    On the other hand, it took Citigroup long enough even to ask the underlying question.

    On the gripping hand, talk is cheap. I’ll truly be impressed if Citigroup changes its policies and procedures to reflect this report’s conclusions, but not before.

    –alopecia

    • MadJuana

      The phrase that immediately came to mind was “well duh!”

      • muselet

        Same here, but I tend to be a bit long-winded.

        –alopecia

        • MadJuana

          I thought about getting a bit windy, but it would be preaching to the choir, as it were. (See Ipecac below.)

    • Christopher Foxx
    • Draxiar

      It is unfortunate that it took a fiscal interest for Citgroup to do the right thing…but it is the right thing. The motive may not be born of altruism but it will eventually evolve into something else. Honestly it’s smart of Citigroup to do this because the diversity of talent is quickly changing. Were I a minority (I’m a white male) freshly graduated from college with a degree in money I would want to work for the company that (at least in statement) wants to change their racial bias.