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An Overlooked Boom

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An Overlooked Boom

10 Blocks podcast February 16, 2022
Politics and law
Economy, finance, and budgets
The Social Order

MI senior fellow and Wall Street Journal columnist Jason Riley joins Brian Anderson to discuss black economic progress before the pandemic and the free-market policies that contributed to it. His new book, The Black Boom, is out now.

Audio Transcript

Brian Anderson: Welcome back to the 10 Blocks Podcast. This is Brian Anderson, the editor of City Journal. Joining me on the show today is Jason Riley. Jason's a senior fellow at the Manhattan Institute. He's a columnist for The Wall Street Journal and a commentator on Fox News. He was awarded the Bradley Prize in 2018 and he's the author of a brand new book that will be the topic for our discussion today. It's called The Black Boom. So Jason, thanks very much for coming on.

Jason Riley: Glad to be here, Brian.

Brian Anderson: Your book, it's a short kind of punchy look at the economic policies implemented under the Trump administration that had led, at least in the pre-pandemic period, to economic gains among black Americans, from employment, you note wages, poverty, inequality. So I wonder if you could just, for our listeners, sketch out the basic argument to the book, why you wanted to write it and just how significant were some of the gains that you detailed?

Jason Riley: Sure. So I wanted to write the book, because I thought it was a very under-reported story. The black economic gains were tremendous. We hadn't seen them in a long time, if ever in some cases, and they didn't get a lot of play in the press. That's because the established media had largely decided that Donald Trump was a bigot and that his policies were going to harm the economic prospects of low income minorities in particular.

So reporting this news, this data, would've undermined that narrative, and so they largely downplayed it or ignored it all together. I thought it was an important story to tell, not necessarily to score partisan points, but because income inequality is something a lot of us care about sincerely. If it was shrinking, I think people should know what kinds of policies were leading to that shrinkage.

Now that we have an administration in place that wants to reverse a lot of these economic policies that Donald Trump put in place, namely tax cuts and deregulatory policies, I think people should know what we could be returning to if those reforms are reversed. So, that's why I wanted to write the book.

Brian Anderson: So those two particular policy areas, tax policy and the kind of deregulatory push by the Trump administration that you see is most essential?

Jason Riley: Yes, that's correct. I mean, I titled the book, The Black Boom, but what we're really talking about is a working class boom, it just so happens that blacks and Hispanics are a disproportionate number of people in the working class. But what these reforms that Trump put in place did were down to the benefits of working class Americans broadly.

He cut taxes, particularly corporate taxes, which means that corporations were incentivized to bring money back from overseas and invested here domestically in businesses they had here, expand those businesses, which required hiring more people and so forth. They brought a lot of people into the workforce, long-term unemployed people, teenagers, seniors, and even less skilled and less experienced workers were brought into the workforce I think as a result of those tax cuts.

Again, the deregulatory effort once again helped businesses, gave them the incentive to expand knowing that there was going to be a lighter regulatory burden, or in many cases just that no more regulatory burdens were going to be added. Which is the sort of certainty that businesses are looking for as they consider whether to expand and hire capital investments and so forth.

Brian Anderson: So your book, The Black Boom, is focusing on the pre-pandemic period. What about post-COVID-19? Did the virus undo the progress you write about and what's happened subsequently?

Jason Riley: Oh, absolutely. I mean, what did we lose? 23 million jobs. Yes, it really wiped out a lot of the gains. I do think that one of the reasons you saw President Obama, or I'm sorry, President Trump do better among minorities in his reelection bid, although he lost, his performance among blacks and Hispanics went up, particularly among men in those groups. It was because of his emphasis on reopening the economy. A lot of those people couldn't work from home, they're in the service sector, they're in hospitality and so forth, and the president's emphasis on getting back to work, reopening the economy I think really resonated with them.

You have to keep in mind, Brian, how bad things got for blacks economically under Obama. Black unemployment did not fall below double digits until the seventh year of the Obama presidency, so blacks did not fare well economically under President Obama. Trump comes into office, black unemployment falls to record lows, black poverty rates fall to record lows, black wages are rising at a faster rate than white wages in this country. So, a tremendous acceleration of what had been happening under President Obama.

Just one quick data point to illustrate this point. Among the lowest wage workers in this country, they saw their wages rise in the first three years of the Trump presidency at more than double the rate they rose in the second term of Obama. So we weren't just talking about a continuation of trends under Obama, which is what a lot of Obama defenders and Democrats and liberals want to call this. This was something unique to the Trump presidency that I think was born of his tax cuts, his deregulation, his emphasis on growing the economy. Economic growth I argue does a much better job of addressing income inequality than does welfare state expansions, government benefits, racial preferences, and so forth.

Brian Anderson: As you noted, the press has ignored this Trump era black boom. I wonder if something is similarly going on right now with regard to the COVID lockdowns that occurred, especially during 2020. COVID obviously wreaked havoc in terms of mortality in the US and elsewhere, and in the US it struck the black community particularly hard, but what about the effects of lockdowns and the subsequent social dislocation that occurred in black communities?

We don't hear much about the economic devastation, the rise in crime that's taking place in these places, which may be related, and the learning loss which must be reaching staggering levels because of the shutdown of schools last year and in 2020 and the continued masking. A lot of problems there. So, I don't think that's getting reported as much as it should.

Jason Riley: You're right, it isn't. I mean, I'm particularly disturbed by what's happening with the schools. We do have an achievement gap in this country and it's clear that the lockdowns exacerbated it. It's also clear that the teachers unions were pushing for these school closures and for them to stay in place long after we knew that children were least affected in terms of spreading it, in terms of getting sick and so forth.

The unions wanted to use this pandemic to leverage better pay and benefits and so forth out of this tragedy, and the impact on these children, minority children in particular, the loss in learning, the psychological effects, the inability of many of them to continue their schooling, because they didn't have the equipment at home to do so.

Brian Anderson: Right.

Jason Riley: I think it's just absolutely devastating, and I think and hope that the unions and their democratic allies will pay a price for what they put black America through. Maybe we're seeing some of that already. You look at the Virginia governor's race, people point to that, but I hope that's just the start of it.

Brian Anderson: Yeah. In The Black Boom, you extend, and we've talked a little bit about it here, what has been a long running theme of your commentary, that disadvantaged Americans of the working class benefits more from opportunity, entrepreneurship and a market economy than they ever could from welfare programs, political favors coming from government.

I wonder if you can talk a little bit more about why this is the case. Sort of on a philosophical level, should economic growth come first? That is do we need policies to encourage prosperity before we can hope to go after social cultural problems? Or does the causality actually run in the other direction, that growth doesn't solve problems on its own, but that markets and capitalism, that they instill certain habits? This is something Michael Novak used to argue, discipline, routine, deferred gratification that bear positive fruits in a life and in society.

Jason Riley: Well, in terms of cultural development, the development of human capital as economists call it, skills, habits, behaviors, I think that's something that has to happen internally within a group. I think there are limits to what the government can do in terms of accelerating that sort of thing. What the government can do is get out of the way and not put in place disincentives for a group to develop the types of behaviors that are conducive to upward mobility. So I think large welfare state, for instance, I think can be counterproductive in that regard, paying people not to work and so forth.

But what I point out in the book is that historically when blacks have been given economic opportunity, they've run with it, they've largely taken advantage of it, and so that should be the focus in terms of a government policy, growing the economy. The period of fastest growth since the end of slavery for blacks in this country has been between late 1940s post-World War II period and the early 1970s.

So, you think about what was going on in America socially at that time. We're talking about a period during Jim Crow, legal segregation. You could put a sign in your window that says we don't hire blacks, or you can't live in this neighborhood. Blacks had very little political representation, very little political clout during that period in terms of elected officials, and yet we saw the strongest economic gains during any period in modern history.

So, what we saw happening under Donald Trump before the pandemic I think was simply a repeat of what has happened at other times in US history when we've had strong growth. That's what we had in the post-war period was very strong economic growth, and then blacks took it upon themselves to take advantage of those opportunities, not withstanding all the other things that were going on socially in the country to stand in their way.

So this book, it's not a defense of Donald Trump's personality or character or Twitter feed, it's a defense of free market economic policies. Which I argue simply do a better job of addressing income inequality and upward mobility than government programs do, and than wealth redistribution policies do. That's what this is an argument for, free market policies.

Brian Anderson: Now The Black Boom also contains two comments on your extended essay, one by Juan Williams and the other by Wilfred Reilly, who look at its argument and they have different takes. So Williams suggests, and you alluded to this position earlier, that Trump can't be fully credited with the progress that occurred on his watch, as it came at the tail end of a cyclical economic expansion that was unleashed by Barack Obama, and then it extended across the entire developed world as it responded to the financial crisis. Reilly takes a different view from you on immigration.

So, I wonder if you could describe these two critiques of the argument of The Black Boom and explain what your response is?

Jason Riley: Sure. My goal there was to take on two arguments that are commonly put forward to explain why we saw the black economic progress that we did see. To the extent that people on the left acknowledge it was happening, I think Juan Williams really speaks for them in his response to my piece. They argue that it was simply a continuation of what was going on under Obama, that Obama just handed off to the next guy a booming economy, and what we saw was going to happen no matter who he handed it off to, it was inevitable.

I take that argument on, because I go back and look at what the expectations were at the time. Economic growth in this country actually fell by about 50% during Obama's final term. In 2015, it had been 3.1%, in 2016, his final year in office, it fell to 1.6%. That is the economy that Donald Trump inherited, a slowing economy to the point where people like Larry Summers were predicting a recession, so was the Federal Reserve, so was the Congressional Budget Office. All of them were predicting an economic downturn, slower economic growth, slower job growth, and so forth. Trump defied all of these expectations.

I argue that Juan sort of making a heads I win, tails you lose argument, in that if things had gone sideways under Trump, I doubt he would've blamed Obama, but because they went in a positive direction, he wants to give Obama the credit. I don't think you can have it both ways.

Wilfred Reilly takes on different argument, and this is actually an argument that a lot of conservatives and Trump supporters in particular make, and that is that it was Trump's crackdown on illegal immigration that led to the black gains that we saw in the first three years of his presidency. My argument is that I just don't see in the data evidence that illegal immigrants or legal immigrants can be scapegoated for bad economic outcomes among blacks.

This is not to argue that we shouldn't address illegal immigration or fix the border or decide who comes into this country and on what terms they come in. I'm not opposed to stopping illegal immigration to the extent that we can, but in terms of the impact that illegal immigrants have on black economic advancement, I just don't see a lot of evidence there that they have very much impact at all.

People debate how many illegal immigrants are in the country. The official number is 12 million or so, but there are other people who argue it's double that or triple that, and I say pick your number. Let's say there are 25 million illegal immigrants in this country, the economic gains I lay out in this book still occurred with 25 million illegal immigrants in this country. We still had wages rising for blacks at faster rates than for whites, particularly at the low end of the economic spectrum, which is supposed to be where immigrants are having the most detrimental effect on US workers.

There is some evidence that wages among Americans, low skill Americans, particularly Americans without a high school degree, there can be downward pressure on wages among that group, but the downward pressure is small, 3%, 4%. The number of Americans without a high school degree is just a very tiny percentage of our population, that has been dramatically shrinking in recent decades. There's no evidence of job displacement from immigrants, legal or illegal. So Wilfred pushes that argument, and that's sort of how I respond to it.

Brian Anderson: A final question. Just this isn't obviously addressed in the book, but what has been your view of the first year plus now of the Biden administration with regard to the argument that you make in The Black Boom?

Jason Riley: Well, I think the problem is that the Biden administration wants to reverse a lot of the economic policies put in place under Trump that I believe led to the results I described in the book. I don't think we would've seen these black economic gains, but for the reduction in taxes, both personal income taxes and corporate taxes, but for the reduction in the regulatory burden, again, which I think incentivize corporations to hire and invest. So to the extent that Biden wants to reverse those things, I'm worried we'll go back to the same slow growth we saw under Obama.

The other thing I find very troubling about the Biden administration is their desire to dramatically increase the size of the welfare state in this country, Brian. We have a worker shortage right now. There are millions more jobs available than there are people looking for work. The idea that you are going to give people more of a disincentive to return to the labor force I find to be very, very disturbing.

Not only that, the Biden administration wants to expand the welfare state deep into the middle class. They're talking about tax credits and family leave policies in homes with six figure incomes. So again, I find that that move to expand the welfare state very, very disturbing under Biden, in addition to his intent to reverse a lot of the policies that I think led to the reduction in income inequality that we saw prior to the pandemic.

Brian Anderson: Well, thank you very much, Jason. Don't forget to check out Jason Riley's work. It's on the Manhattan Institute website, which is manhattan-institute.org. We'll link to his author page in the description. He's also the author of a terrific recent biography of Thomas Sowell. You can also find City Journal on Twitter @cityjournal and on Instagram @cityjournal_mi. As usual, if you like what you've heard on the podcast, please give us a ratings on iTunes. So Jason, thanks. Great to talk with you as always.

Jason Riley: Thank you, Brian.

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Photo by OLIVIER DOULIERY/AFP via Getty Images

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