“Among us today a concentration of private power without equal in history is growing. This concentration is seriously impairing the economic effectiveness of private enterprise as a way of providing employment for labor and capital and as a way of assuring a more equitable distribution of income and earnings among the people of the nation as a whole.”
–Franklin D. Roosevelt April 1938
Message to Congress on the Concentration of Economic Power
President Franklin D. Roosevelt had a vision for an economy that worked for everyone in America. He saw economic inequality not only as a threat to our economy, but also as a threat to our democracy. Today, the Roosevelt Institute, a progressive economic think tank, applies the former president’s bold vision to today’s economy. Like Roosevelt, the institute that bears his name is issuing a warning about the concentration of wealth and power held by corporations and their wealthy shareholders.
We recently sat down with Roosevelt Institute President and CEO Felicia Wong to discuss economic and political inequality in America and the organization’s bold vision for a more equitable economy and government.
SOCAP: Can you tell us about the Roosevelt Institute’s mission and vision for the future?
Felicia Wong: The Roosevelt Institute’s day-to-day mission is to change the way that people think about the economy, and therefore to change what they think is possible economically. The economy is shaped by choices – via institutions and the rules that structure markets. Our rules determine who benefits or loses in a changing and dynamic economy, so they really matter.
Focusing on economics as we do gets you to economic policy, which ultimately gets you to politics. Our economy and our democracy are inextricably intertwined.
What makes Roosevelt unique is that we are a think tank and a campus network, the largest student policy network in the country, connected to a very live sense of our history via the oldest presidential library in the country. Our campus work happens in over 40 states on about 150 colleges – not just elite research universities, but also many public and community colleges. We work with many thousands of students every year. We also are the nonprofit partner of the Franklin D. Roosevelt Presidential Library and Museum in Hyde Park.
We believe in an economy and a democracy for the people by the people. We think it’s possible, but it’s going to take a lot of work to get there.
These three areas of our work make the whole Institute stronger. We believe in an economy and a democracy for the people by the people. We think it’s possible, but it’s going to take a lot of work to get there.
Ultimately, despite today’s news, we are optimists. We believe we need big change. We are optimists because we think that change is possible. This kind of optimism runs through all of our work.
SOCAP: What part of your work are you most passionate about and why?
Felicia Wong: I am grateful to work at a place that does cutting-edge research and is also politically relevant. We put out dozens of reports a year. We’ve helped change the received wisdom about taxes – we argue that tax increases on the wealthy can be good for the economy. We’ve helped elevate the idea that companies can and should be accountable to many stakeholders, not just shareholders. We’ve done a lot of work to connect the rules of our economy to extreme disparities in racial wealth. We’ve put a serious analysis of power back into popular debates about political economy.
Our most notable book is probably Rewriting the Rules of the American Economy, which inspired over 200 media mentions, including a New York Times Magazine cover story the weekend before the 2016 Democratic National Convention. I think we have made the argument about rules shaping the economy much better known.
We do this in part by taking our research to political leaders and help them to see economic policy differently. We work with a range of elected officials, from senators to state legislators to presidential candidates. And we work in alliance with other think tanks and a range of non-profit organizations.
I think we’ve been successful in part because we try to make smart, research-driven arguments, but also because of the times we live in. At this moment in history, the American public and our political leaders are looking for really big change. They are hungry for it. The polls show it; election results show it. What kind of change? Thoughtful experts, including many of the folks at Roosevelt, can be part of exploring what kind of reform is the smartest, and most needed, now.
One of my favorite examples of using our research to evoke change is with Senator Chuck Schumer (D-NY). We talked to him over the last couple of years about how the economy works and why the kinds of corporate tax cuts we saw in 2017 might be bad for the economy. We predicted that, instead of the business investment that we were promised to see as a result of the new tax law, we might actually see an increasing number of stock buybacks – where companies use their windfalls to buy back their own shares, upping their value and, not coincidentally, drastically increasing the take-home pay of their executives. And over the last year, stock buybacks instead of business investment is exactly what we’ve seen. Since then, we’ve seen Senator Schumer talk about how the economy is not working as we want it to. He is not a fan of the corporate tax cuts. He’s been very clear about that, and he’s even worked with Sen. Bernie Sanders (I-VT) to try to curb stock buybacks. That’s one example of the kind of work we do with political change-makers. At a time when people are looking for big ideas, this work is important.
I am also excited about our students, who are really interested in economic change at the state and local level. They want to know what America would look like if we had more public goods: more public universities, public banking, greater public investment in our healthcare system, public transportation. Usually they take these ideas and ask, “how can I make a difference in my local community or on my college campus?” The impact is remarkable. When they graduate, they work at amazingly interesting places: other think tanks, like the Economic Security Project; advocacy groups, like Bend the Arc; foundations, like the Omidyar Network. One of our alumni is VP for Technology Policy at the Center for American Progress. One works on gender equity for City of Stockton, CA Mayor Michael Tubbs. One was federal Chief Sustainability Officer for President Obama, and now runs sustainability for Google. Their careers, and their commitment to Roosevelt as a place where those careers started, is amazing.
Finally, Roosevelt is working at a very big-picture level, asking ourselves, “how do we restructure our economy to make both the private and public sectors better serve more Americans?” Is there a new way to think about organizing our political economy? Is there a new worldview? We’re working with a number of different groups on that question. It’s a big intellectual problem and a big political challenge, which is exciting. Normally you’d think that this is really long-term, a 30-year project, but actually we’re seeing a lot of results from that even now. We’re part of a group of groups—other think tanks and other advocacy organizations– that are working to bring a new worldview to lots of different audiences. The old thinking, that markets are best at solving our problems, is on shaky ground these days.
Our New Rules for the 21st Century report, argues that American economy and our democracy depends on a new way of thinking about markets and a new way of thinking about government – a much greater symbiosis between the two. This means a renewed commitment to transforming corporations, restructuring markets, and reimagining the role of government.
SOCAP: What are some of the most critical structural changes necessary to make our economy work for everyone in America?
I believe in structural change. I believe it is necessary at this juncture, and I believe it is possible. And here’s why we need change: an unhealthy and unsustainable imbalance of power between capital and labor is at the heart of some of our biggest challenges—wage stagnation, climate change, racial exclusion from the job market, much of today’s toxic, frightening anti-immigrant hatred. These issues seem disparate. But they are linked by an unsustainable imbalance of power.
Felicia Wong: We’re having a big debate in America right now: do we need structural change, or should we restore America to some kind of pre-2016 normal, with more calm? I am all for calm, where we can get it, but I believe in structural change. I believe it is necessary at this juncture, and I believe it is possible. And here’s why we need change: an unhealthy and unsustainable imbalance of power between capital and labor is at the heart of some of our biggest challenges—wage stagnation, climate change, racial exclusion from the job market, much of today’s toxic, frightening anti-immigrant hatred. These issues seem disparate. But they are linked by an unsustainable imbalance of power. That imbalance could be greatly improved if we had a healthy, well-resourced, high-functioning government – public-minded rules, public investment for the public good.
We have lived in a world where government has been denigrated at least since the 1980s. We’re conditioned to think that governments can’t do things as well as the private sector. We are always looking for more private-sector investment—that’s a measure of economic health—but expect the government to spend as little as possible. We have an ill-resourced and not particularly well-respected government because some narrow number of elites in America have actually designed it as such.
And government tends to be especially denigrated when it tries to use its own power in the service of people who are outsiders—particularly in the service of people of color. We saw anti-government backlash in the aftermath of the civil rights movement and integration in the 1970s. We are seeing this again today. This exclusion, this racialized way of dividing ourselves against ourselves: this is the biggest structural problem.
It wasn’t supposed to be this way. Deregulating markets was supposed to let freedom and prosperity flourish for all of us. But instead, deregulating markets has produced lower growth and historically high levels of inequality. We were supposed to see more growth and more distribution. Instead, we’ve seen lower growth and worse distribution. Truly free markets were supposed to compete away race and gender segregation. Employers were supposed to hire everybody on their own merits. But instead we see greater racial income and wealth disparities today. And those disparities cannot be explained away by education differences alone.
Truly free markets were supposed to compete away race and gender segregation. Employers were supposed to hire everybody on their own merits. But instead we see greater racial income and wealth disparities today.
If you compare white men and Black men who have the same level of education, the Black men will still have less income, less wealth, worse health outcomes, a greater likelihood of incarceration. Education is important, but it’s not the only answer to this profound tangle of issues. You can change these disparities, but you would have to rebalance power, and you’d have to rebalance power in a way that is explicitly racially inclusive.
Our economic problems are downstream from our policy problems, and our policy problems are downstream from our power problems.
SOCAP: What will need to happen at the policy level in order to get those changes made?
Felicia Wong: The problems we are tackling are complex. So what’s the first move? I’d argue that to see the change we seek, we need to start with new rule-makers: diverse; well-versed; democratic – meaning that they take people’s concerns, their voice, their votes, seriously; public-minded.
After that, there’s a lot we can do to make change.
We should be raising taxes. We should be trying to capture both corporate and individual tax revenue that is increasingly sheltered offshore and outside of federal jurisdiction.
We should be focused a lot more on corporate concentration and on antitrust. Companies now, whether it’s airlines or technology or retail, are more concentrated than ever, meaning that there are fewer companies with more market share and more market power across all these industries. They’re making more profits, but those profits are not leading to either greater investment or higher wages. We have to tackle that problem.
One set of solutions would build worker power through unions and other kinds of worker organizing. My colleagues Todd Tucker, Lenore Palladino, and Brishen Rogers are leaders on this. They argue for new and stronger labor laws so workers can organize in a changing, fissured, fractured economy; a global labor agreement internationally modeled on the Paris Agreement; and better laws so that boards and executives make more stakeholder-minded decisions, every day, in American companies.
I would argue that you need investment in infrastructure. We should think hard about progressive industrial policy, which can drive green investment, boost the economy, and increase equity for historically underinvested communities.
And underlying all of this, we must focus on desegregation and wealth-building, especially in the African American community. There are a number of new ideas for black wealth-building from baby bonds – a kind of federal “children’s trust” – to support Black home ownership in previously redlined areas. This is a time when a lot of new ideas about wealth-building are on the table.
SOCAP: How is the Roosevelt Institute driving conversations about racial equity and what role do you see impact investing playing as a solution?
Felicia Wong: Roosevelt is known for our rule-based arguments. In 2015 we wrote a book called Rewriting the Rules of the American Economy. In 2017 we published The Hidden Rules of Race: Barriers to an Inclusive Economy, which is basically about the racialized rules in our economy. We have taken the rules lens and applied it very specifically to questions of racialized inclusion and exclusion – in this case, African-American exclusion.
I’m lucky to be working with the Roosevelt scholars who are helping drive this conversation, including our current fellows Sandy Darity, Darrick Hamilton, Andrea Flynn, Anne Price, and former fellows, Dorian Warren and Sabeel Rahman. We are an economic policy organization. We have very deliberately and assiduously brought a racial lens and also a gender lens to our economic analyses. My colleagues Andrea Flynn and Rakeen Mabud also wrote a history of philanthropy’s approach to the racial wealth gap that is comprehensive and quite powerful. They show that we need both improved access to capital and race-forward policies to make progress.
As to impact investing as a solution, I think it’s really important to look at how the policy issues I mentioned earlier and impact investing go together. Investment matters. And investors who want to improve wealth for Black and brown communities are increasingly realizing that racial wealth inequality isn’t solely the result of market failure, but also the result of explicit exclusion. It has been the result of labor market exclusion.
For example, in the 1930s cultural workers and domestic workers were excluded from many of the New Deal labor protections. That’s why people in those sectors to this day are not organized. School segregation and housing segregation are the result of political decisions to deny Black people mortgages and adequate schooling and public transportation and jobs; the results reverberate today.
To change all of this, yes, we should be absolutely investing in Black-owned businesses. We should be making sure that people who have capital, both who are investors and who are entrepreneurs, are people of color and women. That is a lot of what impact investors are now turning to and have been turning to. That is really important.
But you have to look at those things in conjunction with looking at the underlying problems that I’ve been talking about. Markets are not going to solve those underlying problems by themselves, and indeed markets by themselves might exacerbate those problems.
SOCAP: You’ll be leading a panel conversation at SOCAP19 about “A New American Prosperity” with Rashad Robinson, Rodney Foxworth, and Alicia Garza. What might this new prosperity look like, and what do you hope will grow out of your conversation?
Felicia Wong: I’m very excited to be able to talk to Rashad, Rodney, and Alicia. These folks are luminaries in the worlds of racial justice and social justice and in creating healthier economies and healthier workplaces. It is an all-star panel, and I am really grateful to be able to facilitate this conversation.
As for what I hope to grow out of the conversation, you know, I’d really love to have a big conversation with these leading lights about the historic roots of the racial wealth gap. I hope to be able to talk about the fact that it’s not just a lack of skills, it’s not just poor education— although segregated education is certainly a piece of it. It’s about explicit segregation, and we have to look that square in the eye. I’d like to hear their ideas for where the impact investment community should go.
I’m also excited that SOCAP attendees are really focused on Black-led investment and people of color-led investment and empowering these entrepreneurs to make business decisions and hiring decisions and investment decisions. Access to capital is access to power. We need to democratize both. It’s great to bring a group of investors into a conversation with people like Rashad and Rodney and Alicia. Because we need to show that these two things are halves of a whole. Impact investing that is specifically designed to combat racialized economic inequality must be part and parcel with structural policy change.
I’m also excited that SOCAP attendees are really focused on Black-led investment and people of color-led investment and empowering these entrepreneurs to make business decisions and hiring decisions and investment decisions. Access to capital is access to power. We need to democratize both
As I said, I am an optimist. With both structural changes and a real emphasis on changing business practices, a SOCAP community focus, we could end up with a more virtuous cycle and healthier system that gives people of color greater access to capital.
The last thing I’ll say about access to capital is that it is important to ask: access to capital for whom? Individuals and communities for sure. I think we really need to focus on that. It is also important for businesses that are led by people of color to have access to capital, but it has to be within the context of this broader access.
SOCAP: What is your call to action for the SOCAP Community?
I have three. First, it is absolutely critical that Opportunity Zones work for people of color and do not replicate the unequal power dynamics that I was talking about previously. Investments in Opportunity Zones have to break those power dynamics. It should not just be about extractive corporations getting the opportunity to invest more in distressed communities.
Second, invest in affordable housing, and make sure that the housing is part of communities that have services – schools, parks, roads – such that it retains and gains. Affordable that is just going to lose value or be isolated is a trap.
And third, everyone should recognize that sometimes a public-private partnership needs to start with the public first. Like public investment in green manufacturing. Of course the private sector will play a role in expanding business, helping new ideas grow and get to scale. But at moments of big economic transition, it may be that public investment and public research and development need to go first. When you’re investing in people of color-owned businesses in this public-private context, make sure the public’s role is actually meaningful.
- New Rules for the 21st Century: Corporate Power, Public Power, and the Future of the American Economy, Nell Abernathy, Darrick Hamilton, & Julie Margetta Morgan, 2019. Short video teaser here.
- Ford Foundation Racial Wealth Gap Evaluation. Rakeen Mabud and Andrea Flynn, 2019.
- The Hidden Rules of Race: Barriers to an Inclusive Economy. Andrea Flynn, Susan Holmberg, Dorian Warren, Felicia Wong, 2016.
- Rewriting the Rules of the American Economy: An Agenda for Growth and Shared Prosperity. Joseph Stiglitz, 2015.