Pundits often claim that racial disparities in the United States are the result of racist capitalism and freer markets. While they are certainly correct in observing socioeconomic disparities, they often attribute said disparities to a lack of government intervention. But as we’ll demonstrate, from poverty and income to unemployment and education, many things have actually gotten worse for blacks since the interventions of the 1960s. “Racism” is a politically convenient excuse that undermines millions of people and seeks to absolve politicians from their failed programs. But as you’ll see, it has actually been government intervention that perpetuated these racial disparities, not free market capitalism.
From 1940 to 1970, black wage growth was almost double the growth from 1970 to 2000. Furthermore, black-white wage disparity widened from 1965 to 1981. There is research suggesting the opposite of this is true, but they are subjected to selection bias and do not account for blacks withdrawing from the workforce. Therefore, the only explanation is a decline in their human capital that cause negative effects on black labor supply.
This can be attributed to three major government failures: educational integration, the war on drugs, and Great Society welfare state.
Let’s explain educational integration with a thought experiment. After Brown v. Board of Education, black children were forced at gun point into white schools. A popular image shows a little girl entering a school with a National Guard escort while picketers scream and yell. No doubt that forced segregation was a horrendous policy, but a quality learning environment does not start with a National Guard escort to first period.
Research supports this theory. A 2007 study concludes that desegregation of schools had a negligible benefit for blacks. In fact, blacks in high black enrollment share districts improved significantly more than blacks with increased exposure to whites. Thus, the conclusion is that improvements were a factor of funding and not diversity. Furthermore, prior to desegregation, only about 40% of racial achievement gaps can be attributed to “separate-but-equal” policies, which suggests family background and values hold greater significance.
The Great Society and bloated welfare programs had detrimental effects on the black labor market. Since 1964, single-mother birth rates for blacks have jumped from 24% to 72%. Although 24% was already above the average, government decided to reward this behavior with generous programs from the Great Society, which have accounted for $22 trillion in spending.
In practice, welfare acts as added labor market competition. It forced black women to make a choice: go to work to feed your child OR take this government check. The big problem is that many of these programs paid more than a regular first job. Economically speaking, the REALIZED COST of having a child was greatly reduced, but only in the short term. As incentives work, new parents made the choice most beneficial to them, and understandably so.
Lastly, the Great Society runs parallel to a mass exodus of black labor – both male and female. Up until the mid-1960s, black labor force participation was in-line with whites and then made a dramatic decline. Instead of “helping” blacks, it only forced them to decide between that first job, which builds experience and lifetime earnings, OR accept a government check. It might seem trivial, but the long term effects of those single decisions have been catastrophic.
In the aggregate, black labor supply has severely constricted due to policy outcomes from the Great Society. These policies restricted supply and diminished competition, thus driving down wage growth. We now have a snowball effect of generational unemployment and poverty.
If all that wasn’t enough, the war on drugs proved to be the last destructive government policy filled with unintended consequences. Blacks and whites use drugs at relatively the same rate . Despite that, blacks are arrested at three times the rate. But why?
Since blacks tend to be more concentrated in low income areas, arguably a result of Great Society housing programs, police have an incentive to arrest them more frequently. It’s simple economics. Let’s do a thought experiment to explain.
Police departments are subject to bureaucratic practices and higher-ups have an incentive to play a political numbers game. They want to say “look how much I lowered crime” when election time comes, and they do so simply by arresting more people. Statistically speaking, it is much more lucrative to arrest low income citizens for two BIG reasons: 1) since they cannot afford the legal fees, they are more likely to enter into a plea deal at the advice of a public defender; AND 2) they tend to live in densely populated areas, thus delivering a higher turnover rate.
As a result of draconian punishments, blacks are herded into prisons for childhood mistakes that amount to lifetimes of problems. In fact, the black incarceration rate has more than TRIPLED since 1960. According to The Sentencing Project, 1 in 3 will go to jail in their lifetime, largely for nonviolent drug possession. The compounding effect has been single family homes and violent gang life, all of which perpetuate from generation to generation.
If pundits want to address racial disparity, they must first realize the litany of big government programs gone wrong. Well intended or not, government programs designed to “help” black people instead largely proved disastrous. What’s certain is that freer markets did not fail African Americans, government did.