How Racism Hinders Industrial Policy and Economic Progress

August 1, 2019

Why This Matters is a series from Roosevelt staff connecting our individual work—from papers to reports and everything in between—to our broader vision of creating a better, more equitable economic and political system. This series will give readers the top takeaways from our latest writing and thinking, with a focus on why they matter as we redefine the rules that guide our social and economic realities.

In a report released earlier this week, Roosevelt Fellow Todd Tucker explains what industrial policy is and how we can do it better. Notably, he argues that—despite the common but mistaken assumption that the US does not use industrial policy—ad hoc and exclusionary industrial policies have hindered the kind of robust industrial planning necessary to compete in a modern global economy. [1]

Point blank: Institutional racism—alongside sexism, legalism, and neoliberalism (an ideology built by strategic racism that has long promoted the erosion of public power), among other factors—has continually obstructed effective industrial policy and planning.

From the late 1700s to the New Deal era and even today, the failure to write inclusive rules and put all people—not just white Americans—before private interests has blocked meaningful economic and social progress both domestically and abroad. As early as 1790, Alexander Hamilton understood that the expansion of our nation’s manufacturing capabilities would move America forward. This type of national industrial policy, however, did not benefit slave owners, and they actively worked to dismantle it, championing decentralization and privatization of the US’s planning capacity over the collective good—including the well-being of Black people. “Slavery stands aghast at the prospective promotion of the general welfare … and the inalienable rights of man,” said President John Quincy Adams in an 1842 speech. Adams recognized that the evils of slavery forced upon Black men, women, and children—the legacy of which remains today—greatly disadvantaged progress for all.

The prioritization of the private sector over the needs and interests of the American people—of all races—is a trend as old as our country. We know that industrial policies and programs created during FDR’s New Deal era were racially exclusionary and, for example, deliberately failed to cover jobs predominantly held by Black and brown workers. We know that the implicit and explicit rules of race weaved throughout the fabric of our society mean that today’s economy isn’t working for most Americans, especially people of color.

21st-century crises, such as climate change and a broken higher education system—issues that already carry dire consequences for communities of color—require more robust industrial policy and planning. In the end, Tucker shows that we need a new vision for industrial policy and planning—one that will allow us to build a racially inclusive, democratic society that is capable of rectifying the mistakes of our past and can guarantee shared progress for everyone in the future.

[1] Tucker defines industrial policy and planning as “a horizontal lever of state power that influences the distribution of income among industries.” In his report, he outlines a toolkit for industrial policy and planning and shows how these tools affect input, output, and decision-making within and across industries.