William Spriggs on How Economic Theory and Policy Reinforce Racism Amidst a 'Recession Squared'

William Spriggs, Chief Economist of the AFL-CIO, describes the current economic crisis as a "recession squared," a unique confluence of a pandemic-induced shutdown recession and a traditional collapse in aggregate demand. He highlights the devastating impact on labor-intensive sectors like restaurants and tourism, and the global nature of the downturn, leading to depression-level unemployment. Spriggs critiques the U.S. government's response, arguing that untargeted fiscal stimulus, such as the initial direct checks, was largely saved by higher-income households and failed to prevent economic "permanent scarring." He contrasts this with the more effective $600 unemployment supplement, which low-income families treated as permanent income, leading to increased spending and economic stabilization.

Spriggs sharply criticizes the U.S.'s "fetish of the market," where policymakers expect the market to self-correct even after government-mandated disruptions. He contrasts this with the European approach of tripartite negotiations, involving workers and management, which led to strategies like hibernating companies and paying workers, predicting Europe will recover better. He argues that the untargeted U.S. bailouts exacerbated inequality, benefiting politically powerful corporations with access to liquidity while small businesses struggled. This approach, he contends, risks creating monopolies (e.g., Amazon, Walmart) by failing to address the underlying distortions.

A central theme is Spriggs's critique of marginal productivity theory, which he argues provides a false sense of economic justice by attributing disparities solely to individual merit, ignoring systemic factors. He provocatively suggests that economists often practice a "religion" where the market is an impartial judge, punishing the "unvirtuous." He uses the debate around the $600 unemployment supplement to illustrate this, arguing that if the supplement makes not working more attractive, the problem lies with low wages, not the benefit itself. He challenges the notion that economists are objective, especially when explaining racial inequality.

Spriggs delves into the historical roots of economic theory's failure to address racism, noting that early American economists who founded the American Economic Association were proponents of eugenics and believed in scientifically defined races. He meticulously details how race was legally defined (e.g., Jim Crow, Plessy v. Ferguson, racial covenants) as a mechanism for collusion and denying benefits, yet economists often ignore this history, attributing persistent disparities like the two-to-one Black-to-White unemployment ratio to differences in productivity. He argues that this view forces economists to implicitly assume Black inferiority or to construct elaborate, unproven theories about constantly shifting job requirements that perfectly maintain the racial gap, rather than acknowledging systemic design and animus.

"we're experiencing two recessions in one and one is caused by the uh disruptive nature of a virus we don't have a treatment for don't have a cure for don't have a vaccine for and that is preventing people from taking advantage of demand in a large set of industries"

"I call it recession squared because both of them interact with each other and they have given us depression level unemployment with the difficulty that the normal course of action to just make aggregate demand increase isn't going to work very well because of this uncertainty around the virus"

"if you just increase aggregate demand you you risk permanent scoring that may make the long-term recovery worse if if everyone spins more right now the way things are structured you're going to make amazon and walmart the biggest corporations in the universe"

"we normally don't like to think about picking winners and losers but in some ways we did and so coming out of this to to be reticent to have policies that can try and uh remove the scarring is is going to be a problem because it's it's not in the training of economists to to do that"

"in the united states we chose a very weird path and this is because we have made a fetish of the market and even when we disrupt the market we we expect the market to correct itself despite our disruption"

"I accuse economists of actually practicing a religion because there is beyond just the justice there's a kind of virtue to it and and there's a belief that the market delivers this as a kind of impartial judge picking out the virtuous from them not virtuous"

"if the 600 is the problem then it's not the six hundred dollars it's what you pay them that's what the problem is it should not be the case that me giving you six hundred dollars makes you better off than working it means that you haven't figured out how to make work work"

"the first modern economist the ones who set up the american economic association at the end of the 19th beginning of the 20th century were the brains behind um eugenics in the united states and they believed that that you could scientifically identify the races"

"this is a legal definition it means do you belong to a group that i can designate as getting something different than everyone else and as an economist you understand this is collusion"

"the economics profession looks at that entire history looks at all those mechanisms and then sees the persistence of occupational segregation of residential segregation of disparities in unemployment and marvels at it and says oh well it must be differences in productivity"

"the black unemployment rate is twice the right unemployment rate... since 1972 if you draw a graph on the monthly monthly unemployment difference between black men and white men you get two to one"

"the least qualified white person ends up being what the unemployment rate is for black people after we've cleared the market for white people then we worry about you know clearing up for blacks and they'll end up at the same spot"