Slavery and It’s Everlasting Effects on Economic and Racial Inequality
Behavioral Finance | Blog | Economy
In February of 1968, Harry Belafonte, host of the Tonight Show on NBC, had Martin Luther King Jr. on as a guest. Below is a clip of Martin Luther King Jr. responding to a question from his host and the following quote:
It’s no secret that people who get a head start have more advantages, less hurdles and subsequently, more success. While this is easily seen in sports, it’s most prevalent in our financial lives. The sooner you get an education, the sooner you can start a good career. The sooner you save, the sooner you can retire. The sooner you buy a house, the sooner you build more wealth.
In fact, buying a house and owning property is probably the single most important step a person can make when it comes to building wealth. The ability to borrow from the bank and invest in a limited resource, such as real estate, provides tremendous opportunity for wealth creation.
However, even after slavery ended in 1865, most descendants of slaves were never able to get this economic foothold. While the laws were passed to allow slaves to be free men and women, discrimination was rampant as it pertained to economic freedom. The ability for freed slaves and their heirs to get quality jobs to earn a decent living, access to education to further their careers, and access to capital to buy property was severely limited by a system that actively discriminated against them.
As a result, the ability for black communities (and other immigrant communities in this country) to build wealth and pull themselves out of poverty has been a major contributor to the current social unrest. Current protests have been focused on excessive police force, which most Americans agree needs to be addressed. However, it’s no secret that over-policing happens primarily in poorer communities. The fact that many of these poorer communities are black Americans, immigrants and other minorities, is a natural result of racial inequality being intertwined and inseparable from economic inequality.
After slavery was ended with the Emancipation Proclamation, it took over 100 years for our government to outlaw the type of discrimination that kept blacks and others from gaining an economic foothold in our country. It wasn’t until the Civil Rights Act of 1964, only 56 years ago, that this discrimination was made illegal. Even so, many institutions kept up their discriminatory hiring, lending or admissions practices. In fact, it took several acts to be passed to begin to level the playing field, including the Fair Housing Act of 1968, the Equal Credit Opportunity Act of 1974 and the Community Reinvestment Act of 1977. So, up until the last 40 to 50 years, banks and federal lending agencies were not required to treat borrowers fairly. Even after their passage, many of these laws were often ignored or not enforced.
An example of this generations-long discrimination, was uncovered by a family member of one of our team members. On their original property deed in Salem, OR it specifically stated “nor shall said premises or buildings thereon be used or occupied by persons of any race other
than the Caucasian or white race, except persons of different races may be
employed as servants by residents…” This restriction on the deed was in place between 1946 and 1971. While it may not have been enforceable after the Civil Rights Act of 1964, it demonstrates how rampant discrimination had been through the decades.
If we want to heal our nation and address our racial inequality, we must look first and foremost at the economic opportunities afforded to those people who have been disadvantaged by centuries of discrimination. It’s an overwhelming problem, but it is not insurmountable. Together, we can work towards making this the land of opportunity for all people.