The New Bazaar


160 years of the racial wealth gap

This is a special, between-the-seasons episode of the New Bazaar.Right now, the white-to-black wealth ratio in the United States is roughly 6 to 1. Which means that when you add up all the wealth that someone can own—their cash, the value of their house, their investments in the stock market, and so on—the average White American has six times the wealth of the average Black American. That figure alone should be disturbing enough. But making it even worse is that this wealth ratio of 6 to 1 is about the same as it was back in the 1950s, seven decades ago. Some of the reasons for this long-term persistence of a big racial wealth gap are probably familiar to anyone who knows even just a little about American history. Not just the history of slavery, but also what came next: Jim Crow and segregation, the numerous racist laws and policies that were passed, and the history of racial violence—all of which made it impossible for Black Americans to accumulate as much wealth, and to get the same return on their wealth, as White Americans. Maybe less understood is another cause. If you consider the immediate aftermath of emancipation and the Civil War as a starting point, Black Americans simply began with much less wealth from which to build more wealth—and that initial difference has continued to have a big lingering effect even a century and a half later. These are just some of the conclusions in a new working paper from today’s guest, Ellora Derenoncourt, and from her co-authors Chi Hyun Kim, Moritz Kuhn, Moritz Schularick. Ellora is an economist at Princeton University, where she is also founder of the Program for Research on Inequality. On this episode of New Bazaar, Cardiff speaks with Ellora about this fascinating paper and about some of her other related work. Related links: Wealth of Two Nations: The U.S. Racial Wealth Gap, 1860-2020Can You Move to Opportunity? Evidence from the Great MigrationMinimum wages and racial inequality

Upending Wall Street

Season 1, Ep. 48
Dakin Campbell is the chief finance correspondent at Insider and, full disclosure, Cardiff's close friend. He joins Cardiff on the show to discuss his new book, “Going Public: How Silicon Valley Rebels Loosened Wall Street’s Grip on the IPO and Sparked a Revolution”.When a company is relatively young… let’s say it’s a startup, and it is privately owned… the owners are usually some combination of the company’s founders, and venture capitalists who bet on the company, and maybe early employees who get paid in shares of the company as opposed to just getting a salary. And at some point, a private company like this can decide to go public. In other words, to list on the stock market so that you and I and anybody can buy and sell its stock. And so that the company itself can raise money to fund itself, and to give those founders and employees with early shares a place to sell them and cash in. When a private company wants to raise new money and give its existing shareholders a place to sell their shares, it can hire investment banks to start the process of going public and listing on a stock exchange. That process, of course, is the IPO, or initial public offering. Dakin’s book is about how a lot of private companies through the years have not loved the way that process works. These companies have often been skeptical that the IPO process works as well for them as for the investment banks that they themselves hire. And yet, the traditional IPO model also did not change meaningfully for decades, at least not for the biggest and most prominent companies trying to go public. There were occasional one-off attempts to challenge the model, as when Google went public via auction in 2004. But it wasn’t until just about four years ago that a company, Spotify, not only tried a different model but also kicked off a new trend—one that’s still early, but which seems like it’s here to stay. And as you’ll hear in the chat, Dakin’s book is also about why getting this process right matters not just for the companies that want to go public and for Wall Street, but also for people who want a chance to participate financially in the economy.Related links: "Going Public" book pageDakin Campbell stories at Insider

Inflation: a guide for the perplexed

Season 1, Ep. 47
Here are three things to know about inflation. First, according to a survey of public opinion by Pew Research taken in May, the public views inflation is the single biggest problem facing the country. And—this is a direct quote from Pew Research—”no other concern comes close”. Second, inflation right now is really high. The prices of the goods and services that people buy are more than 9 percent higher than they were last year. And third, Jerome Powell, the chair of the Federal Reserve—the frontline institution tasked with managing inflation—recently said this while speaking on a panel: “I think we now understand better how little we understand about inflation.”Even for the people in charge of dealing with it, inflation can be really hard to understand. When inflation is high, is it the Fed’s fault? Is it the fault of Congress and the President? Is it Vladimir Putin’s fault? Is it greedy corporations? Is it nobody’s fault, just a thing that happens?Matt Klein returns to explain the sources of this bafflement, this confusion. In his newsletter The Overshoot, he recently finished a two-part series about inflation that tries to understand what’s going on—and which crucially leaves room for all possible, complex, interacting forces that can drive inflation. Matt and Cardiff also discuss how inflation fits into the wider economic context of the last couple of years. And then, to close, they recklessly ask the question: Is inflation finally about to start coming down? Related links: Matt's inflation seriesMatt on Twitter