>My 1990s experience says that a lot of people are casually racist, sometimes viciously so, but, at the same time, they are perfectly willing to engage in mutual commerce and other activites with the outgroup, as long as they gain something from it. If this hypocritical kind of racism dominates, the outgroup has a chance to establish itself through education and trade.
I don't think this is hypocritical; just normal human behavior.
Newcomers are always the "other", and treated as such. Over time, as the "in group" discovers that if the "out group" displays behavior that makes for good customers and employees, and that there are financial benefits (increased sales, being able to hire new staff at a lower rate than otherwise) the "out group" becomes integrated with the "in group".
>The "Kauft nicht bei den Juden" or KKK-like kind of racism that really strives to isolate and possibly exterminate the outgroup even at a financial or practical cost to the dominant group is rarer and if it prevails, it leads to really bad consequences.
Yes, but thankfully such behavior is (very) rare. Anti-Semitism has existed in Europe for centuries but conditions had gradually improved everywhere. When fascism/authoritarianism became a thing in Europe in the first half of the 20th century, most regimes at worst maintained the existing casual anti-Semitism. Hitlerian genocidal anti-Semitism was very much an aberration, not seen in Hungary, pre-Anschluss Austria, Poland, or Italy. Mussolini's Italy had many Jewish supporters and leaders; it reluctantly implemented anti-Jewish racial laws just before the war began, after it became clear that Germany was now the more powerful Axis power.
More to the point, the integration can only occur when the "out group" behaves in ways that the "in group" accepts. In the US and Western Europe such integration happened or is happening with Jews, Italians, Irish, Eastern Europeans, Asians, South non-Muslim Asians, and Latinos. This has not happened with blacks and Muslims.