Reproducing Racism: How Everyday Choices Lock In White Advantage

4. Oh Dad, Poor Dad: How Whites’ Early Unfair Advantage in Wealth Became Self-Reinforcing over Time

>> 55  Oh Dad, Poor Dad How Whites’ Early Unfair Advantage in Wealth Became Self-Reinforcing over Time 4. Oh Dad, Poor Dad In 2000, two economists from the University of Washington published a paper on discrimination in jobs. The paper outlined a provocative argument—that segregating the races could reproduce inequality over time indefinitely, even if intentional discrimination were to end tomorrow. The authors set up a simple mathematical racial income gap model that looked very much like Glenn Loury’s earlier model. In their model, a person ’sindividualabilitytogetajobwasdirectlyconnectedtohercommunity ’s ability to help all its residents in their job search. They proposed a simple thought expermient. Suppose there were two communities, one white and one black. Suppose also that each person in a community derived her ability to get a job from some combination of her own innate abilities and the community’s helpfulness in getting its members jobs. (Let’s say that 56 > 57 The second factor—the relationship between job-getting in one generation and job-getting in the next generation—linked earlier history to contemporary outcome. The more trouble a community had had getting jobs, the more trouble a community continued to have getting jobs. Conversely, the better a community was at getting jobs, the easier it was for the next generation. Income levels became self-reinforcing by way of this feedback relationship between the generations. This chapter argues that positive feedback loops play a central role in reproducing racial disparity over time. Through positive feedback loops, inequality reproduces itself from decade to decade, automatically and in the absence of intentional discrimination. We will be looking at a number of feedback loops in this book: family wealth, in which the rich get richer; neighborhood loops, in which better neighborhoods finance the success of the next generation; social networks, in which who a person knows makes a difference not just for him but for his children; and institutional loops, in which being the first to occupy a profession helps to pave the way for later generations. This chapter looks at family wealth feedback loops, in which white families continue to pass down the ill-gotten wealth they acquired during Jim Crow and slavery. Families of color have no such racism dividend to pass down. Before we investigate the details of the family wealth feedback loop, let’s look at some theory on positive feedback loops. Feedback Loops: Some Basic Theory The concept of positive feedback loops has its roots in a new genre of interdisciplinary scholarship called complex systems theory. A complex system is a system made up of individual agents that dynamically interact with each other to produce interesting patterns of behavior. A sand pile is a complex system, with individual sand grains that shift over time in patterns , as in an avalanche. A stock market is a complex system made up of buyers and sellers, in which we see bubbles and crashes. Neighborhoods, body tissue, and ant colonies all are examples of complex systems, as people, cells, and ants follow simple rules that produce complex patterns. 58 > 59 But a number of economists have challenged the law of diminishing returns. Some have suggested that in certain circumstances, markets actually display increasing returns. As early as the 1950s, economists like Gunnar Myrdal and Nicholas Kaldor were pointing out that some markets display “circular and cumulative causation,” in which demand produces even more demand. More recently, economists like Brian Arthur and Paul Krugman have focused on the role of positive feedback loops in high-technology markets . Increasing returns are returns that keep growing in the same direction —that which is ahead gets further ahead, and that which is behind falls further behind. Increasing returns don’t generate a nice, stable equilibrium . Instead, they generate a sort of snowballing effect, as that which gains success succeeds even more, and that which suffers loss loses even more. If a competitor in the market gets ahead, by chance or by some sort of nefarious behavior (as we will see), then increasing returns can magnify that early advantage, and the early winner can go on to lock in the market. The notion of increasing returns turns upside down many of the conventional models of how the economy works. This idea of increasing returns played a central role in the litigation against Microsoft for antitrust violations in connection with operating systems software. In the 1990s, the US government filed a complaint alleging that Microsoft had anticompetitively pushed computer manufacturers to deal exclusively with...