Sept. 16, 2020

The Gini* is out of the bottle

The Gini* is out of the bottle

Early on during the pandemic there was a popular refrain: "We're all in this together." Sadly, time has shown that to be a fiction. The recession ended for the haves months ago. Meanwhile, it's gotten harder and harder for many of us to kumbaya our way through it all. Join us as we talk with our go-to economists Shuaib Hassan and Chinesom Ejiasa about the wealth gap—what it looks like today, how we got here and what it means for us going forward. It may be economics, but we promise you it's not boring!

*Regarding the Gini in the title:
The Gini coefficient, sometimes called the Gini Index or Gini ratio, is a statistical measure of distribution intended to represent the income or wealth distribution of a nation. It was developed by Italian statistician Corrado Gini in 1912, and today is the most commonly used measurement of wealth or income inequality.

Info and background links for today's show:

Shuaib Hassan:

Chinesom Ejiasa:

Interesting info on the Wealth Gap:

Byron Rumford and the California Fair Housing Act:

The Sustainable Development Goals:

Redlining's legacy:

We're No. 28! And dropping!

Connect with us on our Instagram feed:

The theme music is Fragilistic by Ketsa
licensed under CC BY NC ND 4.0


Kelley Lynch: 0:03You know, before I moved here, I was thinking what would be really cool would be to have to have one of those friends who's kind of like Lucy and Ethel. Ethel is always going over to Lucy's house. Lucy's always going over to Ethel's house and they can always sit in each other's houses and they do all these things together. And I thought to myself, God, wouldn't it be so cool to have a friend like that? We've been talking so much about old sitcoms. Um, but it's funny that that's what happened

Cindy Sealls: 0:38Of all the things you wanted for the new place where you live.

Kelley Lynch: 0:44I know that. So, I mean, maybe that tells me something, I don't know . I don't know.

Cindy Sealls: 0:50I don't know what that says about you, but I just, every time you say that it just makes me laugh and it's amazing, but it's also pretty freaking amazing that had it not been for some legislation, that person would have not been me because I'm African American. And as you know, the properties where we live there was actually written into the covenant of the properties that black people could not live here.

Kelley Lynch: 1:22These were built when, 1948 right?

Cindy Sealls: 1:25Yeah. After the war. So this was part of the whole rebuilding America after the war.

Kelley Lynch: 1:31And these were houses for the GIs, right?

Cindy Sealls: 1:34GIS. Yup . And so they have very low interest loans, which were not available to black people. Number one. And even if they were, they weren't able to buy these houses in this neighborhood.

Kelley Lynch: 1:47Man. Amazing. Because now there's like five white people in this neighborhood and well, actually very few African Americans and well loads of people from every country in the world. Amazing little United nations neighborhoods .

Cindy Sealls: 2:02Thanks to the fair housing act of 1968.

Kelley Lynch: 2:06Yeah. So we wouldn't have been friends. We would have never met.

Cindy Sealls: 2:07Right, right. Because I wasn't allowed, well, maybe we would have met because you would have come here to see your white neighbor friend. And I would have been the maid in the house. I've been calling you Miss Kelley. Hello , ms. Kelley.

Kelley Lynch: 2:23Ooh .

Cindy Sealls: 2:24You know, I told you I have the original deed to the property here and it says it right on the piece of paper. I should pull it up and just read it to you. So this is the Rolling Park Land Company, inc. Their bylaws o r laws for these properties that they purchased this land. And then things that were to be built o n t o the land. It says no person of any race other than the Caucasian race shall use or occupy any building or any lot, except that this covenant shall not prevent occupancy by domestic servants of a different race domiciled with an owner or tenant. So the only way, I mean , it means that the only way a person of any race other than the Caucasian race could live in, just live, like not even you couldn't even rent basically, is what they're saying. The only way you could do it is if you lived with a white family.

Kelley Lynch: 3:37As a servant, r ight?

Cindy Sealls: 3:39No person of any race other than the Caucasian race shall use or occupy any building or any lot, except that this covenant shall not prevent occupancy by domestic servants of a different race domiciled with an owner or tenant.

Kelley Lynch: 3:59Basically you could only live here as a servant, as a servant. And that was until when 1968.

Cindy Sealls: 4:07That's really incredible. Isn't it? It's pretty incredible. And this remember they wrote this in 1948, after the war, after hundreds of thousands of black people had gone and fought for the country, this is what they come back to.

Kelley Lynch: 4:25Wow. So how does that make you feel?

Cindy Sealls: 4:31I feel like I'm kind of proud that my relative, Byron Rumford, was one of the people to change the law basically because he wrote legislation in California in 1963 called the California Fair Housing Act that although it was a very contentious thing, finally was upheld by the California Supreme court to prevent people from discriminating against folks based on ethnicity, religion, marital status, and disability or gender. Like we think that all this stuff happened hundreds of years ago. Right? And this thing was written in 1948. So what do I do if I want to buy a house, I got to buy one in the red area. Wow. Where the schools are bad, where the neighborhood it's not great. I can't buy a house in your nice neighborhood with the nice school in the nice yard.

Kelley Lynch: 5:47Well, our neighborhoods , not necessarily that neighborhood now, anyway.

Cindy Sealls: 5:51Yesit is , Hey , we still have a neighborhood that's sought after. As you know, it's becoming gentrified.

Kelley Lynch: 5:59Oh my God.

Cindy Sealls: 6:00As we know , but you know what? I'm not leaving. Even though white people are moving in, I'm not leaving. I don't care what those realtors say about what's going to happen to the neighborhood. Hi, I'm Cindy.

Kelley Lynch: 6:29And I'm Kelly. Welcome to a new normal a podcast about how we're adapting to life during the pandemic and where we go from here. Our guests today are our favorite economists, Shuaib Hassan, and Chinesom Ejiasa. And today we're talking about the wealth gap. Early on during the pandemic, there was a phrase that you heard a lot that went something like we're all in this together. And I think that gave people a lot of comfort, but increasingly I think we can see it's a fiction that makes us feel good, but it's not true. At a time that has been described as the worst economic downturn, since the great depression, we're also seeing the stock market reaching all time highs. We wanted to talk to Shuaib and Chin about what's going on, how we got here and what it means for us as a country going forward. Welcome to the show.

Shuaib Hassan: 7:32Thank you, Kelly. It's to be back.

Chinesom Ejiasa: 7:34It's great to be here with a guy who I've known since high school. So thanks for having me on. Thanks for letting me crash your set .

Kelley Lynch: 7:40So speaking of coming back, Shuaib, everybody loved your show. In fact, my uncle decided that he was going to vote for you for president. I had tell him that probably the birth certificate, wasn't going to work out on this case.

Shuaib Hassan: 7:54I'll use Chinesom's birth certificate. It's okay .

Chinesom Ejiasa: 7:57You're you're better off using Kelley's.

Kelley Lynch: 8:01But Chin, you were born in the U S right?

Chinesom Ejiasa: 8:04It doesn't matter. So was Obama.

Shuaib Hassan: 8:09So Shuaib, you want to tell us, I know you said people were talking to you about what you said last time on the show. Maybe let's start there. What were people talking to you about? People wanted to know different things. What was it? There was a lot of questions around whether this is another event that's going to negatively impact the wealth inequality in the US. So just a lot of questions of curiosity of what's going to happen next.

Kelley Lynch: 8:36So what's going to happen next?

Shuaib Hassan: 8:38Well, it's anybody's guess right now. As we all know , the stimulus package ended and there hasn't been a new one. They are continuing to discuss, fight , whatever it is , and we'll see if they can make any progress. So it really depends on what they agree on, what they compromise on, and what's actually in the stimulus package. So it's kind of unknown right now, but I know there's a lot of very scared people. The FHA did extend the moratorium for evictions and foreclosures to December 31st. So that is taken care of at least. But like we talked about there's consequences to that. The landlords still have to pay their obligations. Plus at some point, these renters will have to pay back their arrears. So all you're doing is adding debt to the people's plate. So, you know, if the economy comes back, say first quarter of next year, when we have a vaccine and things like that, they're going to be behind what eight, nine months of rent. And these are people that are on the margins of the economy anyway. How are they going to survive and continue to make payments that are past due? I just don't see how it's possible. I would love to actually hear Chin's opinion on this because he's more on the finance side of things.

Chinesom Ejiasa: 10:01Until the money is forgiven somebody, or some bodies are going to be on the hook for that money. After the financial crash of 2007, there were a lot more renters in America than there were actual homeowners. Unless money is forgiven either there'll be a rash of commercial bankruptcies, or there will be a rash of residential bankruptcies or both.

Cindy Sealls: 10:27I just, I guess I was surprised about the renters having to pay their arrears.

Shuaib Hassan: 10:34It's again, it's deferred . It's not even deferred really. It's going to be added to the debt obligation. All the protection they have right now is that they cannot get evicted. They signed the lease. They're still responsible for that. Once the evictions or moratorium are lifted, they might get evicted and they will still owe the past amounts due.

Kelley Lynch: 10:57Oh my God.

Shuaib Hassan: 10:57That's the worst case scenario, right? And so again, this is not free money to homeowners or renters or individuals or families. All the protection is doing is allowing them to be past due and not be evicted.

Cindy Sealls: 11:13So as financial guys, how do you see that? I mean, because to me that sounds like a disaster. I mean, even more so I think than homeowners who can wrap their payments at the end of their loan . I mean, how are these people who haven't had a job in four or five months going to suddenly be able to pay? You know, if you're talking about like an apartment here, the cheapest you can get is $1,200 a month. I mean, how are they going to be able to pay that and what happens? So they'll get kicked out if they can't pay it, of course. And then they're not going to be able to get another apartment cause who's going to rent an apartment if they owe all these arrears.

Shuaib Hassan: 12:00Exactly. So, you know, their credit scores will get hurt, get hit, but they will also have the account in collections and so they'll be hounded by collection calls. They'll be hounded by... You know, usually these kinds of debts are not going to be discharged unless they file for bankruptcy. That's what Chin was talking about. Either we're going to see a wave of bankruptcies to wipe off this debt from the renters. That doesn't discharge the debt from the landlords . They're still making payments and have to make payments. And if they can't make payments either, then they will have to file for bankruptcy as well. But it's not going to be just wiped away without any consequences. And even if there's some kind of law passed that helps these renters with some kind of subsidy or something like that, they're still going to have to figure out how to pay back the prior past due amounts. And that's the real danger. And again, these people are on the margins of the economic scale. They wouldn't where they are right now, if they were more affluent and they had savings and t hey h ad three, six months of emergency funds, things like that. They don't, they can't possibly do that with the wages they're making. So in my opinion, this is not going to end well for the landlords or the tenants.

Cindy Sealls: 13:39I don't understand if everyone's saying we're in such a bad position. Why is the stock market setting records?

Shuaib Hassan: 13:47The reason for that is that this is a recession of the have nots, not the recession of the haves. The other reason is the amount of money that the Fed pumped into the system money is given to hedge funds companies and so on. They need to put that money to work somewhere. Holding cash is not an option. The bond market is not very good right now as an investment. So what that money is going into is the stock market and gold and precious metals. If you follow gold and silver and the stock market, they're all at record highs. Not only that you do see a lot of retail investors that have extra money because of the stimulus. They do have extra money in their pockets because they are no longer spending 500, 700, $800 on gas to commute to their work. So there's a lot of excess money left. What's interesting is that during this recession unemployment is up to 10 million plus it was a 20 million, 25 million point, but personal incomes have actually been rising. And the personal income has been rising because those that were unemployed got basically a replacement of their salary or even more because of the stimulus package. And those people that are employed, they're finding ways to save money. Then they're going out less to eat. They're going out less for entertainment. They're not spending money on gas. And so people have more disposable income than they did before. And that money is getting pushed into the stock market.

Cindy Sealls: 15:12So , where did the businesses get their money from? Is that from those PPP?

Shuaib Hassan: 15:19So It's not only just the PVP loans, but in a situation like this, where the economy gets a big hit, one of the ways that the government tries to stimulate the economy back is to basically manipulating the amount of money that's in the system. The idea during a recession is you flood the economy with money and that money goes towards investments. New companies get started, companies invest in new technologies and that consequently translates into employment and the economy gets going back again. So that's where it's come from is the Fed, that puts so much money into the system, not only just to help out some of the people, some of the airlines and cruises that needed that money for the PPP program, but it was also a way for them to try to stimulate the economy and stimulate the growth. Chin, I don't know if you can explain any better than that.

Chinesom Ejiasa: 16:11Basically, if you've been living on $10,000 a year and then somebody ends up giving you $70,000, it's essentially, now you're awash with cash. And so you can save it or you can just put it to work and just sort of invest in all sorts of things. And so now people are just flushed with cash and so they're trying to find different ways to put it in . So multiply yourself times hundreds of thousands of people and give them five times more money than they maybe had before. And everyone's trying to put their money in a finite number of opportunities. And so once they sort of pass that first tier of opportunities and they go to the second tier, third tier, because there's so much money and people have to put their money somewhere. They don't want to put it in their pocket. They're just going to put it somewhere that they think will give them a return.

Shuaib Hassan: 16:56I know a lot of people that were unemployed and, or getting employment benefits and extended unemployment benefits, and they were actually making more money than they were previously at their jobs. I don't want to paint everyone with a broad brush, but they've been putting money in the stock market rather than paying their bills. They can pay their rent with the unemployment benefits they're getting. The stock market has been such a craze and as Chin is talking about this bubble that everyone wants to get in. And so there's a lot of people that are like, Hey, I'll worry about the past due amounts later, but I can't miss the stock market right now. That's one thing. The second thing is that the stimulus package that we got in terms of the money given to pretty much everyone, whether you're employed or unemployed, that was a misuse of money from a federal perspective, because there was a lot of employed people that got money that they didn't need. And that's an extra $1,200 like Chin said, and all of a sudden they're like, okay, well, what am I going to do with this? I guess I'm going to go buy Tesla's talk because it's going up 20% every week. So , it's those kinds of people that are kind of driving this market.

Cindy Sealls: 18:05Isn't that a good thing to put money into the market? I mean, isn't that what they want?

Shuaib Hassan: 18:10Yes, it is. But you know, 87% of the stocks are owned by 10% of the highest wage earners. And it's not a good thing from a perspective of society, because all it's really doing is increasing the wealth gap. Not only the stock market, but housing prices are records right now and there's a high demand, low supply. The rates are low, but guess what? 40% of the African American population are homeowners versus 65, 70% of whites. So it's great that our home prices are going up, but who's benefiting from it? It's great that the stock market's going up, but who's benefiting? And what is it doing to the wealth gap ?

Cindy Sealls: 18:54Why do they tout the stock market is sort of the gauge of how our economy is doing? Cause it makes it look like to me, like I'm thinking, well, the stock market's going up. I mean, we must not be in such a bad position that they say, but now you're saying to me, all these renters are basically going to be kicked out of their housing.

Shuaib Hassan: 19:22I think smart finance and economic people understand that stock market really is not representing the economy right now. The only person that's really pushing that agenda is Trump. And that's obviously for the reelection purposes.

Chinesom Ejiasa: 19:34But he's now having to reckon with this disconnect between what we sort of colloquially dubbed wall street and main street. There's a glaring disconnect now that people can sort of point to whereas before it wasn't as glaring. So we weren't focusing on it as much.

Shuaib Hassan: 19:53Right. But you still won't highlight that right. During the convention speeches, he talked about the stock market, but he never talked about 10 million unemployed. So his focus was so going to be pushing the stock market as a measure of the economy. For sure.

Cindy Sealls: 20:08Shuaib, you said 87% of the stocks are owned by how many

Shuaib Hassan: 20:15By the top 10% wagers.

Kelley Lynch: 20:17Wow. What does that mean for average people? I mean, what does that actually mean in our lives?

Shuaib Hassan: 20:23Well, you know, again, it's the idea of the wealth gap and why the wealth gap continues to increase. What it means is that the wealth gap increases for the top 10% that already pretty well off.

Kelley Lynch: 20:38And so if I'm an average person, which I am, why should I care about that?

Shuaib Hassan: 20:45Why would you care? Because I think from a society perspective it's creating problems overall. And I think a lot of this frustration that you see in the streets is because of this wealth gap, because they do see main street suffering, but they see wall street at record levels. In my opinion, It's beyond just the killings that have been happening. This whole movement's not just about one thing. It's about equality. It's about diversity and inclusion in the workplace and society in general and the quality overall, and that is directly related to this wealth gap.

Cindy Sealls: 21:43There seems to be this group of people over here who is, who are really accumulating wealth. And then the masses who think we're accumulating wealth. But I guess we're really not, you know. I don't know the numbers of how many people are in the stock market because of their retirement fund, because I've heard on the radio as I'm listening, I listen to C-SPAN a lot. So, you know, these are usually, you know, folks who would not be considered the 1% or even the 5%. And they seem to be saying, I'm doing okay. And I was doing well before the really, really well before the pandemic. And that's why I'm supporting Trump. But what it sounds like to me is that maybe we're just think we're doing well and we're not because we look at this , you know, they tell us every day that the stock market is going up. So we think that means we're doing well,

Chinesom Ejiasa: 22:45But what you just raised Cindy around you thought that you were doing well until you realized when you looked up and you started to look at other people. I think that is one of the components of the way in which we think of capitalism. And maybe we can dub for this, for this particular conversation as American capitalism, because there is not one single definition of what capitalism is. It takes its form based on the culture and the context within which it's sort of operationalized. So America has its own version of capitalism. Certain African countries will have their own version. Indonesia will have its own version. They'll look very much similar in many respects and then they'll have their idiosyncrasies in other respects. So when investing there's this notion called alpha. If you invest in an opportunity and that opportunity generates 10% return for you. On an absolute basis, you've done pretty well. Ten percent is a pretty good return. If you looked up and saw that somebody made an investment and got a 15% return, you would then start to say man, my 10% is not looking so great because somebody got 15% But it's that notion that as soon as we start to look at what other people are doing, that starts to dictate our definition of what success looks like, our definition of what stability looks like. It's that notion, I think, that breeds how we've taken on our form of capitalism, or at least that's one of the components of our notion of capitalism. We look to see what other people are doing to define our success. And in the context of capitalism, I think that's, what's gotten us into trouble. Shuaib and I started our careers in the mortgage backed security space. So this is the industry that ultimately brought down the global economy in 2007 , 2008. When I first started right out of undergrad, I was really impressed actually by the financial tool of mortgage backed securities. In its purest form, mortgage backed securities were meant to create further opportunity for those who wanted to buy a home. And we can get into a debate as to whether or not having people believe that buying a home is an American dream. Let's for the sake of this conversation, assume that that's a good notion that everyone should have their own home and own their own home. So under that umbrella is where mortgage backed securities, like I thought and still think , less so, but still sufficiently so, was a really novel concept. It was essentially liquefying the market. It was creating more free flow of capital, such that you, myself, Shuaib could actually buy our homes. That's one side of the coin of where I think capitalism is a beautiful thing and what it actually does for operationalizing economies markets. It creates broader opportunity, broader access for people. Where it got messy and I think where capitalism gets messy more broadly speaking is when we start to feed greed into the system. And greed was reflected in many aspects during the global financial crisis, but specifically within the MBS industry. Greed on the lending side. Greed on the residential side. Greed on the securitization side. And that's what really turned over the entire system. It wasn't necessarily the p rinciple of MBS mortgage-backed securities. It was the way in which we as humans took that novel tool and greedified it up basically, and just sort of amplified it and multiplied it and revved it up to a point that it just sort of brought down the system. That greed is, in my opinion, at least what disrupted the system. And I think if you looked at other components of failures within the capitalistic system that we live in, the unrelenting component that you'll find o r variable that you'll find within any of those issues is greed. That as soon as we o perationalized greed, it will no doubt at some point w reck the financial tool that was at least on its face quite a productive tool.

Kelley Lynch: 27:00So greed is not good. Gordon Gecko said it was good. You're saying it's not good?

Chinesom Ejiasa: 27:04Yes, and so to connect the two together, the greed and the way in which we look at other people to justify, or to at least to reference check how we're doing. Greed, I think can exist without our ability to look at somebody else and say, how are they doing if we were just in our own vacuum? I don't think there would be maybe as much greed don't quote me on this because I'm still in my own head, sort of trying to understand this for my own self, but I don't think that greed would be as successful were it left in a vacuum unto itself. But as soon as we have the opportunity to look at somebody else, greed has much more of an efficacy. So those two things —that's how I was trying to bring those two things together. The point that Cindy made about man, I was doing, I thought I was doing well. And then I looked up and I started to see I'm not doing so well. Cindy could take that now new belief that she's got and become more filled with greed , filled with avarice and say, now I need to do better. I need to, I don't know, buy a second home because I know that my friend down the street as a second home, so I want to buy a second home. And not only do I want to buy a second home, but I want to make sure that that second home generates a better return than my friend down the street. Cindy may not take it to that extreme, but even just buying a second home stems some something that is probably a consequence of her seeing other people have second homes and thinking that's something that I should be doing in order to consider myself successful. And then if you just continue that process and multiply that process, then you have a really sort of greedy system.

Kelley Lynch: 28:40Listening to the first night of the RNC the other night, they were saying the American dream can be yours. Kind of. I kept feeling like, you know, if the price is right, don't let anybody tell you, you cannot have what you want. You can have everything you want. To me that seems to feed right into kind of what you're saying.

Chinesom Ejiasa: 29:04You have now looked up and somebody has told you that what you, effectively, what you currently have is not successful enough. That that is not the American dream. The house that you have, it might've been the American dream back in the 1950s. It's no longer the American dream because the bar has been raised. And so the American dream, I don't know what the American dream is now, but it is not just having your own house. It is now maybe having a second house. It is now being in the stock market and generating good returns. It is now, I don't know. I don't think there's one single definition for what the American dream is. All I'm saying is that there is this notion out there that what you currently have, if you were to just operate within a vacuum of yourself and you define what success is for you and from birth, you were never influenced by anybody else defining what success is for you, you would likely have a different perspective of your success today than what we currently have with these sort of notions tossed into our thinking around what the American dream is. And it's not just the American dream that's happening outside of the U S but we now, we're now chasing this elusive reference point that is causing us to sort of make decisions maybe that we otherwise wouldn't have and it feeds the system.

Kelley Lynch: 30:21So in a way, does that go back into what I was saying about the unrest?

Chinesom Ejiasa: 30:25I think the unrest stems from a lot of historical policies that have been insidiously and overtly implemented to create inequality. I think it gets amplified by this notion now that we have around what success is. But if you took out that notion of success, you would still have inequalities as a consequence of these historical policies and practices that we as the United States of America have implemented. So you would still have inequality, but maybe it would be less amplified because we wouldn't have this notion of the American dream and more and more and more.

Shuaib Hassan: 31:05I saw that the first time of the convention too , and what the administration was basically saying was directly targeting their supporters. And in my opinion, this is my opinion. They were basically saying, Hey, you can have the American dream, which has a capitalist dream. You can have two houses, three houses, you can have three cars, you can have all the things you want, but that was basically I think, directly targeting their supporters and also targeting what basically the other movement is , which is a kind of socialist movement of wanting somewhat equality and equal distribution of wealth. So I think that phrase was basically saying to his supporters saying, you can have everything that you want. You don't have to share with the rest of society. For me, like I said earlier, I think the wealth gap is a huge problem here. It is causing a lot of the civil unrest and people are really realizing now how much gap there is between the have nots and the haves. And so, you know, I don't think that we can get to an agreement on what's important to us and so on until that gets resolved because people do get resentful. People are resentful that they're unemployed, that they, their families haven't had any upward mobility yet. You know, we see on TV that people are buying $8 million vacation homes in the Hamptons and things like that. Um, so for me, honestly, it's the wealth inequality that needs to be solved. And to kind of understand that, you know, you have to kind of figure out how do we get here and understand the history of why the wealth gap is where it is understanding wealth creation is a , it's been something that I've studied for a long time. I was a financial advisor for a while. The best way to create wealth is through ownership of assets, whether it's stocks or whether it's real estate. But the biggest factor in wealth creation is time. In wealth creation, there's a concept called compounding. And what that basically means is that you know, say you invest in the stock market, you put a hundred dollars in there and your return is 7% every year. Well, the first year you get a return. And so now it's worth $107 . The next year you make a 7% on 107 and so on and so on and so on. So if you look at the history of the wealth gap particularly in the African American community and the white community, obviously Americans white Americans had a 200 year plus head start . They were allowed to create wealth in the 246 years that black people. I mean, obviously at that time, unfortunately, black people were a sign of their wealth, but that to me has been the biggest reason for this gap in the wealth creation. They were allowed to own land, real estate, things like that while the black population weren't. Then you kind of go up to after the great depression, one of the ways to get out of the depression was the new deal, which allowed people to really easy access to homeownership , and you saw a huge boom in home ownership after that. And that was part of the way we got out of the great depression at that time, in 1934, it was when the FHA was created. The FHA was the main engine behind the home ownership, a push by the government. And what FHA did at the time was they decided that they're going to look at which areas they should invest in, in terms of real estate loans versus which areas they shouldn't. And they actually went around the country and they had maps where they would categorize various neighborhoods as either low risk, high risk, medium risk or whatever. And they would put them in zones of ABC and D. And the highest risk were the D areas, they actually marked them in red . And they said, these are the highest risk areas for us to invest in so we don't want to make residential loans to people living in this areas. And guess what area were those? Those were African American communities. And so now you're looking, you know, they only hit dad at 240 plus years start. Then they finally get a chance to have some kind of home ownership , and they're not allowed access to bank loans to buy real estate. The Fair Housing Act wasn't created until 1968. And that was created because people finally realized like, okay, this is not an equitable distribution of access to mortgage capital. And even then you have massive, massive abuse of the system towards African American communities. The African American is twice as likely to get a higher interest rate on their loan, despite having the same credit as a white borrower. There still are banks that will not lend in certain neighborhoods because of, I mean, it's still redlining to an effect. And, you know , as we talked about too , the stock market is own majority 87% of it is owned by the top 10% of wage earners. And that obviously excludes African American community too . The other biggest creation of wealth is generational wealth, right? Wealth gets transferred from generation to generation to generation. So again, the white population has a huge start from all aspects of wealth creation. I mean, let's be pretty honest. This whole problem has been created because of a racist history of the United States. That's what it is. And so we have to solve that problem. We have to figure out how to get African American communities to be homeowners. How to get them equal access to mortgage capital. How to get them equal access to the borrowing rates that others have . We have to find a way how to get them involved in the stock market. As Cindy said, it's not bad at all that the Market's going up. I just wish more people, more average people were participating in the Market.

Chinesom Ejiasa: 37:31This is kind of coming full circle in terms of when we first started to talk about income inequality. And I talked about Cindy sort of staying in her lane and realizing that she herself, at least by her own definition was doing fine. Why are we trying to create wealth to begin with? What's the objective of creating wealth? For what purpose?

Kelley Lynch: 37:54Please elaborate on your thoughts. I mean, that is a question, Cindy and I talk about a lot.

Cindy Sealls: 38:01All the time,

Chinesom Ejiasa: 38:02But honestly, that's the legit question is why, why we just entered if we just asked ourselves the question why. Why am I trying to create wealth? For what purpose? So I can buy another home? That would be great. L ike I would love to have multiple homes in certain places. Is that really the ultimate objective? And I think if we start to ask ourselves more intimately, more introspectively, the why around a lot of these things, we would at least individually come to a realization of what's important to us.

Kelley Lynch: 38:43After this pandemic and after the response to this pandemic, can you see a way towards building back better?

Shuaib Hassan: 38:53Before we focus on how to develop the future, we, as a society have to figure out what kind of government we want to and what role government should play.

Chinesom Ejiasa: 39:02I think before that, we have to decide, which is going to be our biggest challenge in the States, we have to decide what we want as citizens. We have to get on the same page first, before we decide what sort of government we want. What is most important to us as a citizen , and hopefully sort of have overlap on those things and then decide what should be influenced by government and what can be influenced.

Shuaib Hassan: 39:26How the government c ould support that vision. Yeah, I agree.

Kelley Lynch: 39:30But we're pretty divided. And these are the exact questions that are dividing us .

Shuaib Hassan: 39:36Honestly, it was just, I just see this division. That's just so bad that it just gets worse and worse and worse. And social media makes it worse. Our leaders make it worse and some it's an epidemic that there's no vaccine for. And I don't know how we're going to solve that until we solve that. Nothing else matters.

Kelley Lynch: 39:59So how would you do it? I mean, I know you guys are economists, but you know, how would you do it?

Chinesom Ejiasa: 40:08So Kelly you're in the international development space. If we looked at the way that we try to encourage emerging economies, developing nations to comport themselves as it concerns their economic development, as it concerns their broader development. I'm generalizing, but we've got these very clear notions of what they need to do there to develop. And it's wrapped now into the sustainable development goals and effectively those goals are essentially the cornerstone, fundamental components of what any strong society should have to consider themselves developed

Kelley Lynch: 40:49While you and I are familiar with these from our everyday work, a lot of people might not be familiar with them. So the sustainable development goals are a collection of global goals that are designed to be a blueprint, to achieve a better and more sustainable future for everyone. They were set in 2015 by the United Nations, and there are 17 goals. I won't say all of them, but they include ending poverty, ending hunger, good health and wellbeing, quality education, gender equality, clean water, and sanitation affordable and clean energy, decent work and economic growth, reducing inequality and climate change among many others. I'll put a link to them in the show notes.

Chinesom Ejiasa: 41:46So if we took a page out of our own authorship and said, let's look at those SDGs and where do we stand with respect to each of those? The SDGs are around education around health care around housing, I think even around workforce. And if we looked at that and we said, fundamentally, what is important to us and how are we performing on those goals? And then maybe even take it a step further and say, what do we believe should be equitable distribution for a given society? Much like we sort of tried to educate and sort of illustrate to developing countries, developing economies, we should also start to try to take our own medicine. What is most important to us? Is it education? Is it healthcare? Great if it is, and we consider those things fundamentally important to us, then maybe now we have a notion of what we want our government to focus on. And then the rest can be managed by the private sector. We've now given our requirements to the government. We can now elect our government, having now been on the same page as a citizenry, and then the government goes forth. And then the work can be done in terms of how we go about structuring economic policy, fiscal policy, around making sure that everyone has access to whatever it ends up being. I think our struggle right now is we're not on the same page.

Cindy Sealls: 43:28Does this give people like you all an opportunity to step back and say, we love capitalism, but is there a different, can we think of a new economic system that works a bit better for everybody?

Shuaib Hassan: 43:47Capitalism in its purest form was created to kind of encourage just competition and over going to be winners and losers. So to me, that's not a shock because I understand that that's kind of the reason for the system. Now, the whole idea of whether that still works today or that that's viable as it is a different question. I don't think it is personally. I think it does need to change. And I think there are systems in the world that we can look at, but that's a discussion of everyone's mindset and philosophy. We all have to agree that we want to move towards that spectrum. And that can be done where you can have relatively a free market. Um, but you can also have the social security that some of these other countries have. I don't think there's a doubt that it can happen and there's a model for it, but we're driving car on the highway right now and trying to change the tire. And that's not easy to do so. iIt was great talking to you guys. Wow. Some really interesting stuff. Yeah, no I I'm. I'm gonna, I'm gonna say you guys should think about talking together, coming up with this economic system, putting it online, writing your book. Everybody else writes a book. Why not? That's the funny thing is actually Chin's views and my views would blend together for the perfect system. I'll make sure he's not a wide-eyed Marxist and he can make sure I'm not a dirty capitalist. A hundred percent. We'll meet somewhere in the middle.

Kelley Lynch: 45:25Well guys, thank you so much. Thanks Kelly. Thanks Cindy. This is was a really good conversation. Hi guys. How you doing? Hey there. Hello . Nice to see you after a couple of weeks. So what do you guys think about the pandemic? The wealth gap prospects for a new normal.

Obaidul Fattah Tanvir: 45:57What this pandemic has done is forced us to see things the way the things are .

Cindy Sealls: 46:06As you know, Kelley here in America, it is definitely the haves and the have nots. We know people personally whose kids are now in school in the pods because they have money, right? And the other kids are home because their schools didn't open and maybe they have a good internet connection. Maybe they don't. Maybe they have a parent that can stay there with them and help them do their lessons online. I mean, cause as you guys were talking, I was thinking, Oh, here the pandemic put a spotlight on the inequalities in our country because Tanveer here. Most of the people catching the virus, who aren't out there doing stupid stuff, are the people who have to go to work, who cannot work from home. They work in the service industry. And now they're in this position because a lot of them are renting because of the 2008 crisis, they're not, they don't have a home they're renting. And unlike the homeowners like Shuaib was saying, who will be able to wrap their payments at the end of their loan. When this is over those apartment dwellers not only will be out. They have to pay back all that money. They didn't pay. So it is going to be interesting To say the least in America to see what happens to our economic system on January 1st, when all those millions and millions of apartment people who, if they lost their job, guess what? They don't even have healthcare anymore because that's tied to your job. The people who are well off, like me being one of them. I mean, well often in that I still have my job, which is of course tied to my health insurance. I have a house, so I'm not going to have to go out on the street even if I can't pay my mortgage, we're fine. But there are millions and millions of people who are on the precipice of disaster, economic, health wise because where are they going to go? If they get kicked out of their apartment, where are they going to go? Nobody's going to rent them an apartment. And it's not like you have shelter winter, right. When COVID is supposed to come back because everybody's now inside. Well it's well, we still have 35,000 cases a day. But yeah, I mean, for us, it is really shone a spotlight on who is doing well and who is not.

Obaidul Fattah Tanvir: 48:39For our culture, it is preached that your life is predestined. So no matter what you do, you, things will happen to you that were written in your fate. The whole idea of American dream was like, you create your own destiny and the way things are happening now, nobody wants to take you as a role model anymore.

Kelley Lynch: 49:09You know, that reminds me of this article I read in the New York times, the other day. It's called we're number 28. Let me pull it up on my phone. Okay. So the United States ranks number one in the world in quality of universities, but number 91 in access to quality basic education, the US leads the world in medical technology, yet we are number 97 in access to quality healthcare . The social progress index finds that Americans have health statistics similar to those in Chile , Jordan, and Albania. While kids in the United States get an education roughly on par with what children get in Uzbekistan and Mongolia. So.

Cindy Sealls: 49:58What? Read that again, is that serious?

Kelley Lynch: 50:01The social progress index finds that Americans have health statistics similar to those of people in Chile , Jordan and Albania, while kids in the United States get an education roughly on par with what children get in Uzbekistan and Mongolia.

Cindy Sealls: 50:21I mean, that just seems I know we're bad. Look , look at me, look at my , look at my, my American arrogance. Wait a minute, now. That can't be true. We're America, but there we go. Now, if you know, if I'm thinking that the rest of the Americans would say on hearing that. Kelley that's fake news.

Kelley Lynch: 50:44It is a social progress index. Um, let's see inspired by research of Nobel winning economists collects 50 metrics of wellbeing, nutrition, safety, freedom, the environment, health education, and more to measure quality of life.

Cindy Sealls: 51:07Okay, tell me where the article came from? Where did it come from? Where is it? Where was it printed?

Kelley Lynch: 51:15It was printed in the New York Times.

Cindy Sealls: 51:17See, fake news. They're jealous. Everybody's jealous of us .

Kelley Lynch: 51:22The New York times?

Cindy Sealls: 51:23We're number one. We're number one. USA USA

Kelley Lynch: 51:27I'm afraid, Norway is actually.

Cindy Sealls: 51:30Norway,? There are 10 people in Norway. Of course everybody's happy.

Kelley Lynch: 51:35And as my uncle said, he going back to last week, he said , uh , yeah, wait I have to pull this up. Cause this was really great what he said about it. So when I sent it to him, he said, yeah, well, Norway, small boat, lots of people who like to sit down, although he did say he would move to New Zealand.

Obaidul Fattah Tanvir: 52:01Actually the problem is as soon as we get that kind of information , we resist it because it does not fit with our version of the vision.

Cindy Sealls: 52:16I like the way you said, I thought you were going to say facts, but that that's a better word vision. That's why people don't want to recognize facts because it doesn't fit their vision. It's not that there are alternative facts as Kelly Anne Conway would say it's alternative vision because vision, it can be anything. I mean , it doesn't matter, but yeah, that doesn't, it doesn't fit our vision of ourselves. Which , which is that we're number one in everything. I don't, I don't even care what you bring up. We're we're still number one. And if we're not number one, now we'll be number one, tomorrow. I read that in a democracy in America, by the Tocqueville written in the 1830s, that he was quite astounded that everyone he ran into, not only wanted to tell him how great America was, but wanted him to admit how great America was. So this goes back a long way.

Shuaib Hassan: 53:24So it has become a habit. You know, we are number one. Again, you know , I heard this Ted talk, you know, fake it till you make it.

Cindy Sealls: 53:38And we're good fakers, good fakers. We have fake news. We have fake facts. We faked the moon landing. Did you know that?

Kelley Lynch: 53:51Oh my God, that's awesome. I've been feeling for a long time like we need to add something to these podcasts. It's not really enough to just point at a problem. I think we need to offer at least some potential solutions. So today I called Chinesom and I asked him to leave us with one question that he thought would help us take things forward.

Chinesom Ejiasa: 54:35I think we need to ask ourselves the why. Why is wealth such an interesting proposition for us? I genuinely think that that's one of the pieces that will , if really sort of earnestly sat with, we'll start a really healthy conversation around this whole wealth and inequality issue. Because if you start to answer the question of why, why do I need wealth? Whatever wealth is for someone, if it's 2 million, if it's 5 million, if it's a hundred million. You start probing that question. I think it starts to resolve some of those, those issues because a lot of this whole wealth creation is stemming from this American dream that is sort of rev'd our culture. And the notion of what is America is around the American dream, which is largely the materialistic dream of being able to own a home, maybe two homes, maybe a car, maybe having lavish vacations, whatever. And I'm not passing judgment on any of those things. What I am trying to say is that if we have a conversation about the why, and we start to deconstruct this notion around the American dream and what wealth is or success is for us, then there will be some people who will want that American dream and that's kosher and cool and fine. But at least for some, it will allow them to disassociate themselves from this treadmill that they're on to attain this American because because they will come to realize that it's not for them. That's I think one piece of it,

Kelley Lynch: 56:07I think that's a really great thing to leave people with. That's awesome. Thank you. So that's it. We hope that you liked the show and that you'll consider sharing it with your friends, subscribing writing a review and following us on Instagram at a new normal podcast next week, I'll be working again, but we're looking forward to being back with you the following week when we have an awesome guest Baratunde Thurston. Baratunde is a writer, speaker comedian who has his own podcast called how to citizen with baritone day.

Cindy Sealls: 56:53Yeah, I think we can say that he is definitely our first legit famous person. Although when I first met him, he wasn't famous use a high school student, but now he's , uh, doing things all over the place. Ted talks, books, podcasts , writing for different shows. He's uh , he has had a lot of experience in the social media comedy, social commentary space. So I think everybody will enjoy it.

Kelley Lynch: 57:29See you then.