Covert Racism in Economics

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Date: January 7, 2021
Time: 12:30 p.m. - 2:00 p.m.
Location: Virtual event
495 Gilmour Mall
Detroit, MI 48202
Category: Seminar

John Komlos
Professor Emeritus
University of Munich

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Abstract:

The mainstream economic theory is replete with implications that feed into structural racism inasmuch as it has the unintended consequence of severely disadvantaging people at the lower end of the socio-economic spectrum which in the U.S. includes a disproportionate number of Hispanics, Indigenous people, and those whose ancestors were slaves. For example, the canon assumes that information is free, whereas it is not, and costly information implies that its
acquisition by poor people requires a greater share of their income, making it more difficult for them to make well-informed decisions. Because of inferior schooling opportunities, the poor are more exposed to the myriad of problems associated with bounded rationality and have difficulties avoiding the traps set for them in small print. Conventional economic theory, in the main, ignores these crucial issues and instead theorizes about an Alice-in-Wonderland economy inhabited by supermen and superwomen who know everything about everything, are perfectly
rational, develop their tastes autonomously, can maximize their welfare, have perfect foresight, and avoid falling prey to opportunists around them. Hence, mainstream economists provide succor for the maintenance of the status quo which tilts the lever of opportunities away from minorities and supports systemic racism as a consequence.

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