November 18, 2020
To put a spotlight on how racism threatens our economy and limits the opportunities for people of color, the Federal Reserve Banks of Atlanta, Boston, and Minneapolis have launched “Racism and the Economy,”, a seven-part series of virtual events aiming to examine and advance actions to dismantle structural racism. In the first event of the series, the Federal Reserve Bank of Minneapolis president “Neel Kashkari interviewed Ursula Burns,”, former CEO of Xerox, who explained that organizations have ducked the responsibility of addressing racism.
The Federal Reserve is a major player in determining economic policy, as its purpose is to influence monetary conditions and regulate banks, with the goal of full employment, stable prices, containing risk, and protecting the rights of consumers. Burns argues that organizations like the Federal Reserve should care about racism, because “the median means absolutely nothing.” It doesn’t work to treat America as all one group—the economic equivalent of teaching to the middle. Within Fed data are individual people—including rich, poor, white, Black, and so on—and it is the job of the Fed to know and be passionate about all of the people, not just an imagined “average” or sum of the parts. Furthermore, Burns believes that the Fed says they are more boxed in than they actually are, when it comes to the power they have to effect change.
To understand some of the power that organizations have, Burns describes the current playing field:
“We’ve built a system... where… the playing field is defined by a whole bunch of white guys. The referees are the white guys. The rules of the game are written by a whole bunch of white guys. The reward system and the judges for every step is a whole bunch of white guys. We then say to the rest of the world—women and African Americans, and Latinos—‘Come into this place. It’s—don’t worry, it’s fair, it’s equal. We’ve designed it for everyone. Come in and play in this field, where I defined the rules, I defined the field of play, I defined everything. I even judge your success.’ And we contort—Blacks and women contort ourselves to fit here. We do. And… we just can’t continually contort enough to be a white guy.”
Racism, supremacy, and sexism are structurally built into the fabric of the United States. Burns points out that those in power say they aren’t racist, but the system they built continues to keep some people out. Furthermore, those in power are reluctant to change without a compelling reason. In order to overcome these barriers and create a fairer system, we have to act affirmatively. Burns is clear that we can’t reprogram minds and, thus, changing behavior is the first step. As a country, we may be waiting a long time to change every person’s beliefs—but companies can institute value systems that require employees actions’ to be anti-racist while at work, and employees will have to abide by those values and rules.
Throughout the interview, Burns emphasizes the need to be creative and flexible, and to build in structure to ensure that progress is made. Burns offers a few suggestions:
- Everyone can do something. Whether you are Congress, the Federal Reserve, or any other company or organization, it’s everyone’s job to do something. Burns stresses that we can’t keep passing the responsibility off on someone else. We all have to look at the tools we have and think flexibly and creatively about how we can help improve business, commerce, and people’s lives. The Federal Reserve, for example, can think about how to use interest rates to drive growth, equity, and inclusion.
- Stakeholders can use their power. Burns notes the shifting of attention from shareholders to stakeholders. Shareholders and CEOs are starting to realize that they need to do more than simply maximize shareholder value. This means attending to employees, social media, and global politics. Many companies are in a moment of reflection right now, due to recent protests against systemic racism. When individuals come together and raise their voices as employees, on social media, or elsewhere—companies are beginning to respond.
We found this conversation to be strongly connected to the work we’re doing in the field of financial literacy. It is essential for students to understand not only the existence of systemic racism and its financial effects but also what affirmative measures can be done and by whom. Understanding that it is financial policies and structures that perpetuate inequality—and not any individual personal failing—can help give students self-efficacy and agency. At the Initiative, we currently provide students with the tools and flexibility to approach systemic racism on a number of fronts:
- Question. Students are encouraged to look critically at the financial systems around them, question the motives of financial players, and dig deeper into the fine print.
- Navigate. When faced with the need to make immediate decisions, students must know how to navigate the present system, which includes reflecting on how one’s economic environment affects one’s financial well-being. Students are taught how to make the best decisions for themselves, given their unique goals and circumstances.
- Challenge. Students must also know how to challenge systemic racism in the financial system, in part by understanding consumer protection and anti-discrimination laws, and in part by increasing awareness of the historical and present-day context of racial financial inequity.
- Shape. With strong foundational financial knowledge and an understanding of how systemic racism permeates the financial system, students have the initial building blocks necessary for advocating for and creating change through actions such as those described by Burns—whether students go on to become policy-makers, shareholders, or stakeholders in their community.
In the end, Burns paints an optimistic picture, but it’s one that depends on everyone doing their part. While our work at the Initiative is a start, we also need to continually look for places to improve. As Burns implores, we all have to go out into the world, see how people are really living, understand that help is needed, and think about how to provide that help. Whether we are running the Fed, running a smaller organization, or simply demanding more from the companies we work with and for—we can all heed Burns’ call to action.