Top Economist: America’s Racist Economy Getting Worse, Not Better

Lynn Parramore explores Peter Temin’s new book on the country’s two economic histories: progress for whites, slavery and segregation for Black people. He warns of a second-tier global future unless they come together.

The United States of America has a deeply divided economic history. So contends economist and economic historian Peter Temin, Elisha Gray II Professor Emeritus of Economics at MIT, whose new book explores the divergent realities of the Black and white economies.

Temin, who previously applied the dual economy model first proposed by West Indian economist W. Arthur Lewis (the first Black person to win a Nobel Prize in economics) to show that America has bifurcated into two separate economic countries for the affluent and the rest, now turns his attention to an ignored and distorted record of economic apartheid. “Never Together: The Economic History of a Segregated America” aims to expose the bleak counter-narrative to America’s story of growth and prosperity and to point to ways in which Black and brown people can be integrated into this story going forward.

If not, he warns, the United States simply can’t go on with business as usual. It will be relegated to a second-rate position on the world’s economic stage.

Here is no reading for the fainthearted. Temin’s analysis bristles with shameful, stomach-turning details of reprehensible and deliberate acts of racial oppression that have thwarted America’s struggle to live up to its billing as land of opportunity. He explores the troubled trajectory of an economy built on the rotten foundation of a deliberately created pariah class, and shows not only how that system lives on, but the myriad ways it is getting worse, not better.

From the abject failure of Civil War Reconstruction to the bare-knuckles brutality of Jim Crow, from a robber baron-ruled Gilded Age of Carnegies and Fricks keen to exploit Black people to a New Gilded Age of Zuckerbergs and Bezoses inclined to do the same, Temin shows that Black Americans, with every effort to join the economic mainstream, have been penalized, demonized, criminalized, defrauded, and assaulted by dominant whites – first by Southern landowners, later by wealthy industrialists, and finally by today’s financiers and tech giants whose oppression is less violent but plenty effective. He catalogs moments of victory followed again and again by a reverse alchemy that transmuted success into suffering for people of color.

Temin demonstrates that for most Black people, economic history has been an American nightmare. Are we finally ready to wake up?

The Birth of a Flawed Economy

Progress for whites, slavery and segregation for Black people. As Temin sees it, that sums up America’s economic development, starting with a plantation system consigning Black people to a pariah caste to justify exploitation. Temin argues this remains largely true today: “America is still colonial Virginia writ large,” he writes.

Temin’s book exposes the roots of the dehumanization of Black people as abhorrence for the poor brought over by colonists from Britain, where the poor were harassed, imprisoned, or sent abroad. White colonists adapted this attitude in the creation of a “highly closed and caste-like” slave economy far more punishing to the enslaved than those of other societies, such as Rome, where the enslaved were not pariahs, but could be educated, hold economically responsible roles and become accepted into society upon freedom. Not so in America.

The Civil War’s end concluded hostilities between the North and the South, but not those against Black people who could not expect civil or political rights beyond abolition or many opportunities for education or land, notes Temin. Planters and their descendants enacted racist policies that gave them labor control in place of slavery, fought to end Reconstruction, installed the brutal Jim Crow system, and went on to make sure Roosevelt’s New Deal excluded Black people from several of its key benefits. They are still attacking Black Americans today through a variety of tactics, from mass incarceration to voter suppression.

Education is a key ticket out of economic misery for Black people, Temin stresses, but dominant whites have been historically unwilling to pay taxes to support it, and remain so. The strategy of violence to keep Black subjugation in place, he reminds us, lasted throughout the Gilded Age in the South and trapped Black people in dismal agricultural roles without education or votes. Jim Crow violence and the consequent plummeting of Black voting ensured the plantation economy’s survival until World War II – even though the whole economy of the South suffered as a result.

Were the newly rich industrialists of the Gilded Age any less eager than the old Southern elites to line their pockets at the expense of Black people? Not really, according to Temin. Robber barons used those who moved North as strikebreakers and forced them into non-unionized jobs. The Pullman Sleeping Car Company concocted an “antebellum” system casting Black people as servants of the new rich and pushed them to the sidelines of America’s forward progress.

Black people could expect little better in the westward expansion, where they found people of color demonized and relegated to low-paying jobs in a system similar to the South’s, complete with Jim Crow-like laws. Dreams of success turned into dust.

The heinous policy of segregation, enshrined in the 1886 Supreme Court case, Plessy v. Ferguson, further locked Black Americans out of economic prosperity, delivering violence to those who managed to carve any security, as residents of Tulsa, Oklahoma’s Greenwood community, known as “Black Wall Street,” learned in 1921 when whites laid waste to their homes and businesses and murdered hundreds (research proves that the economic effects of this massacre haunt Black Tulsans today). Like many participants in the Great Migration, which saw millions of Black people heading North and West to escape destitution, Tulsans did not find relief for long.

Though incomes did improve for many relocated Black workers, Black–white geographic sorting was exacerbated during the Great Migration: Temin notes that in Northern cities, for every Black entering, almost three whites left. White banks prospered, but Black banks failed due to the poverty of clients in segregated cities.

Meanwhile, white America comforted itself with myths promoted by historian William Dunning and the Dunning School at Columbia University, along with D.W. Griffith’s film, “The Birth of a Nation,” which argued for the rightness of Black subjugation. President Woodrow Wilson, a Southerner, resegregated the U.S. government. The reality of America’s economic reality was thus obliterated, and once again, the dominant white narrative served to justify exploitation.

A Raw Deal for Black America

Despite the advances of white America’s economy after WWII, Temin reminds us that Black people actually lost ground to whites after the war. Black veterans returned from the battlefield to face harassment and violence, like Isaac Woodard Jr., a decorated veteran attacked so viciously by South Carolina police as he was taking a bus home that he was left permanently blind.

FDR’s New Deal brought more Americans to the economic table, but Southern senators made sure racial oppression remained in place. Temin observes that projects like the Tennessee Valley Authority relegated Black people to menial jobs, and the 1944 GI Bill, which appeared to offer Black people benefits and opportunities, “discriminated sharply against them to the point of mocking them for believing the promise of equal treatment.” The Social Security Act, signed in 1935, excluded farmworkers and maids and thus denied most Black people any security at all.

Even the 1954 Brown v. Board of Education decision ending segregation didn’t bring white and Black economic history together. Temin views it as a landmark decision, but one that could be walked back rather than as a bellwether indicating that Black people could rely on the Supreme Court to uphold their rights. Dominant whites found ways to subvert integration then as they continue to do today.

Temin observes that the national unemployment rate for Blacks and whites was the same in 1930, but by 1965, the Black rate was double that of whites. Wealth accumulation was practically impossible with low incomes, legal structures denying access to homes and land, and redlining blocking homeownership. When the automobile and national highways increased the white exodus from cities, Black people without resources to buy cars and suburban homes found themselves trapped in inner-city economic prisons. Soon they would be trapped in actual prisons, en masse.

Temin comments that in mid-century America, contact between the races declined. “America built a middle class,” he writes, “but systematic discrimination kept most African-American families from being part of it.”

More Wrongs Than Rights

The Civil Rights era brought Black people new voting protections and Lyndon Johnson’s more inclusive programs like Medicare, Medicaid, and Head Start, and migration to the North allowed Black people to take advantage of the state education system (higher education only; lower levels were starved for funds thanks to the Milliken v. Bradley decision by the Supreme Court in 1974). The emergence of a small Black elite held the promise of a better economic future.

But even these victories were fleeting, Temin argues. Conservative whites opposed Johnson’s civil rights laws, which were “observed in the breach for a few decades and then nullified by the Supreme Court.” The backlash led to President Nixon’s infamous Southern Strategy and the deliberate casting of Black people as born criminals.

Temin emphasizes that America’s laws were always more friendly to big business than to working people, especially Black and brown ones. “Conservative rich people considered Johnson’s Great Society to be harmful to the unregulated competition that they desired,” he writes. Starting around 1970, labor’s share fell while capital’s share grew, and America ended up with two separate economies for low-wage and high-wage workers. The top group required a college degree, which most Black people could not afford.

As the urban unrest of the late sixties brought white panic and Nixon’s War on Drugs, mass incarceration contributed to more crime, which in turn fueled demands for more draconian responses, thus creating a vicious cycle in which Black people were demonized as a pariah class of prisoners. Social immobility was sealed as incarceration tore families and support networks apart.

States funneled education resources to the new prisons, and Temin shows that despite the real educational gains of the sixties and seventies, Black progress was stalled. Just as it happened in the nineteenth century, hostility against them intensified as income inequality increased. The wealthy “followed the British colonial playbook of encouraging racism to divide working people,” notes Temin, and soon the Koch brothers and other rich conservatives, supported by the flawed work of economists like James Buchanan, focused on excluding Black people from voting and political decisions. They remain highly influential today.

Temin outlines how shifts in the economy encouraged by dominant whites, including deregulation, financialization, and globalization, increased burdens on Black workers, who were left out of the higher-paying jobs in the new services industries as manufacturing declined. The shift from employers hiring subcontractors further altered the labor landscape and subjected low-wage earners to benefits-free work with intrusive monitoring. “This change particularly affected Blacks who had missed the opportunity to get an education in the prosperous years,” writes Temin. Those who tried to upgrade their skills became victims of for-profit education schemes.

As the twentieth century drew to a close, presidents Reagan and Bush had reduced federal funding for cities and decimated urban working-class communities. The philosophy of New Federalism, espoused by conservatives starting with Nixon, had shifted decisions about resources to states and cut federal grants, thus eliminating many federal government jobs that had helped Black people join the middle class. As labor unions shrank and weakened, wages stagnated for both white and Black workers, and as the rich gained political influence, their tax rates plummeted, further cutting off funds for education and other critical services.

America’s Future at Stake

The reader of Temin’s book walks away with an eerie sense of how much America’s economic history rhymes. In the twenty-first century, he argues, the problems described have metastasized into a disastrous combination of macro inequality and systemic racism that wealthy planters might have looked on with approval. The U.S. and other English-speaking countries have the most unequal incomes on the planet. Modern Republicans, who, as Temin puts it, “look increasingly like Southern Democratic in the original Gilded Age,” are bent on gerrymanders that shrink the influence of Black voters.

Dominant whites have seen to it that Black Americans have gotten the worst of the 2008 financial crisis, which increased racial inequality and reversed progress on homeownership, as well as the COVID-19 pandemic, which brought them greater job losses, more health risks, and heightened educational losses – all by design, not by accident.

Reconstruction was supposed to give free Black people forty acres and a mule, but failed. Two centuries later, notes Temin, Black people still lack education and physical capital. “While some Blacks have got education and succeeded in acquiring some wealth,” Temin writes, “many more have ended up in prison.” Just as the South stymied its own economic progress relative to the rest of the country by failing to invest in Black citizens, the U.S., Temin shows, is doing the same now relative to the rest of the world. “By neglecting their education, access to favorable banking, and access to good jobs, the United States is depriving itself of the skilled labor that might otherwise develop within the poor, Black and brown communities,” he writes.

The white economy still prioritizes corporations over working people, as the 2010 Citizens United decision highlighted. And business schools, Temin observes, produce a corrosive capitalist mentality that creates division and makes economies work worse, not better. This can be seen in the growing power of private equity firms, which raise capital from wealthy individuals and institutions to make risky investments that promise high returns, and in doing so destroy companies, tear apart communities and leave society to pick up the tab – all the while indifferent to the exacerbation of racial inequality these activities produce. Just like the last Gilded Age, writes Temin, “racism and wealth still go together.”

He warns that if all this continues, “we will see ourselves falling behind other postindustrial countries and slipping backward into what economists used to call a less developed economy.” Already, he cautions, the U.S. has fallen dramatically in the Social Progress Index (it is the lowest of the G7 and 28th in the world) and has fallen below countries like Argentina on education and healthcare. Without profound changes, “the very rich will prosper, as will the top fifth whose incomes have continued to rise for the past half-century, while the lower 80 percent will see their incomes and social services decline,” he states.

Temin advises that if we want to fix or improve these conditions, we had better not ask the robber barons and rich ideologues of the New Gilded Age, whose “only interest is in low taxes” and remaining oblivious to the suffering of Black and brown people. They will show as little commitment to the basic things that have been shown to help Black economic progress, like raising the minimum wage or funding education, as their forebearers in the last Gilded Age.

“Early education is a very important beginning,” Temin points out, “but mass incarceration and housing segregation prevent public education from progressing.” And, he warns, any effort to reduce mass incarceration will be entangled with the problem of immigration and the fact that prisons increasingly furnish employment for white rural workers.

Temin does not paint a rosy picture of America’s chances to pull its economic histories together. But he does observe that even in the bleakest moments, ordinary Americans have been much more willing than most rich whites (who have little contact with Black people), to accept people of color as their equals. The only way forward, Temin argues, is a rigorous commitment to include Black and brown people into America’s economy and political life.

The future of both whites and Blacks depends on Black success.

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