Many of the comments on my post yesterday, “Bernie Sanders, Minimum Wage, and Systemic Racism,” March 1, were particularly good. They have convinced me that I need to walk back some of the things I said. Like most people, I hate to admit that I’m wrong. Unlike most people, I’m typically quite quick to admit that I’m wrong. Back in the 1970s or 1980s, my friend Michael Walker, who founded Canada’s Fraser Institute, asked Friedrich Hayek why people don’t seem to be convinced by evidence or logic. Hayek replied (I can just picture him doing this with his characteristic half wince/half grin) that people’s ideas are one of their most treasured forms of private property and when you convince them that they’re wrong, they suffer a capital loss. That fit my experience. But my next thought on hearing it was that you already had the capital loss; you just, to use tax lingo, realized it. And to push the metaphor maybe too far, you get a tax break on the loss. Translation: you’re better off admitting you’re wrong because then you won’t make that mistake again and you’ll get clarity for the future.
Now to the issue at hand.
I’ll focus on 8 comments.
BC writes:
Then, is “systemic racism” used synonymously with “unequal outcomes”? If not, then what would be an example of unequal outcomes that are unfavorable for African Americans that does not reflect systemic racism?
Good question, BC, to which I don’t have a good answer. It’s the first comment that got me wondering whether there is such a thing as systematic racism, at least as defined by the NAACP’s President Derrick Johnson.
John Hall, after raising the issue of SAT scores, writes:
I think David needs to think on this issue a little harder to distinguish between this case and the minimum wage case.
I think John is right.
Vivian Darkbloom, as is Vivian’s wont, has one of the best comments, writing:
I’m opposed to a minimum wage increase to $15 for all the reasons likely discussed here previously.
Nevertheless, I’m wondering how someone in favor of such a hike would respond to this definition (and the conclusion therefrom that the hike constitutes “systemic racism”):
“[NAACP President Derrick] Johnson defined systemic racism, also called structural racism or institutional racism, as ““systems and structures that have procedures or processes that disadvantages [sic] African Americans.””
It’s highly likely that a disproportionate number of African Americans would either lose their jobs or fail to get one (or work fewer hours) as a result of such a minimum wage hike. However, is it possible that a disproportionate number of African Americans (those that keep their jobs or manage to get one) would benefit from a wage raise and enjoy a slightly higher standard of living?
What I’m getting at here is whether, per the proposed definition, one should look solely at those disadvantaged, or should one weigh the *net* effect on those all those affected by the change? Could Bernie Sanders reply “I acknowledge that there will be some loss of employment and some reduced employment as a result of this hike. But, those negative effects are exceeded by the benefits of those who will get a pay raise”.
The same thought goes for those “disproportionately arrested” for whatever reason. Is it possible that African Americans “disproportionately benefit” from more policing in those communities?
I don’t have a ready answer, but on the side of those opposed, one tends to refer only to those who tend to lose, and those in favor only to those who tend to gain, with neither side seriously attempting a net benefit analysis. I think it is rare with respect to policy changes that there are only winners *or* losers rather than winners *and* losers.
I agree with Vivian that one should look at all the effects and that, in doing so, one might find that the gains to the black gainers outweigh the losses to the black teenage losers. I doubt it, because a high percent of low-wage people are employed in industries that produce goods that are sold to other low-wage people. Think of McDonald’s in Alabama, for example. But Vivian’s point remains.
Also, Vivian’s point about the disproportionately arrested black people is also relevant. Heather Mac Donald often makes the point that cops in low-income neighborhoods are valued highly by residents, including black residents, because they protect them from crime by other people and that the criminals are disproportionately black. So one would want to look at the total effect.
That last point is interesting because it was precisely the “disproportionately arrested” point that my friend made who convinced me that there is systemic racism. I called my friend to talk it out and actually got him to doubt his own claim, based on Vivian’s reasoning.
zeke5123 writes:
I think this definition [of systemic racism] is dangerous. I am reminded of an example by Kendi that lowering capital gains tax is racist, because it disproportionately favors non-blacks since blacks are less likely to have wealth.
The counter to this is if lower capital gains rates lead to net efficiency, it is a sound policy regardless of the impact on certain cross sections of the populace. Indeed, if you implement enough net efficiency policies, it is very likely that you end up lifting up all cross sections. But this is basically just saying: implement policies that are Kaldor-Hicks improvements.
Once when, with a single policy, you bring into the discussion how it impacts certain cross-sections of the populace (i.e., in this case race), you are more likely not to implement Kaldor-Hicks efficiency polices because racism is bad. No — that way lies madness. Focus on Kaldor-Hicks efficiency generally* and the rest will follow.
I think in your examples you believe changing those policies is Kaldor-Hicks efficient — that is, you think on net minimum wage is bad. But if you argue we should eliminate minimum wage (or not raise it) to reduce structural racism, then why can’t Kendi argue we should raise capital gains to reduce structural racism? I get that people can walk and chew bubblegum at the same time, but ultimately I think your case against the minimum wage is that it is bad economics; not that it harms black people because that would be your argument against raising capital gains tax rate (assuming you agree doing so would be bad).
*I would worry about situations where a policy causes massive losses to Group A to benefit Group B by the losses plus epsilon. There are mismeasurement errors, political risks, etc. So, I would limit Kaldor-Hicks efficiency where there is not (i) massive losses to a particular group and (ii) the gains clearly outweigh the losses. For me, a good rule of thumb is a strong presumption of liberty.
I pretty much agree with what zeke said, including that it’s a dangerous definition and that there’s a strong presumption of liberty. My guess is that my presumption of liberty is even stronger than his, but that’s just a guess.
Knut P. Heen writes of Derrick Johnson’s definition of racism, which I adopted but am now furiously backpedaling on:
A definition of systemic racism which excludes all races but one. Great. I thought this was the definition of racism.
Touche.
Andrew_FL writes:
Minimum wage laws have disparate impacts on many groups, but no one would say the minimum wage is part of “systemic ageism” or “systemic credentialism” even in the rare case of someone who would both correctly understand the consequences of such laws and be inclined to agree with this definition of “systemic racism”
The whole notion is more about proving that we are all guilty collectively of a crime none of us can be said to be guilty of individually. Of course, if committing the category error of attributing racialist ideology and malice to non-human things like “systems” leads to a vast deregulatory push in housing and labor markets, that’s great. If it leads to a mass redistribution of wealth from the supposed perpetrators to their supposed victims, not so much.
The first paragraph is particularly on target. Andrew’s second paragraph points out the perils of using bad arguments for good policies: they can also be used for bad policies. Better just not to use bad arguments, period, even when they help you, which is getting to where I’ll get to soon.
Tom Nagle writes:
While I concur with all your facts, your concluding logic seems flawed when you assert that “Bernie Sanders, therefore, advocates systemic racism”.
Think in terms of a Venn diagram. Circle A is defined to encompass all policies that embody systemic racism as defined in your post. Overlapping a small part of Circle A is another Circle, label it B, that encompasses all policies designed or intended to increase the share of national income earned by low wage workers. Bernie Sanders is a socialist who likely supports all the policies in Circle B. But is it fair to claim that Sanders “advocates systemic racism”–that is, the policies in circle A–even if the overlap is small, the consequences unintended, and he clearly does not support an overwhelming share of the policies that could be classified as systemically racist. Would it be fair to state that “David Henderson advocates the suppression of women’s rights in Afghanistan” because that is an unintended consequence of pulling the US military out of there, a policy that you support?
Good point. Tom, by the way, is the person who convinced me, with the police example, that there is systemic racism. As I noted above, in response to Vivian Darkbloom, he is starting to wonder about his own belief.
Finally, BW writes:
Here is a relevant Slate Star Codex post.
I read it. As is often true, that post is very good. Damn the New York Times.
So where am I? I’m back to doubting that we have systemic racism. And this might answer the first questioner, Dylan. He asked what I had thought systemic racism was before Tom Nagle convinced me that it existed. I had in mind things like slavery, compulsory segregation of restaurants, government requirements that people on buses and streetcars be segregated, etc.
Moreover, I doubt that the concept is useful. Let’s say that you convince me that Bernie Sanders does not believe in systemic racism. And, by the way, the commenters have convinced me. Does that make me dislike his proposal for a $15 minimum wage any less? No. Does it mean that the $15 minimum wage would not cause as much harm as I think it would? No.
I hereby resign as an expert on systemic racism.
READER COMMENTS
Frank
Mar 2 2021 at 7:12pm
When evaluating policy changes, it is best to keep in mind efficiency effects in addition to distribution effects. An increase in the minimum wage lowers efficiency, leaving less to be redistributed. A decrease in the corporate income tax raises efficiency, leaving more to be redistributed.
Enhance efficiency enough and we might be able to undertake less redistribution. 🙂
Frank
Mar 2 2021 at 7:14pm
The only systemic racism I can see in the US of A lies in state controlled school systems. That’s where Black kids get the raw deal that sets them up for life.
And we know how to do it better.
JK Brown
Mar 3 2021 at 2:15pm
The state-controlled school system is the systemic part. The racism is in the curriculum imposed that inculcates far more than “school helplessness” in black students, but also any sense they have agency in life. Social Justice indoctrination is given to all students, but the lessons are the same for all students. For blacks and Hispanics, the lesson is “why try” as “they” won’t let you succeed. For white, Asian and other “white” students, they are told to not oppress, but otherwise, success is theres for the taking, perhaps with a bit donated to the oppressed.
Thomas Sowell crystalized the matter in this Uncommon Knowledge discussion:
Brandon
Mar 2 2021 at 9:30pm
Systemic racism might actually exist, David. Here, for example, is one sociologist’s recent take on systemic racism in the U.S.
He says he’s being “rational” about the whole debate, but somehow I don’t think arguing in favor of reparations is all that rational (though I personally support such a measure).
The strongest arguments come in the housing, education, and employment segments.
S. F. Griffin
Mar 3 2021 at 4:25am
“Damn the New York Times.”
Indeed. For those that don’t know, Scott Alexander is writing at Substack: https://astralcodexten.substack.com/.
Pierre Lemieux
Mar 2 2021 at 10:32pm
Interesting discussion. However, what zeke5123 says about the weighting of costs and benefits is debatable. Cost-benefit analysis is largely an illusion. This follows from Samuelson’s 1950 Oxford Economic Papers “Evaluation of Real National Income.” It can be more or less summarized in Anthony de Jasay‘s observation:
Frank
Mar 3 2021 at 12:47am
Yeah, everybody better have the same slope of the utility function to make cost-benefit analysis of policy changes in currency units work.
Nothing too bad about that assumption. Better than any alternative.
zeke5123
Mar 3 2021 at 11:35am
Pierre — I didn’t fully flesh out my thoughts in the comments, but you might find it surprising that I agree with you! I tried to note the problem by making reference to mismeasurement errors. I worry about the technocratic desire to do cost-benefit analysis; largely because I think it is almost impossible to perform a cost-benefit analysis in many situations satisfactorily. That is why I have a strong presumption in favor of liberty. Besides being a good unto itself, I think history has shown that liberty generally produces net benefits over the long run.
Are there examples where I’d cut the other way? Yes. One I could think of is airplanes. Historically, people owned their property from the depths to the heavens. Not much of a problem for most of human history.
But then Airplanes were invented. Now, we had this situation where airplanes were technically trespassing on millions of people’s property. The hold-out problem here is immense. Airplanes can’t really work in that environment.
So, the courts ruled that to the heavens really didn’t mean to the heavens and it wasn’t a trespass. While I agree with the outcome, I don’t agree with the holding. I think it is a trespass but the way it should be handled is that a takings. The harm is negligible and the benefits large (air travel benefits everyone; not just the person flying); thus there is an in-kind payment for an easement. In this case, I am using the government to curtail some property right, but I think it clearly overcomes my strong presumption.
Pierre Lemieux
Mar 5 2021 at 12:46am
As you imply, the presumption of liberty (defended by de Jasay) is very different from CBA, which is a presumption of takings. Now, in practice, CBA can be useful to slow down the government, force it to state its assumptions clearly, and tell us whom it takes and whom it favors (to the extent that the CBA is done correctly, which is not easy). I have not completely fleshed out the argument either.
Dumky
Mar 3 2021 at 12:28am
Every policy helps some groups and harms some others. There’s enough bad things with most policies that we don’t need to tailor our evaluation to single out a particular ethnic group.
Many policies harm the poor the most (education system, housing restrictions, multitudes of taxes, welfare traps, work restrictions, cronyism, …) as often discussed in these pages. While a disproportionate portion of the poor are black, the analysis stands regardless of race.
Unless some intentions can be demonstrated (and I’m not convinced that “lineage” qualifies), I’m not sure what is gained by invoking categories of “racism” or “systemic racism” in such discussions. It appears a trendy source of heat (typically a bludgeon) rather than a source of light.
Worse, you can take some policy (say restrictions on sales of sodas) and craft an even more horribly racist/unjust variant (say “ban sale of sodas to blacks” or “ban sale of sodas to overweight people”, extreme to illustrate the absurdity) that would have to be considered “anti-racist” by definition (ie. disproportionately “helping” blacks) using the proponents’ understanding of anti-soda policies.
That tells me that such concepts of “systemic racism” and “anti-racism” are unrelated to racism and likely bankrupt.
Billy Kaubashine
Mar 3 2021 at 11:40am
Excellent discussion. It seems that if one digs deep enough into the derivative results of any policy, one can find disparate impact on some group.
Even if the net effect of the higher minimum wage on minority employees is positive, the higher wage will disproportionately benefit large publicly owned corporations with economies of scale over small businesses. Might that be racist because it disproportionately favors non-blacks since blacks are less likely to have wealth and own stock?
Michael Rulle
Mar 3 2021 at 11:44am
David
Not sure why the title—I cannot tell if it’s part barb/putdown and/or part serious.
I have found that reading John McWhorter (and many others, but I like JM best) is very helpful on this subject. He has written a recent series of essays that are on the new disintermediation website “Substack” (you guys should check Substack out–I am sure you have!).
He has been writing on this topic for a long time and there are hardly any issues he does not address. I am sure you read him—–but does not hurt to mention him.
Roger McKinney
Mar 3 2021 at 2:10pm
I’m surprised and dismayed no one brought up the books on this topic by Thomas Sowell and Walter Williams!
According to them there is no systemic racism in yhe US since Civil Rights.
Of course it’s always cheap and easy to define things so that your argument wins by default.
Nick Ronalds
Mar 3 2021 at 5:05pm
Vivian and others seem unaware that in the long run, “all the factor owners’ loss from a capital income tax is a loss to labor”. For the same reason, a capital gains tax cut flows to labor in the long run. Hence, it is not correct that “a capital gains tax cut disproportionately favors non-blacks since blacks are less likely to have wealth”. See here, for example: https://caseymulligan.blogspot.com/2017/10/furman-and-summers-revoke-summers.html.
Warren Platts
Mar 4 2021 at 3:53pm
I wouldn’t lump corporate income taxes with capital gains taxes. A corporation is presumably engaged in producing real goods & services, whereas capital gains are “unearned income”. When you tax something, you get less of it. Thus, I have never understood why workers and corporations and corporations producing real goods and services should be taxed at higher rates than capital gains income. Low capital gains taxes might make sense if economic growth was constrained by available investment funds. But the country is awash in savings: there are more dollars available than there are productive investment opportunities. Hence musical bubbles.
As for a national $15 minimum wage, my take is that President Trump had the right idea: leave it up to individual municipalities or states. Because of the radical differences in the cost of living as you move across the country, a nationwide, one-size-fits-all minimum wage doesn’t make any sense. You are literally better off making $7.25/hour in Youngstown than you are making $15/hour in New York City because the the cost of living in Youngstown is 1/3 the cost of living in New York City. Thus a $15/hour national minimum wage won’t change a thing in NYC (it’s already $15/hour there), but it will close more factories in Ohio and Pennsylvania.
In general, if you think the minimum wage where you live is too low, then lobby your local city council to raise it. Why expect Washington to do what your local city council will not do?
(That said, eliminating minimum wages is no panacea either; cf. Italy: no minimum wage, yet absolutely massive youth unemployment.)
As for systemic racism, the one elephant in the room nobody dares talk about is the fact that, as Borjas has ably proved, mass immigration has done more to immiserate the black working class than any other policy. Yes, it is the case there is a net (albeit very modest) “immigration surplus”, and thus immigration creates somewhat more jobs overall than would otherwise be the case. But as Pierre might say, it is nonetheless also true that saying that the government favors immigrant people of color and wealthy white people while disfavoring American descendants of enslaved black people describes the same reality.
TMC
Mar 4 2021 at 11:41am
Treating people as individuals cuts through the haziness of all this. Would a white kid get in with the same score as a black kid who was denied? No? Not racism. We are all a part of many groups, with conflicting characteristics. We should be evaluated as individuals, not members.
DeservingPorcupine
Mar 4 2021 at 6:07pm
I agree, the notion of systemic racism has never been coherent. There is only plain ol’ racism and good/bad policies. There’s never a reason to talk about anything else.
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