What’s Really Going On?
Reading the news each morning one might conclude that a significant part of our society has gone pretty much off the rails. A couple of article links are enough to make the point:
These trends are antithetical to a free society, so what is going on? It would be easy to point to one factor, like the police, as the cause of this meltdown but social science and history are usually a lot more complex than that. In fact, one might rightly suspect most of what we see on the television, read in the news or on social media is one major distraction from the true challenges we face. And one does not need to dismiss any contributing factors like the virus pandemic, the shutdowns, or racist conflict to make the case.
There is racism in this country — it exists, it’s real. But there is racism to different degrees in every society — the fear and persecution of the “other” is one of the stains on the human soul, one of our original sins. The question is how determinant race discrimination is in any particular society in determining the outcomes and fates of those so discriminated against. Posing that question demands an empirical analysis — it cannot rely solely on anecdotal, lived experiences. In other words, if I have suffered a racist action, that alone does not prove the entire society is racist, only that one case of racism has occurred. A pattern of anecdotal cases is also not enough, we must do an analysis with a much larger data sample. So, “systemic” racism must be addressed with scientific data analysis, not lived experience and media narratives. That work has been done elsewhere and is not the focus of this essay.
Instead, we will zoom out from the chaos to gain a more measured perspective. Police violence is the tip of the spear propelled by a complex web of social and political policy failures. I cite a couple of recent articles that make the larger points surrounding our current social crisis:
The True Plight of Black Americans
[The] Depth of Black Americans’ Economic Struggle
The first article is written by Walter Williams, one of the most prominent scholars on the economic plight of blacks in America. He, along with Thomas Sowell, has examined the causes and effects of racism and their research, along with that of some sociologists, point to the more significant causes of urban poverty: the breakdown of the family due to welfare dependency, failures of public education, corrupt machine politics, drug culture, lack of economic opportunity, among others. These urban cities have been dominated by the post-60s liberal ideology of the Democratic Party. But we disassemble and allow these failed policies to continue, then expect the police to step in to control the chaos.
A simple graph of the plight of blacks in Minneapolis reinforces the case:
This is less a failure of black Americans to grasp the American Dream than it is of failed social, tax, and financial policy by the Federal and state governments under both party leaderships. The volcano we see erupting today has been boiling below the surface for the last 50 years. The biggest factor is financial policy, because, with the right financial policies, we can usually afford a lot of social policy failure.
The decoupling of monetary policy from the discipline of Bretton Woods pegged-dollar policy means the supply of money and credit is no longer constrained beyond the discretion of the monetary and political authorities. This happened in 1971 but it took a decade into the mid-80s before policymakers realized that they were no longer constrained by price inflation as well because of the explosion of global labor supply. The economic liberalization due to the failures of state planning in the USSR, China, India, Africa, and South America, opened up their labor forces to international trade and production. This kept wage push inflation off the table and allowed the Federal Reserve to pursue its massive credit creation and financial repression. The result has been a combination of cheap credit and low wages, leading to the massive leverage of existing productive assets.
That has driven wealth and income inequality that has impoverished those who do not own these appreciating assets. So, jobs have been created because they’re cheap in many respects, but everything one needs to buy — such as housing, education, medical care — has sky-rocketed in relative price. Most urban residents left behind on this train have dim prospects for wage incomes, decent educational opportunities, homeownership, or accessible healthcare. This is what has thrust the spear of police violence against the urban poor into the spotlight.
So one can understand how the Tea Party and Occupy Wall Street came to this. The solutions are obvious, we just choose to ignore them because of our treasured political ideologies and partisanship identity politics. Urban minorities must turn the tide against corrupt urban machine politics. Zooming in again, here is an article showing how one city reformed urban policing:
Camden, NJ, did police reform right
The key cited here, which many on the Left will find disconcerting, is to reform public-sector union contracts to break up the cozy relationship between city councils and those who fund their campaigns: public-sector unions. This applies to teachers’ unions, police unions, firefighter unions, and municipal employees’ unions. At the same time, we need more transparency concerning the relationships of politicians with the private sector, including real estate developers and the Bar Association.
Zooming back out. These urban political reforms can only succeed if we get our financial house in order. Free-wheeling monetary policy — like the one that quadrupled the price of a house in the past 20 years — must be reined in to support fundamental value creation. In other words, our economy must produce and distribute wealth according to real value creation that improves our quality of life, not through speculating on asset appreciation. When the hedge fund industry and lives of the financial elites are no longer in the headlines, we’ll know we’re on the right path. Unfortunately, with our descent into the distractions of anarchy and chaos over identity, I don’t have hopes of this happening any time soon.
