Chloe Thurston’s chapter in the recently published The American Political Economy: Politics, Markets, and Power looks at how the U.S. government’s delegation of social policy goals to the markets enables and reinforces racial inequalities.
In most advanced economies, social polices include an array of programs related to education, healthcare, unemployment insurance, retirement, housing, family and sick leave, and child care. Yet to a far greater extent than other OECD countries, the United States relies on markets and private actors to carry out these programs — and this both continues and contributes to racial inequalities, Chloe Thurston, professor of political science at Northwestern University, argues in a chapter of the recently published The American Political Economy: Politics, Markets, and Power (Cambridge University Press). The book was coedited by Stone Center Affiliated Scholar Alexander Hertel-Fernandez, Jacob S. Hacker, Paul Pierson, and Kathleen Thelen.
Thurston’s chapter examines the complex role that public-private social policies play across a wide range of issues in the political economy of racial inequality in the United States. By reinforcing and exacerbating existing racial inequalities, these policy arrangements also impact the politics surrounding inequality. “While public-private social policies serve welfare functions, helping to protect against risk, meet basic needs, or provide access to key opportunities, they can also stratify populations,” she writes. “These sources of stratification interact with America’s racial divides to shape both material racial inequality and the politics of responding to it.”
Her analysis first provides an overview of the extent to which, on an individual level, the benefits of many public-private social policies depend on whether and where that individual works, where they live, and how much wealth they own. All of these factors, in turn, are characterized by high levels of racial inequality. “The ability of citizens to enjoy employer-provided benefits, for example, is tied to whether their employer offers such benefits in the first place,” Thurston writes. Another example: the effective value of tax deductions “can rise as household incomes rise into higher tax brackets, as well as with the amount households spend on a tax-advantaged goods” such as housing and retirement investments. Rather than benefitting people with comparatively lower incomes, wealth, and employment status, many public-private social policies are upwardly distributive measures that increase inequality.
Thurston identifies four underlying reasons that these policies can reinforce and amplify racial inequalities. First, the delegation of responsibility to third parties — banks and insurers, employers, real estate agents — creates multiple opportunities for discrimination that are often difficult to monitor and regulate. Second, these policies can interact with existing inequalities in ways that amplify them, such as in the example of employer-provided benefits, which are “conditioned on access to a labor market marked by racial (and gender) disparities in occupations, hiring, wages, and working conditions.” That is, racial discrimination in the labor market results not only in barriers to jobs with higher earnings for workers of color relative to white workers but also in less access to the benefits that are often associated with those jobs.
Third, and similarly, these policies can interact with existing residential segregation in ways large and small, such as the prices households pay for auto insurance, which are greater in majority-minority neighborhoods than in otherwise similar white neighborhoods. (Read about how residential zoning laws have locked in racial and class segregation at the local level in this spotlight on research by Jessica Trounstine.) Finally, and perhaps most well known, wealth plays a significant role in the ways that households can benefit from these policies; inherited wealth, for example, enables households to buy property in areas more likely to generate higher returns on investment and to provide access to better educational opportunities, to rely less on or even avoid debt for housing and student loans, and to allocate more of their income in retirement accounts with tax advantages.
Turning to the politics needed to reverse these dynamics, Thurston argues that the very nature of the design of public-private social policies insulates them from reform. The indirect distributional mechanisms of these policies, their low visibility in the public sphere, their interconnected nature, and the outsized power of private actors together make it difficult for individuals to fight these policy arrangements or even to become aware of them. While there have been significant anti-discrimination reforms in the past, as well as more recent proposals such as a system of baby bonds, the overall trend toward deregulation has made these public-private policies even harder to oppose. And although there is widespread dissatisfaction with many social policies, particularly those related to medical costs, retirement savings, housing affordability, and access to higher education, white voters may perceive deep flaws in the public-private system of social provision identified by communities of color as outside of their concern.
The end result is a continuation of public-private social policies that promote both racial and class inequalities. “The United States’ reliance on public-private social policy arrangements to secure goals that might otherwise be designated to more direct forms of taxation and transfer — from protecting against risks to promoting opportunity — contributes to longstanding patterns of material racial inequality,” she concludes. “But racial inequality is not just an outcome of American politics. It feeds back into politics by shaping the terrain on which profits are made (and defended) and policies are contested. This makes grappling with the role of race central to understanding the American political economy.”
Read More:
The American Political Economy: Politics, Markets, and Power, coedited by Jacob S. Hacker, Alexander Hertel-Fernandez, Paul Pierson, and Kathleen Thelen
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