Wintery Knight

…integrating Christian faith and knowledge in the public square

Should blacks vote for Democrats? Do liberal policies help young black men?

I want to quote from two black economists – my two favorite economists – to answer some questions.

First, Thomas Sowell.

Economist Thomas Sowell

Economist Thomas Sowell

Is minimum wage good for young blacks?

He writes:

Low-income minorities are often hardest-hit by the unemployment that follows in the wake of minimum wage laws. The last year when the black unemployment rate was lower than the white unemployment rate was 1930, the year before there was a federal minimum wage law.

The following year, the Davis-Bacon Act of 1931 was passed, requiring minimum wages in the construction industry. This was in response to complaints that construction companies with non-union black construction workers were able to underbid construction companies with unionized white workers (whose unions would not admit blacks).

Looking back over my own life, I realize now how lucky I was when I left home in 1948, at the age of 17, to become self-supporting. The unemployment rate for 16- and 17-year-old blacks at that time was under 10%. Inflation had made the minimum wage law, passed 10 years earlier, irrelevant.

But it was only a matter of time before liberal compassion led to repeated increases in the minimum wage to keep up with inflation. The annual unemployment rate for black teenagers has never been less than 20% in the past 50 years, and has ranged as high as over 50%.

You can check these numbers in a table of official government statistics on page 42 of professor Walter Williams’ book “Race and Economics.”

Incidentally, the black-white gap in unemployment rates for 16-year-olds and 17-year-olds was virtually nonexistent back in 1948. But the black teenage unemployment rate has been more than double that for white teenagers for every year since 1971.

Second, Walter Williams.

Economist Walter Williams

Economist Walter Williams

Is voting for black leaders good for blacks?

He writes:

Black leaders stress the importance of political power and getting out the vote, but we might ask how important political power is to the ordinary black person. As a start toward answering that question, we might examine black life in cities where blacks hold considerable political power.

Detroit is the nation’s most dangerous city. Rounding out Forbes magazine’s 2013 list of the 10 most dangerous cities are Oakland, Calif.; St. Louis; Memphis, Tenn.; Stockton, Calif.; Birmingham, Ala.; Baltimore; Cleveland; Atlanta; and Milwaukee.

According to a recent American Community Survey by the U.S. Census Bureau, the 10 poorest cities with populations of more than 250,000 are Detroit, with 33% of its residents below the poverty line; Buffalo, N.Y., 30%; Cincinnati, 28%; Cleveland, 27%; Miami, 27%; St. Louis, 27%; El Paso, Texas, 26%; Milwaukee, 26%; Philadelphia, 25%; and Newark, N.J., 24%.

In addition to poverty, there is grossly inferior education and high welfare dependency in these cities.

The most common feature of these cities is that for decades, all of them have had Democratic administrations. Some cities — such as Detroit, Buffalo, Newark and Philadelphia — haven’t elected a Republican mayor for more than a half-century.

What’s more is that in most of these cities, blacks have been mayors, chiefs of police, school superintendents and principals, and have dominated city councils.

[…]Let’s be clear about what I am saying and not saying. I am not suggesting that there’s a causal relationship between crime, poverty and squalor on the one hand and Democratic and black political power on the other. Nor am I suggesting that blacks ought to vote Republican.

What I am saying is that if one is strategizing on how to improve the lives of ordinary — and particularly the poorest — black people, he wants to leave off his high-priority to-do list the election of Democrats and black politicians. Also to be left off the to-do list is a civil rights agenda.

Perhaps the biggest roadblock to finding solutions is the widely held vision that the major problem confronting blacks is discrimination. I am not arguing that every vestige of discrimination has been eliminated. I am arguing that the devastating problems facing a large proportion of the black community are not civil rights problems. The solutions will not be found in the political or civil rights arena.

And third, more Walter Williams.

Is focusing on the few cases where a white police officer shoots a black man good for blacks?

He writes:

Excerpt:

Each year, roughly 7,000 blacks are murdered. Ninety-four percent of the time, the murderer is another black person.

According to the Bureau of Justice Statistics, between 1976 and 2011, there were 279,384 black murder victims. Using the 94-percent figure means that 262,621 were murdered by other blacks.

Though blacks are 13 percent of the nation’s population, they account for more than 50 percent of homicide victims. Nationally, the black homicide victimization rate is six times that of whites, and in some cities, it’s 22 times that of whites.

Coupled with being most of the nation’s homicide victims, blacks are most of the victims of violent personal crimes, such as assault and robbery.

The magnitude of this tragic mayhem can be viewed in another light. According to a Tuskegee Institute study, between 1882 and 1968, 3,446 blacks were lynched at the hands of whites. Black fatalities during the Korean War (3,075), Vietnam War (7,243) and all wars since 1980 (8,197) come to 18,515, a number that pales in comparison with black loss of life at home.

It’s a tragic commentary to be able to say that young black males have a greater chance of reaching maturity on the battlefields of Iraq and Afghanistan than on the streets of Philadelphia, Chicago, Detroit, Oakland, Newark and other cities.

Not everyone who runs around crying “racism, racism” is interested in helping blacks to do as well as other racial groups.

Blacks will do well, just as they used to do, when the political parties in power embrace free-market capitalist policies, such as lowering the minimum wage, or scrapping it entirely. Blacks will do well, just as they used to do, when we strengthen and subsidize natural marriage – by repealing no-fault divorce and reforming welfare for single mothers. Blacks will do well, just as they used to do, when we make public schools more responsive to parents, and less responsive to teacher unions. And so on.

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Where is the outrage in the black community for black-on-black crimes?

Walter Williams

Walter Williams

A recent editorial by George Mason University professor of economics Walter Williams.

Excerpt:

Each year, roughly 7,000 blacks are murdered. Ninety-four percent of the time, the murderer is another black person.

According to the Bureau of Justice Statistics, between 1976 and 2011, there were 279,384 black murder victims. Using the 94-percent figure means that 262,621 were murdered by other blacks.

Though blacks are 13 percent of the nation’s population, they account for more than 50 percent of homicide victims. Nationally, the black homicide victimization rate is six times that of whites, and in some cities, it’s 22 times that of whites.

Coupled with being most of the nation’s homicide victims, blacks are most of the victims of violent personal crimes, such as assault and robbery.

The magnitude of this tragic mayhem can be viewed in another light. According to a Tuskegee Institute study, between 1882 and 1968, 3,446 blacks were lynched at the hands of whites. Black fatalities during the Korean War (3,075), Vietnam War (7,243) and all wars since 1980 (8,197) come to 18,515, a number that pales in comparison with black loss of life at home.

It’s a tragic commentary to be able to say that young black males have a greater chance of reaching maturity on the battlefields of Iraq and Afghanistan than on the streets of Philadelphia, Chicago, Detroit, Oakland, Newark and other cities.

This is not even to mention abortion, which disproportionately affects blacks. Yet it is overwhelmingly supported by blacks who vote more than 90% Democrat. Maybe we should be more focused on black-on-black crime and black genocide, since these are bigger problems.

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Walter Williams: where is the outrage over black-on-black crimes?

Walter Williams

Walter Williams

A recent editorial by George Mason University professor of economics Walter Williams.

Excerpt:

Each year, roughly 7,000 blacks are murdered. Ninety-four percent of the time, the murderer is another black person.

According to the Bureau of Justice Statistics, between 1976 and 2011, there were 279,384 black murder victims. Using the 94-percent figure means that 262,621 were murdered by other blacks.

Though blacks are 13 percent of the nation’s population, they account for more than 50 percent of homicide victims. Nationally, the black homicide victimization rate is six times that of whites, and in some cities, it’s 22 times that of whites.

Coupled with being most of the nation’s homicide victims, blacks are most of the victims of violent personal crimes, such as assault and robbery.

The magnitude of this tragic mayhem can be viewed in another light. According to a Tuskegee Institute study, between 1882 and 1968, 3,446 blacks were lynched at the hands of whites. Black fatalities during the Korean War (3,075), Vietnam War (7,243) and all wars since 1980 (8,197) come to 18,515, a number that pales in comparison with black loss of life at home.

It’s a tragic commentary to be able to say that young black males have a greater chance of reaching maturity on the battlefields of Iraq and Afghanistan than on the streets of Philadelphia, Chicago, Detroit, Oakland, Newark and other cities.

You might remember that the NAACP just recently came out for gay marriage. Do they have their priorities straight?

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Does the free market work to reduce poverty?

Economist Walter Williams

Economist Walter Williams

From Investors Business Daily.

Excerpt:

There has never been a purely free market economic system, just as there has never been a purely communist system. However, we can rank economies and see whether ones that are closer to the free market end of the economic spectrum are better than ones that are closer to the communist end.

Let’s try it.

First, list countries according to whether they are closer to the free market or the communist end of the economic spectrum. Then rank countries according to per capita gross domestic product. Finally, rank countries according to Freedom House’s “Freedom in the World” report.

People who live in countries closer to the free market end of the economic spectrum have far greater income than people who live in countries toward the communist end — and enjoy far greater human rights protection.

According to the 2012 “Economic Freedom of the World” report by James Gwartney, Robert Lawson and Joshua Hall, nations ranking in the top quartile with regard to economic freedom had average per capita GDP of $37,691 in 2010 compared with $5,188 for those in the bottom quartile.

In the freest nations, the average income of the poorest 10% of their populations was $11,382. In the least free nations, it was $1,209.

Remarkably, the average income of the poorest 10% in the economically freer nations is more than twice the average of those in the least free nations.

Free market benefits aren’t only measured in dollars and cents.

Life expectancy is 79.5 years in the freest nations and 61.6 years in the least free.

Political and civil liberties are considerably greater in the economically free nations than in unfree nations.

Leftists might argue that the free market doesn’t help the poor. That argument can’t even pass the smell test.

Imagine that you are an unborn spirit and God condemned you to a life of poverty but gave you a choice of the country in which to be poor. Which country would you choose?

To help with your choice, here are facts provided by Robert Rector and Rachel Sheffield in their report “Understanding Poverty in the United States: Surprising Facts About America’s Poor.”

  • Eighty percent of American poor households have air conditioning.
  • Nearly three-fourths have a car or truck, and 31% have two or more.
  • Almost two-thirds have cable or satellite TV.
  • Half have one or more computers.
  • Forty-two percent own their homes.
  • The average poor American has more living space than the typical non-poor person in Sweden, France and the U.K. Ninety-six percent of poor parents stated that their children were never hungry; in other words, they could afford food.

The bottom line is that there is little or no material poverty in the U.S.

At the time of our nation’s birth, we were poor, but we established an institutional structure of free markets and limited government and became rich.

This might be a good article send along to people who want to bash our free-market system. It’s easy for them to make assertions that we have to do this or that policy to redistribute wealth. But the real solution to helping the poor is not to take from one and give to another, it’s to put into place a system that causes wealth to be created for all. That’s what happened in the United States, and you can see how it happened in other capitalist economies like Chile, Hong Kong and Singapore. Capitalism turns poor nations into rich nations.

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Wal-Mart cancels plans to build three stores after D.C. leftists raise minimum wage 50%

From Fox Business, a story that shows how completely clueless left-wing politicians are about economics.

Excerpt:

Wal-Mart Stores (WMT) no longer plans to build three stores in the nation’s capitol, after the city’s council voted to force large retailers to pay starting wages that are 50% higher than the minimum wage there.

The world’s largest retailer also said it will consider its options related to three other Washington, D.C., stores that are still under construction.

The bill, called the Large Retailer Accountability Act of 2013, was approved by an 8-to-5 vote, even though Walmart had warned that the company would leave the district.

“Nothing has changed from our perspective: we will not pursue Skyland, Capitol Gateway, and New York Avenue and will start to review the financial and legal implications on the three stores already under construction,” Walmart spokesman Steven Restivo said, referring to the locations of the planned stores.

“This was a difficult decision for us—and unfortunate news for most D.C. residents—but the Council has forced our hand.”

The district’s new law requires retailers with sales of more than $1 billion and with stores of at least 75,000 square feet to pay their workers starting salaries of at least $12.50 an hour, compared to the minimum wage of $8.25.

Unionized businesses are exempt from the measure. Large stores that already have a presence in D.C., including Target (TGT) and Macy’s (M), have four years to comply.

Now for most of my readers who understand economics, what happened here is going to be pretty obvious. But sometimes people get specialized in other areas and neglect the study of economics. The danger then is that they will be moved to support policies that appeal to their hearts. But it’s very important to understand that policies that sound good, like raising wages, often have unexpected negative results.

Here is George Mason University economics professor Walter Williams to explain the problem with increasing the minimum wage, starting with the basics of economics.

Excerpt:

Are people responsive to changes in price? For example, if the price of cars rose by 25 percent, would people purchase as many cars? Supposing housing prices rose by 25 percent, what would happen to sales? Those are big-ticket items, but what about smaller-priced items? If a supermarket raised its prices by 25 percent, would people purchase as much? It’s not rocket science to conclude that when prices rise, people adjust their behavior by purchasing less.

It’s almost childish to do so, but I’m going to ask questions about 25 percent price changes in the other way. What responses would people have if the price of cars or housing fell by 25 percent? What would happen to supermarket sales if prices fell by 25 percent? Again, it doesn’t require deep thinking to guess that people would purchase more.

This behavior in economics is known as the first fundamental law of demand. It holds that the higher the price of something the less people will take and that the lower the price the more people will take. There are no known exceptions to the law of demand. Any economist who could prove a real-world exception would probably be a candidate for the Nobel Memorial Prize in Economic Sciences and other honors.

[…]University of California, Irvine economist David Neumark has examined more than 100 major academic studies on the minimum wage. […]About 85 percent of the studies “find a negative employment effect on low-skilled workers.” A 1976 American Economic Association survey found that 90 percent of its members agreed that increasing the minimum wage raises unemployment among young and unskilled workers. A 1990 survey found that 80 percent of economists agreed with the statement that increases in the minimum wage cause unemployment among the youth and low-skilled. If you’re looking for a consensus in most fields of study, examine the introductory and intermediate college textbooks in the field. Economics textbooks that mention the minimum wage say that it increases unemployment for the least skilled worker.

When considering what economic policies to adopt, it is not enough to do what feels good. Liberals and conservatives agree that it is good to help the poor. Liberals think that higher minimum wage rates help the poor, and conservatives think that lower minimum wage rates help the poor. This is not a topic that is up for debate, though, because economists across the idological spectrum agree on this one – and for the reasons outlined above and illustrated in the Wal-Mart case.

Take a look at this post from moderate Harvard University economist Greg Mankiw.

He writes:

I believe it is better to introduce students to economics with topics about which there is more of a professional consensus. In chapter two of the book, I include a table of propositions to which most economists subscribe, based on various polls of the profession. Here is the list, together with the percentage of economists who agree:

    1. A ceiling on rents reduces the quantity and quality of housing available. (93%)
    2. Tariffs and import quotas usually reduce general economic welfare. (93%)
    3. Flexible and floating exchange rates offer an effective international monetary arrangement. (90%)
    4. Fiscal policy (e.g., tax cut and/or government expenditure increase) has a significant stimulative impact on a less than fully employed economy. (90%)
    5. The United States should not restrict employers from outsourcing work to foreign countries. (90%)
    6. The United States should eliminate agricultural subsidies. (85%)
    7. Local and state governments should eliminate subsidies to professional sports franchises. (85%)
    8. If the federal budget is to be balanced, it should be done over the business cycle rather than yearly. (85%)
    9. The gap between Social Security funds and expenditures will become unsustainably large within the next fifty years if current policies remain unchanged. (85%)
    10. Cash payments increase the welfare of recipients to a greater degree than do transfers-in-kind of equal cash value. (84%)
    11. A large federal budget deficit has an adverse effect on the economy. (83%)
    12. A minimum wage increases unemployment among young and unskilled workers. (79%)
    13. The government should restructure the welfare system along the lines of a “negative income tax.” (79%)
    14. Effluent taxes and marketable pollution permits represent a better approach to pollution control than imposition of pollution ceilings. (78%)

When you raise the price of anything – including labor – fewer people will buy it. Wal-Mart will still spend the money on new stores and new employees, just not in Washington, D.C. – not with those laws. Notice that number one on his list is the case of rent control, where government good-intentioners try to hold the price of rent down. What happens next? Well, it the price goes down then everyone wants to buy more of whatever just went on sale. But the people providing what just went on sale stop making it because they can’t make a profit. The unexpected consequence is that there is a housing shortage. The quantity of housing decreases, and the quality of housing decreases. The quality decreases because demand is so high that property owners no longer have to maintain the properties, since demand has skyrocketed. Economics is something that everyone should study, so that we don’t just have good intentions, but also have good results.

 

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