July 13, 2017 - Freedomain Radio - Stefan Molyneux
31:03
3741 Race and Economics | Walter E. Williams and Stefan Molyneux
Dr. Walter E. Williams is the John M. Olin Distinguished Professor of Economics at George Mason University and a nationally syndicated columnist. He is the author of over 150 publications which have appeared in scholarly journals and many books including “Up From The Projects: An Autobiography,” “Race and Economics: How Much Can Be Blamed On Discrimination?” and “American Contempt for Liberty.”Website: http://www.walterewilliams.comRace & Economics: http://www.fdrurl.com/Race-And-EconomicsAmerican Contempt for Liberty: http://www.fdrurl.com/American-Contempt-for-LibertyLiberty Versus the Tyranny of Socialism: http://www.fdrurl.com/Liberty-Versus-SocialismUp from the Projects: http://www.fdrurl.com/Up-From-The-ProjectsMore Liberty Means Less Government: http://www.fdrurl.com/More-Liberty-Less-GovernmentDo the Right Thing: http://www.fdrurl.com/Do-The-Right-ThingSouth Africa's War Against Capitalism: http://www.fdrurl.com/South-Africa-War-On-CapitalismAll It Takes Is Guts: http://www.fdrurl.com/All-It-Takes-Is-GutsThe State Against Blacks: http://www.fdrurl.com/State-Against-BlacksAmerica: A Minority Viewpoint: http://www.fdrurl.com/America-Minority-ViewpointYour support is essential to Freedomain Radio, which is 100% funded by viewers like you. Please support the show by making a one time donation or signing up for a monthly recurring donation at: http://www.freedomainradio.com/donate
He is the John M. Olin Distinguished Professor of Economics at George Mason University and a nationally syndicated columnist.
He is also the author of over 150 publications which have appeared in scholarly journals and many books, including Up from the Projects in Autobiography, Race and Economics, How Much Can Be Blamed on Discrimination and American Contempt for Liberty.
You can check out The Good Doctor's work at WalterEWilliams.com.
Thank you so much for taking the time today.
Thank you for inviting me.
One of the great tragedies for me as an ardent free market advocate is the degree to which there is this idea that somehow to bring about egalitarianism between ethnicities in economic outcomes, we need the big giant fist of the government to scoop up And redistribute vast amounts of money.
I think one of the cases that you make most strongly, Dr.
Williams, is how much the free market is the real friend of the disadvantaged minority and how much government power has been used to keep people from the table of equal opportunities.
Oh, yes.
And there are a number of areas that you can look at, but one general comparison is that If you go to poor black neighborhoods, you will see at least some nice cars, some nice clothing, some nice booze, and maybe even some nice houses, but no nice schools.
And so you say, well, why not at least some nice schools?
Well, cars and clothing and booze and other items, they are generated through the market system.
Schools are created by the political mechanism, by the government system.
And if you are a disadvantaged person, whether you're black or white or any other race, you want to minimize allocation through the government because the market is far superior.
And if you look at the state of education in our country, You know, the level of education that white kids get is nothing to write home about, but the level of education that black Americans receive is an utter disgrace.
And just a few examples.
The average black student who has a high school diploma in his hand has the reading, writing, computational ability of the average 7th or 8th grade white student.
Just recently, in the city of Baltimore, it turned out That there are seven high schools in the city of Baltimore, and they spend roughly $15,000 per kid.
In seven schools, not a single student scored proficient in math and English.
But yet, I looked at one of the schools, I looked at one of the schools in Baltimore, a predominantly black school, and they held a graduation ceremony in June.
They were graduating students Who are not proficient in English and math.
And what that means is that the diploma that they receive is a fraudulent document.
That is, when you have a diploma that says that a test that you can read and write at the 12th grade level and when in fact you cannot, that diploma is fraudulent.
And I might also add that a number of diplomas that white kids receive It's fraudulent and the evidence is that close to 50% of incoming freshmen at the nation's colleges require remedial English and remedial math and remedial writing.
And so that says something about the high school diploma that they received.
Oh, it's very frustrating for me as well because it's very...
I've always been fascinated how much greater parental control, greater neighborhood control over education might be able to close this IQ gap between blacks and whites or blacks and East Asians and so on.
And I've read some material that there's an indication that greater parental control over education, some market incentives in the provision of education can help close the IQ gap between blacks and whites.
Oh yes, that is.
Some of the charter schools are doing much better than the public schools, and some of the private schools and some of the parochial schools are doing much better in the education of children in general than the public schools.
And so I think that, again, and more of some of the evidence is that some of the evidence of the parents' want for these choices It comes when schools give out vouchers, when people give out vouchers or people sign up for charter schools.
There are huge lines, often with parents, black parents, waiting outside overnight trying to get their kid out of the rotten public schools.
Now, you've also talked about something which I think few people understand, which is the market incentives against discrimination.
And people think that somehow, you know, where the dollar goes, all human iniquities follow.
But I wonder if you could help lay out the case as to why in the free market those who discriminate irrationally against their own economic best interests end up being punished in the long run.
Well, one example of this is a book that I wrote in 1989 or 1994.
And the title of it is South Africa's War Against Capitalism.
And I spent several times, I visited South Africa, and one time I spent about three months in South Africa doing studies on the labor market in South Africa.
And I discovered, and I give many quotations in the book, that white racist unions are major supporters of minimum wage laws for blacks.
And their stated purpose in South Africa is that they want to protect white workers against competition with low-skilled black workers.
Now, here's what was happening.
I believe in 1971, somewhere around that era, White construction workers, that is, they were laborers on construction projects, they were being paid $1.91 an hour.
It turned out that black workers would be paid, doing the same job, $0.39 an hour.
So there was a lot of incentive for contractors to disobey job reservation laws and hire, or contravene them in some way, and hire black workers.
The market, that is people, that is contractors, had no greater love for black people in South Africa than the average white or the Afrikaner.
But the economic incentives of being able to hire someone for a lower wage provided opportunities for blacks that they otherwise would not receive.
Another example of this in the United States, that during the 1920s, one could not prevent whole neighborhoods from From going from white to black virtually overnight.
And this is like in 1920s before there was a HUD, no equal housing laws, etc., etc.
And in neighborhoods like in Harlem and Strawberry Mansion and many other places in our cities.
Now, so you ask the question, well, how in the world did these disadvantaged poor black people come to seize the use control of property from whites?
Well, it's very simple.
That is, a landlord that might have been renting a three-story building to a white couple, and let's assume that the landlord might have been a racist, what six black families might have come up to him and said, look, if you cut this building into six parts, we'll pay you $50 per apartment.
And so the landlord looked at the prospect of making $100 rent from a white family versus $300 from the blacks, And so he opted to rent his places to blacks.
So what it turned out is that blacks just simply outbidded whites for the property.
Now some people, I know some listeners will say, well look, is it fair for some people to have to pay a higher price of what they buy than others?
Well, economic theory can't answer the question about what is fair, but economic theory can talk about the effects of not allowing some people to pay higher prices of what they buy than others.
And just one example that people easily relate to, if I were to ask any of your listeners, suppose you saw a fat, old, ugly cigar-smoking man married to a beautiful young lady.
What kind of prediction would you make about that man's income?
Your predict is pretty high.
And what is the man doing?
Well, he says to the beautiful young lady, I can't compete for your hand on the basis of a handsome guy, so let me offer you a higher price.
Now, some people might say, oh, is it fair for beautiful young ladies to charge fat, old, ugly cigar-smoking men higher prices than handsome men?
And you might say, no, it's unfair.
And you make a law.
That beautiful young ladies can't charge fat, old, ugly cigar-smoking men higher price than an handsome man.
Then after that law is passed, you say, what is the probability of a fat, old, ugly cigar-smoking man marrying a beautiful young lady?
It goes to silch, because by denying him the right to offer a higher price, what you do, you take away his most effective means of competing with the more preferred man.
And going back to the housing issue, If you deny blacks the right to pay higher prices of what they buy, you take away their most effective means of competing with the more preferred person.
Well, it's one of these things where you may look at it and a certain amount of aesthetic dis-appeal is in the situations.
Oh, it's unfair, it's unfair.
But the remedy is always worse than the supposed illness because the only way to try and remedy this is to use the vast and corrupting power of the state to interfere with people's free market decisions and violate their property rights.
Yeah, I think you're absolutely right.
And if you look at the areas where blacks are most disadvantaged, you look at, you know, what does it take for a person to get into the taxi cab business to become an owner-operator of a taxi?
Well, you need a car, you don't need a whole lot of education, you need an insurance policy.
But in cities like New York, historically, the license to own and operate one taxi was It got as high as close to $1 million.
That is the medallion price you had to pay.
And so you say, well, look, if you create a system where you have to buy a costly medallion in order to become an owner-operator, well, who does that discriminate against?
Well, it discriminates against people who don't have $1 million laying around or bank credit to get a loan for that amount.
And so...
You look at many areas where there's occupational licensing or business licensing by the government, and that handicaps the less preferred people or it handicaps latecomers or people without political clout.
Now, let's do a bit of a time whiplash and go back to sort of 17th, 18th, 19th centuries.
I always feel every time I read intelligent and well-educated people on a subject to do with history, particularly American history, particularly race-relation American history, I feel like...
History has been robbed from me and I've never been told the truth about anything.
And one of the things that you point out is you sort of push back against the narrative that it was like universal, like there were house slaves, there were field slaves, and nobody had any opportunity who was black.
And you do point out some differences to do with that.
I wonder if you can help people understand that it was not all universal oppression, but some of the amazing black entrepreneurs that popped up in American history with a fair degree of regularity.
Oh, absolutely right.
As a matter of fact, during the time of slavery, the blacks would sometimes work at night for somebody else in order to get some money.
As a matter of fact, there was a practice they called quasi-free Negroes.
And these were blacks who their owners would allow them to go into business for themselves or do various jobs And the agreement with the owner would be that the black takes care of his food and his housing, etc., etc., and then he comes back and pays a little bit of money to, you know, give his owner some of the commission.
And so the portrayal of blacks as helpless Helpless victims of slavery is just plain wrong.
Now, don't get me wrong, slavery is a horrible, horrible attack on personal liberty.
But it turns out that sometimes economics can bring people to their senses and allow slaves to be granted extra privileges.
Right.
Now, three of the biggest issues I think that everyone with concern about these issues looks at the black community and says, well, there's problems with illegitimacy, there's problems with high unemployment, there's problems with high crime.
And, of course, the standard answer is, well, you're embedded in a system of white privilege and white racism, and therefore, therefore, therefore...
But of course, if those problems were better in the past, that kind of puts the final nail on the coffin of that thesis.
I wonder if you could take people back to a little bit more recent history and how much better the black community was in these areas before, say, the welfare state and other things that have...
You're absolutely right.
That is currently the illegitimacy rate among blacks is 75%.
That means 75% of black babies are born without the benefit of a mother and father who are married.
Now, it turns out that the illegitimacy rate among blacks in 1940 or 1938 was somewhere between 12 and 14 percent.
Today, the percentage of blacks living in two-parent families, that is black kids living in two-parent families, is right around 30 percent.
But if you go back to 1925 in Harlem, it was 85 percent of blacks living in two-parent families.
And in other cities, Cleveland and Philadelphia and some other cities, somewhere between 70 and 85 percent of blacks were living in two-parent families.
Now, people who say that the black family structure today is a result of slavery and discrimination Well, they should explain, well, how come it was not much worse in earlier periods when blacks were indeed much closer to slavery than they are today?
You know, a lot of people just ignore the fact that black Americans have made many, many great gains, and the big problem For us is to somehow get these gains to thirty-some percent of black people for whom they appear elusive.
And as I often point out, that black Americans have made the greatest gains over some of the highest hurdles in the shortest period of time than any other racial group in the history of man.
Well, what's the evidence for this?
Well, if you just add up the income that black Americans earn each year and just thought of us as a separate nation, We would be the world's 20th richest nation.
Some black Americans have been some of the world's most famous personality.
One black American, Colin Powell, was the head of the mightiest military in the world.
And there are few black Americans who are among some of the world's richest people.
Now, the significance of all this is that in 1865, neither a slave nor a slave owner would have believed that this kind of progress would be available it would be possible in just a little bit over a century and as such it speaks to the intestinal fortitude of a people but just as importantly it speaks to the greatness of a nation where these kind of gains were possible that is these kind of gains would have been impossible anywhere
on the face of the earth except United States and so I think that many people push the agenda that black Americans are just poor, helpless people, and we need government, we need white liberals pushing government to somehow protect us, and that is utter nonsense.
Well, and this is astonishing, too, reading in your work, Dr.
Williams, about historical rates of black employment, because unemployment, particularly youth unemployment, which I would argue, of course, is a function of excessive unionization rules and high minimum wages, youth unemployment is extraordinarily high in the black communities in certain neighborhoods.
But historically, this was not the case at all.
That's right.
In my book, Race and Economics, I showed the Department of Labor Statistics, and That shows that in 1948, black teenage unemployment was less than white teenage unemployment.
I think that black teenage unemployment was 9.4% and white teenage unemployment was 10.2%.
Blacks were more, they had a higher labor force participation than whites, namely it's 106% of that are whites.
And today it's exactly the opposite.
In some cities, black and teenage unemployment is 50%.
Their labor participation rate is very, very low.
And how do you explain this?
Well, can you say, well, gee, in 1948, the reason why black unemployment was so low was because there was less racial discrimination in 1948 than today, or that black teenagers had greater skills than white teenagers in 1948.
Well, that's just plain nonsense.
What explains the high rate and growing rate of black teenage unemployment are increases in the minimum wage law and also increases in numerous labor laws that protect adult workers from having to compete with teenage workers.
In your description of growing up in your neighborhood, you mentioned that there was very little crime.
People wouldn't even lock their doors till like 11 o'clock at night and so on.
And I've also been struck by Dr.
I guess retired Dr.
Sol's description of growing up in a poor neighborhood.
I wonder if you can help share with people your experience of the neighborhood you grew up in and compared to what people's general perceptions of these kinds of neighborhoods are these days.
Well, I grew up, I spent a good part of my life in the Richard Allen Housing Project in North Philadelphia.
And in the Richard Allen Housing Project, many people there did not even lock their doors at all.
And if they did lock their doors at night, many just waited until 11 o'clock or 10 o'clock when everybody was in the house.
I would go over to my friend's house and just knock on the door and let myself in.
There was people in hot, humid nights.
People felt comfortable sleeping out on lawn chairs or sleeping out on the balcony.
You don't do that today.
We did not go to bed with the sounds of gunshots.
But today, there's all kinds of gunplay.
And in looking at crime, Crime has really just taken off in many black communities.
Just over the 4th of July weekend in Chicago, 80 people were shot, and I believe it was like 14 homicides.
And one of the tragedies about the huge killing rate in Chicago is that the clearance rate is less than 20%.
That means that the police catch a murderer Just 20% of the homicide victims, their murder is caught.
And people are living in fear.
The average white person would not begin to tolerate the kind of conditions that many black people live under.
Some black mothers will put their kids in a bathtub at night so as they won't get hit by stray bullets.
Sometimes some parents...
Tell the kids don't go to the window, or either serve dinner sitting on the floor so as to avoid stray bullets.
People put bars in front of their houses, in front of the windows, and special locks on doors.
And all this is entirely new among black people.
And I can't imagine that these experiences are far off from the emotional traumas that people experience in direct war zones.
Oh yeah, it's incredible.
And the average American just has no idea and would not begin to tolerate the kind of living conditions that many black people must live under.
And one of the very unfortunate things is that many of the so-called black leadership, they make sure they exempt themselves from those living conditions, such as Maxine Waters, I mean, she's the representative, Congressman Maxine Waters, she's the representative of Southeast Los Angeles, whites.
But she doesn't live anywhere near her constituents.
She lives in a, I think it's 6,000 square foot, over $4 million house in a very, very nice part of Los Angeles.
Right, which I think is only 6% black, so she's not- And then another thing about these so-called leaders, Is that in terms of they will vote against vouchers and tuition tax credits to enable black parents to get their kids out of these unsafe and failing schools.
They'll vote against it.
But their children, they have them in private schools or in charter schools.
They would not begin to have their children go to one of those schools I just mentioned in Baltimore where Teachers are assaulted.
I think in Baltimore, I think in 2010 or 2012, an average of four teachers were assaulted each day of the school year.
These people who vote against tax credits and vouchers, they would not begin to have their kids in such a school.
Well, and I remember Dr.
Williams hearing the phrase, the Democrat plantation, regarding the harvesting of poor blacks for votes in return for, you know, whatever drips you can get from the government feeding tray.
And I remember thinking, wow, that's a really harsh phrase.
But the more I've talked to people like yourself, the more I've researched it myself, the idea that...
Blacks in the inner cities are being kept in a state of squalor and violence and so on, and people aren't acting to do the free market reforms that would genuinely help those communities.
For me, it's hard to avoid returning to that phrase in my mind.
Yeah, it's very difficult.
And matter of fact, if you ever want more insights, a fellow who's far more involved with it than I, Larry Elder, he's a radio guy in Los Angeles, and he talks about it, and he does a nationally syndicated column, and he talks about the kind of things that undermine black achievement.
And you're not going to really do very much to help people, number one, until you get rid of or do something about the crime rate.
Because what the high crime rate means is that people who can do better and people who care more, they're the first to leave.
With the high crime rate, teachers being assaulted, etc., etc., that means that the best teachers won't go anywhere near these unsafe schools.
So I think a first-order business in dealing with any of this, all these problems, is to do something about the verber high crime rate.
And also do something to the extent that we can about the breakdown of the black family.
Matter of fact, breakdown is probably the improper word to use.
It's not very descriptive at all.
The family doesn't start in the first place.
And we have to do something about the family structure.
And all the evidence that we see, the statistical evidence that we see, is that kids from female-headed household We're good to go.
The historical black approach to government relations to merely two streams, but just for the sake of efficiency, let's pretend it was.
Because like the Japanese who came to America, eschewed involvement in politics and, you know, worked to save and worked to grow their businesses and so on, and have ended up doing better than whites in America.
Versus the Irish who came and, you know, became like politicians and cops and so on and have lagged behind.
This idea of what is your relationship, if you're disadvantaged, what is your relationship to state power?
Now, nowadays, generally what we hear through the mainstream media is the blacks who say, or the black leaders who say, well, let's vote ourselves into prosperity.
Let's get more advantages from government.
Let's get more benefits from government.
But there was another very strong stream, particularly after the end of slavery, of black leaders saying, no, no, no, no.
Like the famous ancient French minister, laissez-faire, leave us alone.
Don't try and help us.
Don't step in our way.
Just leave us free to compete.
And that thread seems to have diminished over time.
Oh, yes.
And I think that there's this growing assumption, or there's this assumption that That there's a connection between political power and economic power, and there's no evidence to support that whatsoever.
As a matter of fact, you mentioned Japanese or Asians in general.
Japanese don't even have political power, don't have much political power.
In the areas that they're the most numerous, such as Northern California and Southern California, but nonetheless, by any measure of socioeconomic success, Japanese Americans are just about at the top.
Now, on the other hand, you find, as you mentioned, Irish Americans historically have been very, very much involved in the political systems in our country.
But it turns out that the Irish Americans were the slowest rising of any of the white ethnic groups.
If you look at, if you say, well, what are the areas today where blacks live under the most horrible conditions?
Well, there are the very cities where a black is the mayor, a black is the chief of police, or...
The Democrats have been running the city for a half a century or more.
That is, you don't find all the decay and rot in cities that are essentially run by Republicans.
Now, I'm not saying that blacks ought to run out and vote for Republicans, but I'm just pointing out that there is little or no connection between political power and economic power.
Well, and if, you know, the free market solutions is always a band-aid that hurts in the moment, but it's better in the long run.
And looking back in time, and it's easy for me to say because it's not my livelihood on the line, but looking back in time, if the mechanisms of the state had not been used to keep Blackstrom evenly competing with everyone else, On the economic playing field, well then of course black incomes would have risen and everyone's economics would be much better off and very very few of the problems that we face today would either be here or be as immense as they seem to be because the longer you keep holding off the inevitable free market reforms the
more communities and families and incentives get distorted to the point where when you have to bring back the free market reforms it's a much bigger pile of pain than it would have been in the past.
Oh yeah, I think so.
And I think that we can begin to bring the free market back into play by a lot of just deregulation.
And there's an organization called the Institute for Justice, and they've been at the forefront of fighting various kinds of licensing laws and various kinds of regulations that handicap people from getting into business, such as As hair braiding or the taxicab business, barbering, and many other businesses.
And I would suggest that the listener would just check out IJ.org, Institute for Justice, and they are leading the struggle to bring many elements of the free market back.
Right.
And of course, these kinds of regulations hit in particular the least advantage, which is why I think if they come down, we'll see a lot more progress in these communities.
Now, I know we don't have a huge amount of time this morning, Dr.
Williams.
I want to really, really thank you.
I hope that this has given people a taste of the kind of innovative and creative information and arguments that Dr.
Williams brings to this fractious topic.
I want to remind people, please, please go to WalterEWilliams.com.
I'll put a link in the show notes.
His books are fantastic, very easy to read, and very powerful.
Lots of data and lots of great anecdotes.
You possess a very elegant pen, and I appreciate how you put it to work in these areas.
