How the Myths of the Free Market Fail Black Communities

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When President Abraham Lincoln signed the Emancipation Proclamation in 1863, the African American community owned less than one percent of total wealth in the United States. Some 154 years later, that number has barely changed.

A study by the Survey of Consumer Finances found that in 2013, the median white household had $13.00 in net wealth for every $1.00 held by the median black household. And that number is declining, according to another study by Prosperity Now and the Institute for Policy Studies, which found that median black households stand to lose nearly 18 percent of the wealthy they held in 2013 by 2020, while the median white household wealth will increase by 3 percent.

One solution that has been proposed to combat this gap is the bank black movement, which advocates for African Americans to invest in black owned banks, to keep money in the community.

It’s a solution that has been proposed for centuries. But Mehrsa Baradaran says there's something more going on, and it's linked to a larger problem with how we view the racial wealth gap. She’s an associate professor of law at the University of Georgia and in her new book “The Color of Money: Black Banks and the Racial Wealth Gap,” she traces the structural failings of capitalism to deal with the racial wealth gap back to the Freedmans Bank, created after the Civil War.

This segment is hosted by Todd Zwillich.