Politics is Not the Answer to Black Economic Woes

A recent Pew Research Center report using US Census Bureau data painted a grim picture of economic decline among blacks (and Hispanics) during the current downturn (see here).  In 2005, for example, the average white household net worth was $135,000; for blacks it was $12,124 (net worth reflects home ownership, stocks, cars, retirement accounts and the like minus debt).  But, while the asset figure for white households dropped to $113,149 in 2009, for blacks it fell by more than half to $5,677.  In fact, 35% of black households had zero or negative assets (the figure for whites was 15%).  The median net worth of single black women is $5.00 while at the other end of the continuum, married or cohabiting white women have a net worth of $167,500 (see here)!  Blacks are also disproportionally leaving the workforce altogether while unemployment increases across the board (see here).  Even more surprising, a report by the National Urban League Policy Institute found that unemployment for blacks with a degree from a four year college tripled from 1992 and was more than double the unemployment rate for similarly educated whites (also see here).

Much of this bad news can be explained by the collapse of the housing market, but unexplained is why blacks still lag so far, far behind whites, and this gap seems to be increasing, despite a half-century of fervent government effort to narrow it.  After all, today is not the 1950s when African-Americans faced formidable obstacles such as under-funded segregated schools, blatant discrimination in employment and college admissions, unequal access to bank loans ("redlining"), and multiple other artificial impediments to achieving the American dream.  

This is a complicated question, but let me suggest one possibility: excessively relying on political solutions to achieve affluence.  In a nutshell, moving up the economic ladder via politics may offer some short-term benefits, but enduring gains are fragile and are easily lost.  Easy come, easy go, so to speak.

Consider the traditional pathway to wealth followed by almost every ethnic/racial group -- the multi-generational economic relay race.  It typically begins with a hard-working immigrant who saves and scrimps to provide a better life for his or her children.  In turn, these children get a better education, advance up the ladder, and their children -- the grandchildren -- frequently enter the middle class.  Political activism almost always follows wealth-creation; it does not itself generate wealth. 

Centuries-long slavery obviously disrupted this classic pathway.  Still, enormous post-slavery progress did occur, but not via politics.  Specifically, from the early 20th century onward, millions of Southern blacks migrated northward and with access to better schools and jobs (and freed from Jim Crow laws and blatant discrimination), most prospered (see here).  To be sure, African-American migrants encountered formidable obstacles to a better life, but incomes still rose.  As before, each generation typically outdid their parents.

In the mid-1960s this hard work-driven, trans-generational relay race model of advancement succumbed to political solutions.  Ironically, this shift was not black-instigated but largely pushed by well-intentioned white liberals though civil rights groups quickly embraced it.  The mechanism for this transformation was Lyndon Johnson's Great Society.  In an instant the self-help message preached by Booker T. Washington and Marcus Garvey became anathema.  Now, government, especially Washington, would jump-start black wealth creation, and do so within a single generation.

The allure of a quick-fix political solution was overpowering.  It was clearly less demanding than taking arduous entry-level jobs, forgoing consumption, saving money, studying hard, and often accepting glacial progress across generations.  Compare holding a massive one-day rally to demand "good jobs" versus gradually upgrading one's skills and patiently waiting for a promotion.  Indeed, compared to any alternative path to prosperity, politics seems the quickest and least demanding, other than winning the Power Ball lottery.

So, rather than spend countless hours hitting the books, hold a protest march to demand that school officials lower standards and grant diplomas to just about everyone.  SAT scores too low?  No problem -- just demand that colleges drop the SAT in favor of "community experience."  If the lack of a high school diploma is a disqualification for a good job, file a lawsuit to exclude a HS degree as discriminatory since fewer blacks graduate.  Too few black office-holders?  Don't hone one's political skills -- pressure the Justice Department to gerrymander districts to guarantee that a black is elected.  Befuddled by civil service exams?  Sue for exams that whites and blacks pass in equal proportions.  Can't qualify for a home mortgage due to inadequate assets?  Pressure banks to make the loan even if all signs point to a future default.  Examples can be multiplied but the tactic is always the same: exert political power to achieve collectively what was once accomplished individually.

Make no mistake, some government intervention may be justified as legitimate compensation for past (and still lingering) injustices, but this argument rings less and less true after two or three generations.  Hard to argue the legacy of slavery impedes black youngsters from cracking the books and paying attention in class.  Or that discrimination hinders saving money to start a business.  To be politically incorrect, politics has become a cheap substitute for the traditional (and often painful) formula for slow but sure economic progress.

Unfortunately, these politically achieved gains can be transitory.  Every economic gain attained via politics can be reversed, and, as today's recession demonstrates, this can be remarkably quick.  Yes, the threats of a boycott may loosen the requirements for a high school diploma but potential employers can impose their own tests, mechanize the job (think US Postal Service), or just relocate to where the degree still signifies genuine academic accomplishment.  Recall how civil right leaders pressured government to integrate schools as a shortcut to black academic progress.  The upshot was massive white flight, not soaring test scores.  Banks may be coerced to finance an expensive home even if one does not qualify, but sooner or later you will be evicted if you fail to make the payments.  Not even a government job, once the safest of the safe, guarantees future prosperity.  Electing a black mayor and black city council may win high-paying jobs for African-Americans, but what happens if tax-paying businesses flee and population drops?  Hard to meet payrolls when the depopulated city falls into bankruptcy.  If black political control were the pathway to prosperity, cities like Newark and Detroit would be thriving.   

The awkward reality is that political solutions are chiefly about creating wealth for those who occupy political positions or agitators like Jesse Jackson, less about enriching voters and demonstrators.  At best, political remedies may supply psychic gratification and short-term economic benefits but this solution rests on sand, especially in tough economic times.  Firms faced with declining revenue are unlikely to choose "diversity" over survival and will somehow find a legal solution to firing affirmative-action blacks.  

These data on how blacks have suffered the most economically from the current downturn should be a wake-up call regarding the insufficiency of politics as the cure for economic woes.  That this downturn occurred with a black president should drive the point home.  But, alas, I would not bet on it.  If I had to guess, these statistics will instigate yet louder calls for yet more government rescues, perchance yet more ineffective "shovel ready" stimulus packages, not self-reflection on failed strategies. 

A recent Pew Research Center report using US Census Bureau data painted a grim picture of economic decline among blacks (and Hispanics) during the current downturn (see here).  In 2005, for example, the average white household net worth was $135,000; for blacks it was $12,124 (net worth reflects home ownership, stocks, cars, retirement accounts and the like minus debt).  But, while the asset figure for white households dropped to $113,149 in 2009, for blacks it fell by more than half to $5,677.  In fact, 35% of black households had zero or negative assets (the figure for whites was 15%).  The median net worth of single black women is $5.00 while at the other end of the continuum, married or cohabiting white women have a net worth of $167,500 (see here)!  Blacks are also disproportionally leaving the workforce altogether while unemployment increases across the board (see here).  Even more surprising, a report by the National Urban League Policy Institute found that unemployment for blacks with a degree from a four year college tripled from 1992 and was more than double the unemployment rate for similarly educated whites (also see here).

Much of this bad news can be explained by the collapse of the housing market, but unexplained is why blacks still lag so far, far behind whites, and this gap seems to be increasing, despite a half-century of fervent government effort to narrow it.  After all, today is not the 1950s when African-Americans faced formidable obstacles such as under-funded segregated schools, blatant discrimination in employment and college admissions, unequal access to bank loans ("redlining"), and multiple other artificial impediments to achieving the American dream.  

This is a complicated question, but let me suggest one possibility: excessively relying on political solutions to achieve affluence.  In a nutshell, moving up the economic ladder via politics may offer some short-term benefits, but enduring gains are fragile and are easily lost.  Easy come, easy go, so to speak.

Consider the traditional pathway to wealth followed by almost every ethnic/racial group -- the multi-generational economic relay race.  It typically begins with a hard-working immigrant who saves and scrimps to provide a better life for his or her children.  In turn, these children get a better education, advance up the ladder, and their children -- the grandchildren -- frequently enter the middle class.  Political activism almost always follows wealth-creation; it does not itself generate wealth. 

Centuries-long slavery obviously disrupted this classic pathway.  Still, enormous post-slavery progress did occur, but not via politics.  Specifically, from the early 20th century onward, millions of Southern blacks migrated northward and with access to better schools and jobs (and freed from Jim Crow laws and blatant discrimination), most prospered (see here).  To be sure, African-American migrants encountered formidable obstacles to a better life, but incomes still rose.  As before, each generation typically outdid their parents.

In the mid-1960s this hard work-driven, trans-generational relay race model of advancement succumbed to political solutions.  Ironically, this shift was not black-instigated but largely pushed by well-intentioned white liberals though civil rights groups quickly embraced it.  The mechanism for this transformation was Lyndon Johnson's Great Society.  In an instant the self-help message preached by Booker T. Washington and Marcus Garvey became anathema.  Now, government, especially Washington, would jump-start black wealth creation, and do so within a single generation.

The allure of a quick-fix political solution was overpowering.  It was clearly less demanding than taking arduous entry-level jobs, forgoing consumption, saving money, studying hard, and often accepting glacial progress across generations.  Compare holding a massive one-day rally to demand "good jobs" versus gradually upgrading one's skills and patiently waiting for a promotion.  Indeed, compared to any alternative path to prosperity, politics seems the quickest and least demanding, other than winning the Power Ball lottery.

So, rather than spend countless hours hitting the books, hold a protest march to demand that school officials lower standards and grant diplomas to just about everyone.  SAT scores too low?  No problem -- just demand that colleges drop the SAT in favor of "community experience."  If the lack of a high school diploma is a disqualification for a good job, file a lawsuit to exclude a HS degree as discriminatory since fewer blacks graduate.  Too few black office-holders?  Don't hone one's political skills -- pressure the Justice Department to gerrymander districts to guarantee that a black is elected.  Befuddled by civil service exams?  Sue for exams that whites and blacks pass in equal proportions.  Can't qualify for a home mortgage due to inadequate assets?  Pressure banks to make the loan even if all signs point to a future default.  Examples can be multiplied but the tactic is always the same: exert political power to achieve collectively what was once accomplished individually.

Make no mistake, some government intervention may be justified as legitimate compensation for past (and still lingering) injustices, but this argument rings less and less true after two or three generations.  Hard to argue the legacy of slavery impedes black youngsters from cracking the books and paying attention in class.  Or that discrimination hinders saving money to start a business.  To be politically incorrect, politics has become a cheap substitute for the traditional (and often painful) formula for slow but sure economic progress.

Unfortunately, these politically achieved gains can be transitory.  Every economic gain attained via politics can be reversed, and, as today's recession demonstrates, this can be remarkably quick.  Yes, the threats of a boycott may loosen the requirements for a high school diploma but potential employers can impose their own tests, mechanize the job (think US Postal Service), or just relocate to where the degree still signifies genuine academic accomplishment.  Recall how civil right leaders pressured government to integrate schools as a shortcut to black academic progress.  The upshot was massive white flight, not soaring test scores.  Banks may be coerced to finance an expensive home even if one does not qualify, but sooner or later you will be evicted if you fail to make the payments.  Not even a government job, once the safest of the safe, guarantees future prosperity.  Electing a black mayor and black city council may win high-paying jobs for African-Americans, but what happens if tax-paying businesses flee and population drops?  Hard to meet payrolls when the depopulated city falls into bankruptcy.  If black political control were the pathway to prosperity, cities like Newark and Detroit would be thriving.   

The awkward reality is that political solutions are chiefly about creating wealth for those who occupy political positions or agitators like Jesse Jackson, less about enriching voters and demonstrators.  At best, political remedies may supply psychic gratification and short-term economic benefits but this solution rests on sand, especially in tough economic times.  Firms faced with declining revenue are unlikely to choose "diversity" over survival and will somehow find a legal solution to firing affirmative-action blacks.  

These data on how blacks have suffered the most economically from the current downturn should be a wake-up call regarding the insufficiency of politics as the cure for economic woes.  That this downturn occurred with a black president should drive the point home.  But, alas, I would not bet on it.  If I had to guess, these statistics will instigate yet louder calls for yet more government rescues, perchance yet more ineffective "shovel ready" stimulus packages, not self-reflection on failed strategies. 

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