Dr. Jeffrey C. Fuhrer is a nonresident fellow in Governance Studies at the Brookings Institution and a foundation fellow for the Eastern Bank Foundation. He previously served as executive vice president and director of research at the Federal Reserve Bank of Boston, where he was also responsible for the bank’s diversity and inclusion functions. Jeff has been active in economic research for more than three decades and has served as an associate editor for the American Economic Review. He is the author of The Myth That Made Us: How False Beliefs about Racism and Meritocracy Broke Our Economy (and How to Fix It).

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Jeff Fuhrer:

There are no free markets. So, when people say that, what they’re really saying is not that we keep the purity of free markets alive. It’s that they like the particular way in which the government has intervened in markets the way it is right now, because it’s helping them. And they don’t want that to change.

Leon T. Andrews, Jr.:

Welcome to The Measure. I am your host, Leon Andrews, president and CEO of Equal Measure. At Equal Measure, we help foundations, nonprofits, and public entities advance social justice through evaluation, strategy, and communications. On The Measure, you’ll hear conversations about how to support more equitable communities through centering racial equity and transforming systems. I’m honored to speak with Dr. Jeff Fuhrer. Jeff is a nonresident fellow in Governance Studies at the Brookings Institution and a fellow for the Eastern Bank Foundation. He was previously executive vice president and senior policy advisor at the Federal Reserve Bank of Boston. He’s also the author of a book called The Myth That Made Us: How False Beliefs about Racism and Meritocracy Broke Our Economy (and How to Fix It). Welcome, Jeff.

Jeff Fuhrer:

Great to be here, Leon. Thanks for inviting me.

Leon T. Andrews, Jr.:

So, I’d like to begin, typically my interviews, Jeff, with more of a personal question. At Equal Measure, a lot of our work looks at long-term investments to transform inequitable systems in areas that you cover in your book, such as health, education, and economic mobility, especially in our Black, Indigenous, and our Latine communities. So, we think a lot about place, their context and history. I’d love if you were able to reflect on your own personal background, and how your own context of history and place have affected your life journey.

Jeff Fuhrer:

I have a pretty boring early life. I think I was fortunate to grow up in a pretty middle-class kind of neighborhood. It was not a very diverse neighborhood, so mostly middle-class white folks. I went to college, I went to grad school, studied economics for a long, long time. In the last 15 years of my career especially, I got involved in a bunch of projects that were much more centered on the areas that you mentioned before about equitable provision of education, housing, healthcare, especially to populations that are lower income and disproportionately families of color.

And in the course of working on those projects, not only did I become exposed to the subject matter, but I think much more importantly, I was out the field in low-income communities that have been left behind by our economy and talking to folks. But, really, mostly listening to folks, to hear what their lives are like, what works for them, what doesn’t, what are their aspirations, what do they see as things that really need to change? And, for me, that was transformational for two reasons. One is those relationships were a gift. They gave me a perspective I couldn’t really develop on my own.

But second, they helped me to realize how little I knew about the economics of those communities and how little my formal training had prepared me to think about that. So, I realized a bunch of gaps in my understanding. And from there, both by talking to and listening to folks from those communities, reading more, talking to scholars who worked in the area, I developed this sense that monetary policy is important, setting interest rates matters, obviously. But for me, right now, the thing I need to focus on is how to bring attention to the fact that opportunity is not provided equally to many families around our country—millions, tens of millions. And that we need to restructure our economy in a way that more equally provides opportunities. So, that’s what I want to be working on and am working on right now.

Leon T. Andrews, Jr.:

You said a couple of things that I’m wondering if you could reflect a little bit more on. One is that you grew up and your life was relatively boring. And you also acknowledge you grew up in a predominantly white community. But even in the context of sitting with that “boring life” and in a predominantly white community, as you think about the work you’re doing today, that place and context of where you grew up still helped inform even how you started to process the work that you may not have been sitting with. So, I’d love for our audience to hear how you reflect on that.

Jeff Fuhrer:

It was a journey to understand how beneficial my family resources were, my family connections in my own success. This is one of the hardest things for many people, whatever their background is, but particularly those who have grown up with economic and financial advantages. It’s so hard for people to recognize how much of their success is not due only to their hard work and their brilliance. It’s due to the fact that they had supports, they had opportunity. They were not discriminated against systemically or personally. And to recognize that when those things didn’t happen, it is a really important part of understanding not only how you yourself succeed, but how folks are able, or not, to succeed in the economy that we all live. I mean, this is still ongoing for me and I think for many people.

Leon T. Andrews, Jr.:

Yeah, thank you for sharing that more of a personal context as you think about your own place and that history. And a lot of that I felt shows up particularly in your book as you looked at banking, and housing, and education, and health, and workforce development and so many other sectors. And, so, you really were trying to unpack and create a better view of the myth. What is the myth?

Jeff Fuhrer:

The myth, it’s a suite of narratives or stories, if you want, simplistic stories that are false and that we all, almost all, commonly use to help us make sense of a complicated economic world. So, it’s not surprising that people use simple stories to describe complex things. We do that all the time and it can be really useful. In this case, though, the narratives are false and corrosive and have been really destructive. But most importantly, they’ve been used to structure over and over again an economy that provides opportunity to a few and denies opportunity to many. And, of course, that divides across racial, ethnic, and class lines. The first narrative is that individual effort is sufficient to success. If you just work hard, you will succeed in the U.S., because we are, after all, at least supposedly, the land of opportunity.

Turn that on its head, importantly, that means that you can look at folks who are not attaining success and impute to them lack of effort. And that is probably the worst aspect of this. It’s particularly bad when it combines with a second narrative, which is that we are a post-racist world, post-racist country, post-racist economy. And that’s aspirational, in a sense, but it’s, of course, false. The notion that the effects of systemic racism have petered out and no longer matter, if they ever did, it’s just dramatically contradicted by data, by experience, by common sense. And, so, when you combine those first two—all you need to do is work hard and we’re a post-racist nation—then when folks who are ignorant or maybe are just not connected to communities of color, they look at the disproportionate lack of success and they say, “Well, particularly for Black and brown folks, lack of effort.”

Well, that is deeply corrosive, deeply disrespectful, and deeply ignorant. I briefly mentioned two more narratives. One is that the only thing that businesses, especially large publicly traded businesses, are responsible for, is to maximize their profits, to maximize shareholder value—something Milton Friedman put forward very strongly in 1970. He said, at the time when businesses had started to focus on the effects of their activity on the environment, on the communities that they work in, or, in fact, indeed, on their employees, he said, those “sidetracks,” he would’ve called them, were tantamount to socialism. So, for Milton Friedman, that was fighting words, right? That means that’s awful stuff. You don’t want that.

But that narrative—that the businesses have to slavish, events a slavish devotion to maximizing profits—you can see everywhere in the large corporate world, they are unbelievably efficient in the sense of keeping costs down. They keep labor costs down. They keep labor from organizing. They keep labor from having a voice, and the result is massive profits today. The corporate sector is earning record-breaking profits, even as many of their workers are struggling to make ends meet. And the last narrative is, what’s the role of the government in all of this? And there people conflate these false notions about how the economy works.

They often say, “Well, the government has to stay out of the way of free markets.” All the markets are supported by the government in a host of ways. Most of them have been designed specifically to provide gains to some and losses to others. There are no free markets. So, when people say that, what they’re really saying is not that we keep the purity of free markets alive. It’s that they like the particular way in which the government has intervened in markets the way it is right now, because it’s helping them. And they don’t want that to change.

Leon T. Andrews, Jr.:

Well, that is powerful and so much to unpack there. Part of what you are naming and you talk about in your book, as well, is the narrative, the narrative change that needs to happen because these are the myths that have been named. How do you sit with the intentionality behind it, or the unintentionality behind these myths, and the work that it takes to disrupt or transform the narrative that’s tied to these myths?

Jeff Fuhrer:

Well, I’m glad you mentioned the intentional and the unintentional, because there are both of those operating when it comes to how the myth works in our economy. I don’t blame the average person in the U.S. for holding to these sorts of myths because they’re somewhat aspirational and they go way back into the founding of our country. The notion that we really are free and that there’s opportunity. And if you work hard, you’re always … I understand why people want to believe that. The folks I blame are the folks who know completely well, that is not the way the economy works. In fact, they keep structuring the economy so that it doesn’t work that way.

Why did they do that? By and large, it’s because doing so allows them to retain political and economic power. But we have changed narratives, I think is the good news. While it’s not easy, we have changed narratives in this country over time and for the better in some cases. In particular, I think the narrative that I used to hold and that most people used to hold about the LGBTQ community back in the 1960s and ’70s was unbelievably bad. I would say first part, public activism, protests, drawing attention to the unequal rights, the discrimination, the physical violence, that was done against people of that community.

And then, as people came out, it was the power of the existing relationships we had with folks in the LGBT community who were, we found out—we didn’t know in many cases—we found out that they were our friends, family, neighbors, relatives, coworkers, people we already cared about, we loved. So, that’s hopeful. It suggests that at least, in part, changing narratives comes through a relationship. That has certainly happened to me.

Leon T. Andrews, Jr.:

Yeah. Thank you for that. In our conversation, we are making the distinctions between the intentional and the unintentional as we talk about the myths, as we talk about the work. And, so, one of the points in your book is the income inequality, the differences between high and low incomes, is that you mentioned isn’t the only problem we need to talk about. And, so, love for you to share, as you were sharing the need for us to address actual low incomes, and what you describe as the absolute sides of incomes.

Jeff Fuhrer:

Yeah, absolutely. Again, this is not to suggest in any way that income inequality is not a problem. Of course it is. But the point I made is that even if I couldn’t make much progress in equalizing incomes, lowering some of the highest incomes, I would still be worried about the absolute low level of so many incomes. And what I mean by that is we often cite the poverty rate as the benchmark of how well we’re doing as a country and an economy. And the point is the poverty level is so low that it’s not a really helpful benchmark in the end. So, the poverty level nationwide for a family of four, two adults and two children, is $30,750. In what place in the country can a family of four survive on $30,750? The answer is nowhere.

The way I arrived at that is I looked at the cost of providing for basic necessities by county, for every county in the United States, by family size. Obviously, it’s more expensive to provide for a larger than a smaller family. And I matched up individual family incomes plus all of the aid they get from state and federal aid, whatever they have for resources available to them. And then compare that to the cost of living in the county in which they reside. It turns out that north of one-third of all families in the United States are falling short in terms of really being able to provide for basic necessities.

The poverty rate is around 11 or 12%, so really three times that many people are in economic dire straits. And again, basic necessities. I mean food, housing, clothing, no vacations, no frills, no fancy cars, no nothing, none of that. That cannot be right. We absolutely can do better than that.

Leon T. Andrews, Jr.:

Yeah. And you talked about wealth and wealth distribution. Can you speak more broadly about how you think about wealth distribution in this country?

Jeff Fuhrer:

So, the disparities between the highest wealth holders and the lowest wealth holders are enormous. Roughly half the people in the economy have very little net worth at all. So, that’s a basic disparity. And then, I think, by now, people are beginning to hear over and over again, as they should, the disparity between the median net worth for a family that is headed by a white person versus a Black or brown family, the ratio is something like six or seven to one. So, over $250,000 median net worth for a white family, one-sixth or one-seventh of that for the median Black and Hispanic family. Wealth is about opportunity to provide basic economic security. People need some savings set aside because things happen. They need to be able to buffer against disruptions to income and to expenditures. But it’s also opportunity to pursue education, to secure retirement, to get housing, to start a company.

And those things are all ways to build wealth. The opportunities are just not there. Now, when I talk about reparations, which is addressing that slavery-based and, more generally, race discrimination-based discrepancy in wealth, when I talk about addressing that, repairing it, improving the balance, people say to me, “How could you endorse a government policy that targets a subset of our population to build their wealth?” And my answer is, we already did that. We did that for not all, but many, white families in the 1930s, ’40s, ’50s, ’60s, and up till today. The New Deal. Not only that, a bunch of other policies were constructed to build wealth for white families. And they were very successful for many, but not all, white families at the—in some cases, explicit, in other cases, implicit—exclusion of everyone else.

We have a national reckoning to go through to understand, make sure everyone understands that we did that. We did that on purpose, and we have the choice today about trying to provide the same opportunity for wealth accumulation to everyone who lives in the economy, not just the fortunate white folks of the ’30s, ’40s, ’50s, ’60s, and so on.

Leon T. Andrews, Jr.:

Can you share for our audience where you’ve seen promising action of actually what transforming a system could look like?

Jeff Fuhrer:

So, I think to date, we have not had large efforts at the national level to really transform our system. I hope those are to come, maybe in part spurred by the successes that we’ve seen in some communities that take this seriously. So, one community that I’m familiar with that has experienced a number of successes over the last 15 years or so is Lawrence, Massachusetts, which now a community that’s predominantly people of color. They’re just chronically having trouble with low incomes, higher than average rates of incarceration, all sorts of bad economic and social indicators.

The Fed was involved in helping them, but we were far from the only group to make this happen. Helping them build a collaborative, collaborative across the nonprofit sector, government, the local government, state government, the private sector. That collaborative agreed that they needed to work together to address a sequence of issues, recognizing that each one of those issues was multifaceted and crossed the domain of any one of those institutions. There’s no such thing as just a housing problem. It’s a housing and an employment and a healthcare and an education problem. So, the success there is great.

The collaboration, the community engagement are two key pieces of the road to success. And, in the end, some of these changes, some of the systemic changes we want are have to be pursued at the state and the national level because of the nature of the policies involved and the magnitude of the problems. For example, national provision of early childhood education, high quality for every family in the U.S. People will see the success with states and communities that have pursued those sorts of policies locally and learn from them and figure out how to do it well nationally.

Leon T. Andrews, Jr.:

What are the things that make you feel we can still get there? As you realize that the system is designed to do what it’s doing, and there’s a lot of efforts to try to figure out how to take it on, it can feel overwhelming. And, so, I’m curious, what are the things that you hold onto that give you that hope?

Jeff Fuhrer:

There are a number of things that give me hope. One is that I don’t believe that the American people want the outcomes we have today. And I think if they understood where they came from and how so many are being harmed by our current system, I think we could get the vast majority of the American people behind a movement to make the changes necessary. They would see the values in the second source of my hope, which is that most all of these measures that I propose are about improving economic and human potential for the economy. There’s some redistribution and some may be required to get there. But in the long run, this is about bringing everyone to their full economic potential, which is too far from the case today.

That’s something everyone should get behind, because not only will it benefit the folks who have fallen behind because of the design of the system. It’ll benefit everybody. Because in the end, it’ll make the whole economy larger, more supply, more demand, more for everybody to share in so that economic potential is hopeful. Because if people understand that it’s not a zero-sum game, that it’s an economic-potential-building game, then why not do it? The subset of that, that also gives me hope is that those investments not only are improving potential, they’re improving it dramatically.

So, the investments in early childhood education, for every dollar you spend, you get six to seven or $8 back in the long run in terms of better wages. You know this, of course. Better wages, better healthcare outcomes, less involvement in criminal justice, all of these things. How could you not make that investment?

I think in the end, while I’m trained as an economist, part of the message of this book and the reason I’m hopeful, that this is about our vision of what humanity looks like in the United States. Is it a small, narrow, mean, fearful, hate-fueled humanity? Or is it one that’s embracing, inclusive, caring for each and every one of our folks, providing everybody opportunity? That’s the kind of humanity I want to live in in the U.S.

Leon T. Andrews, Jr.:

Yeah, love that. We can do better. Thank you for joining us today, Jeff. Really enjoyed our conversation.

I’d like to leave you with a quote inspired by my conversation with Jeff. It’s from Angela Davis: “In a racist society, it is not enough to be non-racist. We must be anti-racist.”

Thanks for listening. Be sure to rate, comment, and subscribe to The Measure Podcast. You can learn more about Equal Measure by visiting our website, equalmeasure.org. Until next time.