Conferences & Events

October 20, 2021

Transcript

Raphael Bostic: Hello, I'm Raphael Bostic, president of the Federal Reserve Bank of Atlanta. I'd like to welcome you to the ninth installment of the Federal Reserve's Racism and the Economy webinar series. This session focuses on the wealth divide. My job today is to set the context for the session by first talking about why we are doing the series overall, and then turning to the question of why we have chosen a focus on wealth. In terms of the series, the Federal Reserve has a long history of talking about aspects of our economy and institutions that are barriers to stronger economic growth. This is because of our relentless commitment to actively pursue the maximum employment portion of our congressionally established dual mandate. In our bank, we use the phrase, "an economy that works for everyone" as a tagline for articulating this notion. Because if the economy works for everyone, more people will contribute to the economy and add their productivity and innovation to our already rich pool of talent.

This increases our economic potential of our nation and ultimately enhances economic performance in ways that increase our competitiveness and our economic resilience. Put in the terms of our mandate, moving closer to an economy that works for everyone brings us closer to achieving a state of the world where all Americans who want a job can find one commensurate with their full potential. Indeed, a world where we achieve our longer-term maximum employment mandate. Barriers to achieving an economy that works for everyone are a natural concern for the Federal Reserve, and they should be. This webinar series focuses on one particular barrier to achieving this vision: racism, particularly racism embedded in the structures that undergird our economy. If you've been fortunate enough to attend one of our previous sessions, you have no doubt learned how laws, decisions and practices based on race, many of which prevailed long ago, have locked in cycles of unequal access to opportunity that prevent people from multiple racial groups from achieving their full economic potential. These race-based policies and their historic legacy are thus one important barrier to our meeting our maximum employment mandate more fully. It is therefore important that a spotlight be placed on this, with an eye toward solutions that help reduce these barriers moving forward. I will note that there is broad consensus on this point with perhaps the strongest evidence of this being the fact that this series is sponsored by all 12 Federal Reserve Banks.

Let me now take a few minutes to talk about today's topic, the wealth divide. I'm sure you recognize that wealth is an important determinant of economic success. Indeed, many view wealth as the key to accessing and realizing opportunities for both families and communities. Wealth can be leveraged for investments and things like education and small businesses. Wealth provides a cushion that protects people during times of hardship and thus lessens precariousness and increases economic resilience. Wealth allows for investments in future generations and thus facilitates continuing expansion of skills and productivity. These are three examples of the importance of wealth for influencing one's quality of life, economic self-determination, and productive contribution to our economy.

Unfortunately, there is a large race-based divide in wealth in this country. In 2019, the typical White family had $184,000 in wealth. Whereas the typical Hispanic family had $38,000 in wealth, and the typical Black family had $23,000. These differences are broad-based. Across all asset categories, housing, stocks, retirement funds, and business holdings, Whites consistently fare better, and the gaps are often large. For example, the holdings of stocks, bonds, and mutual funds for the median White family had a value five times that of the holdings of the median Hispanic family. These disparities arose and persist in part because of a past and present institutions and policies that have prevented people of various races from attaining home ownership of assets that can be a foundation for wealth building.

Let me offer a few examples. In the years, following the onset of the Great Depression, federal government agencies engaged in red lining, which effectively prohibited people living in neighborhoods with large Black populations from getting affordable and safe mortgages. Similarly, there has been considerable evidence through the years of higher rates of denials for mortgage applications by Black and Hispanic prospective owners that cannot be explained by differences in standard underwriting variables. At various points in history, acts by the federal government facilitated the loss of wealth-producing assets owned or controlled by racial minorities. Consider the dispossession of massive tracks of lands that were the homelands of indigenous nations as but one example of this. Further, these disparities can trigger what you might think of as a vicious cycle. Wealth gaps can worsen racial disparities in education, employment, health, and housing stability among other factors. But disparities along these dimensions contribute to perpetuating, and in some cases exacerbating, wealth divides. Understanding wealth and the systems that facilitate wealth generation is very important if we wish to break cycles of dependence and help people truly have access to opportunity. Let me close by making a few quick points and you can think of these as bullets if you were reading this in a text.

• One, this is about wealth gaps and cycles beyond just the Black-White wealth gap, as disparities exist for many minority groups.
• This is about changing how our systems work so people of all races have the same opportunities to accrue wealth and deploy it. It is not about trying to make it so everyone has the same amount of money.
• This is about community wealth, as well as family wealth, as community wealth represents a potentially important source of investor capital. We are interested in spending our time in the solution space rather than just talking about the nature of the problem.
• Finally, we recognize that the Fed won't have the tools to solve many of these problems. But that doesn't mean that we should avoid highlighting these as barriers worthy of attention to those who do have the tools.

Okay, let me stop talking so we can get on with the program. I will note that there is one change in the program. Charlie Evans, president of the Federal Reserve Bank of Chicago, will unfortunately not be able to participate in the president's panel. Now, let me introduce Reema Khrais, who will be our moderator for the day.

Reema is the host and senior reporter for the Marketplace podcast This Is Uncomfortable, a weekly show about life and how money messes with it. The podcast digs into the unanticipated ways that money affects relationships, shapes identities, and often defines what it means to be an adult. If you haven't subscribed to the podcast, but listen to American Public Media's Marketplace business program, you have likely heard segments from this podcast. I have to say, I find the show to be quite interesting, and the critics agree as she's won a Gracie Award for her work. Reema also sometimes fills in as a backup from Marketplace and does a fine job with that role as well.

Before joining Marketplace as a general assignment reporter, Reema covered education at North Carolina Public Radio. She reported for WNYC and as a former NPR Kroc Fellow, Reema graduated from the University of North Carolina at Chapel Hill, and I'll say, "Go Tar Heels." She is currently based in Los Angeles. Reema, take it away.

Reema Khrais: As you mentioned, my name is Reema Khrais and I am excited to be here with you all today and honored to moderate conversations on what is an incredibly huge and pressing topic. For this first opening panel we're going to hear from three esteemed speakers who will lay some foundation for us about the racial wealth divide. They'll get into past and current policies that encouraged wealth accumulation while stripping and excluding it from others. We'll also touch on the implications and some of the solutions. At the end of their comments, we're going to take questions from the audience. If you have any, you can ask them on Twitter using the hashtag racismandtheeconomy, or you can send an email with your thoughts or comments or questions@racismandtheeconomyatbosdotfrb.org. We're going to hear from each of our panelists for a few minutes and then bring them in together for a discussion. We're going to start off with Mehrsa Baradaran. She is a professor of law at the University of California, Irvine. Welcome Mehrsa.

Mehrsa Baradaran: Thanks so much for having me.

Khrais: If you want to go ahead and lay out some of your thoughts and then we'll get to the other panelists and then we'll have the larger conversation.

Baradaran: Okay, great. Let me start off by commending the entire Federal Reserve team for this entire series. I've watched every single one, especially as presidents Bostic and Kashkari and the entire Fed teams have put together a stellar year-long program. I think the series really highlights what we talk about when we talk about systemic racism, right? What is that system? One of the primary drivers as President Bostic said driving racial disparities today is wealth across every socioeconomic level. Black families have a fraction of the wealth of White families. I am going to focus on the Black-White racial wealth gap. In my book, The Color of Money, I use actually the banking system and the credit policies to show the drivers of the system. The gap between average White wealth and Black wealth has actually increased over the last decade, and the COVID crisis disproportionately affected Black communities.

It's a gap that hasn't abated over time, over 150 years of emancipation. This is not despite the best intentions of policymakers. The history reveals, in fact, the federal policies have created and perpetuated these gaps over the course of 150 years. Without targeted policies aimed specifically at the causes and mechanisms in play here, which we'll hear about later, there's no reason to believe that the gap is going to close on its own. What I point out in the book is the racial wealth gap is where past injustice sort of breeds present suffering and doesn't need added inputs to self-perpetuate because it's locked into the mechanism of the market. Wealth isn't just a total sort of sum of assets minus liabilities, as it is on a balance sheet. For the middle-class for most of American history, wealth was a home, a pension, a buffer against life's misfortunes. Whether you lived in an FHA-insured home in a White suburb or redline Black neighborhood meant that you had either ladders toward mobility or not. Schools that were resourced or not. Lower public services, a lack of tax benefits, access to jobs in these redline areas, also an exposure to environmental pollutants, and to violence and the hardest edges of the American system of both the market and the legal system.

America's long and clear history also meant that the very measures of wealth that most Americans use are race-based. Racism has been lodged in home values, in credit scores, in zip codes. The types of credit and capital available into the darker side of credits or the racial disparities in debt, student mortgage and payday loans, also reflect this history. It was federal, state, and local policy, specifically. I focus, in my work, on credit and banking laws and the agencies that have shaped these economies that created a bifurcated economy in the redline spaces and in the White spaces. The legal system, quite frankly, over history, hasn't protected Black properties and contracts. There's been exclusions across the board. I focus on Black-owned banks to show one of the myths here is that if the communities themselves had self-help or worked toward entrepreneurship that these things would fix.

That's one of the myths that I sort of try to undercut in the book. Part of that myth is the actual history is that the American middle-class was created through a lot of government-supported credit infrastructure and subsidies. Many of the explicit racial policies that put these two different systems of credit in effect are no longer with us, but this gap that they embedded into the legal and credit system still self-perpetuates. This myth of self-help personal finance is one that Black banks have always had to deal with. As I show in the book, the very sort of reasons Black banks have been necessary over time, which is exclusion and segregation. The reason there were Black banks in Jim Crow, and still today, those same forces also undercut their ability to grow wealth.

The myths that we tell about certain markets and the way that credit systems work actually inhibit our ability to get to justice. Part of getting the right policies is really reckoning with our history and the way that the policies really kind of prevented, not just sort of... it wasn't benign neglect, but actually the use of credit to block these capital accumulations. I look forward to the other panelist points, but really kind of having a robust debate on what these policies were meant to do. I won't go on longer than that.

Khrais: Thank you for your comments. That was great. Next up, we have Matthew Fletcher. He is a Foundation Professor of Law and the Director of Indigenous Law and Policy Center at Michigan State University. Welcome, Matthew.

Matthew Fletcher: Thank you very much. It's a real pleasure to be here and a real delight to see the Federal Reserve address some of these issues. What I'm going to do is I'm going to take you down a little bit of a history of my tribe. I'm a citizen of the Grand Traverse Band of Ottawa and Chippewa Indians. We're located in the northern lower peninsula part of Michigan. I'm going to start in 1835, a couple of years before statehood for the state of Michigan. In 1835, north of what is the Grand River, we'll see across the east to the west of the state of Michigan from about Grand Rapids over to Detroit. North of that area was all trees and primarily American Indian people Anishinaabe, Ottawa, Potawatomi, and Chippewa. In 1836, the United States and the tribes reached an agreement for the tribes to sell most of that land to the United States, ultimately totaling about one-third of what is now the State of Michigan. The price that the tribes received in exchange for this land session of all of this acreage, a third of an entire state, was about 11 cents or 12 cents an acre.

So, the tribes negotiated for cash. They also negotiated for a continuing relationship between the United States and the tribes, which we call the Trust Relationship. They also negotiated for permanent reservations, land, basically homelands. The tribes also negotiated for off-reservation hunting and fishing rights going forward. Fast forward a couple of decades, and very little of the benefits of the Treaty of 1836, this huge land session agreement, went to the tribal communities. The permanent reservation provisions of the treaties are deleted by the Senate. The United States continued to threaten to forcibly remove the Michigan Odawa and Ojibwes from the State of Michigan, much like the Cherokees had been removed by the United States around the same time as the Trail of Tears. Other tribes around the country suffered that same fate. In 1855, the tribes again reached an agreement, another treaty, with the United States in which we would have, again, the establishment of permanent Homeland. This again, never was implemented. As soon as a treaty would be announced, this happened in 1836, and again in 1855, many settlers would enter into the area places they weren't supposed to be the areas of the reservations that were set aside for the tribes. The United States failed to enforce those reservation boundaries. In fact, actively encouraged non-Indians to come in and squat on the land with an eye toward protecting those interests later on. Tribes and Indian people who did actually homestead and develop lands, and put homes, and start farms on the reservation lands usually were forced out either by violence, coercion, or trickery, sometimes through illegal taxation, sometimes just through incompetence of the federal government. Fast forward a few more decades to the end of the 19th century. You see over the course of just a couple of decades, the deforestation of the entire state of Michigan. The old growth pine trees all completely eradicated from the state over the course of a very short period of time.

Now, the off-reservation hunting and fishing rights, which still existed, basically became more or less useless at the time because of the deforestation of the state. Within a couple of decades into the 20th century, the state of Michigan began to actively discriminate against American Indian people who were engaged in hunting and fishing protected by their treaty rights. Fast forward a few more decades, the tribes in Michigan, the Odawa nations particularly, were administratively terminated during this period, meaning the United States treated them as if they didn't exist. The State of Michigan treated them as if they were Indians and so offered them little to no governmental services. One example is during the Great Depression, there were 10 to 15 work groups put together by various great New Deal era programs. One of those work groups was segregated as American Indian and was never given any work to do. All of the work went to non-Indian groups. By the 1970s, the Grand Traverse Band, Little Traverse Bay Bands, and Little River Band of Ottawa Indians were down to just a few acres each. At Grand Traverse Band, we had 12 acres and a can of coffee, an empty can of coffee, a Folgers can that had some change at the bottom of it. That was our assets at the time, our wealth. The United States government eventually reaffirmed us in 1980. We began a process of trying to reacquire some of the land in Northern Michigan. It's very expensive land, it's resort rural. Trevor City is there. Petoskey is there for Little Traverse. It's hard to recover much of the land base. It's very checkerboarded, it's spread out over places. Our ability to restore our wealth will never really be recovered. We have asked for Congress to authorize a federal court to hear a claim on our behalf, which is a claim against the United States government for a Fifth Amendment taking of our, both of our reservations, really, but particularly the most recent one, the 1855 Treaty reservations. Congress will not pass this act for a variety of reasons, but the reason that they have given is that they will not, according to the Michigan congressional delegation, will not enact this bill to allow us to bring our Fifth Amendment claims against the United States, unless there is no opposition from any non-Indians or non-Indian governments in the area. There's plenty of opposition to that. Not entirely sure what the opposition is because it's not a claim against them, it's a claim against the United States.

Nonetheless, you see, if you haven't already, a wide variety of points in time where structural and overt racism against American Indian people has completely depleted the ability of Indian people in the area to manage wealth, to actually acquire wealth and to maintain it. The tribes are not completely destitute anymore thanks to gaming and the rise of tribal self-determination through federal government contracting, the tribes have sort of moved from abject poverty to lower middle class, but there remain an enormous number of struggles. This is again, just a snapshot. There's a paper that I think was made available that goes into some of these details a little bit further nationally, and I'm happy to answer any questions. Thank you very much for having me.

Khrais: It's really fascinating. Really appreciate your perspective because it's important when we're talking about the wealth divide that that we're not just talking about money, right? It does include things like land assets, natural resources. All right. Now we're going to move on to Noel Poyo. He is the US Department of the Treasury's deputy assistant secretary for Community Economic Development. Welcome, Noel.

Noel Poyo: Thank you to the Federal Reserve for the opportunity and a real honor to be on this with my colleagues here. You know, just a couple of opening points. Just to be clear, I want to get to a place where we talk about the economic imperative of equitable growth. Of what it means for us to actually fully tap into the strength of communities that have been marginalized in our economy. That's where I want to go. I think we've heard some powerful things from colleagues here on the panel. I think it's important always just to begin with...if we're going to talk about where we could go positively, we don't want to dwell entirely on the negative message, but we do need to own it. I think there is something very challenging in this country and in this world about how many of us live in a faith tradition, and it's hard to admit that our ancestors, that our parents, that our own actions might be contrary to that faith tradition, or those beliefs, right? Getting past that and being able to hear and being willing to let the truth of our histories be told, I think is terribly important. I really value what we've heard.

The other thing I think is really important before we talk about economics or broader economic opportunity is to remember the economic consequences of violence, targeted discrimination, and that many of the things that we want to do in our economy, create access to credit and capital and really make the economy work for everyone. It doesn't matter for folks who are faced with violence in their lives and for folks who are faced with very targeted discrimination. Again, just remembering these facts and holding them as we have a discussion about what it looks like, a vision for the future, what it looks like to move forward in this country economically in a stronger way.

To pivot a bit to our economic strength, I serve at the Treasury Department as the deputy secretary for Community Economic Development. Prior to that, I led a community development financial institution, both a lender and grant maker that invested particularly in Latino communities. I think oftentimes when we talk about community development and we talk about targeted strategies to invest in communities that have been economically marginalized, oftentimes that communication falls into a bit of a trap that, that work is for those people over there. Maybe for those people over there, but really, it's not for me. I think many people view these things as not having a value for all of us in this economy. I think echoing what President Bostic said in his opening, I think we have to remember and understand that this country will be more globally competitive. This country will have stronger growth if we tap into the economic potential of all of our people. When I say our people, I say that very intentionally, we have to own one another, and it's been terribly difficult these past few years, given how polarized this country is. But the truth is if we do care about this being a truly globally global strength, the globally competitive economy, we are going to have to find a way to own each other's potential in this country.

I think about what the sort of campaign slogan of this administration Build Back Better, which has turned into really specific policies. I have been at the center of implementing many of the policies focused on housing, on access to capital for marginalized communities in particular. This effort has two parts to it. One is to recover from the significant economic challenges that we've had, right? It certainly rings bells about what happened a dozen years ago in this country. We've unfortunately, in the very recent past, had to climb our way out of an economic hole, out of a crisis, out of a great recession. We want to do that in a way that puts us certainly back at a place where we've got a foundation to build on, but that is not enough to dig our people out of a hole. It is not enough to get to where we were the day before the pandemic started. Because as we've heard on this panel already, that was not a place where we tapped into the full economic potential of all of our people.

The next step then is to create equitable growth. This is the hard part. This is the part where we have to make capital flow in this economy to places where it didn't, or it didn't enough. It's interesting because again it's very easy to think about this as something for a certain segment or certain communities. But as I talked to, as I have over the course of my career, CEOs of the largest financial institutions in this country, people who are very much at the center of how capital flows in our economy. These are people that the differentiation between those that have been the most successful and those that haven't is oftentimes those who understand that their growth as an institution or the growth of their sector is actually predicated on bringing people into that sector or working with the communities, that they had not worked with in the past. Oftentimes I hear CEOs talk not so much about diversity and inclusion, but about market share. When they say market share what they're talking about is Black, and Latino, and native people, because those are people that are up for grabs, so to speak, in the economy because they have not been intentionally courted, intentionally integrated. I also think that we have to, as Reema and others have pointed out, really think about those institutions that come from community and that focus on communities that have been marginalized, because oftentimes while mainstreaming economically is so critical, institutions that are serving a broader economy, a broader marketplace, sometimes don't have the cultural linguistic competence to get where we want to go in those communities.

I'll just say that I think it is critical for us to think about the balance between those institutions, which have the largest portions of market share or the largest segments, the largest balance sheets, but to hold that in balance with institutions that have come from communities that know how to serve those communities, oftentimes more effectively. I've thrown a lot out there, and I hope held in balance a number of things that are challenging to do that with, but I look forward to the rest of the conversation.

Khrais: Thank you, Noel. That was great. I want to go with what Mehrsa said, to a point that you made. You mentioned that you wrote a book called The Color of Money and it explores the Black and White wealth divide. Particularly, as you said, the role of financial institutions, what role they've played in driving this inequality. You challenged this long-standing idea that Black banking and community self-help is the surefire way to close this racial wealth gap. Can you talk more about how we see these policies of the past still impacting and hurting Black communities today?

Baradaran: Thank you. I think the mechanism of banking...it's not magic. There is a little bit of magic with it, but it's an engine that reflects and intensifies the already existing economic patterns. Banks can't come into a system and create wealth where there isn't capital already. What I show through history, and you can look at the balance sheets, and... just speaking historically, Andrew Brimmer was the first Black Federal Reserve Board governor, and did a lot of this history in 1968. There has been this legacy of people pointing out, "Look, you can't look at these communities themselves that are disenfranchised," that the George Bailey type model of banking, it doesn't work in a system that is all connected to the Federal Reserve in so far as you have the equity, the asset, the loan, that the bank is supposed to profit from is not being guaranteed by the FHA, or is in a neighborhood that has been historically segregated and the property values aren't rising.

These banks are really stuck in the same patterns that the communities that they serve are also stuck in. That's not to say that the banks shouldn't be encouraged. There's a legacy of Black banks. Martin Luther King was a booster of Black-owned banks, W.E.B. DuBois, there isn't a Black leader out there that wasn't a supporter of Black-owned banks and they serve multiple functions. There was often a preacher who was a Black banker or a community leader or a civil rights activist. The thing that I challenged in the book is the policy apparatuses outsourcing the obligation of remedying the policies that the mainstream created onto these institutions that can't bear the weight of the Fed's power or the Treasury's power. That has to be routed in a way that understands the complexities of the system. The Federal Reserve of course knows when you put in liquidity or credit mechanisms there's a way that you can kind of support a system and get that the lending out. But if the rails that you're using are putting more money in certain places, you're not going to fix that unless we actually look at the rails, and in this country the rails have very much been diverted over to White neighborhoods.

Khrais: I really appreciate that sentiment of how this is a myth, right? You mentioned your opening remark of just self-help personal finance. If the communities themselves had self-help tools, then all these things would be fixed. In that vein, Noel, what are some of the biggest myths we tell ourselves about the racial wealth gap? Can you talk about the harm in perpetuating these myths?

Poyo: I want to just pick up real briefly on one thing that was just said about some of the guardrails or the terms that get put in as a part of investments. When you sign on an investment, you signed on the terms of what you can do with that money and so you've signed in the terms of the value you can bring to your community. The emergency capital investment program right now that the Treasury is in the process of putting out, these are investments in community development, financial institutions, including minority depository institutions that are equity or equity like investments. It's just right to that point, right? About equity is something that gives an institution power, that gives it flexibility. Debt is something different, right? Making investments that are equity or equity like, I think is very powerful.

I think it gets to some of these myths that you're pointing to, right? This idea that, well, you know, really any money that you put out there into a community is a good thing, right? To the point where we sometimes talk about any kind of financial transaction, no matter its character, its terms, its rate. It's serving the community needs, right? We hear this where predatory financial transactions are then cast as investments in the community or providing access to financial services, for example. It's something that I think we have to really look, particularly at the terms of investments. Sometimes I think we put too much emphasis on interest rates. A business person can do their own calculus about do I really want to take that interest rate or not, or a consumer many times, but it's that hidden term, that prepayment penalty, it's the way something is structured so that there's more money made in the failure of the person receiving the loan than in their success. Those are the places where we have to really question what is a loan, what is a financial product and what in fact is just a trap? We really have to challenge, some of those myths as we think about how we invest and how we use public policy to incent investment.

Khrais: That's great. I want to throw that question to you too Matthew, thinking about the myths that perpetuate this racial divide and thinking about it in the context of American Indian communities.

Fletcher: Absolutely. I wrote a book too, The Ghost Road: Anishinaabe Responses to Indian-Hating, and there are a couple of chapters in there about a reaction to the rise of tribal self-determination, the fact that tribes have economic development opportunities and activities that just seem different to outsiders.

The big myth about Indian people is that their Indian tribes are gone, that Indian people either have disappeared, the myth of the vanishing Indian, or that they're assimilated into society to the extent that there's nothing different about Indian people. As I explained before there are still residual property rights that remain that Indian people negotiated for through the treaty process, those property rights often have been honored in the breach, but they do exist. At times, tribes bring claims to try to enforce those property interests. What you see around in places like Emmet County, Michigan, Leelanau County, Michigan, where the Odawa nations are in Northern Michigan, you see a lot of activism against tribal activities.

Some of this activism is really virulently racist. Newsletters go out from law firms and property rights organizations that claim that if a tribe prevails in a reservation boundaries case that the property values in the area will drop precipitously. They claim that if you own land on Lake Michigan, beachfront property, your land will become valueless and Indians might even move in next door. Those Indians naturally will then begin to open up their properties to flea markets, Hooters are going to open up all over the place, Applebee's, casinos will be everywhere. This kind of a new type of stereotyping and racism merges in with the old type of stereotyping racism. It really can be quite a nasty vicious circle. It definitely impacts public policy throughout the state and particularly in northern Michigan, and very likely impacts the ability of tribes to actually bring viable legal claims to enforce their property interests.

Khrais: There's so much to dig into, but I want to shift the conversation since we have about 10 minutes left to think about the solutions. What should we do to rectify these policies that have hurt Black and Brown communities' ability to build wealth? What policies, thinking about income policies, employment assets, need to be considered, and I'll throw that to you Mehrsa.

Baradaran: When the United States wants to create wealth, it actually knows how to do it. When we want to support markets, we do it quite well. The wealth gap was created across institutions, across federal, state, and local government. It was through policies from school board policies, the way we dropped county's taxation, credit, risk profile, all of that stuff, it was all part of the mix of this driven by the improper motives of native land dispossession and Black-White segregation. We are convinced as a society, if we are, and I do believe in that sort of moral vision, and there is an economic argument to be made, but there's also a justice, a moral argument to be made that, look, this is America's original sin, not just Black-White racism, but also native land dispossession.

Really looking at the history and staring it in the face, having truth and reconciliation, is a benefit to all of us, to everyone. I'm an immigrant to this country so I don't have the legacy as many Americans here do have of ancestors here, but looking at it from an outsider, from a new American I should say, it really is a drag on our political body, on our economy, and our vibrancy. I think, look, we just need the political will and the policies that the actual sort of details are just details. I mean, as everyone at the Federal Reserve knows there is, there's a lot of very smart people that work there. I mean, just looking at an example of history where we've done this, with the FHA mortgage guarantees, say what you will about other new deal programs, but the FHA and the secondary markets, Fannie Mae, Freddie Mac, for the time that they were publicly supported were incredibly successful in the thing that they were trying to do.

They did inscribe segregation into this century, and they really created harms for Black communities, but for the communities that they included, they were incredible. Especially some community members who were not formerly privileged, the Italians, the Irish, people who got those FHA loans who were previously discriminated, and now that legacy has gone.

I am a believer in policies can change hearts and minds, and we should not wait for hearts and minds to change before we push for policy. I think policy really... in America, White people thinking that Irish people weren't White, they were lower on the evolutionary scale or whatever the pseudoscience of it was at the time and all of a sudden you have Irish neighbors and that difference erases over...you don't even need to wait a generation. All of a sudden, these are your neighbors, these are your friends, these are your kids' playmates and that is gone. Same with the Italians, same with several... there are lingering racisms, but the fact of living together and having that, not the barriers or the walls that were created with the Black communities can really make things change.

Khrais: Noel, I'm going to throw that to you too. Thinking about policies and solutions, and also if you want to go there, what role do you see monetary policy playing in either promoting combatting inequality?

Poyo: I'll offer a couple of thoughts, just three things, three ways that we could go about this. I think monetary policy is worth talking about. What does it mean to essentially allow the economy to burn a little hotter? I think that there is a conventional wisdom that that supports full employment better, but I also wonder whether we've brought our full analytical thinking to the question of who gets hurt when you have asset bubbles? When those bubbles burst, what communities get hit hardest first? On either side of the argument about whether allowing a somewhat higher level of regular inflation good or bad for a larger number of people in our country?

Obviously an incredibly complex question. For me, the question is really, how are we analyzing those things? Who do we have in our mind when we look at both sides of this, because I'm not sure that there is a completely settled case on the following approach to monetary policy is much better for people who've not integrated well into the economy, but I think that we have not done enough to answer the question about who is affected how by different approaches.

I'll also briefly just say that we really do need to think about those local policies and particularly zoning, which enforced ongoing segregation in our country. Our country is as segregated as it has been virtually forever. That segregation creates a situation in which no matter how well you make the financial system work, you reinforce social dynamics, which undermine the potential positive impact. There's been really important research, the Federal Reserve has highlighted among others, that if you live in a place to some extent it does not matter what your economic status is, that place has profound impacts on your economic potential moving forward. Certainly, that's connected deeply to race, ethnicity, and language.

Finally, I'll just say, I mentioned earlier, but investing in community-based institutions. If we want dollars to flow to those places, impact people that are our mainstream economy has not been as good at getting to we need institutions that are built to do that. Oftentimes that means they must be built by the communities themselves. Investments in community development, financial institutions, community development corporations are a part of my portfolio at Treasury. I have the pleasure and honor of working with the community development financial institutions fund and the whole team. I think there is a great deal more we can do not just for local and regional economy, but for this economy overall, by investing through and building the infrastructure of community development institutions in this country.

Khrais: Thank you for those comments. I want to give Mehrsa and Matthew an opportunity to respond. We have a couple minutes if you have any comments.

Fletcher: Just briefly, yes, the vast majority of native people, what they would want in terms of a change of policy is to get the benefit of the bargains, of the treaties that established the nations really in the modern era. With many tribes it's the restoration of a land base that was promised, there's also the full funding of self-determination and self-governance contacts that states promised centuries ago. That's really step one. From there, there's a lot more we can talk about, but I urge you to stick around, April Roll is coming up, and she's going to be able to answer that that a little bit more. Thanks.

Baradaran: As the last comment, I will say the idea that race neutrality is what we have, or that race neutrality works, even in monetary policy, in liquidity policy, none of this stuff is as neutral as we think it is. It's not neutral because we're not operating on neutral ground. If you look at racism as a sort of terrain creating a rig terrain, or a topography where water in one area always, and you put either benefits, or a plate, or a sort of an incentive into it, it's still going to match that topography. Segregation has created a topography of race where certain places get the goods and certain places are always deprived of it.

There's this saying that came up over and over again in the history of Black-owned banks: when Wall Street gets a cold, Harlem gets pneumonia or the flu. You could think about this in the COVID crisis quite literally how sickness presents across races differently. I just think we should drop this idea that monetary policy is a real technical, neutral, not a racially inflicted thing that we do. Everything is inflicted with race and history, as is monetary policy.

Khrais: Like I said, I wish we had more time. There's a lot to dig into, but we're going to move on. Thank you so much for your time and insights Mehrsa, Noel, and Matthew. I'm going to turn it over to Tom Shapiro for our next panel, which will focus on the role of reparations policy and tackling the root causes of the racial wealth divide. Tom is a professor of law and social policy at Brandeis University and I will hand it over to you now.

Tom Shapiro: Reema, thank you so much. I want to echo the heartfelt congratulations to the Fed for the courage for putting this series on. Also, especially for all those folks behind the scenes that have made this possible, the Sarahs, the Katies, and the Tommys out there. I really want to thank Dr. Darity and Ms. Mullen for the absolute gift that they have given the nation by pulling together an incredible book. I know how long the birth of that book was. I hope that it has a really long life because people really need to take a look at it.

I would like to begin by maybe broadening the conversation a little bit in the way that thus far we've really been focusing on looking at wealth as if it's an end in itself and as if it's a goal. I would like to suggest that it may be a goal and it may be an end in itself for some folks, but for most of us, it's really a road. It's really a means to other things in life that are important, whether that be economic security, whether that be power, whether that be freedom, whether that be the opportunity to fail more than once and be able to get back up on our own feet.

I would like to open up the conversation with Dr. Darity and Ms. Mullen with the following question or observation, if you will. We started with President Bostic using the phrase locked in. We've also used the phrase frozen in time to think about how race and policy in the United States have locked in, frozen in time, a set of relationships, power, if you will, over a long, long period of time. We need to get into that a little bit, I think. I want to open up the conversation by asking the two of you, as we think about reparations, as we think about the process of reparations, what other changes would that unlock along the way, that is along the way to reparations what is the work that needs to be done to get us to that place?

William A. Darity: I think that Kirsten and I would like to start by proposing that the central objective of a reparations program is to close the racial wealth gap in the work that we've done. The reason we want to close the racial wealth gap is to provide the material conditions for full citizenship for Black Americans who were descendants of persons who were enslaved in the United States. Full citizenship that has never been established in the United States. I would suggest that perhaps the comments that were made by Matthew Fletcher indicate that one of the central objectives for the Native American community is to establish sovereignty, but that's a different objective from the pursuit of full citizenship, which I think is the objective that the Black American population has had for multiple generations. As a consequence, the focus of our book, From Here to Equality, is on the aim of eliminating racial wealth differences in the United States.

I'm not sure that anyone has talked about what the magnitude of those differences are yet. But if we were to look at the average Black and White household the differential in wealth is approximately $840,000 based upon the Fed's survey of consumer finances. This corresponds to a situation in which Black Americans have about 12 percent of the nation's population, but less than 2 percent of the nation's wealth. There are historic reasons why this pattern of inequality has arisen that have to do with intergenerational transmission effects. What's critical here is that I think a substantial amount of the Fed's current research is focused on the notion that if you could eliminate income differentials in the United States, you could eliminate the wealth gap. I think that's far, far from true.

There are a number of reasons why I think that's far from the truth. The first is that the gradient for age and wealth by race widens dramatically after people pass their early 30s, and the gradient for age and income does not widen as dramatically once people pass through their early 30s. Moreover, income and wealth do not mesh in the same way by race. Median wealth among the lowest-income Whites is higher than median wealth across all Black Americans. The poorest Whites in the United States, those in the bottom quintile of the income distribution, have a median net worth of about $18,000. It is close to zero for Black households. If we consider education, better-educated Blacks have a higher income than less well-educated Whites, but this is not true for wealth. Black heads of household with a college degree have two-thirds of the net worth of White heads of household who never finished high school. Blacks in the professional managerial class have a higher level of income than Whites in the working class, but Blacks in the professional managerial class have significantly less wealth than Whites in the working class.

Finally, I'd like to mention that there is evidence that has been emerging lately that parental and grand-parental wealth actually is a driving factor in the younger generation's income level. I'm speaking specifically of the work that's been done by [Jermaine] Toney and [Cassandra] Robertson on the wealth income nexus across generations. Just one final comment at the beginning here, we need to look at the historical processes that have produced the wealth disparity in the United States. Those are policy related and I hope as our conversation proceeds Kirsten will have an opportunity to talk about the historical context for the racial wealth gap.

Shapiro: Thank you very much. Kirsten, will you take the cue from the gentlemen sitting next to you?

Kirsten Mullen: Absolutely. Thank you so much. One of the central findings of the book he and I wrote together, From Here to Equality: Reparations for Black Americans in the 21st Century, is that federal policies produced and sustained the racial wealth gap. The origin of the racial wealth gap begins with the legalization of slavery itself. The Republic could have been founded as a nation of free women and men with all being admitted to full citizenship. That is not what happened. An amoral, illegal institution, the enslavement of the first Black Africans, and then their descendants, basically a de facto affirmative action program for White Americans, was widely practiced. Among the 11 states that seceded from the union in 1861 to establish the Confederacy, Louisiana registered the smallest percentage of White families that enslaved Black people with at least 20 percent; five states registered 34 percent or higher. We're talking about White households and two, South Carolina and Mississippi, peaked at the staggering rates of 46 and 49 percent respectively. Then there was a massive potential for profiteering.

The second major federal policy that accelerated the growth of the racial wealth gap was the Homestead Act of 1862, which enabled Whites to build wealth through the acquisition of 160-acre land grants in the Western territories. This was land that had been occupied by indigenous people completing the nation's colonial settler project. At almost the same time, recently emancipated Blacks were promised and then denied 40-acre land grants, starting with the 30-mile wide band stretching from the sea islands of South Carolina, through Georgia, on to the St. John's River in Florida. Property that could have been made available for exclusive use of Black families for homesteads, that land was returned to the Confederates. In the 20th century, the federal government policy advantaged Whites first with the New Deal, which was touted as a bulwark for all Americans, but widened the gulf in education, employment, and wealth. Then with the GI bill, which provided Whites with subsidies for farms, home mortgages, business enterprises, while actively disadvantaging Blacks. Political scientist Ira Katznelson observed that of over 3,229 GI Bill-guaranteed loans for homes, businesses and farms made in 1947 in Mississippi, for example, only two were offered to Black veterans. Over 3,000 to Whites and two to Blacks. Then in New York and the Northern edge of New Jersey at the same time, fewer than 160 of the 67,000 mortgages were granted to nonwhite GIs. Then in a public partnership, public-private partnership with municipalities and banking institutions, the federal government introduced redlining, restrictive covenants, and then authorized funds for interstate highways that decimated Black residential and business districts and devalued those properties while connecting White suburbs to new parks and commercial centers.

Shapiro: Thank you so much for a very, very quick tour of a long, and unfortunately torturous, deeply embedded history that we're all living out and need to make that U-Turn. One of the presumptions of this series and a lot of other work is that a full inclusion of African Americans, Latinos, and Indigenous peoples will benefit the whole society. I would love to take the last few minutes we've got to think about that a little bit and to get your views on that, about the benefits for the entire society for the kind of inclusion that we're talking about.

Darity: I think that the primary benefit would be, from a societal standpoint, apart from the moral rectifications that have not been met for 156 years. The other benefit to the society as a whole would be creating the opportunity for the talent and creativity of large segments of the American population that's been suppressed as a consequence of economic deprivation, a flowering of those talents that would provide us with new degrees of ingenuity, new ideas, technical change, prospects, especially in a world in which we're having to cope with dramatic climate change that threatens the survival of the planet as a whole. Wouldn't it be better if we unlocked the brilliance of the segments of our population that have been denied the opportunity to contribute fully in those ways, as a consequence of American White supremacy?

Shapiro: Anything else to add, Kirsten?

Mullen: Well, it's interesting. We often are asked, especially by White Americans, "What can we do?" I think that there's a growing sense as we learn more about our history. Because I think a lot of our history has been suppressed and when I say our I mean American history. People are stunned and ashamed to learn what kinds of policies, what kinds of actions and inactions have taken place under the imprimatur of the federal government. When people learn about, for example, the over 100 White massacres that took place from the period of Reconstruction up through the second World War, people will say, "Gosh, this doesn't sound like the United States of America. This sounds like the places that we go and monitor."

I think there's also a tremendous benefit in, as [Darity] was saying, the moral rectitude. The United States has positioned itself as the arbiter, the police for the world. I think certainly the last four years, especially, if not an even longer period, that the authority that we have to play that role has been deeply questioned. My hope is that we will lead by example and not be hypocritical in our leadership.

Shapiro: Thank you so much to both of you. My quick sense here is that it is a hope, it's also a necessity for the nation to move forward in so many ways, not just the inclusive economy, but the moral reckoning and the confronting of our own history that I think is so important for all of us. I want to thank you, both of you, and commend the great book, From Here to Equality, on the part of both of the authors in front of you. If you've not had a chance to read it, take my recommendation. I would just quickly say, I'm the owner of two copies. The first copy was stuck on my desk at my office, and I had to order another one for home many months ago. I'm still waiting for the signatures for both of these guys. Thank you. I'm going to return it back to Reema.

Khrais: Thank you so much. That's a great conversation. Gave us a lot to think about. We're going to keep things going and keep talking more concretely about solutions. We're about to hear from four panelists and each of them will share a brief outline of their specific policy proposals. Later on, we'll bring on some experts to respond and give feedback. Once again, for those of you in the audience, if you have any questions for any of the panelists, you can send them over via Twitter using the hashtag racismandtheeconomy, or you can send an email to racismandtheeconomy@bos.frb.org. I'm going to introduce the panelists one by one. First, we have Dorothy Brown. She is a professor of law at Emory University. Welcome, Dorothy. If you want to go ahead and start talking about your policy proposal and then I'll move on to the other panelists.

Dorothy Brown: Great. Thanks, Reema. Thanks for having me. I'm delighted to be part of this conversation. My proposal is a wealth tax credit, and it's my second best proposal. In my remarks today, I'll draw upon research in my book, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans and How We Can Fix It, which shows how tax policy contributes to the racial wealth gap. When White and Black Americans engage in the same activity, tax policy subsidizes the way White Americans engage in the activity while disadvantaging their Black peers. When White and Black Americans marry, White married couples are more likely to get a tax cut than their Black peers. White homeowners are more likely to benefit from the wealth building tax breaks associated with home ownership than Black homeowners. White workers are more likely than Black workers to have employers that provide tax-subsidized retirement accounts. The tax breaks for gifts and inheritances are more likely to benefit White wealth building than Black wealth building.

If there is one thing I hope you remember from my remarks today, it is that the racial wealth gap will never be eliminated without significant tax reform. Our tax system has been used to siphon money out of Black pockets and put them into the hands of White Americans in largely invisible ways because the Internal Revenue Service does not publish income tax statistics on the basis of race and/or ethnicity. Had I not become a detective over the last two decades, the research supporting the whiteness of wealth never would've happened. The Treasury and the Internal Revenue Service are outliers in this regard. While other federal government agencies collect data by race, when it comes to tax data, we have nothing. Although President Biden signed a racial equity order in January that requires federal agencies to disaggregate data by race, 10 months later, we still have nothing.

Think of how much worse the COVID-19 vaccine rollout would have been had we not had the information about vaccine rates by race, which allowed the Biden administration to make mid-course corrections in order to ensure that Black Americans who were dying from the virus at higher rates than their White peers actually had access to the vaccine. Data are powerful tools and the failure to provide race and tax data reinforces the incorrect idea that who pays taxes is a colorblind question. My ideal tax reform proposal would be the enactment of a tax credit available to Black Americans as compensation for the decades of higher taxes paid. It would be a refundable tax credit that would offset any taxes owed, and if the credit amount were greater than the taxes owed, the difference would be refunded to the taxpayer every April 15th. It is only an ideal because unfortunately the Supreme Court would likely find that tax credit unconstitutional. What the Supreme Court would find constitutional, however, is a tax credit based upon wealth.

Enter my second best proposal. A refundable wealth tax credit, which would be a tax credit for all individuals living in US households with below median wealth, which is roughly a $100,000. A wealth tax credit would help low-wealth taxpayers of all racial and ethnic backgrounds. While it would help White taxpayers in low wealth households, the racial wealth gap means that the effect would disproportionately help Black taxpayers because of the racial wealth gap. In 2016, 83 percent of Black households had less net worth than the median for White households. A refundable wealth tax credit is different from the earned income tax credit in that it is measured by household wealth, whereas the earned income tax credit is a function of income. In addition, while the earned income tax credit is extremely complicated, a wealth tax credit would be quite straightforward to implement.

It could be a fixed amount that each taxpayer is eligible to receive, eliminating any possible confusion as to the amount of the credit claimed. If the taxpayer lives in a household with below median wealth, the taxpayer is eligible for the refundable wealth tax credit. It could be a tax credit that ends after a term of years, or after the wealth gap decreases, or continues in perpetuity. The idea of a refundable wealth tax credit is the important point and the actual details should allow for flexibility in order to obtain political support. A refundable wealth tax credit could help low-wealth family members that are currently being supported by higher-income relatives, which is relatively common among Black families. A refundable wealth tax credit would use the racial wealth gap in order to benefit Black Americans. For far too long, Black Americans have paid higher taxes than their White peers. Fairness requires a significant change to the status quo. A refundable wealth tax credit would be a start. Thank you.

Khrais: Thank you for your remarks. That's an important sentiment that the tax code is not colorblind. Next, we have Nia Evans and James Vamboi with the Boston Ujima Project. Nia's going to share the policy proposal and then turn it over to James.

Nia Evans: Good afternoon. Thank you. I'm intrigued by the wealth tax credit. I'm Nia Evans, I'm representing the Boston Ujima Project ecosystem and Ujima Fund, along with my colleague, James. Ujima is Swahili for collective work and responsibility. In that vein, I'd like to acknowledge my additional primary colleagues, but not my only ones. Johnny Charles, Cierra Peters, Paige Curtis, Aaron Tanaka, and Martin Familia. The Boston Ujima Project is contracting years of disinvestment in our communities and filling in gaps in financing our small businesses, first by bringing together actors from two creative sectors that are traditionally not often in conversation with each other, finance and organizing. Second, by experimenting with an integration of cutting edge community wealth building tools into a single ecosystem in Boston. The Boston Ujima Project ecosystem unifies previously siloed innovations, community impact funds by local campaigns, participatory budgeting, and anchor institution strategies into an unprecedented locally governed ecosystem where each element of the ecosystem is made stronger by the other and the whole is more than the sum of its parts. A systemic address for the systemic issues of poverty and the racial wealth gap.

The Boston Ujima Project ecosystem comprises several components—including the Ujima Fund, a community controlled investment fund, neighborhood assemblies, Ujima's Good Business Certification, and Ujima Business Alliance—and anchor it to institution strategy. A quick walkthrough, our ecosystem. A multi-stakeholder group comprised of community members, small business owners, workers, grassroots activists, impact investors, members of unions, faith and civic organizations form Boston Ujima Project's governing body. We pool our resources in a community controlled capital fund, the Ujima Fund. Each voting member receives one vote, no matter how much they've invested, on decisions like which businesses and real estate initiatives the Ujima Fund will invest in and what high-road business practices we would like them to uphold, like paying a living wage. Our Good Business Alliance supports businesses who receive funding from the Ujima Fund with creative organizing, marketing and by providing technical assistance.

We advance campaigns for the cities, state, and large nonprofits, to direct investment subsidy and procurement dollars to Ujima's network of certified good businesses and developers as well as divesting from extractive industries like prisons and fossil fuels and directing those dollars into our network instead. Finally, we reinvest some of our returns, and with each new investment cycle continue to do, learn, and grow a virtuous cycle. The Ujima Fund is an alternative and emerging funding source that acts as a vehicle to grow BIPOC business ownership and counteract the ratio wealth gap by giving BIPOC borrowers access to below-market capital with higher risk tolerances than banks and most traditional funds. Ujima's ability to offer these products is achieved by constructing a four-tranche capital stack with distinct risk and return profiles for each investor type.

For example, 10 percent of the Ujima Fund will be raised as a philanthropic gift, which significantly expands the risk tolerances for the fund. While hoping to build successful BIPOC businesses in Boston, the Ujima Fund also addresses the wealth gap by providing us 300+ non-accredited working class members with new opportunities to build savings, 3 percent annually via the Kujichagulia Note by investing in their own community. These 3 percent returns to community investors contrast with the notes for accredited and philanthropic investors who accept higher risk, less security and longer-term length, and lower yields, one and a half to 3 percent than a non-accredited investors. This is in direct contrast to the conventional risk return tradeoffs where higher risk investment to larger check sizes are typically compensated with higher returns.

With Ujima, we sought to expand our definition of risk and risk tolerance to consider the lived context of our investors. For example, a community investor who loses $500 through an investment in the Ujima Fund could be more severely impacted than a wealthy investor who loses $50,000 in the same fund. As a result, we designed the relationship between tranches to reflect our commitments to equity and reparations while ensuring that the average cost of capital is low enough to offer affordable and additive financing for BIPOC companies. We call this capital stack equity. As an illustration of demand to date, the Ujima Fund has raised over $4.8 million from 370 investors. These 370 investors include Ujima members, community members, founding Business Alliance members, foundations, faith institutions, civic institutions, and high-net worth individuals.

Almost a third, 32 percent of our investors identify as BIPOC. In 2019 Ujima began a unique collaboration with Union Capital Boston, which works to build social capital by investing in its members for the actions they take every day to strengthen our community. That matched UCB's reward system with the Ujima Fund. At UCB's silver reward tier, UCB members can choose to have UCB make a $50 investment in the Ujima Fund on their behalf. Through this collaboration, 30 UCB members chose to invest in the Ujima Fund Kujichagulia Note and gained access to an additional wealth-building vehicle for their families and communities, an important illustration of demand for equitable wealth-building opportunities in working class BIPOC communities. The Ujima Fund offers a blueprint for equitable capital structuring for larger funds in the future. The Boston Ujima Project ecosystem modernizes traditional economic development strategies by structuring democratic coordination through the full cycle of local value creation, consumption, and exchange.

By combining community planning, collective investment, business support, and anchor procurement into a full cycle of mutually reinforced economic activity, Ujima is modeling the possibilities of a local, democratic, and healthy economy. Though each community must tailor its solutions to its local context, we believe that similar approaches to Ujima's participatory approach to ecosystem building and governance can be created in other cities and towns. We have been contacted by community members in Albany, New York, Atlanta, Georgia, Cincinnati, Ohio, Los Angeles, California, and New York, New York, who want to start a Ujima-like ecosystem where they are. I'd like to now hand it over to my colleague, James Vamboi, who will close us out with Ujima's care practices. Thank you.

James Vamboi: Thank you, Nia. As Nia mentioned, there are a number of financial tools and offerings associated with our ecosystem. In addition to those, we also hold a number of economic practices that really center our lives and our community. Racism often tells us that our bodies matter less than money. As a social worker coming into this role, it was really important that we make some considerations on like how this cultural and economic shift, what it's going to look like for the folks in our community, and properly acknowledge our life experiences and needs in this work. The proposal of the Ujima ecosystem, it's ultimately an invitation for us to be in better relationships with ourselves, learn to connect, communicate, negotiate, share. We come together through our assemblies and democratically vote on how we want our shared resources to care for not only our existing community, but also see the communities and expressions we want to share space with in the future. Much of how we think about care is illustrated in how we listen, and also how we validate each other. The community standards process, for example, really enforces a commitment to community wellness and care and ensures that we are endorsing jobs that demonstrate care for the employees and wider community. There's also a reinforcement internally and learning internally on how we ourselves are creating good jobs and how we care for each other. This shift is also demanding a reorientation of how we think about care and how we steward our community. For us, it became incredibly critical this past year, under really dire circumstances where grieving and loss was in the air for many of us.

At Ujima we believe new economic practice demands of us to prioritize and care for ourselves, and that means for us right now, a couple different things. We really always check in with each other. During every meeting, during every interaction, we connect, and we make time to do that. We also really validate and honor seasonal breaks outside of unlimited space to really do what we need to do and eliminate vacation time. We also have seasonal breaks that we courage our members to prioritize in our lives. We also give space for grieving in our practice and really encourage transformation in our work responsibilities, if needed, to really properly grieve. Lastly, I think really encouraging a workspace and a culture that is really anti-performative, professionalism and allows us to be ourselves and be with ourselves. Just thinking about care practices as centering our community's well-being over profit and prioritizing Black and Brown residents, insight, and expertise on knowing what they want and need in their community.

Khrais: Thanks, James. The spirit of the network sounds beautiful. Lastly, we have Dãnia Davy. She is the director of Land Retention and Advocacy with the Federation of Southern Cooperatives.

Dãnia Davy: Thank you so much. Thank you to the entire Federal Reserve team for affording me the opportunity to share with you all today. I'm humbled, honored, and grateful to be a part of this conversation. I look forward to the actions that these proposals and your support will spur for the communities. I have to admit the three panelists before are personal heroes. I'm feeling a little bit giddy right now, but that will hopefully make for an interesting few minutes with my comments. Our proposed project will empower heirs' property owners to lead the necessary policy reforms that will promote Black land retention. When the constitution was drafted, Black Americans were legally classified as property, and yet from Emancipation through 1910, Black landowners amassed 19 million acres of land.

As those earlier stated, while the legendary Sherman's Field Order Number 15 never actually provided the so-called 40 acres and a mule, as a part of the New Deal the government established the Resettlement Administration. These resettlement communities afforded African Americans opportunity to purchase land in various areas throughout the South. Black landownership became a source of economic stability, as well as a symbol of more meaningful citizenship, improved political power and quality of life among Blacks who owned land compared to those who did not. Now, I remember in 1997, I was in the ninth grade and the movie Rosewood came out, and I grew up in Florida. That movie was very traumatic for me as an immigrant to understand what African Americans endured as they tried to amass wealth and have stable communities after Emancipation. We know that from 1865 to 1950, almost 6,500 Blacks were lynched in America, which had a chilling effect on Black land wealth accumulation. By 1992, Black landowners held only 2.3 million acres of land, which represented a 90 percent decline from the 1910 peak of Black landownership in less than a 100-year period.

Institutionalized racism in the legal system causes many Black landowners to pass away without estate plans. Their land is inherited through state intestacy laws and called heirs' property, which is significantly susceptible to loss. We at the Federation estimate that 60 percent of all Black-owned land has been inherited through state intestacy laws and has held as heirs' property in a tenancy in common legal state. An estimated $28 billion of Black wealth is held in approximately 3.5 million acres of heirs' property. The biggest threat to maintenance of heirs' property has been partition sales. In 2010, the Uniform Partition of Heirs Property Act [UPHPA] was adopted by the American Bar Association and the UPHPA has been enacted in 18 states and introduced in seven more states. What the UPHPA does is number one, it establishes a legislative definition of what heirs' property is, and it's been instrumental in the most recent Farm Bill, as well as the most recent FEMA regulations for acknowledging and recognizing the African American-owned land and property that is held in heirs' property.

Our proposed project will provide culturally responsive advocacy training to a cohort of heirs' property landowners, so they can lead necessary policy reforms to promote Black land retention. By centering retention advocacy on heirs' property owner leadership, we can accomplish a few important goals towards eliminating a race-based wealth divide. Number one, we can ensure that Black landowners who are the most vulnerable to land laws are involved in the process of identifying the most critical policy solutions in response to the challenges they face. We can also ensure that the public and policymakers hear directly from these heir property owners themselves so that relevant probate and real estate legislative infrastructure can be more responsive to their needs.

We'll also establish a replicable model for Black landowner leadership in addressing the structural barriers to their land and wealth retention efforts. Finally, by engaging heirs' property owners as advocates, we'll also encourage increased access to affordable culturally appropriate estate planning legal services. Anyone who's listening today can support our heirs' property work at the Federation by either attending as a practitioner or offering to sponsor an heir property owner, or perhaps 10, for our Forward '22: National Heirs Property Conference this December 1st through 3rd, which will be virtual and the registration will open on Monday. Thank you all so much.

Khrais: Thank you so much. All right, now we're going to move on to the response portion of our program. We have a few panelists who will give feedback on the proposals just heard and share their thoughts based on their research and experience. At the end of this, we'll take questions again from the audience. Please continue to ask them via Twitter using the hashtag racismandtheeconomy. I am going to bring on the panelists. If you all turn on your cameras, and I'm going to start by asking each of you to take a few minutes to respond to anything that caught your attention in the proposals. What are your initial reactions and what potential do they hold to disrupt inequalities? We're going to begin with Phil English. He is co-chairman of the Government Affairs at Aaron Fox and a former Congressman. Welcome, Phil. Can you tell us briefly about your background as it relates to this topic and your initial thoughts on the proposals?

Phil English: Well, briefly my background, 14 years on the Hill working on the committee that deals with tax policy and also the social safety net. I've also served on the board of the Tax Foundation and an organization now called Prosperity Now. But more to the point, I come from a community that has a serious racial wealth gap. I think all politics and all economics are local. I have to say, Erie, Pennsylvania, has the lowest income census tract in the United States. It has historic problems with vast gaps between the minority community and the rest of the community. It also is a place where we had, starting in 1980, identified that we had the highest level minority community poverty in the country. Locally we've been moving to try to deal with that problem. From that perspective, I like what I've heard. I like the fact that we're talking about the tax code.

The tax code is not a panacea. I realize that because some of the incentives that were built into the tax code were unavailable to African Americans at the time, they particularly had a big impact. As a result, African Americans have not benefited in terms of wealth formation from the tax code the way many other groups are, including some of those who started out at a very high level of poverty. I think Professor Brown's proposal deserves greater attention. I think over time when it is scored and it is compared against some of the other incentive options that are out there, I think probably, to be fair, it will change. But I think it's a good addition.

There are a number of others, and I'd like to specifically say, in terms of asset building, I think an auto-IRA, a provision now being considered in Congress, would go a long way toward encouraging people to save money at the beginning of their work histories. Baby bonds have been discussed by people like Senator [Cory] Booker. Going all the way back to when I was in Congress, I was a co-sponsor of something similar, giving every child an asset, which will appreciate over time, even if it means borrowing to do it. There are other ideas out there, like for example, Robert Johnson, a client of our firm, has been promoting something called the BOOST Act, which [congressman Kweisi] Mfume dropped in H.R. 4367. I hate to go into this level of arcana but it's an exciting idea because it involves investing, creating an incentive, for those that invest in minority-owned businesses. I realized this would be a further tax break on things like capital gains. Yet as a practical matter, it would be a direct incentive for capital to move to minority entrepreneurs. I think it has enormous potential and also frankly, a potential for bipartisanship.

There are other things that I think we can do to address the problem through economic geography. We can build on existing opportunity zones, which in Erie has been so far a fabulously successful startup program, which I think we need to see through. Professor Brown has criticized the mortgage interest deduction, which I think is interesting and a discussion worth having. I think that we ought to consider things like a first-time homebuyer credit, which I championed when I was in Congress.

I think we should rethink homesteading. I heard that mentioned earlier. I think if we go back to the core idea of homesteading and apply it to today's urban settings and set aside the failures of the program that were tied to the failures of Reconstruction, I think we could use a homesteading concept to boost many of our urban neighborhoods at a time when cities are reinventing themselves. I also think, right now, there's a debate in Congress on the earned income tax credit and the child credit, that would be particularly useful to explore.

The other ideas that I've heard, I think I like what's being proposed in Boston and I'd like to understand how we could expand that to a broader setting. I like what I'm hearing about the co-ops in the South aimed at property ownership, which is a core necessary building block of wealth. Many of these latter ideas are very similar to what Canada experienced with the Antigonish Movement, which combined co-ops, poverty banks, and also credit unions. I like everything that I am hearing and as, frankly, the federal government contemplates heroic levels of spending and alternately the limits of that spending, I think we could integrate these discussions into programmatic discussions and also fundamental tax reform. I hope that's helpful.

Khrais: Thank you, Congressman. Next up we have Seema Agnani; she is the Executive Director of the National Coalition for Asian Pacific American Community Development [CAPACD]. Welcome, Seema. Can you just briefly tell us more about your work too, and what stood out to you in these proposals?

Seema Agnani: Thank you, Reema. I just want to thank all the panelists and their proposals really, enjoyed reading them and inspired me to think more deeply about solutions. I really want to thank everybody, an honor to be here.

National CAPACD, we're a coalition of about a hundred locally community-based organizations working in low-income Asian American and Pacific Islander communities. Asian Americans and Pacific Islanders are among the fastest growing racial and ethnic group in the country today and also the fastest growing poverty population, so I'm looking at these solutions also from that perspective. My previous work was in Queens, New York, working with the south Asian community there that is also facing extreme poverty, and is in fact the highest poverty population in the city today.

I really enjoyed reading these proposals and strategies, as I said. As I was reading them, I was thinking, if we really do want to achieve addressing the wealth gap, as well as becoming truly a multi-racial society where everyone can thrive, it's really these type of bold proposals that we need to be moving forward. I appreciate the Congressman's raising the moment we're in right now, where we're really facing a time in history where there are proposals on the table that we need to move forward and are struggling to do so. It's very real to think about what needs to happen compared to where we are at politically in this moment in this country, but I have always believed that we need to move forward on real reparations for Black America and also in the need to put land rights back in the hands of indigenous communities. I really appreciate that thinking here.

We also, in order to really get to where I think we need to be, we need to bring everyone else along. Thinking about the communities that I worked in, data is our greatest challenge as Asian Americans and Pacific Islanders. Because if you look at us in aggregate, we do have many of those that are doing very well in this country and have accumulated wealth. But we also have, as I said, extreme poverty. I appreciate pieces of these solutions that also bring everyone else along. I think what I really liked about the proposals is that they all kind of advance self-determination for communities and really move us towards building wealth collectively rather than individually and find established ways for us to take care of each other in local communities. If there's anything we learned from COVID is that in moments of crisis it is our local communities that are going to really help us overcome moments of crisis.

The tax credit proposal, I really love it. It also reminded me of the baby bonds proposal that is being discussed these days. I appreciate that it brings others along, even though it was the second choice, I agree and understand why, because again, I do believe there needs to be directed resources to Black communities, however, bringing others along addresses other communities like the south Asian community and others that have also been impacted by US foreign policy, immigration policy, and a colonial history that really brought us to where we are today. I think as we look forward in the United States, addressing all those who are struggling is needed.

In terms of the Ujima fund, again, what an amazing model that's being put in place. I love that it challenges individualism and instead moves us towards a more community-centered approach. It reminded me of our empowerment economics model that National CAPACD has put forward, that really is a framework that thinks about how you build wealth in a multi-generational way and how do we put strategies in place that build community wealth, not individual wealth.

I know I'm running out of time, but lastly, I just want to say I think the final strategy that we heard, I learned so much from the tenets in common policies and the need to move those forward. What I loved about it is that it not only builds wealth, but it builds community capacity, it builds leadership. I think there are a lot of solutions in that model that will be important to us as we confront issues like climate change as well, where we're going to need to work collectively to really address those issues. I'll stop there. Thank you.

Khrais: That's great. Thanks, Seema. All right, next, I'm going to turn to April Youpee-Roll, she's an attorney at Munger, Tolles and Olson, and much of her expertise and practice is on American Indian law. Welcome, April. Can you tell us a little bit more about your background? You have a particularly unique perspective. What came up for you while hearing these proposals?

April Youpee-Roll: Sure. Thank you. First of all, I'm so grateful to be included in this conversation and so excited to hear and read the proposals and learn from all of the folks part of the event today. I'm a member of the Fort Peck tribes, a federally recognized Indian tribe in Montana. I was born and raised on my reservation. I'm also, as you mentioned, a lawyer and I'm a lifelong scholar of federal Indian law. With that sort of background, I primarily want to provide a tribal members' perspective on Dana's heirship proposal.

Earlier, we heard some remarks from Professor Matthew Fletcher, which illustrated the missteps in federal Indian policy and the larger colonizing forces that built this country and led to the loss of hundreds of millions of acres of Indian land, including 90 million acres lost as a direct result of allotment, which was a policy that individualized Indian land holdings and sold what the government considered to be surplus land. Allotment also bred land fractionation, which presents immense challenges to everything from land management and marketability, resource development, but also presents challenges to fundamental public safety in Indian country because land ownership directly impacts which of the three sovereigns—tribal, federal, or state—possesses criminal or civil jurisdiction over a particular parcel of land.

I, however, have a slightly different perspective on restrictions on heirship because my family actually successfully challenged the provision of the Indian Land Consolidation Act in 1997. I know a lot of this may be unfamiliar terrain for some of those who are watching and listening. Some brief context: Congress has plenary power over Indian affairs. Over the last 100 plus years, it has really vacillated between supporting and individualizing Indians under assimilationist policies, and then supporting tribal self-determination and really focusing on the strength of tribal cultures and tribal governments.

Unfortunately, this vacillation has bred a real tension between the rights of tribes and the rights of individual Indians, particularly in the heirship context. One other sort of aside before I kind of dive into some examples, I want to be clear that although I'm very critical of this tension and critical of certain policies from the perspective of an individual tribal member, the maintenance of tribal pre-constitutional sovereignty is paramount for all individual tribal members. Our individual identities simply do not exist without a citizenship or a kinship tie to our tribal nation.

Because of Congress's support for tribal self-determination and tribal sovereignty, especially recent consolidation efforts and restrictions on heirship in Indian country have privileged tribes over the rights of individual Indians in Indian families. For example, as part of the settlement of the lawsuit brought by Elouise Cobell for a full accounting of Indian trust assets, the federal government provided $1.9 billion to tribes to consolidate fractional interest in Indian land. What tribes did is they turned around and they solicited individual tribal members to sell their land to the tribe. I own interest in multiple parcels of trust land on my reservation and among the parcels that my tribe offered to purchase from me was my interest in a parcel with only four related owners, and on which I own a home. Keep in mind that tribes themselves, thanks to the American Indian Probate Reform Act, can actually now themselves force partition sales of certain fractionated tracts, especially if the tribe owns a portion of that tract. Having the tribes step in and try to purchase fractionated interests of that parcel could actually bear dire consequences for my family's continued use and ownership of that tract in the future.

I also want to touch on, I know I don't have a ton of time, but there's a separate issue here, which is the trust structure itself in Indian country, prevents individual tribal members from leveraging our land holdings as collateral, which is an obvious barrier to the building of individual wealth. To my knowledge, basically only small native CDFIs [Community Development Financial Institutions] will work with native borrowers to figure out how to lend against Indian Trust Assets. Against that backdrop, I think it's really interesting that Dana's proposal would potentially leverage a restriction on alienation with the goal of building wealth.

I think that in the context of Black heirship, Dana's proposal is really promising. Courts should absolutely consider context, history, culture, and land loss and the wealth gap before approving a partition sale. To just echo some of the themes on the first panel, I do think that we need to be aware of the history and the context of similar restrictions as we move forward. We need to really keep in mind that restrictions on heirship in Indian country have really been limiting to individual tribal members, but also in terms of building wealth, large land-based tribes are by and large not seeing increases in wealth, despite recent consolidation efforts and minor growth in tribal land holding.

Khrais: That's really great. Thank you so much for those comments and those insights. I want to bring everyone now for a larger conversation. If folks from the policy panel want to turn on their cameras... Oh, sorry. Excuse me. Rodney, your video was not on my screen. Lastly, I want to toss to Rodney. He is with Common Future. Rodney, can you tell us very briefly about your work and your responses to the proposals?

Rodney Foxworth: Absolutely. Thank you, Reema. It's been really wonderful to hear from the presenters who I have so much appreciation and respect for and, of course, the respondents. I think overarchingly when I think about the proposals and the presentations, what I really appreciate is the fact that each of them were really grappling with the fact that there is really a wealth chasm, there's a framing of a wealth gap, but really we're talking about a chasm, and recognizing how deeply systemic these challenges are. One of the things I was sort of remarking internally was just thinking about the fact that each of the proposals really are wrestling with the fact that there's a place for retention of wealth, because there's been an extraction purposefully designed, whether in a tax code and other areas, but also looking for a path forward in which you can actually build, not just wealth at an individual level, but also looking at it from a lens of community. I have profound respect for that. I think particularly where we are right now, we have to acknowledge that while we already have that "wealth gap" the last two years, the last 18 months or so has really exacerbated that and has caused conditions in which future wealth building in communities of note will be even more challenging.

When I think of these proposals, I try not to think about them in isolation. As an example, having been able to have some real familiarity with the work of Boston Ujima Project, I was really thinking and imagining into what it might look like for the wealth tax credit to be able to be applied as an investment from individuals in Boston and other ecosystems in which Ujima is looking to develop out there, their model. I think even with Ujima, I was remarking about the fact that we don't think typically enough about how wealth is accrued today and the balance between maintenance of wealth, and particularly in communities of color, in which the primary driver has historically been around housing, land, et cetera. Then thinking about where the wealth accumulation has occurred most recently in the US, and the fact that our incentives, our policies, do not benefit unaccredited investors in a way that will allow for direct benefit to the growth of our economy, but particularly from a local level. I think it's really important to think about that in the context of what Ujima has been doing, bringing in unaccredited investors to actually be able to partake in the economic gains of their communities. When paired with the wealth tax credit, it makes me think a lot about the opportunities that would be presented if there's more wealth that can be reinvested back into the communities in which individuals are living in.

I look at these proposals, not just in isolation, but really how they can actually build upon each other. When I look at the work that we have done over at Common Future, I would be remiss to not acknowledge the fact that Ujima Project is a part of the Common Future network. We've been able to engage with them over the years. As an institution we're able to work with organizations like Boston Ujima that are doing this remarkable community wealth building work across the country. When I think about the profound opportunities that these policy prescriptions could actually provide some accelerated opportunity for creating more economic impact in communities in which we've been so unfortunately impacted by economic and racial injustice, I get really excited by that. I also like to think about the opportunity that where are there where we can actually be able to present these policy prescriptions that are locally sourced and locally developed and ways that can have real impact at the federal state and local level at a policy perspective.

I think oftentimes we overlook the innate genius and policy perspectives that those on the ground, and I think Ujima is a perfect example of this, have been able to percolate up and how can we implement those into federal policies. As an example, the Congressman had mentioned opportunity zones. Well, what might it look like if instead we had some kind of mechanism from a policy perspective that would actually engender the type of thing that Ujima is driving forward? How do we incentivize low-wealth individuals to have additional participation in their own local economies and such that they're gaining wealth, and not actually prioritizing the interests of those who are able to invest in the public markets that are getting capital gains taxes, for example, to them? How can we actually look at the Ujima model as one in which we're actually prefacing the economic gains for low wealth and low income individuals?

Khrais: Those are great remarks. Thank you so much, Rodney. I want to go ahead and bring back the policy presenters into the discussion, open it up a little bit. You want to turn your cameras on. Actually, Rodney, I'm going to go off of the sentiment that you were just sharing, because I find it really fascinating thinking about community wealth-building strategies and these proposals they touch on, shared decision-making of cooperative work, the power of pooling resources and knowledge to create change. Going off of what you said, Rodney, how feasible is it to scale these models up? How do we develop and codify these strategies at a state level or even a national level? I'll throw that actually to Nia.

Evans: Okay, great. We talk about scale a couple of ways. When I mentioned in the presentation in... and how much time should I take to answer this?

Khrais: Well, this will just be a discussion. Just a minute or so.

Evans: Okay, great. One is what I mentioned in the proposal, which is helping other communities to create an ecosystem where they are. I guess, scale in a horizontal or a lateral sense, and again, with attention to very local context. We're aware that we're able to build Ujima based on a pretty unique context of a lot of really strong organizing. There are a lot of nonprofits here, so there is some informal infrastructure that we've built Ujima on top of, and every region doesn't look the same.

The second way we've conceived of scale at Ujima is with a larger fund. What we've said is if we're able to demonstrate success with this fund, which is a $5 million fund, then our next fund is a $25 million fund. Just thinking about Noel's remarks in terms of debt versus equity, this fund right now is primarily a debt fund with the ability to do some equity. We're thinking that our $25 million fund, which we're looking to start designing pretty soon, will be primarily an equity fund that will focus on real estate. I'll stop there to perhaps give Rodney a chance to answer as well.

Foxworth: I appreciate that Nia, but I mean, you're the leader in this space, so I appreciate it. But I think the one thing I would add to Nia's point is just the opportunity set for making sure that there've been years of organizing work before Ujima launched. I think there's so much of this sort of hidden infrastructure that exists in communities that when I say hidden, it's not hidden to people like it changed with Nia, but it is hidden to so many, and how can there be an activation and recognition of those community groups, those institutions that might not even be not-for-profits, but community members that have consistently been organizing and how to best bring them into the conversation. I think Ujima project is a remarkable example of that.

Khrais: I'm seeing a question from an audience member that is pretty interesting. The question is, "Can the panelists please comment on the logic of economics that 'all parties benefit from trade' using the racial wealth gap as an example?" They go on to say, "Isn't economic/capitalism more accurately a win-lose strategy? Someone benefits while someone else doesn't, as opposed to a win-win strategy. How then does economics make space for justice?" I will throw that first to Dorothy.

Brown: I was afraid that was going to happen. Part of my response is we've never seen an inclusive capitalism. Capitalism was built off the backs of humans that we treated as property. Part of the answer is there's an assumption that the capitalism we see is the only type of capitalism that exists. I believe it doesn't have to be that way, but I think capitalism generally goes to the least common denominator. You can be intentional in putting your policies forward when thinking about a capitalist system that often has anti-Black and anti-Indigenous propensities. You can counteract those.

Khrais: Congressman Phil, do you have a response to that?

English: Well, yeah. I think we have to look at economic history and conclude that capitalism has big flaws and it's very hard to find an alternative system that has the potential to do the kind of uplift that we're talking about on this panel. Look, "You're not going to have social justice without economic growth." The thing we need to understand is that economic growth has not been adequately distributed in recent years for a variety of reasons. That's actually a global phenomenon, but it's something that the United States has a potential to move the needle on changing. Simply having economic growth through capitalism doesn't guarantee social justice, but I don't believe any of the solutions we're talking about are going to be possible without economic growth.

I'll just suggest to Professor Brown, there are plenty of examples of successful capitalism around the world that were not grounded in slavery. Take a look at the Scandinavian system, take a look, frankly, at how the British economy over time, having extirpated slavery, was able to create all kinds of opportunities, even and as they fought off some of the mistakes coming into the Industrial Era that were created by, for example, the Speenhamland laws. I believe, getting back to the questioner's core, people ask, "How do you deal with free trade and at the same time deal with inequities in your system and moderate capitalism?" Which I would argue is a very important question that was much neglected by both parties for several decades, and now is very much on the front burner. I think that we need to have a trading system that levels some playing fields, but also reserves opportunities for a local access to the economy and to the global economy. I'm happy to let the others comment and I'll come back on if you want additional thought.

Khrais: Yeah, we actually only have a few minutes. I just want to throw in another listener question right now, which is, what other lessons can we leverage from other movements and efforts that help to advance an inclusive economy? April, if you feel comfortable answering that as it relates to the rights of Indigenous communities.

Youpee-Roll: Well, first and foremost, I think there's sort of an interesting part of this. I'm talking about the rights of individual Indians versus the rights of tribes, but tribes themselves have been really creative and have seen economic growth, even when traditional indicators wouldn't suggest that they should. We're talking about really rural communities without access to large population centers, without a lot of capital or access to it. There are definitely lessons to be learned in Indian country because tribes have just been so creative. I would really recommend the work of the Harvard Project on American Indian Economic Development. They study these trends and highlight programs in Indian country that are doing sort of very creative work, not only around economic development, wealth building sort of things, but around community building in general. I would point people there if they want to learn about some of the innovations in Indian country.

Khrais: I'm looking at the time and I wish we could get into more things, but I want to do a rapid fire round, maybe just a few sentences each. A big theme I'm hearing today is that blatant racialized policies aren't really in the past. As we move forward, I wanted each of you to take, like I said, just a few seconds to tell folks in the audience something they can learn about or do to actually help change what we've talked about today, and/or a large takeaway that you want folks to hold on to.

Brown: I'll start. Tell your members of Congress, tell the Treasury, tell the IRS they have to get moving on publishing tax statistics by race. That information is critical. In the absence of it, we have Black Americans paying higher taxes than their White peers. Most Americans would say that's unfair.

Khrais: Love that radical transparency, as you call it. Nia, I'll go to you. We have a few minutes as a group.

Evans: Cool, great, I think in terms of learn about, I'll just recommend Mehrsa's book. I don't know how familiar everyone in the audience with the various myths that we carry as truths, but I would say definitely undertake some myth debunking for yourselves. The Color of Money is a good place to start.

Agnani: I'll just use my minute to lift up the challenges that the native Hawaiian community faces. The empowerment economics model that I mentioned was really inspired by what we were seeing the native Hawaiian community implementing. I think they also don't have the same rights as the Native American community. There's a lot of work that needs to be done there, and hope that everyone will take some time to learn more about what's happening in the native Hawaiian community.

Khrais: Rodney, I'll go to you.

Foxworth: Yes. I think I'm going to segue a bit from what Nia said, in the sense that there are some cultural values that we hold to be too evident today. As an example, what we're experiencing right now—where some sectors are increasing wages for workers where apparently they could not have a living wage previously—I think that points out to consistent exploitation and extraction. I know the earlier question about how can you have an inclusive capitalism: not going to get into that, except for the fact that we have to consistently interrogate how often we can see very visibly extraction and exploitation happening today.

Khrais: Congressman?

English: I would go back to the core point that we need to have a much broader solution than has been proposed in the past. I think it needs to be grounded in the idea that we need to have strong economic growth, and we need to find a way of creating access points to the broader economy. I think that having local projects that bring people together in communities and specifically shoot at local examples of the racial wealth gap are very, very important. But I don't think those are going to be sustainable unless I believe economic growth occurs because I don't think this is a soluble problem if it's a zero-sum game.

Khrais: Great. To cap it off, James.

Vamboi: Yeah. I mean, I think I would say participate to show up, come through, listen. I think also be open to experiment and practice. I think Ujima is an economic practice where we're figuring this out and we are open to connect and partner with y'all in doing this. I try not to get so centered on the possibilities and not put energy to practice and experimentation. I just always want to encourage folks to explore that alongside us or in other ways.

Khrais: Love it. All right. Thank you so much, everyone. I feel so honored to be here with you all and to learn and to soak up all of your insights. Yeah, our time is up, but thank you again, and we're going to keep things moving. I'm going to turn to Anne Price now. She is the president of Insight Center for Community Economic Development. Welcome, Anne.

Anne Price: Thank you so much. I'm so thrilled to be here and have the opportunity to talk to two Federal Reserve presidents. I'm going to do something a little different. I know that today we've heard a lot of great data and research, and some very robust solutions, but I want to end our conversation today with a story, and I want to be able to actually nest my questions to the Fed presidents based on the story.

I want to talk about a relative of mine, James A. Parsons. He was a scientist, inventor, a professor, and yet so much more than that. He loved jazz. He loved to smoke a big black pipe. He was an avid swimmer.

His story really started in 1900, he was born in 1900. His family said at 14, as a young, very dark-skinned Black boy, he said, "I want to be an engineer." He was really good at math, and it caught the attention of his father's employer. His father was a butler for an executive in Dayton, Ohio. He ended up taking a test to become an engineer to go to the Naval Academy. He actually got accepted. He was the first Black person accepted to the Naval Academy. Chose not to go. It was 1917, probably ill-advised to be the first Black person during World War I.

He ended up getting an engineering degree at Rensselaer Polytechnic Institute in Troy, New York. He went on to do really great things. At the age of 30, he had his first patent. He went on to have several patents and advanced his career to teach. This cousin of mine, who I'm so proud of, actually developed what we know today as stainless steel. His inventions actually led to the development of stainless steel. In talking to his family, they said to me, "There was no financial wealth built from these contributions, and the wealth he created for a company, and a significant contribution to our overall economy."

I'm telling this story not because James was in fact exceptional. There's no doubt about it. I don't think you go on to invent something called stainless steel and not be exceptional. But he was no exception, because his inability to build wealth as a Black man at that time was really mirrored in terms of other families. Right? I think about this, something that has been said many times, that there really hasn't been a Black middle class when you think about wealth. James was no exception. It wasn't just one thing. It was housing, of course; he lived in a segregated redline community. The house he lived in today is worth less than $50,000. He also faced wage and pay discrimination. He wasn't able to get the kind of positions you would think for someone who was accomplished. He ended up teaching at an underfunded historically Black college in Tennessee, a college that we know today was not supported by the state for many years. That college is probably owed about half-a-billion dollars of funding that it has coming, that is due to them. The real thing here is that James' life is no exception. That there are myriad ways in which he was unable to build wealth and pass that on to his family. Many of them you heard today from other esteemed panelists.

This is a question that I want to ask you both: How could we really think about the lived experience of those that have historically had the lowest wealth? Whether that's Black Americans, or Afro Latinx folks or Indigenous folks? How can we use that as a standard, as a litmus test, to use tools that you have, that the Fed has, to actually address racial inequities in our economy? Using your radical imagination, what do you think Fed Branches can do to really center the lived experiences of those who've been left out of our economy? What are some of your ideas? I'd love to hear from you both, maybe starting with you, President Kashkari.

Neel Kashkari: Thank you. It is great to be with you once again. The series is just eye-opening, and there's so much to digest. I would say our tools are limited, but not zero. I mean, monetary policy as we've talked about is a very blunt instrument. Some of the panelists talked about one of the things that I've been advocating for years, since I've been at the Federal Reserve, is to use monetary policy to generate a strong labor market as we can, while keeping inflation in check, because what we saw before COVID hit was the highest wage gains were coming to the lowest-income Americans. We finally started to make some progress in closing some of the income disparities and some of the opportunity disparities, but that's a long way from closing the wealth disparities that's been a focus today.

Monetary policy, I don't think has no role to play, but it has a limited role to play. I do think all the Federal Reserve Banks have a role to play through our research. I mean, this series is a great example of us using our platform and our network of experts to convene other experts to bring these ideas forward.

The Minneapolis Fed has an Opportunity and Inclusive Growth Research Institute dedicated to doing research to try to shine a light on the disparities, but also on solutions so that policy makers across the spectrum can benefit. I know my colleague, Jim Bullard at the St. Louis Fed, they also have a research center that is doing this kind of work. I do think the Reserve Banks have a role to play, whether it's monetary policy or not. I think monetary policy has limits, but I do think we have an important role to play. I think the success of this series is great evidence of that. I'm so proud that all 12 Federal Reserve Banks are united in this work and trying to lift up these issues and bring these experts forward.

Price: Thank you for that. What are your thoughts, President Bullard?

James Bullard: Thanks for the question. I'm going to agree with Neel, which is the most logical thing to do. But definitely, I would say as far as what the Fed can do, what the regional banks can do, we're doing some of it right now by convening a discussion on wealth and racism. I do think this is an excellent conference, and I do appreciate the opportunity to participate. It's a wide perspective, a wide spectrum of ideas and insights. I guess my main comment is that there is a lot of passion around these ideas right now. I think that I'm passionate as well, especially about economic ideas. I think ideas are powerful. I think the ideas that are here, some of them will end up being transformative and lead to important change in our economy.

I think this kind of event is taking a page from Silicon Valley, which has become so dominant by being so innovative over the last couple of decades. But that a lot of the ideas there are, "Try a lot of different ideas, be passionate, go all in. If it doesn't work, that's okay. Go on to the next idea." I think there are a lot of things I'm hearing here today that go in that kind of direction.

I agree with Neel: Is it really interest rate policy? I don't think so, but I think we need better models to understand distributional impacts of monetary policy across the economy. Some of you know that I participated at a conference also at the Minneapolis Fed just last week, talking about framework that we could use for analyzing these kinds of issues that is also consistent with the existing literature in monetary policy.

I just want to stress macroeconomics generally has not ... I don't want to overstate it but has not addressed distributional issues very well over the last several decades. Some of the main insights have come from that don't have distributional consequences. That's being rectified, I think, in the newer literature to which I'm trying to contribute, but I think the ideas that are here about the historical context, the lived experience... you want to be able to somehow incorporate that into your assessment of all kinds of interesting macroeconomic policies like tax policy, which we've heard about here.

I like the emphasis on the racism in tax policy that Dorothy Brown is emphasizing, because that is the most standard channel through which we can make policy changes. That's where Congress operates most naturally. I think it would have a big impact. One thing that macroeconomics tells you is that taxes are always ... almost always ... important. They have big, big effects on the equilibrium outcomes. You can't ignore the tax code when you're thinking about this. Very few people would say that we have an optimal tax code today. Almost everyone would say, "No, it has all kinds of distortions in it. All those things could be done better."

I do want to mention, like the Minneapolis Fed, the St. Louis Fed also has initiatives where we're trying to be a part of the solution. We've had the Center for Household Financial Stability that many of you are aware of. Many of you know Ray Boshara. That institute, or that center, has documented racial wealth gaps over the last few years since it was established in 2013. We now have a successor institute, the Institute for Economic Equity. We brought in a new director, Bill Rodgers from Rutgers. Some of you know Bill. We're expecting a lot, and we're hoping we can get some good impact there. That institute published a book, The Future of Building Wealth, to which some of you have contributed. That's joint with the Aspen Institute. I'd encourage you to look at that book. That also has comments from other Fed presidents. But I'll stop rambling on, and let you get back to the panel.

Price: Oh, thank you for that. We know the value of the research that's been produced, particularly that Ray has done over the years and the work coming out of the St. Louis Fed. So appreciative of that in informing our solutions.

I want to get into a point that's been made over the course of the morning and afternoon. That really comes through when we talk about the idea of local solutions. This was picked up early; Noel talked about this. Also, Rodney spoke to the importance of local initiatives.

When you look at wealth, I mean, one of the things that's really, I think, important is that as a nation, we still don't fully understand how wealth is accumulated. Kirsten raised this issue that much of this has been invisible. When you think about local and regional kind of issues, and really pulling out how wealth has been accumulated for those in the regions that you serve, and the fact that so many other groups have been left out, what do you think the Fed's role is to actually lift up what's really been invisibilized for so long? That is the rules, the practices, and the policies that have stripped wealth away from so many, and enabled others to generate wealth. What is the Fed's role in lifting up this local research, local stories, local history that really a lot of us don't know about? What do you think you can do about that?

Kashkari: Well, I would start by saying it's only invisible because we haven't been looking. Once my eyes were opened, now everywhere I look, I see it. It's impossible not to see it now that my eyes have been opened. I read a lot of history. You can see my room; I've got lots of historical pictures behind me. Abraham Lincoln is behind me. A lot of the speakers talked about it today. Once my eyes are opened, now when I read history, I see so many examples where wealth has been given from the government to White Americans. Homesteading was an example of that, 160 acres. Or after World War II, FHA grants, as we heard about, were given almost exclusively to White soldiers, not to Black soldiers who served their country.

When I step back, I look at it and I say, "Okay, there's one group that's been given a lot of stuff for free from the government. Now you're telling the other group, 'Now you all, you just work hard and catch up.'" I don't know how that's possible when one group got the wealth essentially granted to them from the government.

Step number one is, go look for it. I spent a lot of time with Sandy and Kirsten. I learned a lot from them. They've also opened my eyes. But first of all, go look for it and you'll see it. Second of all, let's stop making the problem worse. I'm going to give you an example of this. Throughout the series, we have heard a lot about systems that are programmatically designed to get certain outcomes. I'll give you a specific example of this. A year ago, when COVID hit, Congress passed the PPP Program. I fully supported it. Helped small businesses keep their workers together and support their workers. The Federal Reserve Banks all played a role in creating a program to get money out to banks so they could turn around and make these loans, which were really grants to small businesses.

But in the middle of the crisis, it dawned on me: We're doing it again. Who are the business owners that are directly benefiting from the PPP Program? This is a multi-hundred-billion-dollar program. Mostly White business owners. Even if they were businesses of color, many of them were disadvantaged because we had to go through the banking sector to distribute the money. If minority-owned businesses didn't have that banking relationship, they often struggled to participate in the program.

I think when history is written about the COVID pandemic and written about the PPP program, I think the PPP program will have shown to have exacerbated White/Black wealth gap in America. Not intentionally—that was not the purpose of the program—but I think that will end up have being one of the results. That, to me, was a very powerful example of, "Wow, when the whole system is designed a certain way, even if you have the best of intentions, even if you are aware, these things end up perpetuating and the gaps end up getting bigger and bigger and bigger."

We want to close the gap: I would say the first thing we have to stop doing is increasing the gap. The way we start is by all being aware of why these gaps exist. That's why the historical context that was offered today, I just think is so important. I mean, for me personally, I did not really understand where we are without fully understanding. I don't claim to fully understand but understanding the history of how we got here. For me, you can't separate those two. Because just saying, "I'm going to look at the raw statistics of where we are," that doesn't give us nearly enough information that understand how to go forward in a better direction.

Price: What are your thoughts, President Bullard?

Bullard: Yeah, I mean, as far as the history goes, I'm probably in a minority among economists: where I actually love economic history and I think we should do more of it. Inside economics has struggled, I think, to maintain parity within the discipline compared to other things you can be working on a study.

I think the historical context is incredibly important. My reading of history has never been that it's a pretty thing. It's a struggle, for sure, between groups and different policies having different impacts, disparate impacts across groups. To be able to design policies that don't do that, like Neel was just describing, would be the goal going forward. It's not so clear, exactly, how you're going to be able to do that, but you're going to have to write down ... I do macroeconomic theories. You have to have something that can tell you about the distributional consequences of various types of policies. I can tell you from reading the very technical literature and trying to participate in it, that it's not at all easy to discern. Even what you would think of as straightforward, easy-to-understand type policy is going to affect different people in the economy in different ways. Those that have been low- and moderate-income usually bear the brunt of the disparity.

One of the things that comes across, I think that's interesting and was talked about here a little bit, was that if you don't have enough wealth, you don't have as much insurance. A lot of what we do is try to think about how shocks are going to impact the economy and are going to impact individual people in the economy. Those that are well-insured, have a lot of wealth, are going to be able to weather the storm very well. Others are going to be hit very hard. I think this concept of thinking of things in terms of insurance is really valuable and is a leading edge, I would say, of economic research. This was brought up in the context of bubbles in asset markets. The most recent recession was not caused by a financial bubble, but the previous two were. When the bubble burst, you get lots of distributional consequences.

I wanted to mention one other thing here that I don't think has come up in the discussion, which is that wealth building is not a zero-sum game. The point of...many nations across the world have moved from poverty to wealth. South Korea would be an example in the postwar era, but there are many others. What we have here is part of the labor and wealth distribution is not as good as it could be, but the good news is that there is some potential to get realigned. It gives me hope for the future, and I would cite the San Francisco Fed's paper that came out this spring, [The Economic Gains from Equity, by Shelby R. Buckman, Laura Y. Choi, Mary C. Daly, and Lily M. Seitelman]. That's one paper in a sequence of papers that have tried to document the idea that basically what's happening is you're not using all the talent in the economy as effectively as you could.

If you could get that to be used effectively, you'll get a big macroeconomic impact that is not just a zero sum but is a net addition to the total output and the total income in the economy. They got a number of 2.6 trillion on an economy of about 22 trillion. That's about a 12 percent increase per year. This is tremendous upside potential here if we can get many of the good ideas that are out there at this conference implemented in the U.S. economy.

Price: Thank you so much. I'd love to ask one more question, but I don't think we have time. I do want to just make one point that we heard opening up from Matthew. Conversation about narratives, and how narratives about people of color really shape policy. I just want to leave on the note that the Fed can play a great role in shaping narratives around those who have been left out of the economy. I want to thank you so much, presidents Bullard and Kashkari, for a great conversation.

Kashkari: Thank you.

Bullard: Thank you.

Price: Over to President Bostic. Thank you so much.

Bostic: Well, thank you, Anne, for that talented moderation. Really appreciate your participation in this. I just want to thank everyone, all of our speakers, for doing a tremendous job. There were a couple of things that jumped out at me as I listened to the presentation. I have a bunch of notes on my sheet.

One is, again, one of the hallmarks of this program and the series has been the open dialogue and the plain talking. I thought today was another great example of that. Second thing that came up a lot in the president's panel was this notion of history. It's a theme that went through the whole program today. That time dependence thing that happened a long time ago, many years ago, have implications for today is really important. Then the third thing, and you saw this in some of the solution proposals, is that institutions matter, and the details of institutions matter. As we think about how we move forward, we are going to have to get into the details. Small things can make big differences.

I thought today was great. I hope that you did as well. I want to thank you for joining us. I'm very excited that you were here, and I want to close just by hoping that you continue with us on this journey. Our next program will be on ... let me get this right ... on November 16th. We'll start at noon Eastern time. The topic there will be financial services. It's another one where there's a whole lot to talk about. Hopefully you will join us, be part of the conversation, take the things that you've learned today, and continue having people become much more aware of what's going on. Thank you and have a great afternoon.