Dr. Loretta Mester’s views, as represented in this article and her lecture, are her own and not reflective of her affiliated institutions.
Dr. Loretta Mester, president of the Federal Reserve Bank of Cleveland and professor of finance at the University of Pennsylvania, asked the Swarthmore department of economics to recognize how the United States’ economy produces racial disparities in her lecture on April 15. Her presentation, titled “The Cycle of Disparities in Economic Outcomes and Opportunities,” employed statistical analysis and data from the Federal Reverse in the discussion of potential policies to address intergenerational poverty and gaps in opportunity.
According to Dr. Mester in her lecture, the United States economy fuels racial disparities through differences in educational attainment, labor market outcomes, and access to credit.
To the virtual audience of more than 90 students, faculty, and staff, Dr. Mester highlighted the generational character of poverty and emphasized that promoting economic opportunity and inclusion are essential to the Federal Bank system’s central mission.
“That mission is to promote a healthy economy and stable financial system in the United States, on behalf of the public,” she said.
She also discussed particular policies that might address intergenerational poverty, expounding on the role of monetary policy in affecting the economic structures that create demographic disparities.
“While monetary policy is too blunt a tool to be used to close existing gaps in economic outcomes and opportunities across demographic groups, it does have a positive role to play. By promoting maximum employment and price stability, monetary policy produces longer expansions, which makes the economy stronger for everyone, including those individuals and communities least able to withstand economic downturns,” she said.
According to economics Professor Marc Remer, the department of economics is familiar with Mester from her previous work at the Federal Reserve Bank of Philadelphia.
Although the pandemic has made it difficult to structure an extensive lecture series sponsored by the department of economics this year, Remer expressed a broader goal to bring in a greater diversity of speakers.
“We’re just looking for diverse voices in the field of economics every year, and we’re also looking for different sets of topics. We have been putting a greater emphasis on including women and underrepresented minorities in our lectures,” he said.
Mester was one of two lecturers this year and introduced a focus on structural inequalities. She presented figured data on salient topics such as long-standing racial gaps in income and wealth, the geographies of upward income mobility in the United States, and trends in the growth rate of income inequality since 1987.
She included statistics derived from median family income and net worth, average household incomes across age ranges and percentiles, and selected measures of household income dispersion. Her lecture drew attention to Remer’s assertion on the relevant visibility of these issues through her repeated point that issues of intergenerational and racial disparities in economic outcomes and inclusion are well-known and established. She also detailed the pandemic’s exacerbation of these principal issues.
Remer further commented on his main takeaways from Mester’s lecture, particularly focusing on the inequality of economic opportunity for people of color.
“One, there’s a lot of inequality of economic opportunity in our country. I mean, that should be no surprise. That [data on disparities in income levels and average net worth across racial demographics] was clearly demonstrated in the lecture,” he said. “I think what was a little more subtle, but just as important, is that when the economy goes through a downturn, which it does regularly through our business cycles, underrepresented minorities tend to bear much bigger costs than the rest of the country. The lecture represented that in clear, obvious ways.”
The lecture was also tied to the coursework objectives of the economics department, as Remer further underlined the importance of integrating conversations about inequality into curricula.
“It is something that I think we talk about to some extent in most introductory economics courses. We didn’t set up our lecture because we have a hole in our curriculum, but there is an increased emphasis on these topics in recent years. I think we need to do more of it. We were glad to, at the least, have one big lecture on [economic inequality]. Obviously, that’s no substitute for an entire semester’s course,” Remer said.
Mester closed her lecture with a reiteration of how the Federal Reserve System’s mission relates to disparities in economic outcomes and inclusion.
“Investments in human capital increase access to education and present a good value proposition to the country. They hold the promise of a stronger economy that works for all of us. That is what we are essentially trying to get to: a strong economy with everyone participating in it and enjoying the benefits of that strong economy,” she said.
Students and faculty posed questions to Mester after her presentation, probing the Federal Reserve’s strategies to maximize employment, the differences in geographical upward mobility in the United States, and seeking advice on solutions to issues of economic inequality.
Mester conclusively emphasized the dominance of institutional issues and called further for systemic change.
“You can’t explain away these gaps. You have to turn to the fact that there is something in the institutions that we set up that are sustaining economic disparities,” she said.
Wasay Qureshi ’24, a prospective economics major or minor, discussed his takeaways from Mester’s lecture and elaborated on the value the lecture added to his coursework in the department.
“Coursework had only told me that identity can be a factor in determining an individual/group’s economic status while the lecture went in-depth of how, where, and why this happens,” he said.
Qureshi made it clear that the lecture drew students’ attention to how factors of both institutional and personal gravity contribute to widespread economic inequalities.
“I thought it was intriguing how the lecture showed that even if you account for all the seemingly relevant variables, individuals who belong to marginalized identities are still worse off than those who don’t,” he remarked. “This indicates that outside of oppressive institutional structures, in-built biases and prejudices also play a part in determining the economic position of individuals and groups from marginalized identities.”
Gabby Cosey ’23, an economics and sociology double major, also attended the lecture and commented on her impressions and the department’s overall approach to issues of economic inequality.
“I think that I am sometimes a little bit hesitant to go to guest lectures, because I feel like there’s some missing of the bigger picture. Economics will very rarely draw from sociology, anthropology, or critical race,” she said. “I will say that I think that the econ department as a whole really tries hard to get good speakers to come.”
Cosey enjoyed the lecture and felt that it highlighted important points on inequality in economic outcomes and opportunities, although she identified some limited areas of Dr. Mester’s discussion.
“It was a really good lecture. But I think that, to me, the overall gist was that we want to minimize oppression to make our labor force more effective and productive and therefore [make] our economy more productive,” she stated.
Cosey also posed further issues with presenting a framework to students that intends to solve sociological questions on the limited basis of economic progress rather than pursuing a critical, interdisciplinary approach.
“Maybe we shouldn’t be looking to solve racial discrimination on the basis of making our economy more productive. Maybe that is not the reason we should be doing it. Maybe we should be doing it because our societal apparatuses are hindering people’s lives; they are literally killing people. Maybe that’s a really good reason to do it. In econ, it’s always about making the economy and labor force more productive. I just don’t think that is the point,” she emphasized.
Cosey reiterated that she enjoyed the lecture but wanted to ensure that the department was acting with integrity and a willingness to broaden its approach to integral issues of social concern.
“I think, definitely as a department, they are trying to have more intentional conversations about racial inequality and the gaps that are hyper present. I think that where they lose social sciences and humanities students is that they are not really connecting their conversations to these long histories of exploitation and oppression that are at the root of our economy. These are aspects of the discipline that we can’t erase,” she expressed.
In the future, Cosey suggested that the economics department could consider hosting lectures similar to Mester’s, but including faculty from other departments at Swarthmore who are equipped with alternatively nuanced perspectives.
“The economics department could just have a really productive conversation with professors of Black Studies and sociology and anthropology and those who studied critical race and have developed thoughts on these matters. This would be a really helpful approach to ground students in the work of looking at racial inequalities,” she concluded.
Photo courtesy of Greg Hatfield on Flickr.