I have covered a long list of historical events in my career that have triggered domino effects thereafter — the fall of the Berlin Wall, the 1991 Gulf War, the World Trade Center bombing and the Arab Spring — but one that stands out for its initial shock with little return is the 1992 Los Angeles riots.
It was the beating of black American Rodney King by four LAPD officers who were acquitted on April 29 of assault and the use of excessive force that sparked the mayhem. I remember telling my editors at the time, as an Angelino by birth, I could sense tension was brewing on the streets and that if the case did not go in favor of King, something explosive would unfold.
In the end, the riots lasted five days, leaving more than 50 dead more than 2,000 injured. One thousand buildings were destroyed or damaged with an estimated cost of over $1 billion.
German-born Christoph Ruhl had just started as a young economics professor at UCLA that year and vividly recalls how neighbors took up arms to protect their apartment building. I, too, remember a video shoot that week of the riots when a South Korean store owner, frustrated by the absence of police officers to protect livelihoods, went to the rooftop to fire his gun on looters.
While there was a real sense of injustice, there was something much deeper at play. Racial tensions have always been prevalent in Los Angeles and the wider US, but they have been fueled by a wealth gap that has only widened over the past three decades.
“I am not surprised by the income differentials because when you look at the numbers you see the income numbers across the nations regarding race have increased since the 1980 and 1990s,” said Ruhl, now at Columbia University.
“The share of income controlled by the top 1 percent and the top 10 percent is substantially higher now than it was in the 1980s or 1990s,” he added.
After a week of riots, cooler heads prevailed in Los Angeles, calm was restored and a “Rebuild LA” program was launched, but the scars remained because so little was accomplished. They were reopened by the killing of George Floyd in Minnesota.
There is a great deal of soul searching in the US right now, and has rightfully reached into the stereotyping of blacks when it comes to household brands like Aunt Jemima, Uncle Ben’s rice and Mrs. Butterworth, which are either being scrapped or face a complete review by their corporate owners. But when it comes to race inequality, it has become abundantly clear there is no silver bullet.
When asked at a recent virtual Congressional hearing on Capitol Hill if the US central bank is one of the institutions that have failed in addressing the wealth gap for all minorities in the country, its chairman offered this honest response.
“The economics discipline, like every other aspect of our society, does have a troubled history when it comes to issues of racial inequality,” said Jerome Powell.
The current political climate of divisiveness and populism is only making matters worse. There has been a record $3 trillion dollars poured into the US economy since the COVID-19 pandemic took hold. The stock market shot up over 40 percent from the lows of March, but one would be hard pressed to find anyone that believes any of that money will reach down to those who need it most.
According to the Federal Reserve, the wealthiest 10 percent of US households owned 84 percent of all stocks as of 2016, the latest year that data was collected. The wealth gap remains stubbornly wide, at $40,000 per annum between the average white family and their black counterparts.
There is a long list of “must do’s,” but seeing deep economic reforms to address this issue under the Trump administration seems unlikely. The fabled billionaire investor Warren Buffet has been forthright in saying that it is flat out wrong that his secretary pays a higher rate of tax than he does. But there are deeper challenges to tackle, most notably the highest cost in the world for both private health care and education, which Ruhl notes are key drivers of inequality. There is also the need of long overdue prison reform.
“The US has the largest prison population of all developed countries by far, but if you zoom into the black community they are a disproportionate share of that,” he said.
In the absence of a concrete government policy response to date, some of the largest US corporations are coming together in the name of equitable injustice.
In an open letter to global employees, Randall Stephenson, chairman and CEO of AT&T, the parent company of CNN, said the push by society feels different this time around and the well-known business association the Business Roundtable, or BRT, is leaning in.
“The BRT has initiated projects addressing racial inequality across a broad range of areas including health and the disparate impact the pandemic has inflicted on black communities, financial systems, and education and workforce development,” wrote Stephenson.
This is a long journey forward to close today’s inequities, which are under the spotlight in the US but can found worldwide.
“It has taken place in the developed world but also the developing countries, but it has been much more pronounced in the US than in other countries,” said Ruhl.
• John Defterios is CNN Business Emerging Markets Editor and host of The Global Energy Challenge on CNN International.
