The Irrational Economics of Racism and Xenophobia

The Irrational Economics of Racism and Xenophobia

People participate in a protest march calling for human rights and dignity for immigrants, in Los Angeles, February 18, 2017. REUTERS/Lucy Nicholson

The other day I was asked to deliver a keynote address to inspire young Latino leaders. How does one even begin to inspire the next generation of young Latino leaders in a political environment that has degenerated into a toxic stew that is anti-immigrant and quite frankly anti-Latino?

Interestingly, we find ourselves in a world where a person like myself whose maternal line can traced almost six generations in southern Texas, can have the legitimacy of his place in this country questioned by a man whose mother was a foreigner and his wife is an immigrant.

As I pondered this question, I was struck by the biblical phrase “this too shall pass.” The current flirtation with White nationalism and xenophobia as a quasi-official government platform will pass. It will have to pass because punitive and vindictive policies, designed to humiliate whole populations, can never be an effective means of governing a multicultural society.

So my goal was to present our youth with a more hopeful vision of the future; a future whose trajectory is set because the two forces, economics and demographics, have converged, and the momentum that drives them is at this point irreversible.




When we speak of the future that the next generation will inherit, it is important to understand that we are living amid a radical paradigm shift in economic terms. We are currently amid a transformation from the industrial era to the information age. In this new era, the primary means of wealth production will no longer be mainly physical capital but rather human capital. This is the wealth that can only be generated by well-educated, highly skilled individuals.

If the agrarian age belonged to the monarchs and the industrial age belonged to the capitalists, this new era will belong to the creative class. We see this trend clearly in labor statistics; in the 1950s, 60 percent of all jobs were classified as unskilled. By 2020 65 percent of all jobs in the U.S. will require some sort of postsecondary training. To be at the forefront of innovation will be the key to economic prosperity in the future, which means that we as a society will have to aggressively mine human talent. Now, we have done a great job with the middle and upper class, so the new untapped source of human capital will inevitably have to come from the lower socioeconomic quartile of our society. And this is precisely the segment of society that is disproportionately made up of people color and an increasingly a greater representation of Latinos. This leads me to the second force that is driving the momentous change, an irreversible demographic wave.




We have all heard the forecast that suggests nonwhites will comprise the majority of our nation’s population by 2050. Let us delve into the data and parse out exactly how this forecasted change will occur. Whites will go from 62.2 percent of the population to 43.6 percent, African-Americans are expected to go from 13 percent of the population to 14 percent. Asian Americans will grow 5.4 percent of the population to about 9 percent. Latinos are expected to grow from 17 percent of the population to around 30 percent.

The nation’s population will become a majority non-white population by 2050 precisely because the of the Latino demographic boom. The current Latino population 56.6 million will grow to 132.8 million. This means that roughly one out of every three people will be of Spanish speaking descent in 2050.  

Why is the discussion of demography central to the discussions of economic viability? Well let’s start with social security. At its inception you had roughly nine workers for every one retiree, twenty-five years from now this ratio is expected to be two workers for every one retiree.  It is estimated that the 75-year actuarial balance of social security would be higher by $2.6 trillion if the national fertility rate were 2.3 versus the current rate of 1.7.  

We see the effects that demography has on the viability of an economic system in Europe as they experience massive public pension short falls.

In the U.S., the undocumented immigrant population alone has paid over a $100 billion dollars into social security over the past decade, on average $13 billion per year.  It has been the rapid influx of immigration and high fertility rates of immigrant families has helped us maintain fairly consistent fertility levels.




So now let us examine an alternative narrative relative to Latinos. We are all familiar with the negative publicity surrounding poverty rates and the academic achievement gap. 30 percent of Latino children live in poverty compared to the national average of 20 percent, which by the way I think is still too high. Also, between the years 2005-2015 only 21 percent of Latino fourth grade students read at a proficient level compared to 46 percent of white students. I am not trying to sugar coat reality, and I recognize that there are still many challenges in our community. However, we must be equally cognizant of the untapped potential.

Latinos currently comprise 25 percent of the K-12 population, and are expected to be a third by 2023. We have made tremendous progress reducing high dropout rates to historic lows since the 1980s. Latinos are now the largest ethnic minority represented on college campuses nationwide. In the past decade the number of Latino adults with a post-secondary credential has gone up by 22 percent. Between 2014-2015, the average household income for Latinos increased by 6 percent, this is compared to an average increase of 4.4 percent for Whites, 4.1 percent for Blacks, and 3.7 percent for Asian Americans.  Of course all of these groups had higher initial household incomes, but progress is progress nonetheless.

Also from 2015 to present, poverty rates have been declining, as have unemployment rates. This especially relevant since Latinos are expected to comprise 19 percent of the U.S. Labor force by 2020. In addition, Latinos males have the highest labor participation rate of any group. All of this requires our nation to take a closer look at the Latino population because it is the most logical replacement for the retiring baby-boomer population.

One of the areas that show the greatest promise for our community is entrepreneurship. Latinos are more likely than any other ethnic group to open a business. According to a study by the Stanford business school there were 4.2 million Latino owned businesses in the United States in 2015 and the buying power of the Latino consumer market was $1.3 trillion dollars. It is also important to dispel the stereotypical assumption that Latino owned businesses mainly serve Latino clients or are restricted to the barrios and colonias. 75 percent of Latino owned businesses are located in primarily non-Latino neighborhoods and serve mainly non-Latino clients. Immigrants comprise about 30 percent of Latino owned businesses, and of these, roughly half have revenues of over a million dollars per year and employees on average totaling 50 or more, there’s a plug for job creation.

70 percent of Latino business owners are U.S. born and half of these are millennials. Latino business owners are skewed very, very, young, which means they will be around contributing for many years to come. They also tend to be a very self-sustaining and dynamic commercial force. Furthermore, half of all Latino businesses use internal funds during the start-up phase. These resources are derived from personal savings as well as loans from family and friends, with only 10 percent of Latino businesses utilize government loans at any stage.

The current political toxicity will pass not only because it is uncouth, hateful and fundamentally un-American. It will pass because it is socially, politically and economically unsustainable. In a country where close to half of the population under 30 is comprised of people of color, white nationalism is not a compatible ideology and it will fail. It will fail because it failed in South Africa in 1994, because it failed to stop the civil rights movement of the 1960s, because it failed to realize its false promises in Germany in 1945 and it failed to stop the dissolution of slavery in the U.S. in 1865.




In conclusion, the aging demographics of our country and the need for higher levels of education to preserve our competitive advantage is creating a social/political paradox. To transcend this challenge and continue to be successful as a nation we must reconcile our past, a past that has historically been indifferent to the most marginalized segments of our society.

All talent must be realized to its full potential and a special emphasis will have to be placed on our nation’s Latino population because of the irreversible demographic wave that is now unquestionably linked to our nation’s economic vitality. But let us not forget the vexing moral question with profound social justice implications that are intergenerational in nature.

Latinos, due mainly to their youth and high labor participation rates, will overwhelmingly shoulder the burden of supporting an older, aging and, disproportionately White, population. Without sufficient human capital investment into this rapidly growing demographic, we are creating a society of neo-serfdom. It will be a world where the most youthful and energetic segment of our society is tied indefinitely to long hours, low pay, high taxes, subsistence level quality of life and little prospects for upward social mobility. This would constitute an oppressive caste system that given the changing demographics, would be socially, politically and economically unsustainable.

However, I am confident that neo-serfdom will not be the future of our youth. Our nation will rise to the occasion and do the right thing. Our nation has done that every time we have been faced with insurmountable challenge.  In each of our most challenging moments in history, we have united around shared values that transcend our differences and exalt our humanity.  This is why our nation has historically served as the beacon of hope throughout the world and the model for political democracy. We have served as a model not only because our democratic institutions serve as a check on raw power and absolutism, but because the very legitimacy of our democracy rests on a solid foundation that is, in essence, the democratization of opportunities for upward social mobility. The future that the next generation will inherit will be great not because one person will make it so. It will be great because we as a people, nation and society will wake up, come together, seek the common good and recognize that ultimately only a rising tide will lift all ships.

Written by Ramon Ortiz

Ramon Ortiz

Ramon Ortiz holds a PhD in Educational Leadership and Administration from UW-Madison and an MBA in Finance from UW-Whitewater.