Are America’s Poor Worse Off Today?

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AEI’s Robert Doar highlights a fairly new review in The New York Review of Books that, in Doar’s estimate, “provides two very strong caveats” to the some of the recent claims by sociologists Edin and Shaefer “that some single parent families are dramatically worse off than they were before the passage of the 1996 welfare reform legislation, which replaced a federal entitlement to cash welfare (AFDC) with a block grant to states to implement work-focused cash assistance programs (TANF).” Harvard’s Christopher Jencks (the review’s author) points out that

estimates of extreme poverty change when they treat the value of EITC refunds, food stamps, and rent subsidies like income. The second row of Table 1 shows that including these resources reduces the estimated prevalence of extreme poverty among households with children from 1.7 to 1.1 percent in 1996 and from 4.3 to 1.6 percent in 2011. Because the reduction is so much larger in 2011 than it was in 1996, the increase in extreme poverty between 1996 and 2011 falls from 2.6 to 0.5 percentage points. In other words, the growth of EITC refunds and noncash benefits offsets about four fifths of the decline in extremely poor families’ pretax money income between 1996 and 2011.

Jencks_figure1

Doar expounds, “Edin and Shaefer acknowledge that they focus only on “cash” income and they argue that vouchers which pay for food or housing are not cash, and don’t cover all the needs of a family.  But for most readers of their book, and certainly for all of those who just hear the headline about families living on $2 a day, the distinction goes unnoticed: Living on $2 a day means that is all they have to purchase food and housing.  That is, after all, what it customarily means when used in the developing world context from which Edin and Shaefer drew the statistic.” Jencks’ second caveat is summed up as follows:

The fourth line in Table 1 shows that when Shaefer counted only those who had spent three or more months living on resources worth less than $2 a day, the prevalence of extreme poverty among households with children fell from 1.7 to 0.5 percent in 1996 and from 4.3 to 1.0 percent in 2011. This more stringent definition of extreme poverty among households with children clearly leads to a sharp reduction in its estimated prevalence. But it does not change the upward trend. The prevalence rises from 0.5 percent in 1996 to 1.0 percent in 2011, and the actual number rises from 189,000 to 373,000 households with children.

All this makes Doar suspicious: “Could it be that the small increase in extreme poverty was caused by the bad economy in the wake of the Great Recession? Did the fact that federal policymakers decided against incorporating strong work requirements in their expansions of assistance programs affect this in any way? Is it possible (if not likely) that the increase is due in part to more underreporting of income on surveys such as the one used by Edin and Shaefer?” Jencks is also skeptical, concluding that the claim about welfare reform “is not the kind of speculation that can be either verified or refuted; but it is worth serious consideration nonetheless.”

All of this demonstrates why consumption is a superior metric for measuring the economic well-being of the poor. A Brookings report from a couple years ago found that when measured for consumption, virtually no one in the United States lives on $2 a day.[ref]Based on his own research, Scott Winship at the Manhattan Institute says, “In truth, practically no one in the United States gets by on $2 a day in any meaningful sense for any meaningful length of time.”[/ref]Poverty in the U.S. has declined substantially since the 1960s with major material gains for the poor and middle class. While there is still much to do, accurately assessing the situation is necessary in order to determine what steps to take next.

The New Jim Crow: Mass Incarceration in the Age of Colorblindness by Michelle Alexander

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This is part of the DR Book Collection.

Let me start out by saying upfront: this book rocked my world a little bit. As any readers of Difficult Run will probably know by now, I’m extremely critical of contemporary social justice activism. I try not to use the pejorative term “social justice warrior” these days, but you’ll recognize the notion by buzzwords like “trigger warning” or “microaggression.” And so when I picked up Michelle Alexander’s The New Jim Crow: Mass Incarceration in the Age of Colorblindness, it was with a side of skepticism.

On the other hand, being a Christian means taking issues of social justice seriously. Of course, what I have in mind when I say “social justice” might not line up very well with the social justice movement as it exists today, but there’s no escaping the simple reality that both Old Testament prophets and the New Testament teachings of Christ are often most pointed on precisely the topic of justice in society.

“The Lord standeth up to plead,” wrote Isaiah, “and standeth to judge the people.” And what was God’s condemnation? “What mean ye that ye beat my people to pieces, and grind the faces of the poor?”[ref]Isaiah 3:13, 15[/ref] And in one of Jesus’s most powerful parables, he taught that visiting prisoners was a service to God, saying, “Inasmuch as ye have done it unto one of the least of these my brethren, ye have done it unto me.” And then, lest there be any confusion, he also stated that, “Inasmuch as ye did it not to one of the least of these, ye did it not to me.”[ref]Matthew 25:40,45[/ref]

So, a book about oppressing vulnerable people by imprisonment? My skepticism was on hand, but my mind was also open. This is important stuff, and I wanted to hear what Alexander had to say.

I’ll get right down to it: on her primary argument, she has me convinced. And this is her primary argument: although the War on Drugs is ostensibly race-neutral, it systematically impacts black and poor Americans to the detriment of their communities while scrupulously avoiding the same kinds of impacts on white and prosperous Americans.

The first component of that argument, that the War on Drugs has a racially disparate impact, is based on a central fact: whites and blacks commit drug crimes at roughly comparable rates, but blacks are far more likely to be charged and convicted of crimes. Here is how that plays out in practice. First, Alexander notes that:

It is impossible for law enforcement to identify and arrest every drug criminal. Strategic choices must be made about whom to target and what tactics to employ. Police and prosecutors did not declare the War on Drugs, and some initially opposed it, but once the financial incentives for waging the war became too attractive to ignore, law enforcement agencies had to ask themselves, if we’re going to wage this war, where should it be fought and who should be taken prisoner?

The answer is simple: vulnerable communities will be targeted (because they can’t fight back politically) and specifically racial minorities will be targeted (because of stereotypes about drug offenders). In regards to the first, she writes:

Confined to ghetto areas and lacking political power, the black poor are convenient targets.

And in regards to the second, she writes:

In 2002 a team of researchers at the University of Washington decided to take the defense of the drug war seriously by subjecting the arguments to empirical testing in a major study of drug law enforcement in a racially mixed city, Seattle. The study found that, contrary to the prevailing common sense, the high arrest rates of African American in drug law enforcement could not be explained by rates of offending. Nor could they be explained by other standard excuses, such as the ease and efficiency of policing open-air drug markets, citizen complaints, crime rates, or drug-related violence. The study also debunked the assumption that white drug dealers deal indoors, making their criminal activity more difficult to detect. The authors found that it was untrue stereotypes about crack markets, crack dealers, and crack babies–not facts–that were driving discretionary decision-making by the Seattle police department.[ref]Some specific stats from the study are available here.[/ref]

Alexander’s case is particularly strong when she notes the difference between mandatory sentences for stereotypically white and black versions of the same drug (e.g. cocaine vs. crack) and provides the legal history of attempts to challenge the racially disparate outcomes of the criminal justice system. There’s McCleskey v. Kemp, for example, in which a death penalty conviction was challenged on the basis of research by David C. Baldus showing that “even after taking account of 39 nonracial variables, defendants charged with killing white victims were 4.3 times as likely to receive a death sentence than defendants charged with killing blacks.”[ref]Wikipedia[/ref] The Supreme Court upheld the conviction, however. Alexander writes:

The majority observed that significant racial disparities have been found in other criminal settings beyond the death penalty, and the McCleskey’s case implicitly calls into question the integrity of the entire system. In the Court’s words, “taken to its logical conclusion, Warren McCleskey’s claim throws into serious question the principles that underly our criminal justice system. If we accepted McCleskey’s claim that racial bias has impermissibly tainted the capital sentencing decision, we could soon be faced with similar claims as to other types of penalty.” The Court openly worried that other actors in the criminal justice system might also face scrutiny for allegedly biased decision-making if similar claims about bias in the system were allowed to proceed. Driven by these concerns, the Court rejected McCleskey’s claim that Georgia’ death penalty system violates the 8th Amendments ban on arbitrary punishment, framing the critical question as whether the Baldus Study demonstrated a Constitutionally unacceptable risk of discrimination. It’s answer was no. The Court deemed the risk of racial bias in Georgia’s capital sentencing scheme Constitutionally acceptable. Justice Brennan pointedly noted in his dissent that the Court’s opinion “seems to suggest a fear of too much justice.”

According to an LA Times survey of legal scholars, it’s one of the worst post-World War II SCOTUS decisions.[ref]Wikipedia[/ref] Prior to reading this book, I’d never heard of it. Nor had I heard of United States v. Armstrong,[ref]There’s no Wikipedia article for that one, but here’s the decision and an LA Times article from the year it was decided.[/ref] which found that defendants who suspected that they were victims of discrimination had to prove that they were victims of that discrimination first, before they could get access to prosecutorial records that would be necessary to prove the question of discrimination. Alexander writes:

Unless evidence of conscious, intentional bias on the part of the prosecutor could be produced, the court would not allow any inquiry into the reasons for or causes of apparent racial disparities in prosecutorial decision making.

Her case is also very strong when she makes two key points. First, violent crime can’t explain mass incarceration. This is something that came up in the Facebook comments after I posted Mass Incarceration is Not a Myth. Walker Wright recently wrote a solid follow-up piece with even more data: The Stock and Flow of Drug Offenders. So one of the common rebuttals to Alexander’s criticism–that incarceration is about violent crime rather than drugs–doesn’t hold up. However, it is worth noting that black men do commit violent crimes at higher rates than white men (in contrast to drug offenses) and so higher differential rates of incarceration in that case are not evidence of racial discrimination, a point that Alexander concedes.[ref]Although she also argues that, once you account for poverty, this gap narrows considerably.[/ref]

Second, and even more strongly, she points out that incarceration itself is not the real problem. The problem is that a felony conviction is basically the modern equivalent of a scarlet-F: it makes you basically unemployable, excludes you from many government programs (like student loans), and therefore makes it all but impossible for people who have paid their debt to society (as the saying goes) to actually re-enter that society. This is why Alexander refers to “a system of control” that extends well beyond literal prisons. She’s right.

But there are some parts where I think Alexander gets important things very wrong. First, she tends to be a little blind to issues of class, which is also a leading problem with most contemporary social justice activists. Interestingly enough, Cornell West–in the introduction–draws this point out much more clearly than Alexander does in her own book, writing:

There is no doubt that if young white people were incarcerated at the same rates as young black people, the issue would be a national emergency. But it is also true that if young black middle and upper class people were incarcerated at the same rates as young black poor people, black leaders would focus much more on the prison-industrial complex. Again, Michelle Alexander has exposed the class bias of much of black leadership as well as the racial bias of American leadership for whom the poor and vulnerable of all colors are a low priority.

After reading the entire book, it sounds to me like West went much farther than Alexander was willing to do, although she has a lot of the pieces right there in the book. Alexander is very critical of affirmative action, first arguing that it does more harm than good and then arguing that middle- and upper-class blacks have in effect accepted affirmative action as a kind of “racial bribe” for their complicity in mass incarceration:

It may not be easy for the civil rights community to have a candid conversation about [affirmative action]. Civil rights organizations are populated with beneficiaries of affirmative action (like myself) and their friends and allies. Ending affirmative action arouses fears of annihilation. The reality that so many of us would disappear overnight from colleges and universities nationwide if affirmative action were banned, and that our children and grandchildren might not follow in our footsteps, creates a kind of panic that is difficult to describe.

As a result of both affirmative action and the takeover of civil rights organizations by lawyers, she concludes that the entire movement is mired in hypocrisy and inaction:

Try telling a sixteen-year-old black youth in Louisiana who is facing a decade in adult prison and a lifetime of social, political, and economic exclusion that your civil rights organization is not doing much to end the War on Drugs–but would he like to hear about all the great things that are being done to save affirmative action? There is a fundamental disconnect today between the world of civil rights advocacy and the reality facing those trapped in the new racial undercaste.

In examples like these, Alexander is clearly demonstrating that race alone cannot explain what is happening, but she is still unwilling to follow that logic to its conclusion. We’ll return to that in a moment, because it’s my biggest problem with her analysis. Before we get there, however, I want to point out that she also tackles a lot of the conservative criticisms head on. In addition to the violence/drug question, there is the issue of “gangsta culture.” Isn’t it a fact, conservatives might ask, that inner city black culture glorifies illegal and anti-social conduct, and that therefore there’s something rotten at the heart of black culture?

This is an important question, because it is a serious one but also one that conservatives generally can’t ask without simply being shouted down as racist. The inability to have a serious conversation about black culture as it relates to crime is probably the single biggest cause of our dysfunctional national conversation about race (or the lack thereof). As long as social conservatives aren’t even allowed to voice their most important questions, there’s really nothing to talk about. But Alexander doesn’t dismiss the question; she takes it seriously and addresses it. She does so in two ways. First:

Remarkably, it is not uncommon today to hear media pundits, politicians, social critics, and celebrities–most notably Bill Cosby–complain that the biggest problem black men have today is that they “have no shame.” Many worry that prison time has become a badge of honor in some communities–“a rite of passage” is the term most commonly used in the press. Other claims that inner-city residents no longer share the same value system as mainstream society, and therefore are not stigmatized by criminality. Yet as Donald Braman, author of Doing Time on the Outside states: “One can only assume that most participants in these discussions have had little direct contact with the families and communities they are discussing.”

Over a four-year period, Braman conducted a major ethnographic study of families affect by mass incarceration in Washington, D.C., a city where three out of every four young black men can expect to spend some time behind bars. He found that, contrary to popular belief, the young men labeled criminals and their families are profoundly hurt and stigmatized by their status: “They are not shameless; they feel the stigma that accompanies not only incarceration but all the other stereotypes that accompany it–fatherlessness, poverty, and often, despite very intent to make it otherwise, diminished love.” The results of Braman’s study have been largely corroborated by similar studies elsewhere in the United States.

If this is correct–and I have no reason to doubt it–then it means that the idea of a monolithic culture of disrespect for law and glorification of crime (not to mention outright misogyny) is a myth. Even in the inner-city there is respect for rule of law, manifested in deep shame accompanying incarceration.

But if that’s true, why is black culture most frequently represented by gangsta rap that does, in fact, engage in that kind of anti-sociality? That’s Alexander’s second point:

The worst of gangsta rap and other forms of blaxploitation (such as VH1’s Flavor of Love) is best understood as a modern-day minstrel show, only this time televisd around the clock for a worldwide audience. It is a for-profit display of the worst racial stereotypes and images associated wit the era of mass incarceration–an era in which black people are criminalized and portrayed as out-of-control, shameless, violent, over-sexed, and generally undeserving.

Like the minstrel shows of the slavery and Jim Crow eras, today’s displays are generally designed for white audiences. The majority of the consumers of gangsta rap are white, suburban teenagers. VH1 had its best ratings ever for the first season of Flavor of Love–ratings drive by large white audiences. MTV has expanded its offerings of black-themed reality shows in the hopes of attracing the same crowd. The profits to be made from racial stigma are considerable, and the fact that blacks–as well as whites–treat racial oppression as a commodity for consumption is not surprising. It is a familiar form of black complicity with racialized systems of control.

The most important part of this response, again, is simply the willingness to engage the issue seriously. This is critical, because once this issue is on the table it’s possible for dialogue. Additionally, however, I find her two-pronged approach compelling.

OK, so let’s get back to my biggest complaint with Alexander’s work: what’s behind the racially disparate impact of the War on Drugs? Throughout the book, she contends that (1) it is exclusively racist and (2) it is deliberately racist. Neither of these claims are supported by her own arguments, and they hurt her case. This starts fairly early on, and then runs consistently throughout the book. Here’s an early example:

The language of the Constitution itself was deliberately colorblind. The words “slave” or “negro” were never used, but the document was built upon a compromise regarding the prevailing racial caste system. Federalism, the division of power between the states and the federal government was the device employed to protect the institution of slavery and the political power of slave-holding states.

In other words, Alexander is arguing that federalism is nothing but a ruse to covertly encode racism within the Constitution. It’s true that federalism enabled slavery to continue by making it a state-level issue, but to say that that is why federalism existed is to deny that the Founders had any independent, reasonable reasons to support federalism, and that’s not plausible. Federalism was, first and foremost, an attempt to avoid the centralized tyranny of the British monarchy that was the ideological raison d’etre of the American Revolution. To dismiss that as incidental is to fundamentally misunderstand the history and philosophy of the Constitution.

At another point, she clearly states that “all racial caste systems, not just mass incarceration, have been supported by racial indifference,” but she also argues that–at the dawn of the era of mass incarceration–“Conservative whites began once again to search for a new racial order that would conform to the needs and constraints of the time.” In other words, Federalism was part of an intentionally racist program (slavery), separate-but-equal was part of an intentionally racist program (Jim Crow), and color-blindness is part of an intentionally racist program (mass incarceration). But I’m not convinced.

Oh, there’s strong evidence–smoking gun evidence, as far as I’m concerned–that Nixon and Reagan appealed to racism as part of their “law and order” approach to the War on Drugs. But that was nearly a half-century ago. And no, I don’t think that the US has emerged into a post-racial utopia since then. Obviously not! But I do think Walter Williams had it right:

Back in the late 1960s, during graduate study at UCLA, I had a casual conversation with Professor Armen Alchian, one of my tenacious mentors. . . . I was trying to impress Professor Alchian with my knowledge of type I and type II statistical errors.

I told him that my wife assumes that everybody is her friend until they prove differently. While such an assumption maximizes the number of friends that she will have, it also maximizes her chances of being betrayed. Unlike my wife, my assumption is everyone is my enemy until they prove they’re a friend. That assumption minimizes my number of friends but minimizes the chances of betrayal.

Professor Alchian, donning a mischievous smile, asked, “Williams, have you considered a third alternative, namely, that people don’t give a damn about you one way or another?” . . . During the earlier years of my professional career, I gave Professor Alchian’s question considerable thought and concluded that he was right. The most reliable assumption, in terms of the conduct of one’s life, is to assume that generally people don’t care about you one way or another. It’s a mistake to assume everyone is a friend or everyone is an enemy, or people are out to help you, or people are out to hurt you.

Williams (who is a black economist) was actually talking specifically about race relations in his piece. He said:

Are white people obsessed with and engaged in a conspiracy against black people? I’m guessing no, and here’s an experiment. Walk up to the average white person and ask: How many minutes today have you been thinking about a black person? If the person wasn’t a Klansman or a gushing do-gooder, his answer would probably be zero minutes. If you asked him whether he’s a part of a conspiracy to undermine the welfare of black people, he’d probably look at you as if you were crazy. By the same token, if you asked me: “Williams, how many minutes today have you been thinking about white people?” I’d probably say, “You’d have to break the time interval down into smaller units, like nanoseconds, for me to give an accurate answer.” Because people don’t care about you one way or another doesn’t mean they wish you good will, ill will or no will.

Alexander had it right when she talked about “racial indifference.” Even overt racism is virtually never racism for racism’s sake. Alexander herself said, “By and large, plantation owners were indifferent to the suffering caused by slavery; they were motivated by greed.”

So, based on the evidence she presents, what’s the real story of racism in America? Powerful people want to maintain their power at the expense of less powerful people. Race, which Alexanders correctly observes “is a relatively recent development,” is only the most potent and insidious means of perpetuating inequalities that are, at their roots, totally agnostic with respect to race or creed or language or ethnicity or religion. All of these are just social markers that can ennable power inequality, but which are mostly irrelevant in and of themselves. So even when race is appealed to directly, it’s always a means to another end, never an end in itself.

So much for the idea of deliberate racism.[ref]I haven’t dismissed it entirely, but recontextualized it as a means to an end.[/ref] What about the exclusivity of the racial aspects of mass incarceration? Here, Alexander uses a military analogy:

Of course, the fact that white people are harmed by the drug war does not mean they are the real targets, the designated enemy. The harm white people suffer in the drug war is much like the harm Iraqi civilians suffer in U.S. military actions targeting presumed terrorists or insurgents. In any way, a tremendous amount of collateral damage is inevitable. Black and brown people are the principal targets in this war; white people are collateral damage.

No analogy is perfect, of course, but in this case her chosen analogy undercuts rather than strengthens her position. The point of “collateral damage” is not merely that it is incidental, but that it is scrupulously avoided whenever possible. I’m not saying that the US is perfect at that, but avoiding collateral damage–at least in theory–is what we strive for.

But if white people were really “collateral damage” in the War on Drugs, then of course we would not only see fewer of them in jail, we’d see none at all. Unlike dropping bombs from miles up, it’s easy to ascertain the race of a suspect before they go to jail. If race were the exclusive characteristic–if mass incarceration were designed specifically to target exclusively African Americans–then why are white drug dealers ever sent to jail? Or Asian, or Hispanic, Native American, etc? Alexander might argue, “to provide enough cover for people to believe it’s truly race-neutral,” but that explanation is thin and overly complex. It falls for the same fundamental mistake as all conspiracy theories: a drastic overestimation in the human ability to plan the future. The War on Drugs was not a consciously designed system of racial oppression that ensnares a set number of white people just to provide a thin veneer of racial neutrality. To see that this is true, just ask yourself: “Who determines the requisite number of white people required to give the system cover, and how do they coordinate all the local, state, and federal law enforcement agencies to make sure the quota is hit?” The whole setup doesn’t makes sense.

No, the War on Drugs isn’t a cleverly designed mechanism. It is an opportunistically cobbled-together mish-mash of policies, laws, practices, and agencies that exploits the vulnerable and powerless because of the blind logic of power, not because it was designed to target minorities. The War on Drugs also feeds off of and reinforces racist stereotypes. It is, without doubt in my mind, systematically racist. But it’s not exclusively racist; it’s also classist. And it does not exist today because of deliberate racism; but because of inertia, racial indifference, and power politics.

There are not just technicalities. They have profound implications for how we talk about race, how we analyze racist institutions, and what solutions we deploy against them. And this is where I found Alexander’s logic to be at its weakest. She is steadfastly set against colorblind policies. And, given the ability of the criminal justice system to be ostensibly colorblind and still produce racist outcomes, I understand. But her logic breaks down when she dismisses colorblindness entirely. This is most obvious when she writes that:

The uncomfortable truth, however, is that racial differences will always exist among us. Even if the legacies of slavery, Jim Crow, and mass incarceration were completely overcome, we would remain a nation of immigrants (and indigenous people) in a larger world divided by race and ethnicity. It is a world in which there is extraordinary racial and ethnic inequality, and our nation has porous boundaries. For the foreseeable future, racial and ethnic inequality will be a feature of American life.

Contrast that with her prior statement that “The concept of race is a relatively recent development. Only in the past few centuries, owing largely to European imperialism, have the world’s people been classified along racial lines.” If race is a “recent development,” can we really be so confident that “racial differences will always exist among us?”

No, we can’t. Race is a fluid concept. Not only was it largely invented in the 17th century, but it continued to change dramatically after that. In the 19th and 20th century, Catholic Irish, Jews, and many other groups were considered non-white. Today, the Irish have a distinct cultural identity within the United States, but nobody would seriously argue that they are non-white. How do the Irish fare vs. narrower racial definitions of whiteness on metrics like housing, household wealth, income, or educational attainment? My guess? Nobody knows because nobody even measures it.[ref]I did a few quick Google searches and found nothing, but if you’ve got something, let me know.[/ref]

I will agree with Alexander this far: race-blindness didn’t stop the racist bent of mass incarceration and it never can. We may need to be proactive about measuring racial outcomes, at a minimum, in our efforts to overhaul the criminal justice system. However, I’m not convinced that the dream of a colorblind society should be so easily dismissed.

Of course, the historical model of an ever-expanding category of whiteness won’t work in the future. First, because any racial definition has to have at least two groups. So if “white” exists as a category, there will have to be non-white. As long as we see the world in racial terms, universal racial inclusiveness is impossible. Second, I would hardly expect African Americans to be enthusiastic about a solution of universal whiteness even if it were possible (which it’s not).
“It’s OK, you can be considered white, too, one day,” is not an acceptable solution to our history of racial prejudice.

There are alternative possibilities, however. The way out of racial binaries is to drop race as a valid characteristic. A Marxist can do this by seeing only the bourgeois and the proletariat, just as one proof-of-concept. But, if we don’t want to all become Marxist, then we’ll have to figure something else out. Nationalism is another approach, although not without its own complications. And who knows: there may be other concepts we haven’t even thought of yet. The point is, I don’t think it’s a bad thing to hope for a day when the difference between an African American and an Irish American becomes much more like the difference between an American whose family came from Scandinavia and one whose family came from Italy.

We can’t get there from here if we do not redress the real and obvious racial disparities within our nation, and the racist War on Drugs seems like a great place to start. But I’m also not sure if we can get there from here as long as we view colorblindness as an intrinsically undesirable destination. If we insist on defining people in racial terms, then Alexander is probably right: “racial and ethnic inequality will be a feature of American life.” So maybe we shouldn’t plan on doing that forever.

At the end of the day, I found this book to have its flaws, but on the central points it has me convinced. I was already skeptical of the War on Drugs, but now I’m downright convinced that it is a needlessly oppressive and exploitative racist and classist juggernaut that somehow we need to stop.

What is Recent Research Saying About the Gender Wage Gap?

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Image result for gender pay gap
Well, about $0.06 cheaper.

We’ve discussed the gender wage gap here on Difficult Run before. My last post on the subject covered a lot of the research. In the comments, I made mention of a couple more 2016 studies that should be included in the analysis. However, I thought I’d highlight them in a post for educational purposes. In a paper soon to be published in the Journal of Economic Literature, Cornell economists report,

Using PSID microdata over the 1980-2010, we provide new empirical evidence on the extent of and trends in the gender wage gap, which declined considerably over this period. By 2010, conventional human capital variables taken together explained little of the gender wage gap, while gender differences in occupation and industry continued to be important. Moreover, the gender pay gap declined much more slowly at the top of the wage distribution that at the middle or the bottom and by 2010 was noticeably higher at the top. We then survey the literature to identify what has been learned about the explanations for the gap. We conclude that many of the traditional explanations continue to have salience. Although human capital factors are now relatively unimportant in the aggregate, women’s work force interruptions and shorter hours remain significant in high skilled occupations, possibly due to compensating differentials. Gender differences in occupations and industries, as well as differences in gender roles and the gender division of labor remain important, and research based on experimental evidence strongly suggests that discrimination cannot be discounted. Psychological attributes or noncognitive skills comprise one of the newer explanations for gender differences in outcomes. Our effort to assess the quantitative evidence on the importance of these factors suggests that they account for a small to moderate portion of the gender pay gap, considerably smaller than say occupation and industry effects, though they appear to modestly contribute to these differences.

Five interesting facts from the study are:

  1. The gender pay gap shrank the most in the 1980s.
  2. Wage-gap narrowing wasn’t tied to government policies.
  3. Gender differences in occupations and job roles matter the most.
  4. High-income women have seen the smallest wage-gap closing.
  5. Findings are fuzzy about the impact of family-leave policies.

A 2016 study from Glassdoor yields further support for #3. When “comparing [male and female] workers with the same job title, employer and location, the gender pay gap in the U.S. falls to 5.4 percent (94.6 cents per dollar).”[ref]There is a consistent 4-6% adjusted gap across countries.[/ref] But it turns out that “the single biggest cause of the gender pay gap is occupation and industry sorting of men and women into jobs that pay differently throughout the economy. In the U.S., occupation and industry sorting explains 54 percent of the overall pay gap—by far the largest factor.” And “while overt forms of discrimination may be a partial cause of the gender pay gap, they are not likely the main cause. Instead, occupation and industry sorting of men and women into systematically different jobs is the main cause.”

In short, the gender pay gap has shrunk considerably and is far smaller than one typically hears in political discourse.[ref]Women actually out-earn men in numerous college majors right after graduation, though this dissipates by mid-career.[/ref] Nonetheless, a gap remains. The Glassdoor study finds that “employer policies that embrace salary transparency can help eliminate hard-to-justify gender pay gaps, and can play an important role in helping achieve balance in male-female pay in the workplace.” Perhaps this and similar policies going forward can help us eradicate the (adjusted) gender pay gap indefinitely.

Media Fragmentation and Political Polarization

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I’ve written about political polarization before. Recent research suggests that media fragmentation is the culprit behind growing political polarization. A new study[ref]An older version can be found here.[/ref] finds that

  • The growing plurality of news sources as well as the increasing access to cable television made the greatest contribution to political polarization. Two phenomena, or a combination of the two, are responsible: Individuals seek out “self-reinforcing viewpoints rather than be exposed to a common ‘nightly news’ broadcast” — this is sometimes called siloing. Also, individuals are jettisoning news programming for entertainment, “thereby reducing incidental or by-product learning about politics.”
  • The decreasing exposure to alternative views and the increasing buttressing of one’s own views has combined to create less sympathy for others’ views and less of an ability to understand others’ views. “This may be reinforced by a tendency for political differences to be decreasingly addressed through genuine debate and increasingly replaced with media coverage of political vilification or grandstanding.”
  • Inequality — the divide between rich and poor — may have contributed to political polarization, but less than media fragmentation.
  • Duca and Saving test for a number of trends but find no statistically significant associations with generational attitudes, voter partisanship, economic conditions or campaign contributions. But they do find associations with income inequality and media fragmentation.
  • There is some evidence that Congress is more polarized at the beginning of a president’s second term.

Despite these findings, there may be room for caution. According to a new paper by Stanford political scientist Morris Fiorina, the average American has not followed the political class to the fringes. Reason‘s write-up draws five lessons from Fiorina’s work:

  1. The political class is becoming more polarized: “If you limit its scope to elected officials and professional activists, the polarization thesis has some truth to it. Since the early ’70s, the parties have gone through a sorting process, to the point where the most left-wing Republican in either house of Congress is now more conservative than the most right-wing congressional Democrat.”
  2. The general public has not followed suit: “Over the last four decades, there has been little change in how Americans describe themselves ideologically—the most popular category in such surveys is still “moderate,” without a big exodus to the liberal and conservative poles. Opinions have shifted on some specific topics, but not always in the same direction: Americans have gotten more liberal on certain issues, such as health insurance, and more conservative on others, such as aid to minorities.”
  3. The more politically active you are, the less well-informed you are about these trends in grassroots opinion: “Both normal Americans and the political class tend to exaggerate the extent that the general public is polarized. But the politicos do much more of this, projecting their divisions onto the electorate at large. “Ironically,” Fiorina writes, “the great majority of Americans whose lives do not revolve around politics are more accurate in their political perceptions than their more politically involved compatriots.””
  4. The stronger your partisan affiliations, the more likely you are to misconstrue what life is like at the other end of spectrum: For example, “Democrats think that 44 percent of Republicans make more than $250,000 per year, when the actual percentage is 2, and that 44 percent of Republicans are senior citizens, when the actual percentage is 21. For their part, Republicans think that 36 percent of Democrats are atheists or agnostics, when the actual percentage is about 9, and that 38 percent of Democrats are LGBT, when the true percentage is about 6. Once again, the more politically involved the respondent, the greater the misperception.”
  5. We’re not retreating into smaller bubbles: “A paper on Twitter users…found that “Twitter networks tend to be fairly heterogeneous politically, in part because many of those in them are connected by only ‘weak ties.’ Contrary to the fears expressed by those worried about ideological segregation, social media actually may lessen people’s tendency to live in echo chambers.””

All of this reinforces something Georgetown professor Peter Jaworski said: “Partisan politics corrupts your character. Instead of trying to get votes for your favoured tribe, try to make money instead. Engaging in markets makes mean people nicer, makes you more trustworthy, more charitable, and more beneficent.”

Religion and the U.S. Economy

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Economist Steve Horwitz once made the point, “Critics of markets sometimes say “you can’t eat GDP.” What they miss is that you can’t eat, or learn to read, or go to school, or leave a bad marriage, or do pretty much any of the basics that we might see as required for a flourishing life without the wealth and time created by the market economy.” This is why I tend to focus on economic growth: it is growth that lifts people out of poverty. This is why I’m happy to report that religion, according to a new study, is good for the economy.[ref]Religious freedom is good for business as well.[/ref] As reported in Christianity Today,

Specifically, religion is a $378 billion to $4.8 trillion boost to the US economy, the Grims found. Even at the lowest estimate, religious organizations make more than the global revenue of Apple and Microsoft combined; at the high end, religion makes the roughly the same amount as a third of the United States GDP.

The researchers’ first estimate only takes into account “the revenues of faith-based organizations falling into several sectors: education, healthcare, local congregational activities, charities, media, and food.” The largest chunk of these–healthcare–raises about $161 billion a year. Congregations raise $84 billion a year, religious schools raise $74 billion, and religious charities bring in $45 billion. Furthermore, the money is increasingly spent on social services like food assistance, parenting classes, and drug and alcohol abuse recovery programs ($9 billion in 2012).

“Their second estimate—that religion has an economic value of $1.2 trillion—adds in the price of social services provided by congregations,” the article continues.

Churches sponsor more than 1.6 million social services programs in America each year, and provide 7.6 million volunteers. More than 9 in 10 congregations actively recruit volunteers for outside projects (93%), half allow their building to be used for non-congregational purposes (50%), and close to half have groups that think about how to meet community needs (48%).

The Grims also added in the halo effect a community receives from the benefits of having a church nearby: it encourages investment in family and children; stimulates the local economy by buying goods and services; provides a place to host weddings, funerals, or large community events; may run schools or day cares; provides outdoor space for leisure activities; and augments the city’s social services.

The result: $418.9 [billion] worth of value.

When religious businesses are considered, the estimate is $1.2 trillion. “The study wasn’t perfect, the Grims admitted. It didn’t add in any of the financial or physical assets of religious groups, or subtract any negative impacts of religious groups, like fraud or abuse of children by clergy…Still, they wrote, “the data are clear.””

Glad to see religion making a big impact in the real world.

Economic Freedom of the World Report: 2016

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The Fraser Institute just published its Economic Freedom of the World 2016 Annual Report. The degree of economic freedom is measured using 5 broad areas:

  1. size of government (expenditures, taxes, enterprises)
  2. legal structure and property rights
  3. access to sound money
  4. freedom to trade internationally
  5. regulation of credit, business, and labor

The ten most economically free countries are:

  1. Hong Kong
  2. Singapore
  3. New Zealand
  4. Switzerland
  5. Canada
  6. Georgia
  7. Ireland
  8. Mauritius
  9. United Arab Emirates
  10. Australia (United Kingdom was tied with Australia)[ref]The United States currently resides at #16.[/ref]

One of the most important findings of past reports that is once again confirmed in the latest is the following:

The share of income earned by the poorest 10% of the population is virtually the same from the least (2.45%) to the most (2.75%) free countries. It is unaffected by economic freedom. But, as shown above, the amount of income earned by the poorest 10% of the population is significantly higher in freer countries. In other words, the poorest of the population are better off in countries that are more economically free.

The rest of the report includes articles on gender disparity in legal rights, Venezuela, Ireland’s growth, and economic freedom in the United States.

Check it out.

Economic Perception and Voting LEAVE

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Recent research finds that the way people perceived the economic outcomes of immigration influenced whether or not they voted “Leave” in the Brexit referendum:

The pattern of voting in the referendum reflects differences in the share of the over-65 group and the less educated across regions (with these two groups more likely to vote for Brexit).  A high rate of immigration and low levels of GDP per capita also correlated with greater propensities to vote to leave. These variables explain not only the voting patterns but also the attitude towards immigrants as neighbours, the perceived dangers posed by immigrants to society, and feelings of apprehension towards the EU. Figure 2 shows the relationship between the latent economic variable E[ref]This was done by “by assigning coefficients to the rate of unemployment for each region, GDP per capita, the share of the working-age population with low education, the rate of immigration, and the share of the population over 65 in each region.”[/ref] and the leave vote by region.

The researchers also found that “an increase in GDP per capita of €5,000…will lower the share of the leave vote by 0.55%. An increase of 5% in the share of the population over the age of 65…will increase the leave vote by 3.3%. A 5% increase in the share of the population with low education…will increase the leave vote by 4.8%.”

The authors summarize,

We have found that old people and those with low education and low income tend to dislike immigration and fear the influence of the EU, and therefore voted for Brexit. A likely reason is that they feel vulnerable to immigration from other European countries. However, the empirical evidence on the adverse effect of immigration on the labour market is weak, although there is some evidence that the lowest-skilled workers in the UK may be adversely affected by immigration…Given the limited effect on wages, an exaggerated fear of immigration in public debate may have influenced voters to want to leave the EU. Thus, voters perceive the numbers and effects of immigrants as being much greater than they actually are.

The Economic Impact of NAFTA

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Image result for nafta

Trump wants to “renegotiate” or even withdraw from it. Clinton is up for “adjusting” it. With trade coming under fire (even from previous supporters), it is no wonder that NAFTA has taken some heat. But what do experts says about the economic impact of NAFTA? According to an excellent brief by the Council on Foreign Relations,

Economists largely agree that NAFTA has provided benefits to the North American economies. Regional trade increased sharply (PDF) over the treaty’s first two decades, from roughly $290 billion in 1993 to more than $1.1 trillion in 2016. Cross-border investment has also surged, with U.S. foreign direct investment (FDI) stock in Mexico increasing in that period from $15 billion to more than $100 billion.

Admittedly, “experts also say that it has proven difficult to tease out the deal’s direct effects from other factors, including rapid technological change, expanded trade with other countries such as China, and unrelated domestic developments in each of the countries.” And like any trade deal, there is debate over “NAFTA’s legacy on employment and wages, with some workers and industries facing painful disruptions as they lose market share due to increased competition, and others gaining from the new market opportunities that were created.”

But what has happened to the U.S. economy since NAFTA?:

In the years since NAFTA, U.S. trade with its North American neighbors has more than tripled, growing more rapidly than U.S. trade with the rest of the world. Canada and Mexico are the two largest destinations for U.S. exports, accounting for more than a third of the total. Most estimates conclude that the deal had a modest but positive impact on U.S. GDP of less than 0.5 percent, or a total addition of up to $80 billion dollars to the U.S. economy upon full implementation, or several billion dollars of added growth per year.

Such upsides of trade often escape notice, because while the costs are highly concentrated in specific industries like auto manufacturing, the benefits of a deal like NAFTA are distributed widely across society. Supporters of NAFTA estimate that some fourteen million jobs rely on trade with Canada and Mexico, while the nearly two hundred thousand export-related jobs created annually by the pact pay 15 to 20 percent more on average than the jobs that were lost.

Furthermore, “economists like Gary Clyde Hufbauer and Cathleen Cimino-Isaacs of the Peterson Institute for International Economics (PIIE) emphasize that increased trade produces gains for the overall U.S. economy. Some jobs are lost due to imports, but others are created, and consumers benefit significantly from the falling prices and often improved quality of goods created by import competition. A 2014 PIIE study of NAFTA’s effects found that about 15,000 jobs on net are lost each year due to the pact—but that for each of those jobs lost, the economy gains roughly $450,000 in the form of higher productivity and lower consumer prices.” Interesting enough, NAFTA may have “helped the U.S. auto sector compete with China. By contributing to the development of cross-border supply chains, NAFTA lowered costs, increased productivity, and improved U.S. competitiveness. This meant shedding some jobs in the United States as positions moved to Mexico, he argues, but without the pact, even more would have otherwise been lost.”

Many critics, however, focus less on the U.S. and more on Mexico. How has the country south of the border done since NAFTA?:

NAFTA gave a major boost to Mexican farm exports to the United States, which have tripled since NAFTA’s implementation. Hundreds of thousands of auto manufacturing jobs have also been created in the country, and most studies have found (PDF) that the pact had a positive impact on Mexican productivity and consumer prices.

NAFTA was “the continuation of a decade of economic liberalization that saw [Mexico] transition from one of the world’s most protectionist economies to one of the most open to trade. Mexico had reduced many of its trade barriers upon joining the General Agreement on Tariffs and Trade (GATT), the precursor to the WTO, in 1986, but still had a pre-NAFTA average tariff level (PDF) of 10 percent. Mexican policymakers saw NAFTA as an opportunity to both accelerate and “lock in” these hard won reforms to the Mexican economy.” Unfortunately, “Mexican unemployment also rose, which some economists have blamed on NAFTA for exposing Mexican farmers, especially corn producers, to competition from heavily subsidized U.S. agriculture.” However, many experts argue that

Mexico’s recent economic performance has been affected by many non-NAFTA factors. The 1994 devaluation of the peso drove Mexican exports, while competition with China’s low-cost manufacturing sector (PDF) likely depressed growth. Unrelated public policies, such as land reform, made it easier for farmers to sell their land and emigrate. As UCSD’s Hanson has argued (PDF), Mexico’s struggles have largely domestic causes: poorly developed credit markets, a large and low-productivity informal sector, and dysfunctional regulation.

Overall, as economist Douglas Irwin summarizes,

NAFTA has promoted the growth of a middle class in Mexico that now includes nearly half of all households. And since 2009, more Mexicans have left the United States than have come in. In the two decades since NAFTA went into effect, Mexico has been transformed from a clientelistic one-party state with widespread anti-American sentiment into a functional multiparty democracy with a generally pro-American public. Although it has suffered from drug wars in recent years (a spillover effect from problems that are largely made in America), the overall story is one of rising prosperity thanks in part to NAFTA.

I expect anti-foreign bias from voters. The problem is that smart politicians will say stupid things to appeal to these voters. I just hope the policies don’t match the rhetoric.

The Stock and Flow of Drug Offenders

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Last month, Nathaniel penned a critique of criminal justice scholar Barry Latzer’s WSJ piece on the supposed “myth” of mass incarceration. The impact of the war on drugs tends to be minimized by counting the amount of drug offenders vs. violent criminals in the prison population (hint: there are more of the latter). In his critique, Nathaniel wrote, “Drug sentences are generally shorter than violent crime sentences, and so taking a headcount of prisoners artificially increases the appearance of violent incarceration simply because those criminals spent more time in jail.” This, of course, was noted by Michelle Alexander in her book The New Jim Crow. But what do the data say? According to Brooking’s Jonathan Rothwell,

There is no disputing that incarceration for property and violent crimes is of huge importance to America’s prison population, but the standard analysis—including Alexander’s critics—fails to distinguish between the stock and flow of drug crime-related incarceration. In fact, there are two ways of looking at the prison population as it relates to drug crimes:

  1. How many people experience incarceration as a result of a drug-related crime over a certain time period?
  2. What proportion of the prison population at a particular moment in time was imprisoned for a drug-related crime?

The answers will differ because the length of sentences varies by the kind of crime committed. As of 2009, the median incarceration time at state facilities for drug offenses was 14 months, exactly half the time for violent crimes. Those convicted of murder served terms of roughly 10 times greater length.  

The picture is clear: Drug crimes have been the predominant reason for new admissions into state and federal prisons in recent decades.[ref]This is the finding of the National Academy of Sciences as well.[/ref] In every year from 1993 to 2009, more people were admitted for drug crimes than violent crimes. In the 2000s, the flow of incarceration for drug crimes exceeded admissions for property crimes each year. Nearly one-third of total prison admissions over this period were for drug crimes:

Rothwell 1125001

In short, Alexander was right when she saw drug prosecution as “a big part of the mass incarceration story.” It turns out “drug crimes account for more of the total number of admissions in recent years—almost one third (31 percent), while violent crimes account for one quarter:”

Rothwell 1125002

As Nathaniel concluded,

First, you don’t have to go to jail at all to get a felony conviction on your record. Second, that felony conviction is going to stay on your record long after you have “served your debt to society.” If the criminal justice system is unfair, it’s not just about incarceration. It’s about losing the right to vote. It’s about losing access to government programs like student loans or food stamps. It’s about the government banning your friends and family from supporting you (if they live in public housing) when you get out. And–most egregiously of all–it’s about a scarlet-F that will follow you to every job interview and ensure that long after you are outside the prison walls you are still practically barred from building a new life for yourself.

There’s  lot at stake here, folks, and it’s not just about violent crime.

The Economics of Immigration: A Cato Lecture by Benjamin Powell

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This is part of the DR Book Collection.

Image result for the economics of immigrationImmigration has been getting quite a bit of attention in the news and here at Difficult Run lately. With political debates shifting from the typical Right/Left to Open/Close, tackling the economic literature on immigration became a priority to me. Hence, my recent completion of the Oxford-published The Economics of Immigration: Market-Based Approaches, Social Science, and Public Policy. And what does the research say?:

  • Eliminating policy barriers to international labor mobility would increase global wealth by between 50-150% of world GDP (pg. 13). “For all its radicalism, open borders’ main effects are fairly well understood. Open borders would dramatically increase global production. It would drastically reduce global poverty and global inequality. At the same time, open borders would make the remaining poverty and inequality much more visible for current residents of the First World” (pg. 185).
  • Immigration has little to no effect on native wages and employment. What effects there are tend to be negative, but small and temporary (pg. 30). In fact, it is mainly those without high-school degrees who lose out in the short run, yet see their wages increase in the long run (pg. 19).
  • Immigration generates an annual efficiency gain for Americans of between $5 and $10 billion (pg. 21).
  • Immigrants boost the demand side of the economy (pg. 42-43).
  • Immigration has little to no impact on the government budget (pg. 63). A typical immigrant may impose a $3,000 net fiscal cost herself, but her descendants have a positive net fiscal contribution of $83,000, producing an $80,000 surplus  (pg. 61).
  • Immigrants today tend to assimilate more than they did a century ago (pg. 90).
  • New research finds “that greater immigration was associated with small improvements in economic institutions or had no effect at all” (pg. 211). In other words, immigrants don’t import negative institutions.

And much more. You can see a Cato Institute lecture on the book below by editor and Texas Tech economist Benjamin Powell.