Racial discrimination has a negative impact on both individuals who are denied employment opportunities and the economy as a whole. Photo: iPhones

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In North America, some racial groups have greater access to economic opportunities than others. Non-whites, particularly indigenous and black people, are clearly discriminated against when seeking employment. Unemployment rates among First Nations in Canada and Native Americans in the United States are far higher than they are for other racial groups in the two countries, estimated at almost 20% and much higher in some tribes. The rate for blacks is over 10%, compared to less than 5% for whites and Asians. Unemployment among young blacks is particularly high, estimated at almost 30%.

Asians encounter a different form of discrimination, facing the “glass ceiling” syndrome – very few have reached the pinnacle of corporate or government power. This is despite the fact that a disproportionally high percentage of them belong to professional groups. Accounting for less than 5% of the population in Canada and the US, Asians make up of over 12% of STEM professionals: scientists, technologists, engineers and mathematicians.

The burning question is: how does unequal treatment of non-whites affect our economy, polity and society? If history is a guide, the impact is significant.

Asians encounter a different form of discrimination, facing the “glass ceiling” syndrome – very few have reached the pinnacle of corporate or government power.

The biggest impact is economics. Institutionalized racism against the aboriginal peoples (i.e. Native Americans and First Nations) – having them live apart from the mainstream community – has wasted a considerable amount of taxpayers’ money and undermined economic growth. Instead of making billions of dollars in transfer payments, the governments could fund aboriginal business startups and job training. Worse, government transfer payments to aboriginal communities have culminated in what one Canadian First Nations leader called “transgenerational” welfare, destroying any incentive to improve economic prospects or self-esteem.

That stigma has wasted an enormous amount of human capital that could have spurred economic growth. For the wider community, not having to make transfer payments would reduce taxes, which could lead to higher levels of consumption and savings. For the aboriginal communities, increased employment opportunities would make the whole economy bigger and more efficient, which could result in higher rates of growth.

The inability or unwillingness to improve economic prospects for blacks or non-white Hispanics has undermined economic growth, particularly in the United States. The the fact that the majority of people belonging to these two groups have few options beyond working in low-paid service jobs or standing in the unemployment line means they are in perpetual poverty, limiting their ability to consume and thereby preventing the economy from reaching its potential.

A lack of employment opportunities brings social problems, raising suicide and crime rates. In Canada, First Nations youths have the highest suicide rate of any racial group in the country because they face increasing hopelessness and despair. And it could be argued that it has been a general lack of economic opportunities that has driven some African Americans and Hispanics into the world of crime.

Asians not having the same opportunities as whites to climb the corporate and government ladders has hurt them in the short term, but it harms the economic and geopolitical interests of Canada and the United States in the long run. A number of major corporations created their own competition by hiring on the basis of race and not ability – Asians such as Jerry Yang have gone on to start up their own information technology companies.

Many Asians have returned to their home countries to develop businesses and help develop weapons technology, which has led to other states challenging US economic and political dominance. The “four tigers” – Singapore, South Korea, Taiwan and Hong Kong – and Japan might not have closed the technology gap as quickly had US firms granted Asians the employment opportunities they deserved. The founder of Taiwan’s Acer Computers, for example, was trained in the US but returned to his native land because over there he was able to reach his professional and business potential.

Discrimination against Chinese nationals based on the belief that they are potential spies could have far-reaching consequences. Being accused of spying could prompt many Chinese scientists and engineers to return to their homeland. To that end, the US would lose a pool of highly skilled workers and China could accelerate innovation.

The US and Canada losing the moral high ground

Unequal treatment of aboriginals and other non-white peoples gives China and other countries a reason to label us “hypocrites” in the area of human rights violations. Each year the United States Department of State issues a report on human rights violations in China and other countries. China responds in kind, publishing an annual report on human rights conditions in the United States. The two countries accuse each other of mistreating their respective visible minority groups or dissidents. For example, the US complains that China routinely imprisons and tortures dissidents. China pushes back by stating the US beats up blacks at home, as well Muslims in Iraq and Guantanamo.

Canada and the United States have been accused of practicing “apartheid,” because they have First Nations or Native Americans living on reservations that are located in isolated and harsh regions. In many cases, they live under conditions comparable to those in the Third World.

However, discriminating against non-whites will not end anytime soon. Sadly, economic woes lead to populism and protectionism in the West because it is easier to blame others than to admit mistakes have been made. As indicated in many studies, automation is the main culprit when it comes to job losses, but populist politicians choose to accuse developing nations of stealing American or Canadian jobs.

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Ken Moak

Ken Moak taught economic theory, public policy and globalization at university level for 33 years. He co-authored a book titled China's Economic Rise and Its Global Impact in 2015. His second book, Developed Nations and the Economic Impact of Globalization, was published by Palgrave McMillan Springer.

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