FORGET WHITE RECKONING TO ADDRESS RACIAL INEQUALITY – WE NEED GOOD ECONOMIC POLICY!
“THE BLACK BOOM” BY JASON L. RILEY – BLACK PEOPLE HAVE THE SAME NEEDS AS EVERY AMERICAN!
Jason Riley is a serious thinker in the vein of Thomas Sowell. Riley uses data to support his positions vs. opinions and political propaganda.
I found Mr. Riley’s arguments regarding how well Black America did economically under President Trump compelling, but not surprising, given Mr. Trump (for all of his oddness) did bring a serious businessman’s experiences to the Presidency – something I think has been lacking in our most recent (and current) Presidents.
All in all – a well-written argument. It’s a short read, and I highly recommend it. I hope the book is widely read because it contains a message that many should read and debate.
EXCERPTS FROM “THE BLACK BOOM” – JASON RILEY
“I did not vote for Trump in 2016 or in 2020. My newspaper columns and television commentary regularly took the administration to task for its immigration restrictionism and trade protectionism. Nor did Trump’s derogatory comments about women and minorities, his marble-mouthed responses to white nationalists, and his behavior on January 6, 2021, when his supporters ransacked the Capital, escape my criticism.
Nevertheless, this book was not written to score partisan political points. Rather, its purpose is to tell an under-reported story about black economic advancement in the pre-pandemic economy, why it happened, and which kinds of public policies facilitated it.
In the wake of the War on Poverty, black labor force participation declined, black unemployment rates rose, and the black nuclear family disintegrated. Between 1960 and 1995, the proportion of black children living with both parents fell from two-thirds to one-third. It turns out that the most significant progress among blacks has coincided neither with greater political representation nor with massive welfare-state interventions. Rather, blacks have tended to do better when the country’s economy is doing better and they have had access to labor markets. What’s needed more than political saviors, racial preferences, and wealth-redistribution schemes is economic growth and opportunity.
TAX REFORM & REDUCTION OF BURDENSOME REGULATIONS
Along with the push for tax reform, Trump also moved to reduce regulations that he argued were weighing on economic growth. So-called major regulations are defined as those that impose a cost of $100 million or more on the private sector, and they exploded under President Obama. According to one analysis, the Obama administration imposed a record-breaking 600 major regulations in seven-and-a-half years, which was 20 percent more than the previous administration had imposed in eight years. On Obama’s way out of the White House, in the period between Election Day in November 2016 and the beginning of the Trump presidency in January 2017, his administration issued 33 additional regulations with total costs exceeding $100 million/regulation. They included new efficiency standards for manufacturers of air conditioners ($12.3 billion additional cost) and ceiling fans ($4.4 billion additional cost), and new requirements for commercial vehicle operators ($3.6 billion additional cost). These regulatory burdens affect hiring and pay and are one reason why the economic recovery under Obama was so tepid.
Trump’s theatrics notwithstanding, he pursued the tax and regulatory agenda of a typical conservative Republican politician, and on his watch tens of millions of Americans who had been struggling economically for decades saw meaningful improvement in their lives, including many members of low-income minority groups. THE TAX CUT AND JOBS ACT was passed in December 2017. Although what followed won’t settle the debate over whether labor or capital benefits most from a reduction in corporate taxes, it ought to at least inform the conversation. The corporate rate fell from 35 percent to 21 percent, and, in addition, companies were given an opportunity to “repatriate” cash being held overseas at a tax rate of just 15.5 percent. Taxes on wages and investment also fell. It was the most significant tax code reform in 30 years, and the dividends were almost immediate. By the end of January 2018, more than 260 businesses—including major employers such as Walmart, FedEx, and 3M Company—had announced wage and salary increases, bonuses, and 401(k) match increases going to at least 3 million workers because of the new law. Exxon Mobil announced that it planned to invest an addition $35 billion in the United States over the next five years. “These investments are underpinned by the unique strengths of our company and enhanced by the historic tax reform recently signed into law,” said Exxon’s CEO. “These positive developments will mean more jobs and economic expansion across the United States in a myriad of industries.” Gross domestic product, which had declined to 1.6 percent in 2016, climbed to 2.2 percent in 2017 and to 2.9 percent in 2018. As remarkable was the change in gross private domestic investment, which is a measure of how much money domestic businesses invest within their own country. It had declined by 1.3 percent in 2016, but grew by 4.8 percent in 2017 and by another six percent in 2018. Lower taxes and lighter regulations were intended to spur economic growth, and business responded accordingly.
WHO BENEFITTED THE MOST?
Part of what made the Trump boom unique, however, is who benefited the most. While an overwhelming majority of Americans found themselves better off than they had been under Obama, the gains were not equally distributed. Instead, the economy grew in ways that mostly benefited low-income individuals and the middle class, categories that cover a disproportionate number of blacks. In 2016, the percentage of blacks who had not completed high school was nearly twice the percentage of whites—15 percent versus 8 percent—and the percentage of adults who had earned a bachelor’s degree or higher was 35 percent for whites and only 21 percent for blacks.
Blacks are overrepresented in the retail, health care and transportation industries, for example, which provide tens of millions of working- and middle-class jobs. Blacks are 12 percent of the workforce, but according to the Bureau of Labor Statistics they are 18 percent of the workers in “motor vehicles and motor vehicle equipment manufacturing,” 20 percent of the workers in “animal slaughtering and processing,” 20 percent of the workers in “general merchandise stores, including warehouse clubs and supercenters,” and 27 percent of “taxi and limousine service” workers. In 2019, 54 percent of black households earned less than $50,000 per year, versus 33 percent of white households. At the other end of the income distribution, slightly more than half of all white households (50.7 percent) earned at least $75,000, compared to less than a third (29.4 percent) of black households. What this means is that reductions in income inequality can translate into reductions in racial inequality, which is what the country experienced in the pre-pandemic Trump economy. Between 2017 and 2019, median household incomes grew by 15.4 percent among blacks, while growing by only 11.5 percent among whites, and the gains were concentrated among low-income earners. A Federal Reserve report from 2020 notes that real (inflation-adjusted) median incomes between 2016 and 2019 grew by 5 percent across all demographic groups, but that families “at the top of the income and wealth distributions experienced very little, if any, growth in median and mean net worth between 2016 and 2019 after experiencing large gains between 2013 and 2016.” Meanwhile, families “near the bottom of the income and wealth distributions generally continued to experience substantial gains in median and mean net worth between 2016 and 2019.”
“The comparative data is striking, and mostly ignored by the press,” wrote the Wall Street Journal in a January 2020 editorial. “During the first 11 quarters of the Trump Presidency, wages for the bottom 10% of earners over age 25 rose an average of 5.9% annually compared to 2.4% during Barack Obama’s second term, according to the latest demographic data from the Bureau of Labor Statistics. Wages for the middle two quartiles increased 3.2% compared to 2.2% and 2.7 percent between 2012 and 2016.” The Journal continued: Less educated workers have also seen the strongest gains. Wages have risen at a 6.1% annual clip for workers over 25 with a high school degree and 3.9% for those with some college—both about three times faster than during the second Obama term. Wage gains have also accelerated though to a lesser degree—to 3.2% from 2.2% for college grads. . . .
While there are arguments against economic policies of this kind, a substantial body of hard data indicates that Trump’s moves did in fact stimulate the U.S. economy, often in ways that primarily benefitted people of color and the poor.
CONCLUSION: WE DO NOT NEED WHITE RECKONING TO ADDRESS RACIAL INEQUALITY – WE NEED GOOD ECONOMIC POLICY!
I do not believe Trump set out to narrow racial inequality. His stated goal on the campaign trail was to “grow the economy to the benefit of the working class, which came to pass even while the media all but conspired to keep quiet about it. We can say with more certainty that the gains of blacks before the pandemic were unprecedented. Black unemployment and poverty reached historic lows, and black wages increased faster than white wages. The use of racism as a blanket explanation for economic disparities is also undermined because Asian Americans as a group out-earn whites. Asians excelling academically and economically has a lot to do with the fact that they are significantly more likely than other groups to have intact families. That Tiger Mom is usually married to the father of her children.”
We do NOT need to shove critical race theory down the throats of our children to close the economic, educational, and wealth gap between the races. Nor Biden’s promises to pick black women ONLY as Vice President and Supreme Court Justices. That is a disservice to the people selected, as they are labeled as affirmative action picks who got the job because of their sex and color, REGARDLESS of their competencies.
All Americans do better when the country’s economy is doing better, and we have access to good-paying jobs. Economic growth and opportunity are needed more than political saviors, racial preferences, and wealth-redistribution schemes.
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I am a proud nerd (as my beautiful wife and daughter have told me) investment and finance blogger with an N.C. State, Chemical Engineering, University Rutgers, MBA and Harvard University, Advanced Management education.
I left a corporate career because I desired to make a difference as a speaker and writer. I was blessed to be coached and mentored by strong women and men in my family and professional life. It is my time to serve and give back.
I started my first business at ~13 years of age (a small but brilliantly created plant nursery). I am a successful investor in stocks, options, real estate and am happy to share my finance and investment lessons. I am NOT a licensed financial advisor. Please do not construe my suggestions on this blog as recommendations for your situation. As an investor, you must establish your risk/loss tolerance. Investment in any asset involves risk, including complete loss.
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I write this weekly blog to make an impact by reaching an audience and demonstrating the need for financial literacy. I will help you get there.