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More Liberty Means Less Government
Our Founders Knew This Well
By Walter E. Williams
Hoover Institution PressCopyright © 1999 Board of Trustees of the Leland Stanford Junior University
All rights reserved.
Race and Sex
Race issues have dogged our nation since its inception. Undeniably there has been racial injustice, not limited to blacks, but to other racial and ethnic groups as well. During the fervor of the 1960s civil rights movement, and the legislation, court decisions, and the huge spending programs that followed, even the most pessimistic person would have guessed that race problems would have been solved by the close of the century. Although there has been considerable progress, thorny problems remain.
I think we can safely say that America's civil rights struggle is over and won. At one time, black, Hispanic, and Asian Americans did not enjoy constitutional guarantees enjoyed by other Americans. Now we all do. There are no legal restrictions on where we may live, work, and eat. Once there were. In all public accommodations we must be treated like any other American. That means if we live in a particular neighborhood, we cannot be prevented from attending the public school or library in that neighborhood. We no longer have to search for a "colored" drinking fountain or restroom. If our children meet the academic standards, they can enroll at the same college that a white person attends. If our young men go to war for our nation, they are no longer restricted to serving in separate units, being cooks, chauffeurs, and quartermasters. Now they can be generals, aviators, and members of the special forces. Being sixty-two years of age, I can remember a time when none of this was true. Saying that the civil rights struggle is over and won is not the same as saying that all vestiges of discrimination are gone. It is to say codified and rampant discrimination is a thing of the past.
Because the civil rights struggle is over and won does not mean that there are not major problems that confront blacks as a group. Heading the list is the fraudulent education received by most black youngsters, rampant crime in many black neighborhoods, family breakdown (more properly described as families not forming in the first place), and unprecedented illegitimacy.
Most of the social pathology that characterizes a large percentage of the black community is entirely new in our history. At a time when there was far greater racial discrimination, and far fewer prospects for upward mobility, blacks who graduated from high school had a higher achievement level, black neighborhoods were safer, there was greater family stability, and illegitimacy was a tiny fraction of what it is today. If, as so many "experts" claim, discrimination and a legacy of slavery explain what we see today, a natural question is to ask, How come those conditions were not worse at a time when racial discrimination was rampant and codified?
I argue that whatever racial discrimination exists today has little or nothing to do with the most devastating problems that confront many blacks such as fraudulent education, rampant crime, family breakdown, and illegitimacy. These are not civil rights problems, and they won't be solved by civil rights strategy. The reason is that if discrimination cannot explain the problems blacks face, antidiscrimination measures are not likely to have a beneficial effect.
Some of these issues are discussed in the columns that follow. Also, there are columns about the increasingly contentious issue of sex equality. In an effort to promote sex equality, many people make the foolish argument that women are equal to men. Based on this argument, there have been calls to allow women to serve in combat units in the military and to serve as firefighters and police. Then when women have been allowed to serve in activities where physical strength and aggressiveness are important, there have been calls for different (lower) performance standards for women as opposed to their male counterparts. One result is a lowering of overall performance standards for both men and women. After all, is it not discriminatory to require that male cadets at a military academy run with heavy weapons, do full chin-ups, and rope climbs and not have identical requirements for women. The typical "solution" is to reduce standards for both men and women.
In the military, double standards not only threaten morale but can be mission-and life-threatening, as suggested by the finding at Parris Island that 45 percent of female marines couldn't throw a hand grenade far enough to avoid blowing themselves up or the case of U.S. Navy Lieutenant Kara Hultgreen, who was given preferential treatment in training and was eventually killed attempting to land her F-14 on an aircraft carrier.
I believe people argue that men and women are in fact equal because they errantly believe that in order to have equality before the law people must be in fact equal. Nothing is further from the truth. Equality before the law does not require that people be equal in fact. Being a human being is the only requirement.
People before Profits
October 25, 1995
Nation of Islam minister Louis Farrakhan says one of the demands of the million-man march on Washington is for the government to create an environment where "people are put before profits." Since profit demagoguery is a deceptive tool used by scoundrels all over the world, irrespective of ethnicity, let's demystify the concept of profits.
Let's get its definition out of the way first. Profits represent the residual claim earned by producers. It's what's left over after all other costs — wages, rent, interest — have been paid. Roughly six cents of each dollar taken in by companies represents after-tax profits. By far, wages paid are the largest part of that dollar, representing about sixty cents. Far more important than simple statistics is the social role played by profits: Profits guide resources to their highest valued uses as determined by people's wants and desires.
Remember when Coca-Cola introduced the "new" Coke? People were outraged. Who do you think made them bring back the old Coke? Was it Health and Human Services secretary Donna Shalala? Sorry. It was the specter of negative profits (losses). Profits make sure producers correct mistakes and find out what most consumers want.
After Hurricane Andrew's destruction, people in the Miami area wanted more plywood. What made lumber mills increase production and lumber yards get the trucks out and head south? Again, the specter of profits — this time the windfall variety. All that plywood heading south meant plywood prices rose in other locations, perhaps discouraging less-valued uses of plywood such as home improvement projects. That's wonderful. After all, rebuilding and repairing homes after a hurricane is a more highly valued use of plywood.
Profits also force producers to behave themselves. If producers waste input, their production costs will be higher and they'll charge prices higher than what consumers are willing to pay. Therefore, the company will make losses (negative profits) and go out of business. As a result the company's resources become available to someone who'll put them to a better use. That's if there's no government bailout, as in the case of Chrysler Corporation, enabling the company to continue squandering resources.
If we care about people's wants, rather than beating up on profit we should beat up on nonprofit makers. Government schools fit the latter category. They squander resources and produce a shoddy product while administrators, teachers, and staff earn higher pay and perks with customers (taxpayers) picking up the tab. Unlike other producers, educationists don't face the rigors of the profit discipline and, hence, they're on easy street.
How about the U.S. Postal Service? It provides shoddy and surly services, but the management and workers receive increasingly higher wages while customers pay higher and higher prices. Again, wishes of customers can be safely ignored because there's no bottom-line discipline of profits.
Without any question the major problem of people in general, and blacks in particular, is the nonprofit-making sector of our economy. In any poor neighborhood, you'll see some nice cars, some nice clothing, and some nice food but no nice schools.
Here's Williams' law: Whenever the profit incentive is missing, the probability that people's wants can be safely ignored is the greatest. It's not just the post office and schools but delivery of police services and garbage collection as well. More than anybody, poor blacks should know this well.
White People Are Divine
January 10, 1996
You've really got to hand it to white people, particularly white men. Ask any race expert why do blacks, as a group, earn less income than white people. Five will get you ten, the answer will be racism. Given black history and the everlasting "legacy of slavery," racism is a plausible answer. But racism doesn't affect all blacks the same way. The fact that white people exempt some blacks from the burdens of racism, and do it in ingenious ways, leads me to the conclusion that they have divine powers. "Williams," you say, "we proudly accept your divinity conclusion, but how do you reach it?"
According to one study, as far back as 1969, black males who grew up in homes where there were magazines, books, and library cards had incomes identical to whites from similar homes and education. The obvious conclusion is that whites discriminate against blacks from homes without magazines, books, and library cards. How they do it is a mystery to me. I haven't seen any white people — at least not that many — peeking into the windows of black houses to see who had books, magazines, and library cards.
Another study points out that in the 1970s, black husband-and-wife families outside the South earned as much as white husband-and-wife families outside the South. Then, by 1981, black husband-and-wife families, in which both had a college degree, earned slightly more than identical white husband-and-wife families, and that was true nationwide. I can understand how God might know that a black man is married to a woman with a college degree, but it's mind-boggling how white employers would have the same information.
Racism is a two-way street and blacks are also guilty. You ask, what's the evidence? Race experts teach us wherever there's disparity there's racism. Look at the announcement and photos of the starting lineup of any professional football or basketball game. It's so much of a tragedy that, cherishing equality of opportunity, I become ecstatic when a photo of a white player comes up on the screen. What else, other than racism, can explain how blacks, who are 13 percent of the population, are 66 percent of professional football players and 80 percent of basketball players? Some people might try genetic explanations like white men can't jump or black guys run like monkeys. I don't buy it; it's racism.
You never see Chinese and Japanese football and basketball players, at least not in the starting lineups. Again, a disparity and, again, racism. Initially, one might think of it as an injustice; but it just as soon could be payback. Everybody knows that blacks have a higher infant mortality rate than whites, and it is caused by racism. It turns out that whites have a higher infant mortality rate than Chinese, Japanese, or Filipinos. This can only be chalked up to some mysterious Far Eastern form of racism, particularly when coupled with the fact that Asians receive less prenatal care than whites. Another disparity is seen in the fact that the proportion of Asian American students who score over 700 on the math portion of the Scholastic Aptitude Test is double the number of whites.
There are many racially rooted disparities resulting from one form or another of group wonderfulness, but the most bothersome one to me is a sex disparity. Men are 50 percent of the population, but men are struck by lightning six times as often as women. I want to know what whoever is in charge of lightning strikes has against men.
Mortgage Racism Revisited
June 12, 1996
In last year's column titled "Myth, Lies and Propaganda," I exposed as a hoax the study by Alicia Munnell, the Federal Reserve of Boston's research economist, that alleged massive bank mortgage discrimination against blacks.
Of course the national media flooded our living rooms portraying the study as controlled and definitive and begging for government attention. I pointed out that Munnell's study failed to take into account significant black/white differences in net worth, credit histories, existing debt, and the size of the loan sought as a percentage of the value of the property. When these factors were taken into account, racial differences in mortgage approvals virtually disappear.
On May 10, 1996, the New York Times carried a story by Peter Passell titled "Race, Mortgages and Statistics," which showed that the mortgage discrimination debate is far from over.
David Home of the Federal Deposit Insurance Corporation (FDIC) obtained records from seventy banks accounting for half of the loan applications in the Munnell study and found serious inconsistencies. For example, several cases of affluent minority loan applicants were rejected because their income status made them ineligible for the government-subsidized mortgage they sought. It had nothing to do with race; they were ineligible, just as a white would be under similar circumstances.
Horne also pointed out that minority-owned banks, specializing in lending in black neighborhoods, were responsible for half of all minority loan rejections in the FDIC sample. Could those minority-owned banks also be motivated by racial discrimination?
Ted Day and Stan Liebowitz, professors of economics at University of Texas, Dallas, also uncovered flaws in Munnell's study in that the interest rates for a large number of applicants were below the market rate. Eliminating those cases from the sample sharply reduced differences in loan rejections by race. They also found that by using the individual bank's method of determining applicant creditworthiness, rather than the Boston Federal Reserve's standard, eliminated racial discrimination as a factor in loan rejections.
Alicia Munnell's flawed study created a witch hunt. The Justice Department brought suit against Shawmut National Corporation, New England's third-largest bank, but dropped it after the bank agreed to pay $960,000 to black and Hispanic applicants who were denied loans. The Justice Department forced a Washington bank that had only a few black applicants to open a branch in a black neighborhood.
Peter Passell did a reasonably good job of reporting on the new evidence about the mortgage discrimination controversy, but he loses it when he says, "Flawed or not, the Boston Fed's investigation had a noble purpose: leveling the mortgage playing field for minorities."
That's the kind of fuzzy thinking that has created one social disaster after another for blacks: Noble purposes or intentions do not necessarily lead to noble results. We see that with well-intentioned increases in minimum wages that have resulted in unprecedented unemployment among black teens. Welfare programs had a noble antipoverty purpose but they've virtually destroyed the black family in a way slavery and racism could not have ever done. The noble purpose of judicial leniency, guided by the desire to rehabilitate criminals, has resulted in many black neighborhoods becoming mini-Beiruts.
No one wants to argue that every vestige of racial discrimination has been eliminated. The important, policy-relevant question is, How much of what we see is caused by discrimination, and how much is caused by other factors? If we don't ask that question, and instead chalk every black/white difference up to discrimination, the policy results will have the greatest negative impact on blacks, not whites.
God and the Underclass
January 1, 1997
Robert Rector, Senior Policy Analyst at the Heritage Foundation, wrote "God and the Underclass" that appeared in the July 1996 issue of National Review.
It starts off with stunning snippets of what's daily fare in predominantly black cities: In Queens, New York, a heroin-addicted mother murders her four-year old daughter, stuffs the body in a bag, and tosses it into the East River. In Detroit, a five-year old is thrown from the 14th floor because he refuses to steal. In Chicago, police raided an apartment of five welfare sisters that was swarming with roaches and whose floor was covered with garbage and feces. Inside, they found nineteen cold and hungry children sharing food in a dog bowl with several dogs. Dazed, one kid asked a police woman, "Can you be my mommy?"
Excerpted from More Liberty Means Less Government by Walter E. Williams. Copyright © 1999 Board of Trustees of the Leland Stanford Junior University. Excerpted by permission of Hoover Institution Press.
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