The United States is the wealthiest society in human history, yet despite decades of economic growth, black Americans remain at a socioeconomic disadvantage. Policies intended to resolve these disparities have only made things worse.
Prior to the welfare state policies like the minimum wages, black Americans improved their living standards through enormous productive gains—an impressive feat, given the lawless injustice of the Jim Crow laws. Unfortunately. These well-intentioned policies have widened the racial gap.
The turn of the 20th century was marked with reduced foreign labor from immigration restrictions and increased demand for Americans goods. The North’s industrial economy boomed and attracted blacks away from the South’s agricultural industry, largely due to recruitment efforts by Northern industrialists. This lead to the population of blacks living outside the South tripling from 1910 to 1950.
Blacks migrating north assimilated into the workforce by accepting lower wages in return for work experience. This pay-gap was not ideal, but it allowed the average black migrant to experience a 30 percent increase in annual earnings by moving north.
Before the [federal minimum wage], the black-white unemployment gap was insignificant, never permanently exceeding 1 percent.
Ultimately, blacks achieved huge gains in wages, education, and political expression, despite the injustices of the time. The black labor force developed considerably and, by 1940, the black-white wage gap had sharply declined.
This began to change in 1938, when Congress legislated the Fair Labors Standards Act (FLSA), and instituted the first federal minimum wage of US$0.25 per hour. The new minimum wage prohibited black youths from entering the labor market, harming their long run employment potential.
Before the FLSA, the black-white unemployment gap was insignificant, never permanently exceeding 1 percent. But since the introduction of the minimum wage, the gap has increased.
In a study of over 600,000 data points, focusing on 16 to 24-year-old males without a high school diploma, the Employment Policies Institute found that every 10 percent increase in a federal or state minimum wage decreased black youth employment by 6.5 percent.
Black teenage unemployment was roughly equal to their white counterparts in 1948, but has since diverged sharply away from whites. The same is true for the labor force participation of black teenagers.
The minimum wage continued to reduce black youth employment from 1940 to 1970, with the racial unemployment gap expanding as a result.
However, during this same period, the racial income gap shrank to it its lowest point. Wage growth for the entire black community — not just black youths — was almost double the subsequent growth from 1970 to 2000.
[adrotate group=”8″]This seemingly counterintuitive development is the result of the disproportionate impact minimum wages have on young people — since they tend to be the lowest wage earners.
While older blacks already in the workforce were less likely to be affected by the new price floor, the minimum wage effectively prevented black teens from gaining work experience, and the necessary skills for future labor. This was exacerbated by an education system rigged by racist government funding mandates, which prevented black teens from building sufficient human capital through schooling.
When this generation of black teens hit their 20s, many of them had no job experience and, because of wage floors, were unable to find employment. Eventually, they exited the workforce entirely.
Until 1970, the labor force participation rates of black males age 20-24 were equal to, and even slightly higher, than whites of a similar age. Unemployment of the same group, which widened after the minimum wage, was 62 percent higher than whites in the same year. By 1980, both measures worsened as blacks exited the labor force in large numbers.
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In 1965, the Great Society began to “fight” racial and economic disparity through a number of welfare programs and jobs initiatives that still exist today. These policies were targeted at the poor, and although blacks were continuing to make large economic gains, they disproportionately qualified because they were still the poorest demographic at that time.
These welfare programs became competition for labor wages, creating perverse incentives for young blacks in the labor market —many of whom responded to these incentives. This is not to say that blacks did not want to work, but that they acted rationally by responding to the incentives to accept wages over welfare.
As Paul Krugman acknowledges in his economics textbook, “Public policy designed to help workers can lead to structural unemployment as an unintended side effect.”
The minimum wage price floor had already contracted the labor market for young blacks who, in search of income, found themselves stuck in government programs. Black unemployment increased, and labor force participation decreased, following the Great Society and the introduction of the minimum wage.
Unfortunately, the Great Society has had very little impact on the poverty rate, and has completely failed to reduce the socioeconomic disparity between black and white Americans.
Blacks made significant gains in economic prosperity up until the minimum wage and Great Society welfare state; all in spite of lawless government policies. Without these disastrous programs, they would have continued to make productive gains and close the economic gap.
The economy must empower blacks to participate in entrepreneurial markets that can build their communities. We continue with a failed welfare state approach, which only increases dependency on the state.
EspañolWhen Islamic terrorists struck Brussels last Tuesday, they brought slaughter — yet again — to the heart of a European capital. Brussels, however, is also the European Union's de facto capital, and Europe's undisputed capital of Islamic extremism. It turns out, in fact, that nearly all recent Islamic terrorist attacks in Western Europe — the Charlie Hebdo massacre, the failed attack against a Thalys train traveling from Amsterdam to Paris, last November's carnage in the French capital, last week's bombings in Brussels — have ties to Molenbeek, a Brussels municipality that has become an epicenter of Islamist radicalism. The Belgian State No Longer Exists Islamophobia and the Defense of Islam in Cervantes's Quijote Last year, German journalist Hansjörg Müller mentioned Molenbeek as a reflection of Belgium's failure as a state in an article published in the PanAm Post: When it turned out that the Islamist scoundrels who attacked Paris on November 13 had planned their strikes in the Brussels municipality of Molenbeek, critics referred to the Belgian government’s weakness. Brussels itself soon came under a state of emergency due to the terrorist threat. Politico.eu then claimed that Belgium is a “failed state,” a term usually reserved for countries like Afghanistan or Somalia. French journalist Eric Zemmour even suggested that France should respond to the terror attacks by bombing Molenbeek instead of the Syrian city of Raqqa. Müller concludes that, to understand Belgium's failure, one has to consider that the country was "a top-down creation forced upon the people by a centralized state." Belgium Is a Relatively New Invention Belgium was created in 1830; the country did not exit prior to this date and it was named after a Roman province. Although the Belgian nation arose from a revolution against King Charles X of France (1824-1830) —Brussels "looked up to Paris then as much as it does now," Müller explains — the country was nevertheless founded as a monarchy under a German king: Leopold I (1831-1865), or Leopold von Sachsen-Coburg und Gotha. The Belgian monarchy rested upon an uneasy alliance between Catholics and liberals: the Flemish merchants of coastal Antwerp and the French-speaking industrialists who owned mines in the south. But French remained the language of the ruling class even though Dutch was the mother tongue of a peasant majority: "politicians, professors, and captains of industry spoke French," Müller writes. "Any non-francophone pursing a career would crash very soon against a glass ceiling." It was only in 1888 that Dutch became an official language in Belgium. But Dutch-speakers still had few opportunities compared to francophones. Never-ending Nationalist Rivalries This is the origin of the nationalist and separatist struggles between the Flemish people and the Walloons that still dominates politics in Belgium. After the 2010 general elections, Belgian parties took 589 days to form a government, a world record among democracies. In the meantime, pro-Flanders and pro-Wallonia factions remained at each others' throats, attacking each other for "anything from Flemish collaboration during the Second World War to allegations of francophone cultural imperialism seeking to impose the Gallic language in Flanders," as The Daily Telegraph reported. When the German Wehrmacht invaded Belgium in 1940, Müller explains, two nationalist Flemish movements welcomed the aggressors with open arms, sealing a Faustian pact out of hatred for their French-speaking compatriots. This guaranteed continued animosity between Belgium's two main language groups after the war, tensions being alleviated only by the transfer of steel-industry funds from Wallonia to Flanders. Wallonian steel production declined in the 1980s. Eventually, the region became a "synonym for economic failure," according to the Financial Times. Meanwhile, Flanders's economy began to grow due to a boom in the service sector. Today, Flanders generates 57 percent of Belgium's GDP, leading many Flemish nationalists to believe that their taxes are paying the bills "of those whose forefathers bullied their own ancestors," Müller notes. Irresponsible Migration Policies Belgian politicians, aware that votes are up for grabs wherever hatred looms, have built entire careers around nationalism and handing out the welfare state's generosity among particular ethnic groups. Inevitably, this led to an over-sized and largely dysfunctional government. As Politico.eu explains: Belgium has eight parliaments (federal, three regions, three language communities and the EU), 19 municipalities with 19 different mayors in Brussels alone, and six separate police departments. Never mind that these bodies often do not communicate with each other or share information. The Belgian constitution enables a peculiar Belgian national condition of encouraging those with power to 'look the other way' when an intractable problem emerges. Given its institutions' dysfunctionality, Belgium was ill-prepared to assimilate the masses of immigrants which began arriving in the 1960s, when the government invited foreign workers to compensate for a dwindling work force. Thousands of Muslim migrants, particularly from North Africa, left for Belgium and decided to stay there. In 1993, Molenbeek's recently elected mayor, the socialist Philippe Moureaux, said the district was “completely incapable of assimilating new immigrants.” But, according to Politico.eu, Moureaux soon realized that he could remain in power as long as he won over the immigrant vote. So he supported the movement to grant citizenship and voting rights to newly arrived immigrants. Ar a result, Molenbeek's population grew 30 percent in 15 years. Today, 40 percent of it is Muslim, and the district has turned into "a retreat base for jihadists,” in the words of Belgian lawmaker Georges Dallemagne. Carte blanche for Saudi Salafism Beyond government incompetence at the local level, Belgium's national government implemented disastrous policies that allowed radical Islam to thrive in the country. In 1969, the Belgian government sought cheap oil, so it let Saudi Arabia build the Islamic Cultural Center in Brussels's Parc du Cinquantenair. The center's goal was to spread the teachings of Salafism, a fundamentalist Sunni sect that advocates for a return to "pure" Islam as established in the Koran and the words and actions of the Prophet Muhammad. The French newspaper Libération reports that “the Great Brussels Mosque has been a Salafist sanctuary for 30 years, offering a fertile ground for extremist networks.” According to Deutsche Welle , the Belgians “allowed their Saudi friends to train Muslim Imams to preach to the growing numbers of African and Maghrebi immigrants coming into the country," giving "the House of Saud carte blanche to spread the message of Salafism" from Brussels. Politico.eu adds that the Salafists placed over 600 of their disciples in Belgium's school system. And the Belgian Salafist movement was also influential in the creation of Sharia4Belgium, a movement that called for the death penalty against homosexuals and the replacement of Belgian democracy with Sharia law. After provoking riots in Molenbeek in 2012, Sharia4Belgium was deemed a terrorist organization and its leader was sentenced to 12 years in prison. But many of the 400 Belgian citizens who traveled to Syria and its environs to join the Islamic State (IS) — Belgium has the highest per capita participation rate in IS in all Europe — had ties to Sharia4Belgium. Police Incompetence Belgium's political class found the will to curb home-grown radical Islam too late. It was only in 2005 that then Prime Minister Guy Verhofstadt took the first steps. But the Belgian police force is not exactly the paragon of competence. As Bilal Benyaich of the Itinera Institute explains: …there is a communication problem because lots of our policemen here do not come from Brussels: they come from Flanders or Wallonia. They do not know the Brussels culture, this urban culture, and they do not know the Muslim communities here in Brussels. Islamic terrorists are indifferent as to whether their victims are Flemish or Walloons. Their aim is to exert total violence against the basic liberties of Western civilization regardless of petty linguistic divisions. Sadly, Belgian politicians were busy fomenting regionalism for their own benefit while the real common enemy was gaining the strength in the Brussels-Capital Region. Translated by Daniel Duarte.