The Myth That Made Us: How False Beliefs about Racism and Meritocracy Broke Our Economy

by Jeff Fuhrer

How our false narratives about post-racism and meritocracy have been used to condone egregious economic outcomes—and what we can do to fix the system.

The Myth That Made Us exposes how false narratives—of a supposedly post-racist nation, of the self-made man, of the primacy of profit- and shareholder value-maximizing for businesses, and of minimal government interference—have been used to excuse gross inequities and to shape and sustain the US economic system that delivers them. Jeff Fuhrer argues that systemic racism continues to produce vastly disparate outcomes and that our brand of capitalism favors doing little to reduce disparities. Evidence from other developed capitalist economies shows it doesn’t have to be that way. We broke this (mean-spirited) economy. We can fix it.

Rather than merely laying blame at the feet of both conservatives and liberals for aiding and abetting an unjust system, Fuhrer charts a way forward. He supplements evidence from data with insights from community voices and outlines a system that provides more equal opportunity to accumulate both human and financial capital. His key areas of focus include universal access to high-quality early childhood education; more effective use of our community college system as a pathway to stable employment; restructuring key aspects of the low-wage workplace; providing affordable housing and transit links; supporting people of color by serving as mentors, coaches, and allies; and implementing Baby Bonds and Reparations programs to address the accumulated loss of wealth among Black people due to the legacy of enslavement and institutional discrimination. Fuhrer emphasizes embracing humility, research-based approaches, and community involvement as ways to improve economic opportunity.

Genres: Economics, Nonfiction, Politics

384 pages, Hardcover

Published September 12, 2023

Reviews

[Isaac Dawson · Rating 4 out of 5]

To preface, I read about ten pages a day (infrequently), so my already inconsistent financial understanding is not the best indicator of understanding, and secondly, that the book was a gift from my grandfather. Additionally, I happened to run into Jeff Fuhrer and while we didn’t speak about his book at all, he appeared incredibly considerate and caring.

Now, the book is essentially split into two different parts: An argument for the how the myth of the economy, and how we could remedy that. The myth, and probably sad truth, is that the economy does not work for us at all, as evident by the present. Not everyone who works hard is equal to others who work hard, and the system does not benefit everyone equally. The solutions that Fuhrer suggests however are standard tax and transfer policies, which also aren’t the cleanest of fixes. What is made clear is that there is no real solution, but what the significant takeaway is that more voices that are added to challenging the massive rise in equality can only help at making sure that we at least attempt making serious progress to combat this damage.

[Marieke · Rating 4 out of 5]

A book that spells out what many of us know and have known: the American Dream is a myth, and the land of opportunity is more often the land of oppression if you’re not already wealthy and white. The author shows how long America has been telling itself this lie, how it has impacted policy and public perception, and, crucially, how we could possibly fix and adjust both.

As an American Studies graduate, a lot of this was repetition - the uncomfortable kind, because who likes remembering the horrid unfairness of the reconstruction or the viciousness of segregation. But even more recent developments were a bit of a shock to me. I knew about the myth of the welfare queen… which was always bullshit, but now as a mother - ain’t nobody getting pregnant, giving birth, raising a newborn, and so on till adulthood, just to make a couple of bucks…Anyway, I did not know that Clinton pulled the same shit with his welfare act, saying basically that if you had kids and weren’t married… well, being poor was kind of your own fault ( the ‘you slut’ is implied). Always fun to see how far back the democrats kowtowing to the republicans goes.

Even with all that data, Fuhrer is really fair about how persistent the myth is and what that’s logical: for the rich, it’s a convenient smokescreen (‘ oh no, the poor people will just waste any benefits you give to them… just give it to us! It will trickle doooowwn! We promise!). For the average American, it just feels right. You work hard, you win, that’s how the stories go (insert the quote about the temporarily embarrassed millionaires here). I appreciated his attention, and hope that this convinced some readers that were still big believers in the myth.

Another smart move was interspersing his oodles of data with human stories. These are neatly placed throughout the book to paint a picture about what it means to live at or under the poverty level. These little vignettes were very effective: just a few sentences about maxing out credit cards to pay the rent stressed me out as much as all the graphs did.

In the end, Fuhrer’s part on solutions is pretty short, but also pretty comprehensive. A lot of these are measures that are to some extent familiar. Government support for childcare, more focus on pre-school education, minimum wage, more worker protections.. and then there’s more ambitious goals like reparations and baby bonds, or you know, affordable housing and public transit. Expensive, of course, but Fuhrer is an economist, so there’s a lovely little graph about the cost of going on like this versus the cost of implementing some frankly wildly socialist policies.

Despite this, Fuhrer remains a capitalist. I disagree with him most about his bit on means testing, seeing the bureaucratic nonsense this can lead to in my own country. But he’s pretty scathing about Friedman’s maxim about shareholder value so he’sstill invited to the barbecue.

Incidentally, Friedman, of all people, wanted to provide welfare solely based on income (and family size, but not to slutshame, just to know the number of dependents). No work requirements, no disability proofs, no lower age limit… the man apparently had layers.

Getting back to the point: this is not, in the time we’re in, a very hopeful book. The current president is not in the least interested in giving the poor their fair share. If we get fair elections in three years, it will take decades to undo the damage, and it doesn’t seem like there are any political leaders near brave enough to implement any of the changes the book outlines. But there are things to be done at the state level, or county level. The conversations breaking down the myth can be had without any cost (well, perhaps your patience). Clearly, America is broken, and far from capitalism’s only victim. But if a federal economist can see the light, and write this kind of book about it… that’s, if not hopeful, then heartening. I sincerely hope he lives to see his country take his advice.

[Chris · Rating 4 out of 5]

A powerful and passionate book from an economist who has spent his career working for the Federal Reserve Bank.

Fuhrer convincingly argues, with a wealth of experience, research, and data, that our current economic policies are designed to create income and wealth inequality, to concentrate wealth among the small group of rich and leave struggling a vast underclass. That it doesn't have to be this way, but that we have chosen it because we buy into an overriding set of beliefs, a narrative he calls "The Myth." At the heart of The Myth is the belief that success goes to those who work hard and failure goes to those who do not. It is a false narrative, yet it drives our political and economic policy choices. This book is Fuhrer's effort to show The Myth as false in order to change that narrative--because there won't be political will to change policies so long as The Myth is the story guiding our decisions.

Five emphatic stars for Fuhrer's ideas and evidence. However, he is an economist and not a storyteller, so I dropped my rating for his presentation of his argument. Regardless, it's a book that needs to be widely read.

Adherence to The Myth would be more understandable if it were a reasonably accurate and representative depiction of reality. However, I will present ample evidence that the stories many of us tell ourselves about how the economy works--the narratives we hold--are at war with the facts about the outcomes our economy delivers. The key narratives held by many in the United States are not at all fair and accurate descriptions of reality. They may in some case represent aspirations for the country, but they are quite far from representing the reality.

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Instead of providing onramps to prosperity, our nation has thrown roadblocks in the way of everyone who is not white, wealthy, and well-connected. We have simultaneously constructed express lanes for the latter groups. We have justified doing so in the name of individual sovereignty, meritocracy, free markets, small government--you name it, we have a readymade philosophy to rationalize our hard-heartedness and stinginess, to say nothing of outright racism. Ironically, we claim that we live in a land of opportunity, when in fact we have systematically denied opportunity for centuries.

It is well past time to cast aside false and hollow narratives, especially our ignorant narratives about who the poor are and how they got that way, and about why people of color fall disproportionately among the ranks of the low-income and low-wealth. Coming to grips with reality, recognizing our role in creating it, acknowledging all our history and its effects today may be dispiriting, but it is simultaneously empowering.

We broke this, we can fix it.

[Gavin · Rating 4 out of 5]

I really enjoyed his section on implementation. Much of the other material I have been exposed to before: WASPs control the US economy and social ladder with limited checks on power, and so they are inclined to rig the system in their favor.

This is like a large-scale version of economist John Harsanyi's ultimatum game. The WASP "proposer" (to use the language of the ultimatum game) already receives access to 100% of what they get above what is received by people disadvantaged by the current system, or the "responder". In aggregate, this amount may be disputed but is more or less a calculable amount available to the public. (This is a prerequisite condition for the ultimatum game.) The proposer (the legislator, CEO, school principal, etc.) communicate how much of the extra they're willing to share. If the responder accepts, it goes through. Otherwise, they both lose. The responder, in this case, could revolt. There is a third option: negotiation, but negotiation against the judge and jury isn't an easily winning strategy.

This mapping of the ultimatum game onto the US racialized caste system scales from the individual making this decision in many ways throughout a lifetime and scales to communities, companies, states, and the nation.

Jeff Fuhrer points out that this is not an optimal situation, especially for the ultimatum game responders, but also for society as a whole. The San Francisco financial district reeks of piss, and we pay in many other ways, such as opportunity costs and impacted public services.

[Mark Thompson · Rating 2 out of 5]

Mainly it regurgitates what has been said and documented already about the dimensions of inequality and about the forces that made it happen since 1980. The solutions he states are also what has largely been said before. As a recap, it is OK; otherwise not. Basic notes. Former Federal Reserve VP, Jeff Fuhrer, presents the chilling facts in his 2023 book, The Myth That Made Us. He outlines the opportunity hardships along with the hardhearted view among policy makers that the poor are poor because of their personal failures. In an international survey, when people are asked why there are people in their country in need, the US leads the pack with 60% agreeing: “because of laziness or lack of willpower.” And we also are on the top end of nations agreeing: “hard work rather than luck is the reason for success.” Why are we so harsh? The was and remains the question. Many say that the top 20% folks are just complacent. There might be other words one could use.

[DocSumo · Rating 1 out of 5]

Many ‘stars,” 2-5 and only a few reviews. Either from the author’s supporters or some wishfully thinking critics of the current disaster that is the US economic system. I join the ranks of those who get the gist but have not labored over the 250 earnest pages.

The earnestness is a bit embarrassing. This white guy from the ethereal elite has seen the light. Poverty, inequality, discrimination, systemic racism, colonialism- all rolled into the unitary MYTH of the title. And he actually has some interesting, if not always original, ideas about work, education, housing… he sees systematic problems. But, as he reminds us in the preface, the current system, capitalism, “is likely the beat system for the United States.” That word “likely” shows a gaping lack of imagination.

[Michelle van Schouwen · Rating 5 out of 5]

"We broke this, we can fix it." So ends Jeff Fuhrer's prescriptive narrative about a United States built on the backs of enslaved people and the land of indigenous people. The Myth That Made Us argues - persuasively - that hard work alone will not allow most people to rise from poverty. Most important, Fuhrer describes solutions, including reparations, that he feels the nation should take. This book should be required reading for students of economics and for anyone questioning the financial and racial inequality that plagues us.

[David · Rating 5 out of 5]

Review to come