This discussion, titled “Money Left on the Table,” addressed the economic argument for diversity and discussed two central questions: Does this argument even make sense? And why hasn't everyone already won? Key leaders from various organizational vantage points weighed in and provided insight on how they witness and address resistance to antiracist change.
In this special episode of Untying Knots, hosts Erica Licht and Nikhil Raghuveera share a discussion from the 2021 Truth and Transformation Conference, hosted by the Institutional Antiracism and Accountability Project on October 14-15th 2021. The conference brought together a range of scholars, organizers, students, and organizational leaders to address whether organizations have lived up to the statements, commitments, and promises they made to racial equity a year before.
This panel, titled “Money Left on the Table,” addressed the economic argument for diversity and discussed two central questions: Does this argument even make sense? And why hasn't everyone already won? Key leaders from various organizational vantage points weighed in and provided insight on how they witness and address resistance to antiracist change.
Featuring experts:
You can find Untying Knots episodes, including more discussions from the 2021 Truth and Transformation conference, wherever you get your podcasts, and, on the Institutional Antiracism and Accountability Project website: https://ash.harvard.edu/iara
Notes:
Untying Knots, co-hosted by Nikhil Raghuveera and Erica Licht, explores how people and organizations are untying knots of systemic oppression and working towards a more equitable future. Each episode features special guests and a focus on thematic areas across society.
This podcast is published by the Institutional Antiracism and Accountability Project and the Harvard Kennedy School’s Ash Center in collaboration with the Atlantic Council GeoTech Center.
Music:
Beauty Flow by Kevin MacLeod
Link: https://incompetech.filmmusic.io/song/5025-beauty-flow
License: http://creativecommons.org/licenses/by/4.0/
About the Institutional Antiracism and Accountability Project
The Institutional Antiracism and Accountability Project believes in working at the intersection of community, academia, and policy to address intellectual and practical questions as they relate to antiracism policy, practice, and institutional change. In order to create and sustain change, the goal of this project is to promote antiracism as a core value for organizations by critically evaluating structures and policies within institutions. The project aims to analytically examine the current field of antiracism with a lens on research and innovation, policy, dialogue, and community involvement.
Our vision is to be a leader in institutional antiracism research, policy, and advocacy, and propose structural change in institutions and media centered on antiracism work in the public, private, non-profit sectors and digital space. This work will focus on researching existing organizations that conduct antiracism training and development while analyzing their effectiveness and promoting best practices in the field. Additionally, we will study the implementation of antiracism work among institutions that self-identify as antiracist and promote accountability structures in order for them to achieve their goals.
About the Ash Center
The Ash Center is a research center and think tank at Harvard Kennedy School focused on democracy, government innovation, and Asia public policy. AshCast, the Center's podcast series, is a collection of conversations, including events and Q&As with experts, from around the Center on pressing issues, forward-looking solutions, and more.
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Michael McAfee:
Why is my humanity predicated on making the case in the first place? Sometimes I think we have to trouble the question in the lines of inquiry that we go down because the mere fact that I got to do that means we've centered whiteness over my humanity.
Nikhil Raghuveera:
Welcome back to Untying Knots. We have another special episode coming to you with one of the panels from our recent truth and transformation convening.
Erica Licht:
And Nikhil, honestly, all of the conversations blew me away that day. And this one in particular, it provides a really strong analysis of how the economic argument for racial justice functions to both perpetuate harmful notions of anti-blackness and distract from building actual systems of economic justice.
Nikhil Raghuveera:
100% agreed, Erica. The panel titled Money Left on the Table, the economic argument for diversity, kicked off the first morning of IARA's convening held on October 15th. And this brought together scholars, organizers, students, organizational leaders, and many more. And the whole day addressed the question head on, have organizations lived up to a year of promises to advance racial equity?
Erica Licht:
And for this panel, does the economic argument for diversity even make sense? Why hasn't everyone already won? You'll hear me, Erica, kick off the panel with introductions of the moderator and the panelists. And as a reminder, all views expressed are their own. Thanks for listening.
Erica Licht:
So this first panel, Money Left on the Table, the economic argument for diversity will really dig in and start tackling the questions. We are joined by moderator, Levi Sumagaysay, reporter at MarketWatch, and panelists, Jarik Conrad, executive director at Equity at Work. Also joined by Dana Peterson, chief economist at The Conference Board, Lisa Cook, professor of economics at Michigan State University, and Michael McAfee, president and CEO at PolicyLink. We encourage you all to read more about their bios through the [HUVA 00:02:30] platform and our conference pages. And without further ado and a few minutes early, which is a great start, I will hand the mic over to Levi. Thank you so much.
Levi Sumagaysay:
Good morning. Good morning, everyone. It's great to be here, moderating this very distinguished panel. I wanted to go ahead and get right into it. You know, last fall city published a study that showed $16 trillion has been erased from the US GDP in the past two decades because of discrimination, that's business revenue and jobs. Talk about money being left on the table. The study also found that if the racial divide were addressed today, we could add $5 trillion to the economy over the next five years. Lisa, I was wondering in light of that, can you talk about the idea that a rising tide lifts all boats?
Lisa Cook:
Absolutely. Thank you all so much for the invitation to join these distinguished panelists and to address this urgent question. I work on the economics of innovation, work on patents. And what I see is if we were to invest in innovation and separately infrastructure and the two are connected, but if we invested in those two, those could lift all boats. Okay. So how would innovation lift all boats? If we included as many people as possible, if we address the racial and gender disparities and the innovation process from beginning to end, from education and training, to practice as inventors, to commercialization, we would increase the productive capacity of the United States. And we would also lift the boats of everyone by raising living standards.
Lisa Cook:
Now I'm not naïve. Of course, policy makers have to pay attention to distribution and to equity, but if you're increasing the productive capacity of the United States, you're ostensibly doing it for everybody else. And what do I mean by paying attention to distribution? I mean, for example, making sure that everyone can participate, whether we're talking about women or African-Americans, workplace climate is a big issue. This is why Google workers organized recently. And this is also why a Tesla worker won $137 million settlement because of these workplace issues. They are not trivial.
Lisa Cook:
So I would say that we really have to address these racial and gender disparities. And with respect to infrastructure, you have heard the case. I mean, I've been talking about infrastructure probably for 20 or 30 years as an economist. And the Biden administration has made that argument. This is one of the most equitable ways to increase long run growth and to lift all boats. Fixing bridges and roads so that people can get to work. Making broadband fairly universal so that everybody can work from home or work from school, do everything that they need to do wherever they are.
Lisa Cook:
So I think there are many investments and childcare I think is critical for both of those types of investment, whether we're talking about innovation so that more women can participate in the innovation process, or we're talking about as a fundamental part of an infrastructure package, I think childcare has to be taken very seriously. [inaudible 00:06:17] to work and there aren't going to be equitable jobs if we don't do that.
Levi Sumagaysay:
Michael, can you talk a little bit more about other economic arguments for diversity and racial equity?
Michael McAfee:
I think Lisa laid them out quite effectively. You know, one thing that I think it's important to think about when you listen to what Lisa shared with us is, why is my humanity predicated on making the case in the first place? You know, sometimes I think we have to trouble the question in the lines of inquiry that we go down because the mere fact that I got to do that means we've centered whiteness over my humanity. And sometimes you can get so fancy that you think if you can just make the case, that that's actually going to trump the anti-black racism that is running through the DNA of this nation. It won't. The case has been made. Lisa just made it. I mean, people have been making it for years.
Michael McAfee:
And the reason why you can use a number like trillions of dollars being added to our GDP and that it would lift all boats and it still doesn't connect with people, is because my humanity isn't fundamentally placed on the same level as whiteness is. And we really should stop and think about that. Because as we think about this moment to be inclusive, all leaders have to really stop and ask themselves, what is it about the nature of our individual being that makes it so hard for us to resist? What makes it just so hard to see people's humanity? Because if you can't answer that question, quite frankly, economic arguments mean nothing to you. They mean nothing to you.
Michael McAfee:
And the national equity Atlas, as an additional resource to what Lisa said, is a powerful example, but it corroborates what she said. We know that we're leaving at least $2 trillion every year on the table because of the racial disparities that are out there. And we have many examples of when you design for the most vulnerable, it has cascading benefits to others. You know, Angela Glover Blackwell PolicyLink, coined a phrase, the curb cut effect. Those little cutouts in the sidewalks that we use every day weren't designed for me, but I benefit from them. UPS and FedEx drivers benefit from them everyday.
Michael McAfee:
There are a host of examples, when you design for those who are being left behind, it benefits us all. And in addition to what Lisa's saying, when I'm asking us to begin to think about centering in these conversations, is why should my value, a case for it have to be made in the first place? I don't operate that way at PolicyLink. People don't have to make a case to be a policy link. That's my job to see them. And if I can see them, I shouldn't be in this role as president and CEO.
Michael McAfee:
And some of this, what you hear me describing, and this is the last thing I'll say is, leaders should be held account for whether they want to do the job that the nation needs them to do, that their organizations need them to do or not. And to not allow folks to participate in work avoidance by romanticizing economic impacts that they actually have no desire to actually bring about. This is the work for our generation, to usher in the innovation and prosperity that Lisa described. But we're not going to get there and we need to be real serious about this, you can't get there when you don't recognize by just the mere line of inquiry. You've just told me that my value is insufficient to whiteness.
Levi Sumagaysay:
Thank you for that. Along that same line, Jarik, I wanted to ask you, do moral considerations matter to why companies should be anti-racist?
Jarik Conrad:
I think they have to. I mean, just piggybacking on what Michael said, when you talk about, hire us because you can make more money, that reduces us to something very transactional. You know, it kind of makes us widgets instead of human beings. And so I think there are a number of ways that we've got to approach this moral question. Number one is, what we're living in is a kind of alternate reality. It was a created reality. Like we would already be there if it wasn't for those policies and practices that [Kalil 00:10:56] spoke about before. So you're not giving us anything. What you're doing is righting the ship, the way the ship would've been otherwise.
Jarik Conrad:
So we have to think about the moral piece, because as both of the panelists just mentioned, the economics really won't matter. Facts don't drive behavior. Emotions drive behavior. We don't see what's in front of us. We see what we want to see. We see what we need to see, what makes us feel good, what we expect to see. And so for me, we've got to really start to understand a little bit more about neuroscience and psychology, how human beings process information, how we fall into specific logic traps, based on how we are wired, how tribalism still affects us. You know, all these are more qualitative things, rather than you hear the economics of it.
Jarik Conrad:
The other thing too, is that it's dangerous because we have all kinds of examples in life where doing the right thing is better for us in a long term, we still don't do it. Most of us know, I'm going to sneak this in because I'm 100% plant based, most of us know the eating red meat potentially causes some chronic health issues, but people still eat steak and hamburgers every day, because that's something that's down the road. It's not necessarily a guarantee. You know, some of that data is squishy for people. So some of the data that we use that we think, well, once they hear this, they're going to operate differently, just unrealistic.
Jarik Conrad:
I mean, just historically you think about just famous examples. I'm a baseball fan. Think about Jackie Robinson and think about the Negro leagues and all the talent that was there. But they didn't want him in the major leagues. When Jackie Robinson came over, he's the best player on the field but even his teammates didn't necessarily want to play with him, even though he was going to win them games.
Jarik Conrad:
And so we can't think about the what the quantitative outcome or what the numbers might be in terms of profit. We have to tap into people's emotion. And unfortunately is hard to do that unless they have a personal connection. You know, people don't necessarily become more open about LGBTQ plus for instance, until they have a son or daughter who comes out. You don't necessarily have somebody black in your family and so it's difficult to have those connections.
Levi Sumagaysay:
I hear you, but I wanted to bring Dana into this whole conversation about what Jarik and Michael just said. But Dana, what are the other pitfalls of making economic arguments for ESG in business?
Dana Peterson:
Sure. So I'll admit I was the person who wrote that report. So let me give a little background for why I wrote it the way that I wrote it, with some other colleagues, but I was the main author. I was sitting at an investment bank that I had been working for, for 18 years, and our audience we're institutional investors, people who are very analytical, who think about money all day, how to make it, how to preserve it, how to grow it. And so for these folks, and also this report was different from anything I'd ever done, because everything else was to speak to economic data, right? Financial markets. And so this was very different.
Dana Peterson:
And I think just as important as conveying the moral aspects of a theme or a topic or an issue, is speaking it in a language that people understand. And so I was trying to speak to our clients who are institutional investors who understand concepts like GDP growth, leaving money on the table, right? And the interesting thing is that I think that reports, as well as a number of other reports done by McKinsey and others, last year and even before we wrote our report, was that the financial services business woke up and they're like, "Oh gee, you know what? The wealth gap, a lot of that's our fault. You know, we're the ones who have been denying people access to credit, denying people access to mortgages, overcharging people for having accounts. You know, we're playing a definitive role in this. We're not responsible for all of it, but certainly we played a role and indeed ensures, wow, we played a role over century ago in redlining communities and denying entire groups of people access to housing that generates intergenerational wealth."
Dana Peterson:
And I think it was this collective realization that prompted them to commit $50 billion. Now what they do with that $50 billion is super important. And what I've read is that a lot of its loans, but that's a start. Whereas before, you couldn't even get a loan. And one shocking thing that we discovered in the report was out of that accounting of 16 trillion, 13 trillion of it was due to businesses that were not able to stay open or even start up because they could not get loan or access to financing. Along every step of the path towards financing, it was the most likely that black entrepreneurs would say, "I did not get what I asked for."
Dana Peterson:
And if you think about it, entrepreneurs, these are not ignorant people. These are brilliant people who are usually already successful in something else, right? I think about friends who work on Wall Street and start up their own hedge funds and their own venture capitalism firms. You know, and the thing is that these are people who are already successful and they go to a venture capitalist and they're denied because the venture capitalist doesn't know them. And when we look at the venture capitalist space and the angel investing space, it's very monochromatic, right? And it's because they don't trust and they don't know, right? And so that was really shocking.
Dana Peterson:
And when you also think about the 6 million jobs that aren't created, because these black entrepreneurs were denied access to financing along every point in the spectrum, that 6 million a year, that's incredible. Right now we have 5 million people who are not working, right? And potentially if we gave black entrepreneurs the ability to finance their businesses, because all businesses need lines of credit and financing, that we could solve the unemployment problem right away.
Dana Peterson:
So the aim of the report was really to speak to those people who have the power to do something about access to money, right? Given the fact that, yes, this is hundreds of years in the making, and our economy in the US was built upon slavery and indentured servitude. And that after World War II, you had policies put in place that denied again, entire groups of people access to the GI bill, access to the ability to buy homes in the suburbs. I just think about my grandparents who lived in the Fort Green projects in Brooklyn. Now Fort Green is all cool, right? Everybody wants to live there. But when my mother was growing up there, it wasn't necessarily.
Dana Peterson:
But the interesting thing is that when they first moved there, and my grandfather was a World War II veteran, you had all different race groups living there. But then little by little, all the people that were left were the black people because they were denied access to loans to purchase homes. And so I think that the report itself talks a lot about action. What can individuals do? What can businesses do, governments and nonprofits? But it also focuses on the history, which is something a lot of people just did not know, and did not realize that they were either the beneficiaries of policies and practices that were put in place long ago and are still perpetuated, as my colleagues have mentioned.
Dana Peterson:
So again, I think the morality is so important, but also being able to speak to people in the language that they understand and on Wall Street, that language is money. So I think it served a purpose and that it was useful in speaking to a very powerful constituent.
Levi Sumagaysay:
I wanted to turn to, so studies like the one that you wrote, Dana, and other studies that show that diversity is good business. Lisa, in my experience covering DEI issues at companies, there continue to be skeptics of such studies that show that diversity is good business and advantageous for companies. Is it important to convert the skeptics, and how do you do that if they don't believe all these studies and data points?
Lisa Cook:
So I think I'll answer your question with a story. I work on patents and a lot of the work that I have done just fell off the page, right? So I just noticed, for example, that men and women patented at different rates, that African-Americans, women, and all patentees patented at different rates. And one of the things I certainly found from the very beginning is that co-ed patent teams, that mixed gender patent teams were more productive than single sex male or single sex female teams. And because I go to Silicon Valley once a year, or at that time, I was going once a year to conduct interviews related to my research, I was being asked by companies, by HR departments to come make the case to their CEOs. And some of these are the leading tech companies that you all know, to come and make the case because they couldn't do it by themselves. They couldn't show their CEOs, the data related to diversity in and of itself.
Lisa Cook:
And as the others on the panel have stated, make the moral case. They were making the moral case, in these studies, I suppose. And they said, what they're going to listen to is that we're leaving a lot of money on the table because these patents aren't happening. If mixed gender teams are more productive, and I think it's not just mixed gender teams that are more productive. This is consistent with the other studies, those studies that they were probably being asked to cast aside, but we have a lot of literature since then. This is in the mid 2000s, early 2010s when I was doing this research.
Lisa Cook:
So a lot has happened since then. There's a lot more empirical evidence that suggests that those who are on diverse teams get to problem solving much faster and engage in problem solving much easier and get to answers much easier and faster. So I think that this just bolstered their case, but I think it has to be, like Dana was saying, you have to speak the language of the people to whom you are asking these changes to be made. And their CEOs, they're the ones who were asking me to come talk to their CEOs because their CEOs talked in terms of value to the firm. And not being good stewards, the HR departments were making the case, not being good stewards of the resources of their firms, because they weren't taking advantage of all the talent they had at their firms. So I would offer that as an example, to answer your question.
Michael McAfee:
Levi, may I add something to what Lisa just said? What Lisa and Dana are raising is really important. It's not an either or whether it's an economic case or a moral case. It's all of them. What you really see us struggling with is, our work is actually being held hostage to having to take 20 and 30 and 40 and 50 years to make a case. That's what's frustrating to people of color when you get into this DEI work, because we're not really centering the fundamental work of this nation, which is liberatory. I mean, think about it right now. We're still making cases for DEI in so many of instances and our counterparts are designing a world to make it look like South Africa. You know, you're denying I right to vote right now. That is structurally being done. Redlining is still happening in this nation, structurally being done.
Michael McAfee:
We can't get to the design of an equitable and just nation because we can't get the case landed. And all the while we're making the case, harm is still being done to us. This is why people have so much energy around DEI when you bring it into your organization. Think about it, you want me to sit still while you make it illegal for me to give my mother a glass of water, because you make her stand in line for eight hours to vote. And so the frustration is that leaders like Dana and Lisa and Jarik have been making these cases for years and years and years. And yet people have the audacity to ask us about results. The results are held hostage right now because we can't get to the liberatory work that would lift that 100 million plus who are economically insecure in America into the middle class and beyond.
Michael McAfee:
And so that's the tension that you're hearing, is how do we ever get a chance to get into the real results based work of designing a democracy and an economy that actually works for the folks that it's never worked for? And we can't actually do that when we are constantly stuck in this cycle of having to make a case. It's totally important, but we can't seem to give beyond it in critical mass enough. Now having said that, I've also never been in a time where you do now have all three sectors who have come to racial equity in a profound way. So maybe this is our moment right now, but I simply wanted to share that because that is what we're ultimately struggling with as people of color is when can we get to the design of the nation to make it work for everyone?
Jarik Conrad:
Levi, can I comment on that as well?
Levi Sumagaysay:
Absolutely.
Jarik Conrad:
I think part of the tension you hear too is, I think Michael and I are talking about what should be. And I think Dana and Lisa are talking about what is in many cases. So we should not have to make the business case, but the reality is they don't listen until they hear dollar signs. The other thing that I think we need to think about, is not a one size fits all. And when you go into an organization, what resonates at the C-suite level is not the same argument that resonates on the shop floor. And that's part of the challenge. You can make a compelling business case that the C-suite and investors buy into, but you've got to deal with that manager on the shop floor who doesn't have stock options, who is working and making paycheck to paycheck. And it's that person that's either macro-aggressions or microaggressions, they're demonstrating on a day-to-day basis and making life very difficult.
Jarik Conrad:
So the business case is not going to be the only case that resonates throughout the organization. You know, I spent 20 years in HR and I learned that I got to have different rationale for different groups within the organization. For some people, it's a career case. So for some people, if I have young people coming into my organization who want to be in the C-suite one day, I can make a compelling career case for them that to understand diversity, equity and inclusion, that cluster of skills is going to be essential for your career as demographics shift. So if you plan to be a leader here long term, you need to demonstrate that you can connect with people from different backgrounds, because those are people that you're going to be interacting with and leading more and more. So I can make a case that's a little bit different from the business case, a little bit different from the moral case. What's in it for you?
Jarik Conrad:
So I think we need to develop different strategies, different mechanisms for trying to reach people where they are. You asked a question about the skeptics. Again, I think there are at least two categories of skeptics. There are skeptics who just, "I grew up in an environment where I just was around anybody different from me. So I just don't know." But then there are willful skeptics, people who are willfully ignorant that we keep making excuses for. If they say, "I don't know," and we present them with all the facts and then they go somewhere right after that conversation and say, "I don't know," we got to stop making excuses for them.
Levi Sumagaysay:
You know, that's actually a good segue into what I wanted to ask you next, Jarik, was most companies now have DEI initiatives. They report on their workforce demographics, other things like that. Yet, at least at the tech companies that I've been watching pretty closely over the years, retaining a diverse workforce has been a challenge. Considering your experience in HR, et cetera, what should companies be doing on this front?
Jarik Conrad:
Yeah, yeah, you're right. It's a challenge, and it is increasingly a challenge during this great resignation where people have been at home and they don't have to go to work and deal with all the things they've had to deal with. There's no coincidence why people of color are least likely to want to go back to work in the office. So I think first we got to start with our shared humanity. You know, we're human beings. We want what everybody else wants at work. We want a sense of purpose. We want good comp and benefits. We want to be engaged. We want a career path, all the things that anybody else would want, we want.
Jarik Conrad:
But what companies have got to realize is the added pressures, the added burdens, the added stressors that we have being in an underrepresented population, how those stressors affect our psychology, our physiology. Just the deep nature of some people having to code switch to go into this environment that is still in some ways foreign to me, even though I've had to navigate it most of my life. And so we've got to understand, we're not some different, unusual breed of human being. We want what all people want, but we have to deal with a whole set of challenges that others don't have to deal with, that make everything we do more difficult.
Jarik Conrad:
And so people oftentimes talk about, we have to do double, or we have to do more work. Just the mental energy and the mental exhaustion that it takes to cope in a world that you're constantly marginalized or treated as an outsider, is a measurable challenge for us. And it plays itself out in health results. We are likely to die at a younger age, likely to experience a whole host of chronic health conditions at a higher rate. You know, all this has to do with the stressors that we experience on a day-to-day basis.
Jarik Conrad:
So one thing that we could do is, if we have more of us in place in tech companies, like the one that I work at and the more comfortable, the less odd we can make it, the fewer rooms that we could be the only person in the room, all those things are going to matter long term.
Levi Sumagaysay:
Michael, I have a question for you. I've written about shareholder advocacy groups that warn that companies are woke washing, in the wake of what happened with George Floyd and the subsequent protests last year. How can companies be held accountable for the statements that they made last year? I say this, besides the pledges to say, "We are going to commit $100 million toward this cause or this other cause." What are other ways they can be held accountable?
Michael McAfee:
It's hard because they have the power. And this is one of those things that Jarik is describing when we say we have to cope in spite of. We recently did a report from intention to impact that showed, there was about $70 billion pledge for racial equity, depending on how you count for it. Low end, at least around $9 billion. Them being accountable for their pledges is really not the journey. It is really the journey that Dana and Lisa and Jarik are asking people to be on. Can we begin to transform on our institutions? Can we see each other's humanity, et cetera? I mean, people of color did not think all those pledges were going to be realized. If it is, it's great, but in many instances it's still charity. People of color are not asking for charity. We're asking for a redesign of the nation.
Michael McAfee:
And so with all due respect, the money is nice, but it's one-offs. What really is helpful is when you think about accountability, you start seeing things like Nasdaq starting to make some requirements around board leadership. You see things like that. PolicyLink is working with a group of folks like Just Capital and B Lab, to begin to actually create a north star racial equity standard for the nation, that would make it easy for folks to step into.
Michael McAfee:
And the frustrating thing about right now is folks have come to this work and our job is to create the path for them to understand how to step into it authentically. And I think accountability starts there. You know, the first line in our equity manifesto says it begins by joining. And while you hear a great deal of frustration in my voice, the real work is to join with corporate America and show them the way. That's why the reports and the analysis that my colleagues are talking about is important. And that's the journey we're on, but it does take a deep, psychological toll on folks who know that our communities are still being harmed. And so you could also use the racial equity tracker that Just Capital has just put out as another really good tool of accountability.
Michael McAfee:
The last thing I'll say here is this, real accountability starts when this work has metrics that are as rigorous as metrics for other functional areas within an enterprise. And until we get to that point, it's really hard to hold firms accountable. And so I think at a macro level, setting standards that are national standards that have been co-created with industry to allow us to have a north star, how to move into the work, that's work that's happening right now that I'm excited about. And then when you bring DEI in, having real rigorous metrics at every level of the value chain, I think is how we begin to hold each other accountable.
Levi Sumagaysay:
Lisa and Dana, wanted to direct a question to the both of you. In the panel to kick off this conference yesterday, Heather McGee of Color of Change talked about economics as it has been taught, sort of helping to justify in inequality. Can either one of you or both of you want to weigh in on that thought?
Lisa Cook:
I'll start if that's okay, Dana. I'm a member of the American Economic Association, executive committee, one of handful of African-Americans in the 100 plus years of the AEA, the American Economic Association. The founder of the association was a eugenicist, and we had our premier lecture named after him. And we had a small group on the executive committee, working with the executive committee, to change the name of the lecture to the AEA distinguished lecture, rather than the Eli lecture. And I thought it was a big deal. It may seem like a small gesture, but we've never done anything like it. And it has been in place for 50 plus years.
Lisa Cook:
Now, the reason why this is important, it's not just this lecture. He taught a generation of people, including Woodrow Wilson, and there is a recent paper that shows the damage done by Woodrow Wilson segregating the civil service. This had a huge impact on the country, huge historical impact on the country. So what I would argue is that these ideas are often embedded in economics. And if you are not aware, then they'll get perpetuated. So I remember this whole sort of anti-union bias in my training and well, unions do this, they only want to raise wages. I remember one of my professors saying this, and I thought, why wouldn't you want to raise their wages? And also they're providing this public good to all workers, right?
Lisa Cook:
So unions, aren't just negotiating for themselves. They're negotiating for all workers. Why? It seems efficient to me. So I was being taught at the same time, efficiency and wage bargaining through unions and economists at the time, didn't seem to want to marry the two, but I thought you don't want to go talk to everybody. You don't want to go negotiate with everybody. You have an organization then that will do it. So I never taught that unions were bad or they were doing bad things.
Lisa Cook:
So in principle, I just rejected some of the ways that that economics was taught and I reject ways that economics is taught. And certainly in our textbooks, we don't have people who look like me or look like us on this panel. So often I am making sure that on my syllabi, I have papers by economists of color, by African-American economists writing about issues that are relevant to African-Americans and everybody else. The paper that I wrote on violence and economic growth, certainly using African-American patentees between 1870 and 1940, but relevant now in the United States and relevant in Russia now, where I was doing my dissertation and this question actually arose, or in other places in the world where rule of law can actually impede economic growth.
Lisa Cook:
And this is where Michael and, is it Rick? Rick's work comes to the fore. This is all part of the same problem and solution, because I can't say you can think about rule of law on this side, and you can think about economic growth on this side. You can't separate the two. So you've got to do the deep work. You can't just ignore ... You can't say economists are becoming woke now. No, some of us have been doing this all along. That you've been paying attention lately is absolutely commendable. But some of us has have been doing it for quite some time, making sure that everybody understands the rules. And I am talking about economics. We are living in capitalist society. That's what I am teaching. Want to make sure that people understand the rules and where there might be any margin for changing those rules and making sure that those are applied equitably.
Dana Peterson:
I think right now, businesses have a golden opportunity, and that's prefaced on the Edelman Trust Barometer, where they essentially ask people all over the world, who do you trust the most? And it's not government, it's not NGOs, it's businesses. So I think businesses are at an inflection point where they can embrace all of what Milton Friedman was trying to say decades ago, businesses at the time just embraced the whole focus on the shareholder, right? But they ignored his comments about investing in social goods, which you can understand what are those social goods by listening to all your multiple stakeholders, your customers, your employees, right? Your supply chain providers, right? And also regulators and the public.
Dana Peterson:
And so I think that right now, this is a great opportunity for businesses to start thinking about listening to those other stakeholders, because they can help inform you on what's really important, right? Because if you don't, you are going to become beholden to shareholders who are activists and also governments who are going to regulate what you do. So you can get out ahead of this or not. Or you can wait to be punished by an activist shareholder or by rules that governments institute that you don't necessarily have much of a say over, right? And then you have to backtrack and lobby, trying to get some outcome that's beneficial to you.
Dana Peterson:
So I think that's really important. One way that economics kind of got it right, in one sense, where you do need to invest in social goods and the social good of society. Because if you think about it, going back to the report, if you marginalize entire groups and prevent opportunities for entire groups and you don't listen to them, you are missing out a lot and you are leaving tons of money on the table, right? And also, you're not benefiting.
Dana Peterson:
As Lisa mentioned, and also Michael mentioned, if you're not getting the most productivity, another economic term, out of your labor force, because as Jarik mentioned, they have to deal with all the macro and microaggressions on a daily basis and do 10 times the amount of work and exhaust themselves and die early because you don't appreciate their value because of the way they look, then that's a problem. And as a business, you would want to get rid of those inefficiencies, also another economic term. So those are my thoughts. Thank you.
Levi Sumagaysay:
I want to turn to some questions from the audience. There's one from Dr. Claudia Cohen. She says the panelists pointed to the impact of speaking the language of powerful financial professionals and mentioned the need to understand psychology and speak to individuals' emotions and personal experiences. Are there collaborations between economists and psychologists that anyone on the panel is aware of and have they been useful in creating strategies to make structural change? And please, whoever has a thought, jump in.
Jarik Conrad:
I can speak to that a little bit. We have created the Equity at Work council. So this is not a plug for an organization that I lead, along with my role at UKG, but that was the purpose of this organization. I was working on a dissertation years ago and I was looking at the relationship between emotional intelligence and intercultural sensitivity. I believe that somebody who had a high level of emotional intelligence probably were more open and appreciative of human differences and all that.
Jarik Conrad:
But I had a struggle trying to find good literature for my literature review because I would find things in pockets. I would find sometimes in behavioral economics, there'd be some pockets of things. Sometimes in sociology, there'd be some things. And so I had to piece together all this stuff. So we have started this interdisciplinary body to bring the best of what each of these disciplines have to bear, along with business leaders, as well as practitioners, people who are dealing with this stuff on a day-to-day basis.
Jarik Conrad:
So this is what we have sought to put together with the Equity at Work council. This is something that's open to anybody, our customers and non-customers alike. So I do think there's an absolute need. Just one quick story. I had read about a concept from a guy who just had a book. It was really popular. You all know, I hate to give it away, but there's a video where people are passing balls and you have to count the people with white shirts and all that stuff. Have y'all seen this? It was out. Nobody's shaking their heads. But anyway, you have to count the people who are catching balls. And then there's a trick to the whole thing and I won't give it away.
Jarik Conrad:
But I called the author of the book and the person who created that, and I said, "I'm working on this book, this dissertation about diversity related issues. And I have some questions for you." He's like, "I wouldn't be the right person. You should talk to my colleague in sociology." And I said, "Well, wait a minute, didn't you describe XYZ?" And then I show how that really speaks to diversity. And he's like, "You know what? You're right." So he didn't see himself because his focus was on human nature and not even thinking about these differences. So it's important to bring these various disciplines together, to take a more comprehensive look at what makes us tick and how we can tick differently.
Levi Sumagaysay:
Anyone else want to weigh in on that question?
Dana Peterson:
I would say that I'm going to nerd out a little bit, that John Nash, the father of game theory, unwittingly created an economic model for giving the use case for diversity. Now, how does that even make sense? Well, a lot of it is about thinking about how people come to agreements on something. And it turns out that in order to win a game, everyone needs to cooperate. Because when you don't cooperate, you get these outcomes that are suboptimal, right? And you have clear winners and losers. And in some games, everybody loses unless you cooperate, right? So that's an example of somebody taking human behavior and trying to mesh it with economics. But it's something that can be applied to the way that we think about diversity, right? If we're all not cooperating, if we're all not playing in the game by the same rules, then you get these suboptimal outcomes, and you wind up with inequality and again, leaving money on the table, and an unjust society.
Levi Sumagaysay:
I'm going to go to another audience question. This one is from Sharon, Cheryl [Onganana 00:49:07]. She asks, it is clear that only diversity devoid of a radical politic becomes good business. Why is diversity that comes with a radical politic, seen as a fiscal liability? Who wants to take that on?
Dana Peterson:
I'll start. I think it's because you have a lot of skeptics who say that if we embrace diversity, then I lose. I'm going to lose something. And so if it's radical, meaning you redistribute the pie. A lot of people are say, "Well, I don't want that because I'm going to be a loser. You know, I'm sorry for you, but I don't want to lose." But I think if we think about growing the pie, then it's very different, right? And especially in the business context, no business wants to be told that you're not growing or you're stagnant or you're even retreating. So the messaging has to be in a way that reaches people and helps people understand, but also helps them to think more broadly and not just about what I lose, but potentially what everybody gains and I'm part of that everybody.
Levi Sumagaysay:
Let me try another audience question. Latisha Price asks, in a challenging financial time in higher education, what would you all say to those who say we don't have the luxury of focusing on DEI when we're trying to save jobs?
Michael McAfee:
Well, what I would say is this, that 100 million number that I raised is an important for this nation. It's probably a little higher than 100 million since we did this report a few years ago. But think about it. One in three people in this nation economically insecure, 48% at the time was white. We've designed a nation that doesn't even work for most white folks now. So you refuse to focus on DEI at your own peril. The nation is becoming too toxic and I'll give you a good example. I live in the Bay. White folks work at these tech companies, and they're now complaining that they can't live here, but they can't live here because of some of those anti-black laws that were passed years ago. I mean, perfect example is with busing and what it did to education. If you read the color of law, as an example, you'll see an elegant design of what it did to the California educational system.
Michael McAfee:
But the reality is this, we forfeited that public good years ago in the Bay. So now if you work at Facebook, Google and Zinga and LinkedIn and all these companies, you can't afford the best education without paying for it, which means you can't afford your mortgage or your rent and that private school, you got to make a choice. And you're now seeing white folks resist that, push back against the fact that they're making a good living, but they can't enjoy the full riches of the Bay. Well, the reason why you can't is because we forfeited public education, because you didn't want to be educated next to me. And you can see so many examples in this nation, whether it's over policing, fines and fees, et cetera, where the design of the nation is too toxic now for white folks.
Michael McAfee:
Now they may not be drawing that connection yet, because we've not fully brought it into relief, but that's what I want you to begin to think about. That 100 million just isn't black folks. Almost half of it is white. And you're going to see this all again and we do this at our peril. You're seeing it happen even with the stimulus dollars that are flowing. Folks are saying, we just need to spend the money quickly. We don't have time to worry about DEI and figure out how it's going to land. Think about how many small businesses were lost because we did that recently.
Michael McAfee:
The reality is this. This is what I mean, you can't keep letting, like we're going to do now, trillions of dollars wash over the very communities that are supposed to receive these dollars and then say, "Oops, we made a mistake." And then on the other side of the fence, want to punish these communities because you spent a lot of money in an inefficient way and outcomes don't improve. See we keep getting punished for what whiteness does to us, right? And DEI is not the problem.
Michael McAfee:
The problem is, as leaders who are authorized to enact a different possibility every day, we refuse to enact the possibility where all boats will be lifted. And we've got real examples right in front of us where we get another chance to get up tomorrow and try to get it right. And that is with all these stimulus dollars. And the thing that I want everyone to understand is unless you're extremely wealthy now, you can't buy your way out of these systems. And so whether you're black or regardless of what color you are, you're going to suffer from them too.
Lisa Cook:
I would, I would just add one thing that I started off my New York Times guest essay, my first column last year with, and that is we can't afford to not do DEI. So I think that this dichotomy is absolutely a false one. What I have found, but, and what my co-author and I have calculated is that GDP per capita would be 0.6% to 4.4% higher if more African-Americans and more women were engaged in the innovation process from beginning to end, from being educated in the STEM fields to participating in IPOs. And what this extreme wealth that is created in places like where I used to live and where Michael lives in the Bay area, is this undermining of the social fabric that is extreme.
Lisa Cook:
So I think that the case, the reality is actually the opposite. We can't afford to not do it. And if you're not doing it as a firm, if you're not doing it as a country, then you're an irresponsible leader in either case. You're not a good steward of the resources of the firm or of the country, if you are not embracing this. So I would say it's the wrong argument, that the argument should be flipped on its head.
Levi Sumagaysay:
I have a question that I've been asked to ask. Kalil's question actually, is it worth considering that company leaders and boards of directors might leave money on the table, because like everyday people, they have their own biases and ideological commitments, commitments to whiteness, to libertarian notions of freedom to discriminate and commitment to power hoarding? Which is not only about maximizing wealth, but also maximizing demographic power. You know, Kalil says when he thinks of Elon Musk and Jeff Bezos rocketing and wanting to colonize outer space, he reads this as a rejection of the economic case for more equality. Who wants to weigh in on that?
Jarik Conrad:
I can real quick, Levi, comment on that because I think Kalil is absolutely right. And that's what I was getting to earlier when I talked about the facts don't matter. Some of these people understand this, but the trade off is too big for them. I mean, right now they're in an exclusive club. When you're in a C-suite and you're in an exclusive club, you're in a club within a club. You know, if you look at whiteness as a club, as a tribe and coming with membership privilege and all this kind of stuff. Now you're talking about a club within a club, and that's the group that wants to maintain the status quo. The group that has benefited the most from the status quo naturally will want to maintain the status quo and not see anything wrong with it, especially when you interview them and they're going to say, "I got here because I worked hard. You know, I wasn't selected because I'm in any kind of club."
Jarik Conrad:
So I really think that with all of this, I'll reiterate, that we have to go back and think about what makes people tick, what drives us. Survival, we have this survival instinct and that starts everything. Whether we see a threat, a real threat or perceived threat, and what are the brain processes associated with that? And that's what creates this tribalism, this need to survive, this pack mentality. And we still carry, we, I mean, human beings still carry this from the early days on the African Savannahs. And for me we got to start to understand that, and it'll tell you exactly why we're experiencing what we're experiencing today.
Jarik Conrad:
The other thing I'll mention is, Michael, I agree with you when we talk about whiteness, but I do think we have to be careful because of this club within a club. There are different drivers. You know, a politician can sit on a panel in Congress and have experts like the ones on this panel, experts come and talk about a particular subject. They get an opportunity to ask any question they want. They have the most real time relevant facts from the best experts in the world, and they understand this stuff. They get on the plane, they go back to their hometown and so and so, the plumber raises their hand and say, "Well, I believe this." And that politician knows that what that person just said is wrong. And they'll say, "You're absolutely right. Continue to vote for me and I'll make sure it doesn't happen."
Jarik Conrad:
So this is not facts. This is not about reality. This is not about data all the time. This is about the need to maintain the status quo. And you're going to find that with the people who've benefited most from it. And furthermore, when you look at, over time, it's not the talented, hardworking whites that are the challenge. They were going to be successful. Anyway, it's the mediocre whites. They know that I might not be at my membership, if you discount my membership, I might not have what it takes otherwise, to reach a certain level of success. Absolutely, they're going to try to hold onto it. Absolutely. Absolutely.
Levi Sumagaysay:
Does anyone else want to say anything on that question?
Michael McAfee:
You see it right now in what's happening. The reality is, this is what all the voting restrictions are about. You saw what happens when people of color exercise their power in Georgia. How do you go from Georgia to 300 laws popping up in state assemblies all over the country in less than 60 days? I mean, this is what's frustrating when Lisa was talking about holding these economic conversations and the structure of this nation to together. This is why we have to hold them. The folks who say don't talk about race, drive me crazy because I wouldn't talk about it if you would stop hurting me. Like me, race based policy is being advanced to deny people of color the right to vote. And folks are silent on it for the most part, outside of a couple of intellectual conversations and advocates on the ground pushing back. But that's real harm.
Michael McAfee:
But then you go further and almost make it illegal to provide even relief to people for having to stand in line to vote. Then you make it illegal to even block a freeway. You make it a felony to protest and raise your voice against this. Think about what's happening right in front of us right now. And we're talking about DEI. When there's a party out there that has made it very clear what it thinks about me, what it's going to do to me, and it's actually not trying to frame it in a way that is palatable to me. It's just doing it.
Michael McAfee:
And that's the tension right now between DEI and what's happening in the world. They're not in the same realms. And we're going to lose this nation, quite frankly, struggling with DEI while white supremacist culture has moved well beyond taking root, it is advancing and it is advancing very hard. And the folks that we think are our allies are philosophizing about it. And this is where business has to decide. You know, you've seen recently what happens to downtowns when you keep harming us. You go to Michigan Avenue, you go to Minneapolis, you go to these places and you see the downtown, Oakland still hasn't recovered from the damage.
Michael McAfee:
If you want stable markets, you better deal with this because I can tell you, this young generation is no longer going to take this. They have nothing to lose, and that is the ultimate risk here. We can talk about it however we want to talk about it, but you know what? If you want stable markets, you better stop hurting us. And you know, you're not going to solve that by creating new laws to quell our voices. These young people are, as you saw it, plus now, coupled with this amazing multiracial coalition, we're going to win on this issue. We're going to win on this issue.
Michael McAfee:
The question is, can we accelerate it before there's a lot more harm being done? And that's the choice really in front of us all right now. One side has made very clear that they're going to advance a structural agenda. And now we have to decide if we care about all of humanity. Will we tend to the structural needs or we will continue to philosophize another 20 years to do the work that our generation is called to do now?
Levi Sumagaysay:
Our time is coming to a close. I just want to ask one last question and please, anyone feel free to answer. In places like California, there is legislation that has been enacted to try to force companies to diversify, their boards to diversify. One of you mentioned that that the NASDAQ is also taking action. What are some other ways that companies can be nudged to go ahead and actually take action on the commitments that they've made?
Lisa Cook:
I would just say that, and I've written before that shareholders have to hold the principal accountable, have to hold the CEO accountable and the CEO has to hold every single leader in the organization accountable. If the leader is not being a good steward of the resources of the firm, that person should step aside and allow somebody who's going to be a good steward of those resources to lead. I would add for the California law, this is based on empirical evidence that we see from Europe. There's a lot of literature that supports this move in California. I would say it shouldn't just be gender. There should also one should also add race and ethnicity to these kinds of boards to get diversity along other dimensions. So I think that's a good first start, but I think a lot more has to be done.
Jarik Conrad:
Yeah. I can end real quickly. I know we're running short on time, but I think you're absolutely right. I think that organizations, leaders have to be accountable, but I think it's got to be broader than just the confines of that organization. I think business leaders have to think more broadly about the systems and structures that have resulted in what we live with today. It goes back to some of what Kalil said about the history, how we got to this point. I think organizational leaders have to invest some time there and own that a little bit, because organizations that have been around a long time have been benefited from the problems that we're experiencing today. So it's got to go beyond the walls or the virtual walls of the organization.
Levi Sumagaysay:
Thank you all. Thank you all for this fascinating conversation. Really appreciate your time.
Erica Licht:
And that you, Levi, for moderating.
Nikhil Raghuveera:
Untying Knots is hosted by Erica Licht and Nikhil Raghuveera. It is a podcast of the institutional anti-racism and accountability project and the Harvard Kennedy School's Ash Center, as well as a collaboration with the Atlantic Council GeoTech Center. We'd like to thank the Robert Wood Johnson Foundation for supporting the convening, as well as our speakers Jarik, Dana, Lisa, Michael, and Levi, for moderating.
Erica Licht:
And we're releasing a few more episodes from the Truth and Transformation convening. So definitely keep a lookout. Thanks for joining us.
Nikhil Raghuveera:
Music is beauty flow like Kevin MacLeod.