Minneapolis Fed President: Systemic Racism Hurts the Economy

on Jun17
by | Comments Off on Minneapolis Fed President: Systemic Racism Hurts the Economy |

SMIALEK: Do you think it’s the Fed’s place to weigh in on such matters, and, if so, why?

KASHKARI: I don’t think it’s the Fed’s place to weigh in on partisan political issues or picking sides Republican versus Democrat. But I live in Minnesota, I’m a voter in Minnesota, our employees live here. We live in our community, and if there are really pressing issues in our community, I think we have a responsibility to speak up. We’ve launched the Opportunity and Inclusive Growth Institute, we’ve already made a commitment that we’re going to do what we can to improve economic outcomes for all Americans. We’ve already said this is going to be an important issue for us, and then you have George Floyd being murdered in Minnesota itself — the epicenter of this — I think it’s totally appropriate for us to weigh in.

SMIALEK: Do you think institutional racism hurts the economy, and do you see that playing out in Minneapolis?

KASHKARI: If white children in Minneapolis had the educational attainment that African-American children have, this problem would have been solved a long time ago. I think racism is an undercurrent of the status quo, and then, you have huge chunks of our population who are not getting a good education, who do not have good job opportunities — it absolutely holds our economy back.

There are big chunks of our population whose innate human capital is basically being squandered because they are not getting an education that enables them to take advantage of their natural talents and gifts. That not only hurts them, that hurts all of us. It hurts our society and our economy.

SMIALEK: What role can the Fed play here?

KASHKARI: If we can use our economic research capabilities to analyze issues using the best data and evidence possible, and put forward policy recommendations that other policymakers can implement, that’s an important contribution for us to make.

The Fed has a big role to play, even if it’s outside of monetary policy, because people trust us as honest researchers.

(Mr. Kashkari has pushed for legislation in Minnesota that would make quality education a right in the state. The Minneapolis Fed is also conducting an analysis of what the impact would be of a local minimum wage increase, he said.)

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