So basically in one very significant group of ways, it works like this: you have two people. Let's say everything about them is the same. Both middle aged men with a wife and 2.3 kids and a house in the suburbs. In fact, about that house... literally it's the same house. It's a common design home-builders used in the early 90's when both houses were built. Same size plot of land and everything. Both of these men own small businesses too. Let's say they're both bakeries. Both in similar areas. Both need continuing rounds of investment in order to keep current equipment and grow the business.
Here's where the skin kicks in. A very common and encouraged thing to do is take out a home loan. It is the key to success for most people, because banks want you to have something to lose to keep you wanting to rather pay them then eat if it came down to that choice. So racism works like this: the same house is worth more when it is owned by a white man in a white neighborhood. That is a complete and absolute fact.
So you know where this is going. Both men refinance, but the white man's home is worth more so he gets more out of his home equity loan. Because of this, he can invest more in his business and reap more return on said investment than the black man could. Eventually, if they're competing for business, the greater investment in the white man's bakery will give him a leg up against the black man's bakery. Eventually the black man's bakery will close if that keeps up. Then the black man will have to take another job that will almost certainly pay less. Because school taxes are a percentage, this will lower his contribution to his son's school, causing his son to have a comparatively lower education than the white man's son. This will in turn lower the value of the black man's house even further, and that's how poverty entrenches itself across generations of black people.
I'm white though, and I have the privilege of not being subject to this vicious cycle. All white people do. It's time all white people recognized this, then we can work on how to stop the cycle.
