Even in 2014, the white community enjoys systematic advantages in America. Those who claim otherwise often point to minority politicians and business leaders as evidence that America has transcended its racial problems. But a couple of anecdotes are no substitute for statistics that overwhelmingly prove that the Black population remains seriously disadvantaged in America. Only 1.2% of all Fortune 500 CEOs are Black and the United States Senate has only two Black senators. 27.6% of Blacks are below the poverty line compared to 9.8% of whites. 44% of white Americans make above $50,000 a year yet only 30% of Black Americans pass the same threshold. Only 678 white men per 100,000 American citizens are incarcerated, yet 4,347 Black men per 100,000 people are forced to spend time behind bars. Education fuels social mobility and economic growth within communities, and there are striking differences. 15% of Black Americans do not have high school diploma compared to 7.5% of white Americans. A Brookings Institute study found that 68% of white Americans reach the middle class by age 40, while only 34% of Blacks reach this earnings level—defined by the study as 300% of the poverty line or about $68,000 for a married couple with two children. Finally, 70% of Blacks and 30% of whites think the police treat Black Americans unfairly. There are similar statistics for the courtroom and the workplace.
Conservatives—including myself—tend to be white males, and it is difficult for us to empathize with the above statistics. Police rarely eye us suspiciously merely for walking alone at night, and white males are almost never depicted as terrorists in Hollywood movies.
Dr. Martin Luther King’s often quoted wish for a nation where his children will “not be judged by the color of their skin, but by the content of their character” is often used to shy away from conversations about how race and other innate characteristics like gender, sexuality, and disabilities are discussed in America. Many distort the quote to claim that even a conversation about race prevents people from judging others solely on personal qualities such as honesty and motivation. Race should never be a factor in forming character judgements about others, but there is still a need to discuss race relations in an open and civilized manner. In an ideal world, race would not be a factor in shaping our life experiences. However, we live in a society where these inherent traits fundamentally affect our life experiences. White males do enjoy distinct advantages that few others enjoy, on average. But why is America this way?
II. Capitalism is not to Blame for White Privilege
Many people ascribe to the general notion that capitalism causes white privilege and racial oppression. There are multiple factors that exacerbate America’s racial problems yet the largest one is rarely discussed. Throughout most of U.S. history, all levels of government have created a system that explicitly and implicitly oppresses racial minorities and the effects are still being felt today. This story is one of the most tragic examples of government intervention gone wrong in human history. First, it is important to understand why capitalism did not create socioeconomic racial gaps.
Free markets did not cause white privilege in America. To understand why, we must turn to a fundamental economic fact: in a competitive market, workers are paid according to the additional value they bring to a firm. In other words, they are paid based on productivity. Better workers lead to higher profits, and any hiring decisions that are not based on productivity impair profit. Nobel Prize winning economist Gary Becker popularized the economic rationale against racial discrimination. If employers decide not to hire a productive Black worker, then they will lose out to firms that do not discriminate and can therefore capture the economic benefits of productive workers. Becker pointed out that the profit motive would usually trump racism in a free market. A recent Forbes article by Tim Worstall provides a modern example of this phenomenon: Donald Sterling. The Clippers owner is a blatant racist, yet his team is composed of mostly Black players. Sterling recognized that, if he only hired white players, he would forgo productive Black players and other allow non-discriminatory teams to outperform the Clippers. Free markets only discriminate on the basis of productivity, because any other strategy loses potential profits. Another force besides the market established a system of white advantage and simultaneously hampered Black productivity. We will see in the next section that this force was government.
III. Government Power at its Worst
The story of white privilege is a story of government policy. Overtly racist laws designed to suppress Blacks and other minorities prevented economic development within these communities and stripped away their dignity for several generations. Even in more recent eras, politicians that have worked to help close racial socioeconomic gaps have unintentionally made them worse. Conservatives assail governments for “picking winners and losers” in society and white privilege is a classic example of this.
Southern plantation owners undoubtedly profited from slavery. Black slaves did not have to be paid, and plantation overseers could use force to maintain production levels. These abhorrent acts, however, would not have been possible without a strong legal framework that protected slavery. Federal and state governments protected slave-owners and actively prevented Blacks from educating themselves and increasing their productivity. In an 1841 publication from the abolitionist American Anti-Slavery Committee, the authors describe government restrictions on education:
“In North Caroline, to teach a slave to read or write, or to sell or give him any book (bible not excepted) or pamphlet, is punished with thirty-nine lashes, or imprisonment if the offender be a free negro, but if a white, then with a fine of 200 dollars.”
In the slavery era, the government systematically prevented Blacks from acquiring an education that could increase productivity. By imposing brutal punishments, splitting families, and banning education, slavery destroyed many of the factors necessary for economic growth within a community. The government institutionalized these horrors. Blacks were put at a disadvantage early in American history that whites can barely fathom. After the end of the Civil War, it was difficult for Blacks to find jobs because they had few skills and were consequentially relatively unproductive. Government-sanctioned slavery made it nearly impossible for former slaves to compete in the marketplace and demand high wages even when they were free.
The government did continued to prevent the Black community from economic development when it abolished slavery. Up through the 1960s, strict Jim Crow laws in the South inhibited Blacks from accruing human capital. Blacks were sent to inferior schools, denied jobs via legal statute, and even violently attacked. One Alabama law, for example, stated, “It shall be unlawful to conduct a restaurant or other place for the serving of food in the city, at which white and colored people are served in the same room.” By limiting interracial interactions in public places and schools, Alabama’s government prevented its Black citizens from broad participation in the predominantly white economy and hampered their ability to learn and exchange ideas.
Government policy hurt the Black community in ways that transcended slavery and Jim Crow laws. For example, many of the economic disparities between Black and White communities are due to historical government housing policies. To combat the Great Depression, the Federal Housing Administration (FHA) began to guarantee private mortgage loans in select neighborhoods. The FHA drew red lines through areas where it would not assist private banks. Redlining was used to isolate Black communities and inhibit their access to financial capital.
An article from the Boston Fair Housing Center describes how, during the 1930s in Detroit, white families began to settle near a Black community. The FHA refused to secure the white or Black neighborhood mortgages because the white community was too close to the Black one. After a concrete wall was built between the neighborhoods in 1941, the FHA secured the white mortgages. Although explicit racial housing discrimination is banned today, cities can still implicitly discriminate via zoning codes that price out lower-income groups.
Even government intervention designed to help previously targeted minorities has had unintended consequences. After the 1964 Civil Rights Act, the government began requiring school districts to bus children to racially integrate schools. In The Triumph of the City, Harvard economist Edward Glaeser describes how “proponents of busing saw it as a means of breaking down the intellectual isolation of the ghetto and improving opportunity for African Americans.” However, the Supreme Court ruled that students could only be bused to schools within the same district. City school districts were forced to integrate while white suburban districts were largely exempt. This spurred increased white migration to the suburbs and further cemented white advantages in education since the inner city schools lost a lot of money they had received from property taxes on affluent white citizens.
Detroit is a prime example of this phenomenon. The map below depicts Detroit’s present racial composition. Green dots represent African-Americans and blue does represent whites. The Eight Mile road shown on the map is Detroit’s northern boundary. Detroit’s Historical Society describes how “Eight Mile marks, both physically and psychologically, a barrier between the region’s Black and white residents.” This is an illustration of how affluent white citizens fled Detroit to escape urban policies like busing and Detroit’s inner city riots. Earlier policies such as redlining also helped cement racial segregation within Detroit. White flight deprived Detroit of important property tax revenue and severely decreased resources for schools and other public services. This further prevented low-income minorities from obtaining a quality education and increasing their productivity and wages.
A Map of Detroit’s Racial Segregation
Throughout American history, governments at all levels—federal, state, and local— have explicitly or implicitly harmed Blacks and other minorities. These historical policies continue to disadvantage Blacks and other minorities today, and they are a key cause of the statistics we saw at the beginning of this article. Skills and productivity compound over generations and, throughout American history, the government prevented Blacks from participating in this process. The government today does not directly enslave Black Americans not does it actively discriminate against them, but the Black community still suffers from generations of policies that inhibited the Black community’s economic development.
It is important to address one potential counterargument that readers will undoubtedly consider. Government policies oppressed Blacks, but doesn’t the government respond to the wishes of its citizens? If powerful Americans with a lot of government influence benefit from white privilege, then aren’t “rich capitalists” truly to blame for corrupting government and using it to pass racist laws? In an era where corporate political influence is vilified, this argument can especially appealing.
We must turn to the design of our political institutions to address this argument. In his essay On the Independence of Parliament, British philosopher David Hume wrote that it is “a just political maxim that every man must be supposed a knave.” In other words, when deciding how to apportion power within government, we must suppose that every potential policymaker is greedy, racist, and manipulative. Political systems must be designed to incentivize good governance and institutionally limit power. Private citizens can have whatever racial views they want, but a government that can impose racist views on an entire nation has too much power as an institution. Governments that oppress their citizens indicate both bad leaders and, more ominously, poor institutional design. Racist politicians and business leaders would be unable to legalize oppression if governments were sufficiently limited in their institutional power. Only the government is capable of constructing and perpetuating a system where one racial group is advantaged at the expense of another. Government power at all levels was used against Blacks during most of American history.
Some may acknowledge government’s role in creating white privilege yet still largely blame capitalism. An argument for this position would claim that a capitalist system still discriminates even if wages are contingent on productivity because minority workers tend to be less skilled due to inferior educational opportunities. This argument, however, does not prove that capitalism is an inherently racist economic system. Instead, it illustrates that markets respond to incentives. They operate within the confines of other institutions that have historically oppressed racial minorities and hampered their productivity. Firms simply select productive workers and, in America, the most skilled workers are often white, because their government never oppressed them and it never blocked quality education for whites. Intelligence and productivity are not predicated on race and if the government had not suppressed minorities for generations, then they too would fill the upper levels of American society. Hiring practices are responses to underlying conditions that affect worker productivity and we will now see how the government hampered minority populations from building human capital.
This is not a case against all federal government intervention. After all, the government’s power has helped the Black community in several instances, including the Emancipation Proclamation, forced integration of Southern schools, and Civil Rights legislation banning workforce discrimination. However, this intervention was necessary only because the government systematically oppressed African Americans in the first place.
IV. Conclusion: Government Backed White Privilege
The historical and statistical evidence leave little doubt: there is white privilege in America. Modern white Americans should not have to apologize for the sins of their ancestors, but they should acknowledge that for generations their race was systematically advantaged at others’ expense. However, this white privilege was perpetuated by the government and not by capitalism. White privilege is a tragic example of government at its worst. By using its power to suppress an entire race for over a hundred years, the government “picked winners and losers in society.”