Black Livelihoods Matter: Access to Credit as a Civil Right and Striving for a More Perfect Capitalism through Inclusive Economics

Abstract

Following the murder of an un-armed African-American male by a police officer, the nation erupted in protest rallying to the call of Black Lives Matter, and shined a light on the systemic racism engendered in American society. While this dialogue often focuses on the political rights of African-Americans, one of the best illustrations of racial disparity can be found in the stark difference in access to credit. In the past century, capitalism has been blamed for countless ills in the United States. From the Great Depression, to the Great Recession, to the ever-growing disparity of income, the scapegoat has been capitalism--a reasonable reaction to today’s economy that is so unfettered it resembles a multi-national financial oligarchy. But a more careful analysis of today’s growing inequality reveals a different conclusion—that the disparity of income between the Anglo-Saxon majority and the historically disenfranchised is a result of discrimination by race, rather than any inherent feature of capitalism. Rather, a more perfect capitalism would mean greater access to capital for all, based on merit, and not race. Thus, a nation with as diverse a population as the U.S. would thrive with a more diverse set of financial products than what is readily available today. Currently, most lending mechanisms are sized to maximize the greatest opportunity per single transaction, using criterion that is ineffective at gauging risk, and instead, primarily serves the wealthy and historically privileged, regardless of their likelihood to repay. More effective and more inclusive financial products would help the historically disenfranchised to acclimate to the code and culture buried in the mysteries of credit underwriting. Such tools, if effectively and efficiently deployed, would remove barriers to access and result in a smaller disparity in income, and thus, serve to equalize political power. The concept of access to capital as a civil right has roots in several activist thinkers throughout history including civil rights leaders Mahatma Gandhi and Martin Luther King, Jr. Concrete solutions have manifested themselves in market-based pilot projects experimented with through a variety of mechanisms, during the New Deal, and even more recently via the Americans Recovery and Rehabilitation Act of 2008 and 2009, and afterwards. Some of these solutions include financial literacy programming, fintech tools, and more inclusive underwriting implementation to name a few, and are discussed as part of an overarching strategy towards achieving an inclusive economic capitalist system.

Keywords: economic inequality, racial discrimination, financial discrimination, credit, finance