Opportunity and Race: The Role Of Capitalism: Glenn Loury, Jason Riley, and Rafael Mangual

good evening everyone my name is greg menken i'm the executive director of the adam smith society and i'd like to welcome you to tonight's event cast opportunity and race the role of capitalism before we begin i do just want to wish everyone a happy veterans day uh here at the adam smith society we do have a lot of members who have served in the military and continue to serve so really just want to extend a heartfelt thank you for your service and sacrifice to our country thank you and i hope you have a wonderful veterans day the adam smith society's mission is to promote is to promote debate and discussion around the moral social and economic benefits of capitalism if you're not already a member please visit us at adamssmithsociety.com or reach out to one of your student chapter leaders if you're at one of our mba student chapters for our student members out there i want to remind you that the adam smith society does not end with business school it's something you can be a part of throughout your career to stay connected to free market ideas industry leaders and each other in our professional network throughout the us and in fact the world tonight's event cast is hosted by our student chapters at the m my keys lone school of management boston university question business school and dartmouth tuck business school representing mit sloan is stephen desandis dartmouth tuck is joe gladow uh the bu question chapter is kim song and please note this event is being recorded during tradition we'll have a 30 to 35 minute moderated discussion with our speakers followed by questions from our three student chapter representatives um at this point i'd like to turn the show over for our first introduction popularity over to uh steve sanders at mit thanks steve for joining us thanks greg hello everyone my name is steve desaeus and i'm co-president of the adam smith society at the mit sloan school of management i have the pleasure of introducing dr glenn lowery who is the morton p stultz professor of the social sciences and economics department at brown university and a senior fellow at the manhattan institute his research focuses on applied microeconomic theory game theory industrial organization natural resource economics and the economics of race and inequality he is a fellow of the american academy of arts and sciences the econometric society and a member of the american philosophical society a prominent social critic and public intellectual dr lowry has published more than 200 essays and reviews and journals of public affairs in the us and abroad and hosts the popular podcast the glenn show you can follow him on twitter at glenn lowry welcome dr lowry thanks steve and my name is joe glado i am one of the co-chairs at uh the adam smith society for the tuck school of business at dartmouth college and i'm pleased to introduce jason riley jason riley is a senior fellow at the manhattan institute and a columnist for the wall street journal after joining the journal in 1994 he was named a senior editorial writer in 2000 and a member of the editorial board in 2005. jason writes opinion pieces on politics economics and education immigration and race he's the author of numerous books including let them in the case for open borders in 2008. please stop helping us how liberals make it harder for blacks to succeed but his most recent book false black power welcome jason riley thanks joe hi everyone my name is tim song i am chapter president at bu western school of business uh and i have the pleasure of introducing uh raphael mangual who is a senior fellow and deputy director of legal policy at an institute as well as a contributing director of the city journal rafael has written widely on urban crime policing and the criminal justice system his work has been featured and mentioned in a wide variety of publications including the wall street journal the atlantic the new york post the washington post philadelphia enquirer and city journal in 2020 he was appointed to serve a four-year term as a member of the new york state advisory committee of the u.s commission on civil rights you can follow raphael on twitter at rafa underscore megual without further ado i'll turn it over to raphael who will moderate tonight's discussion thank you so much for joining us well thank you so much tim for that wonderful introduction um and for the adam smith society for putting this event together um and so i'm going to jump right into it um gentlemen we are here to discuss opportunity race and capitalism now you know even to this day when i hear the word capitalism i think of really kind of romantic success stories uh you know i think of my own grandfather who immigrated from the dominican republic in the 1960s opened up his own business in uh manhattan and and became a you know pretty relatively wealthy man um but there's another side uh to capitalism that uh i think a lot of people are beginning to feel uh does not get enough attention uh and that's the racial wealth gap uh and i wanna just start off with just a couple of top-line statistics and and and get your thoughts on this the median white family in the united states has about 171 000 in accrued wealth this is assets minus debt the medium black family on the other hand has accrued wealth of just 17 600 and this is a gap that seems to be growing today now land ownership seems to be at the center of that that wealth gap uh because home equity accounts for typically about two-thirds of the family's wealth um and of course homeownership is much less common in the black community as opposed to the white community and so you know when you hear statistics like that um i'm going to start with you glenn when you see those numbers do you see a problem and if so what is that problem well um the numbers are stark uh i could quibble about the measurement you're looking at median we have the whole distribution so uh the uh statistic of the median might not be the most accurate way of comparing there are a lot of people with negative net wealth so that needs to be taken into account um obviously the disparity reflects the cumulative consequences of people starting out with less and then being able to acquire and save less over the course of their lifetimes homeownership is a part of that a problem well there are a lot of disparities what's the relative wealth of jewish americans compared to irish descended americans or italian descended americans for example to say it's a problem is to imply that there's some cause of the disparity which is itself illegitimate um i assume this argument goes back to slavery and it talks about the fact that blacks start out with less because they were dispossessed of their labor um i think that's a relatively weak argument in the sense that slavery was a long time ago when wealth is a dynamic process that reflects people's business activity their creation of wealth it doesn't fall from the sky and so on so i didn't really answer your question you're asking me to what extent was it a problem i tend to think the problem is overstated i mean i certainly don't blame the disparity and wealth between blacks and whites on capitalism that would be like blaming the disparity and health between blacks and whites on the american medical association so i'm i'm not as exercised about this disparity as a reflection of some deep problem in american society as many others are so what about you jason i mean you know is going on to something is this is this something we ought not to have our backs up about very much or is there a deep concern here when you when you look at some of these top-line disparities i think i i largely agree with what uh professor lowry said um it's not something that i'm particularly concerned about um and i i'd like to step back a little bit and and look at the question a different way and say um what why would you expect evenness and outcomes where where do we see proportionate outcomes in american society outside of american society today yesterday 100 years ago 500 years ago this whole notion that we should see equal outcomes or more equal outcomes than we have today uh that that is the norm and and where we don't see it you know something nefarious something fishy is going on is a is a premise i i i would reject um uh unevenness and outcomes is the norm and it's been the norm uh down through down through history not only here but internationally and not only today but uh uh very well you know for for as long as recorded history uh uh as long as we've had recorded history um the and also again what's implied in that just to piggyback a little bit on what professor was saying that uh the cause is discrimination i think is problematic um the the uh the gap in per capita incomes between eastern europeans and western europeans is larger than the black white gap in america and in europe you're talking about mostly caucasians um so so even in in in areas of the world where you're where you have more ethnic or racial homogeneity you still get these disparities uh which regrets to me that that something else uh uh maybe may be driving them or at least it suggests that we cannot automatically attribute this to um uh to racism or disparity uh or discrimination and and so forth and that's one of the problems you in trying to use racism or racial discrimination um as a causal factor it's always been with us it's human nature um and and so to say you see this gap due to racism uh when we've always had had racism but uh certain groups have not always been ahead of other groups it seems very problematic to me to to point to race and to stop thinking past that so i'm going to push back a little bit here and and play a little bit of the devil's advocate um and one of the things i'm going to point to is is some recent data that came out showing uh that black immigrants uh who don't have roots in the united states dating back uh you know to legalize segregation jim crow and even back to slavery tend to have significantly better uh economic outcomes doesn't that help make the case that a lot of what we're seeing in the racial wealth gap is a function of the discrimination from the past um glenn i'll throw that one to you first no i don't think so i i actually think it makes the case that these immigrants who are by the way not a random draw on the population but a selected set of people who elected to pick themselves up and move tens of thousands of miles maybe thousands of miles certainly in order to start a new life somewhere they're very entrepreneurial they're very uh you know uh a selective p set of people so i think that should be noted but the other thing i think it says is they start businesses i think it says that they become landlords i think it says that they scramble and and they create wealth their wealth the immigrants wealth didn't fall from the sky it didn't arrive as a check from the government and it wasn't an inheritance they came here probably with very little and they made lives and in the context of making their lives they created wealth so to call attention to the fact that immigrants create wealth at a greater rate than um indigenous uh domestic populations of color or african american populations is not necessarily to discredit the system of capitalism which the immigrants have taken advantage of to further their lives and it's certainly not to prove that discrimination accounts for the fact that african americans didn't start the businesses accumulate the resources and make their lives to the same extent everybody is operating within the same system here so i i would not be at all persuaded by the observation that west indian or west african immigrants to the united states are going to ivy league colleges or opening up bodegas on the corner or doing other business activities i would rather take them as a model of what's possible to be done in this country and encourage my fellow african americans to emulate them so so jason it sounds like like what greg what glenn is saying is that capitalism actually gives us a way to close uh the racial wealth gap to to to make uh you know something of ourselves and improve our economic standing which raises a question about uh sort of what what the racial wealth gap actually says about capitalism so is glenn right as is capitalism the answer here um i i would think you always have to ask the question compared to what um you know capitalism compared to what under what other uh system uh economic system uh do you see um uh the outcomes you'd rather see here in the us where in what country would blacks be better off than they are in america why are black americans the richest black people on the planet um so so you have to say compared to what uh and the other point i would make about the the black immigrants and and and and professional law is right they're self-selecting group so we can only read so much into this but their children also uh outperform the second generation is outperforming um uh their fellow black americans so um uh and and and there you know there's no accent um they look the same as i look or as glenn looks and and so they're facing the same discrimination that is used to explain these gaps we're talking about and and why are they why are they doing better and i think uh i would argue it has it has a lot to do with culture um and and and we can we can talk about that that human capital that they bring um to the task but um uh the other point i would make again this this notion that that that racism can be this all-purpose explanations blanket explanation for these for these disparities we also have examples and and immigrants are just one of them of an oppressed group uh uh rising above their oppressor economically um you know japanese americans uh and japanese canadians were both discriminated against uh and uh severely discriminated against and today they'll earn white americans and white canadians uh the same thing can be said about jews not only in the us but in any number of countries around the world the formerly oppressed group rising above uh their oppressor economically and you can also make this case on the flip side so for instance the the median household incomes of mexican-americans and puerto ricans is lower than the median household incomes of blacks i don't think anyone would argue that mexican americans and puerto ricans have been discriminated against more in the united states than black people have um so again the this this assumption that uh that racism is this causal factor i think we really really need to to question that you you can't that's an assertion that needs to be shown empirically if you're going to make that argument you have to bring some facts some data to that discussion and i just see too many examples out there of oppressed groups not allowing that oppression to keep them from rising economically if they get some other things right so you know what what it sounds like you're saying is that there is something other than the systems and structures uh in place in the united states that contributes at least to a significant degree to some of the the wealth gaps and income gaps that we see which begs the question you know what what is behind is it culture is it uh something else um you know glenn what do you think i mean if if capitalism and the structures in american society don't give us uh a straight answer as to how to account for all of the racial wealth gap um what else could be behind it well i would start with a basic accounting i mean people you know begin life with a certain inheritance they over the period of time develop their skills they go into the labor market they start a business or whatever and so they generate income they have expenditures and so the excess of income over expenditures is their savings which accumulates through time i wouldn't leave out government transfer programs i think that's a huge problem with this uh literature on wealth disparity because americans are entitled to social security that's a part of our wealth if you're thinking about an intertemporal decision problem of an individual who knows that they're going to be eligible to get social security after 65 or whatever they can make their own decisions about saving taking that anticipated transfer into account so that's part of their wealth that's part of their overall lifetime uh assets that's available to them so when you compare people's wealth by group or whatever you want to include the uh the discounted anticipated value of their government transfers but that's a that's a side point i'd have a basic arithmetic people start with something they add to it over time it's the excess of their earnings over their um over their expenditures uh they may make investments they may engage in entrepreneurial activity they may create wealth at the end of the day they accumulate over their lifetime so what's the cause it's going to be lower earnings because of discrimination against blacks in the labor market throughout the 20th century it's going to be lower starting point of inheritance because of the fact that the ancestors didn't have this much and you can trace that back to slavery but it's also going to be savings behavior investment behavior entrepreneurial behavior and wealth creating behavior and i would take all of those factors into account we change the things that we can change we can certainly change wealth creating behavior to the extent that we encourage people's entrepreneurial activity prudently wisely so um and we can cultivate financial literacy and things of this kind we can also engage in transfers and i assume we'll get around to talking about that whether or not reparations paid to blacks is somehow a solution to the quote-unquote problem of uh wealth disparities but but that's how i would begin and i put a lot of emphasis on wealth creation it's a dynamic problem if you don't rectify racial disparities in wealth creation transferring money between people at a point in time will only lead or eventually to a reversion back to the disparity that's being generated by the fact that people are not creating wealth at the same rate again i invite you to compare the jews to the irish catholics i invite you to compare the evil to the house of fulani in nigeria i invite you to compare the chinese in indonesia or the philippines or southeast asia to indigenous populations of malaysia or whatever it is uh as jason pointed out groups differ in the capacities that they exhibit through their behavior to start businesses engage in entrepreneurship trading and finance and create wealth for themselves and those disparities are going to assert themselves unless the underlying behavioral differences between the groups is addressed [Music] so jason i want to i want to offer some pushback on on on what glenn just said um is it is it possible that a function of those behaviors that those behaviors are motivated by attitudes um and doesn't it require a sort of positive attitude about operating and the chances that you'll have to operate within the capitalist system that that informs the choices that people make um and and in that case if that's true does do we have a duty as as defenders of capitalism uh to address that that sense that the system is illegitimate oh yes you do you you have to explain um uh free market capitalism to people and you have to continue explaining it uh for every generation it has to be a lesson relearned over and over and over again i think um uh but it's you know if your concern is uh racial discrimination um you know capitalism is your best friend and and and and that has been because beca because capitalism puts a price on discriminating it's not that capitalist systems are going to uh you know rid society of racism again i think that is human nature i don't expect to live to see a day when racism has been vanquished from america let alone uh the planet and um but the question is to what extent is it a barrier to black progress to what extent does it explain disparities in educational attainment or income or unemployment and so forth and um and and i think uh capitalism is the best way to address that you know if if you are a landlord who uh doesn't want to rent to jews uh or blacks or asians you risk having some vacant apartments for a longer period of time than some of your competitors it's going to cost you if you are an employer who doesn't want to hire certain minority groups who may work for less and they go somewhere else to work uh you're gonna pay for that you're you're those inefficiencies are gonna catch up with you they're gonna eat into your profit margins so again uh it exacts a price and and and that has long been the case whether you're talking about the labor market you know you always have the jackie robinson example in the world of sports breaking the color barrier back in 1947 with the brooklyn dodgers then they they get a few more black players in a couple years they have a competitive advantage now if other if other teams aren't going to dip into this pool of talent they will be at a competitive disadvantage against the brooklyn dodgers and guess what uh they wanted to be competitive you know the same thing happened in academia where you know you had a time before world war ii when uh jewish academics would not be hired by elite colleges then world war ii happens there's a labor shortage in college professors so a few elite schools do hire a couple jewish professors then others need to hire them to to keep up and now jews are overrepresented at elite uh colleges among uh professors so so you see this in in all aspects uh of of the capitalist system and and and that's what uh capitalism offers that other that other economic systems do not offer and and we've seen that time again uh both in the u.s and then and in other places and i think that is the lesson that needs to be taught uh when we are um when we are trying to you know make the case for uh for why our system uh works better than others can i add something raphael sure just very quickly on the legitimacy question because i think it really is a very important question but the so-called racial wealth gap is not where the rubber meets the road on the legitimacy of capitalism and wealth question it's the super billionaires and their wealthy influence over american political affairs which undermines people's sense of the legitimacy of the capitalist system the ability of people with great wealth to uh you know uh in effect import that uh uh influence into uh other realms of public affairs uh that i think is a threat uh to uh the general sense of legitimacy but uh as i say the existence of ethnic disparities and wealth holdings is uh is very commonplace and very widespread um i guess we'll talk about representations in due course i think that's another legitimacy question but um i i have my views about that yeah yeah i mean well i think first without what i'll just give you an opportunity to respond to is what jason said this idea that capitalism you know sort of exacts a price for discrimination i mean is there something to that and are there other systems is there something to that that's one of the basic insights of economic analysis the the the idea what is discrimination discrimination is paying some for less than what a person is worth this discrimination is treating equally productive objects differently have you heard of arbitrage i know you have heard of arbitrage arbitrage is where you buy low and you sell high when you have a worker whose value is 100 but who happens to be black and the employer only wants to pay him 80 there's somebody else who figures out that the difference between 80 and 100 is 20 it's 20 and you can make that money by closing that gap that's why the republic of south africa had to instantiate laws for bidding private companies from employing black workers in certain occupations in order to enforce apartheid because left at their own devices left to their own devices those companies would have maximized their bottom line by picking up the dollar bills lying on the ground which is what discrimination creates so i think there's just a deep misunderstanding about how markets work in the in the context of discrimination and disparities markets don't care about the color of people's skin they make you if you do care about the color of their skin pay for caring about the color of their skin and it's only by impeding market processes that governments have been able to sustain for a long period of time regimes of overt discrimination yeah so i i i appreciate that um and it it i think leads us naturally into the next question which is you know you talked about reparations and that's one of the things that's been sort of thought of as a way forward so if capitalism isn't the driver of this if it has the ability to get people uh to where they want to be on the socio-economic ladder uh is there something we should be thinking of doing to speed that process up or is this just something that has to sort of take its natural course jason what do you think well i don't think there are i think the key to speeding this up is the development of what economists call human capital uh a group's development of skills and habits and behaviors and attitudes and saving propensities um that is what ultimately uh will will will move a group from poverty prosperity and uh i don't think there are any shortcuts to the that self-development and and and and too often i think uh the government uh particularly here in the united states with respect to black americans um has interfered with that self-development and uh there have been unintentional consequences uh for that for that interference um you know the the the the the civil rights movement's greatest achievement to me was getting the government off the backs of blacks particularly in the south with the jim crow laws where the government has gotten into trouble is when it tries to help blacks to say the war on poverty or affirmative action and so forth that's where you're getting you're getting into trouble and and the the more you know socialist leaning uh left politicians and and and activists i think air in their assumption that the focus on helping the underclass should be redistribution of wealth rather than wealth creation for that group um and that's when you get into something like reparations i see it as just another huge wealth redistribution scheme and why why would we expect it to work or be any more effective than the ones we've been trying for the past 50 or 60 years in this country uh we've we've tried this already and and and we see the results and i don't expect uh reparation the results of reparation be any different so glenn what what about that i mean you know is there is there a space between the sort of modern idea of of reparations and you know the sort of uh you know government transfer programs that we saw really get built up over the 60s and 70s or is there something you do want to talk about you want to talk about solutions to the racial wealth gap let me let me mention three baby bonds so this is the inverse of social security everybody gets an entitlement at the beginning of their life maybe they don't get control of it until they turn 21 but the federal reserve creates an account for everybody and everybody gets uh ten thousand dollars or fifty thousand dollars or whatever that's pledged that will be available to them when they turn and that's paid for by taxation on the wealthy uh that's one kind of program uh minority business enterprise development this is where government procurement and private sector procurement is directed to companies that are owned by minorities uh owners uh entrepreneurs and stimulate the development of their businesses in that way and thereby hopefully generate wealth in the hands of minority owners and then finally reparations where a debt is acknowledged by the government for historical exploitation and mistreatment of black people and money is handed over now with respect to baby bonds i think there's a case that can be made for it and it might not be at the top of my list of policies but i think you could make a case that in a country where wealth inequality is skewed and where you're concerned about technological displacement of people and going forward and nobody has enough money to buy themselves basic housing and so forth you could make a case it's a you know left of center initiative to be sure but i think a respectable case can be made in the spirit of universal basic income but slightly different about endowing um american citizens at the start of life with an entitlement that would give them something above zero to to uh to their lives with um i'm not necessarily advocating it but i'm saying i think it passes minimal muster in terms of uh coherence and a kind of a moral case that could be made a minority business enterprise development i think has been deeply problematic i'm sure that jason has probably written a story about this i don't know if you have you haven't about the fraud problems in minority business enterprise development programs if you haven't somebody at the wall street journal has because they have been serious problems um and and you could i don't know about evaluations of minority business enterprise development efforts over the 40 or 50 years that they've been and so how many black millionaires can you point to and how much wealth uh creation i am myself much more inclined toward trying to boost the earnings power of rank and file black people and allowing their levels of incomes to be higher through human capital-oriented strategies than cherry-picking a few people who happen to own uh companies and and boosting their sales um but i you know i could be i could be wrong about that on reparations i'll just say very briefly i think it's a terrible idea to talk about you know you got 40 million african americans if it's a hundred thousand dollars ahead or whatever that might be a high number i don't know it's four trillion dollars um when the us government decided to pay reparations to the japanese victims of internment in camps during world war ii this was a piece of legislation signed into law by president ronald reagan um the amount paid was twenty thousand dollars ahead and the number of people receiving it who had actually been interred in camps not their descendants was eighty thousand people that made six billion dollars so the japanese reparations was 1.6 billion dollars um a reasonable estimate on american reparations to blacks uh 40 acres in the mube would be in the matter uh would be in the trillions that's a social security magnitude fiscal program defined in terms of the racial identity of american citizens it's a horrible idea it's south africa-like we don't want to go down that road we don't want to endow citizens with entitlements based upon their race i doubt very seriously if such a thing could get through the united states supreme court although i'm not an attorney but i have another reason for thinking reparations is a terrible idea you racialize uh the public obligation to take care of the needy and the poor and the black ghettos of this country do you think those ghettos are going to go away uh once reparations is announced do you think that the behavioral problems that generate those ghettos are going to go away i'm talking about failing schools and poorly educated kids i'm talking about broken families i'm talking about criminal behavior etcetera etcetera do you think it's going to go away it's not going to go away however african americans will have monetized commodified and cashed out our entitlement to the sympathetic engagement with our problems of the american polity by sitting at a bargaining table and putting our pack on the table and pushing it across for a bunch of chits it's a horrible way of thinking about the relationship between black people and our country you owe me because the answer to you owe me is you negroes have been paid yeah no i think that's uh that that's that's a pretty strong case you make there and and as much as i want to bring jason in to react to that i think we're sort of at the point in our program where we want to open things up as a q a so i want to bring greg back on to introduce the uh the student chapter leaders uh who are going to ask those questions as i understand it yes thank you ralph uh thank you gentlemen uh first up we'd like to bring on uh tim back from our questrum chapter to kick things off for us i'm going to ask your first question our speakers will address that then ask your second question please awesome thanks so much guys for sharing today my first question is many communities of color who have been in this country for generations have had some of the barriers to wealth building that you've discussed today my question is how do more recent immigrants fare in today's society and how do how does the flow of legal and illegal immigrants affect the challenges facing faced by the communities of color today who's uh jason you want to start with that one uh sure let's say a couple things about it in terms of um uh how recent immigrants are faring i think uh from what i've read the to the extent that people have complained that the uh and we didn't really get into this in the previous discussion but maybe we should have when i look at a wealth at the at the wealth gap and break it down by by race i'm much more interested in in in seeing mobility between the different you know earning income quintiles that we use so um you know if you start out on that lower 20 do you do you wind up there um uh or if you start out in in in in the you know in the middle are you falling are you rising over time is there movement in between in between these um the the the the quintiles that we used to measure income in in america and um from the evidence i've seen is with immigrants you still see that that movement uh yes a lot of poor ones come here but um they they do better and their children do better um now that's gonna you know vary between different immigrant groups but uh on balance i think that is what what we see we still see upper mobility uh among immigrants and uh and that's what we that's what we want to see and to some extent we see it more than we've been seeing it in the um in the native population and and which tells me um you know it's it's not it's not capitalism it's it's how different different groups bring certain skills and attitudes and behaviors uh uh to capitalism and and thrive or don't thrive accordingly but there's nothing i think inherently wrong with the system itself is measured that way um in terms of and i don't know if you're getting at competition between immigrants and and uh and u.s workers or particularly the um uh less skilled uh lower income u.s workers and how that affects uh the wealth gap but if if you were um i'm not very persuaded uh by by that argument which is a sort of um we need to limit uh immigration particularly of low-skill workers because they'll be competing with low-skill american workers and we want those those jobs and those opportunities to go to those those um those low-skilled americans um i i don't see it as a fixed pie i don't see it as a zero-sum uh labor market situation there um and i also have seen some pretty good evidence going back a long long ways that the immigrants who do come here tend to compete mostly with one another and and not with natives for for jobs uh we're not importing clones of ourselves um immigrants tend to come here that come here to neither have you know uh uh higher levels of education than uh the average american and higher skills or lower levels of education and lower skills than the average american so they tend to more compliment our labor markets than to elbow aside native workers and so i don't i don't see uh immigrations posing a problem in that sense glenn any comments on that agree disagree yeah well i don't know that i entirely agree with jason in the following sense um if there's a labor shortage and there are undeveloped people laying around employers will have a tremendous incentive to cultivate these undeveloped people so as to make them fit for employment if the employer's option is to go offshore in the face of the labor shortage they don't have the same incentive uh schools are not working very well in many american communities they are failing to develop the human potential of the people who live there this is not a good thing it's a crisis for the country regardless of immigration it's a less severe crisis of the country perhaps you could argue uh to some degree in virtue of the fact that uh the need for labor can be satisfied by importing immigrants i'm not against immigration i don't want to be misunderstood this is a question of what the causal consequence in uh southern california of a large number of workers some documented some not non not documented with relatively low skills who are prepared to work in hotel and restaurant and furniture manufacture and textiles and whatnot at wages that are near the minimum wage and under the conditions such as what those conditions are that's a good thing for somebody who owns one of those factories it might not be a good thing for somebody who's six generations of american who lives in a housing project somewhere who went to a school that didn't work very well and who needs to be um brought into the modern economic engine uh in a manner that's suitable with the skills that they actually have which might make them uh well suited for relatively low-skilled work and textile or hotel and retail uh uh uh uh commercial work or something things of this kind jobs that are filled by immigrants so get back and can i come yeah please let's let's let's go back and forth i would just want to say quickly we've had some natural experiments with this um i mean there have been economists uh richard vetter has won a labor economist ohio university who has looked at uh rates of employment uh and and rates of immigration going back over the entire 20th century and and higher rates i should say lower rates of of uh unemployment in america correlate uh pretty consistently with higher rates of immigration um uh so so we have some you know we we do have some some data on this the other point i would make and this is a more recent example i could point to um you know there there are upwards of 12 13 14 million illegal immigrants in the country right now um some people claim they're as many as 20 million so pick your number what i would say pre-coded what was the unemployment rate in this country three three point five percent yeah it was real whose jobs were they stealing who who was being displaced we had a labor shortage in this country uh prior to covid no matter how many illegal immigrants you think were here um there were there were there were uh a million more job openings than there were people looking for work so well i think that's that's i think we we need to factor that in before we talk about the last example i'll give and this gets back to culture a cultural point uh glenn that i think you'd appreciate which is you know anyone who lives near a you know a home depot uh and needs uh you know somebody to to help them move some furniture or paint their garage or something can go over there and find um uh a bunch of hispanic men looking for work in that parking lot do you think if we deported those people tomorrow you could go over there next week and you'll find say black men waiting in the parking lot to do these jobs i don't think so what glenn i'm gonna give you a minute to respond and thank you for getting another question we need to be you know i i i i i think they're not inconsistent with one another i think you're saying there's work uh to be done here and uh the domestic-born african-american unskilled workers don't want to do it and so we're availing ourselves of the of the alternative at hand and that's true and what i'm saying is if that alternative at hand weren't at hand the pressure would be on politically socially and economically the private sector and the public sector to do what needs to be done in order to develop that young project dwelling african-american uh person uh so that they would be willing to stand out in front of the whole depot and and take the job i mean you know but i'm not against the i'm against people walking across the border without authorization i'm against that but i'm not against the idea that people seek better lives and that they're willing to do jobs that other people wouldn't do i'm thinking all right gentlemen just getting to the other questions i'm sorry this is a very interesting conversation but i know we've got some other questions to get asked so um tim go ahead awesome thanks guys for your your spirited responses i really i'm really enjoying this um so my second question um is if i could maybe shorten it so um you know sometimes capitalism can be vilified in popular culture like movies or tv shows uh but as supporters of free markets you know one of the things that could address this distaste could be education uh and empower empowerment of people to to help them understand how they thrive in this system in this capitalist system do you feel like that education is one of the strongest influences there and in what ways could you help what ways do you think this education for wealth building could be most effective glenn we'll start with you you got uh you can take it glenn i get you guys i'm sorry though i couldn't understand what tim was saying because of the audio because can you repeat the question raphael the question is do you feel that that that education is one of the stronger influences in terms of helping prepare new generations uh to build their wealth and and you know in what way should we be thinking about making education sort of an effective vehicle uh to developing that uh that you know wealth building capacity gosh i do think education is critical i've been following the work of james heckman uh the economist at the university of chicago early childhood development and stuff like that um i think what goes on in households is critical even before they get to school um i think preschool education can probably supplement what families are able to do for three four and five-year-olds before they begin school um i i think everybody doesn't go to college i think vocational education could be important i think perhaps we ought to we ought to be more focused on trying to encourage uh people completing high school to consider uh programs of development that equip them with marketable skills right away through cooperative engagement with industry and community colleges and things of this kind so i think education is important but i want to defend capitalism can i just i mean because uh the alternative i mean just reiterate what uh jason said earlier compared to what uh capitalism compared to what i mean you don't you know uh the uh uh alternatives have not shown themselves to be very uh effective in terms of creating vital economic systems that allow disadvantaged people to advance so i just had to get that in all right i appreciate that and i appreciate tim from the two thoughtful questions uh and i think our next question is joe who i want to bring on um to pose his first question joe welcome thanks rafael um and thank you both for being here this has been super interesting so my my first question is sort of a push back on on what dr lowry just said in the defense of capitalism is that you know the wealth disparity now is basically equal to what it was in 1968 um during the civil rights area and so given the lack of progress we've had over the past 70 years um what what gives you hope or why are we to think that um going forward the market system is going to um really change anything uh joe i don't have the numbers in front of me but i i dispute the premise of the question lack of progress come on there's been plenty of progress in the last 50 years you say the relative wealth gap i assume that's the ratio of the wealth of the median black household to the median white house owned and that's the number whatever it is 0.1 let's say and is that what you mean and when you say it hasn't changed over this period of time um i've already offered my concerns about measuring disparities in populations by looking at ratios of medians especially in samples where there are a lot of zeros or negative numbers uh these medians are in no way a good assessment of the wealth that's available to uh to the entire population of households um it's so i mean but again that's a that's kind of a technical measurement point there has been progress in the last last 50 years is what i want to say i don't have the numbers in front of me but i'm sure home ownership has increased substantially for all these populations over the 50-year period that we're talking about jason said this in passing but it wants to be radiated reiterated african americans are by far the richest population of people descended from africa on the planet nigeria has almost 200 million people and its gdp is less than one trillion dollars a year african americans are 40 million max and we've got what 10 8 of a 20 trillion dollar economy in terms of our income flow we're so we're we're much more prosperous than most black people on the planet which may not be saying very much since wealth in africa you know people are poor but uh there has been progress and i certainly don't think capitalism is to blame uh you know private ownership of the means of production a stock market uh people owning their assets that's the problem we're going to collectivize do you think a politically administered distribution of the national economy would work to the favor of black people uh the black poor uh i have serious doubts about that so that that's my response all right joe another question yeah definitely um and thanks for that response um my other question is is about code 19 obviously a uh a big issue today um so the covet outbreak has has affected black americans disproportionately hard uh we've seen rates of covet infection and deaths that are higher in counties with higher than above average uh black populations and we've also seen black americans are most likely to feel adverse economic impacts caused by the disease so moving forward how do we balance um you know interventionist approaches using public funds to address some of these public health issues while at the same time promoting market-based solutions well um i think i think we've been talking a lot about the the disproportionate health problems uh the black communities disproportionate health problems related to covid uh but i think that's mainly a function of of um you know their their preconditions and pre health conditions pre-existing health conditions in these communities already um and then also partly based on you know what what types of jobs they have service sector jobs where they're interacting with the public you have a lot of multi-generational households in the black community uh grandmothers uh raising kids uh raising grandkids and so forth uh so they had a lot of that was was going on um uh but i i think that what's been underplayed a little bit is the extent to which the lockdowns have hurt um these communities uh the the you know these folks can't work from home like uh like like a lot of us can um uh you know they're delivering the amazon products and the ups deliveries and and the groceries and the dry cleaning and and so forth and and i think when you go back to if you want an appreciation of how devastating economically covet has been you you need to go back to this pre-covered economy that this country was enjoying and how uh these minority groups were faring you you saw record low unemployment rates among blacks and hispanics you saw record low poverty rates among blacks and hispanics you saw wages rising faster for these groups than for their bosses and management um you saw you saw a reduction in income inequality uh all that stopped with the lockdown and um uh and i think the impacts you know there are gonna be felt for years to come and you know a little bit has been made of how well um or how much better uh president trump fared with the black vote but particularly with black men uh last week in the election and i think it had a lot to do with his emphasis on reopening the economy uh these these folks had really been hurting uh under under uh president obama you know you know the the unemployment rate for blacks did not fall below double digits until the seventh year of his presidency uh there are a lot of black people who remember how how tough things were back then and in recent years they have been much much better and and and in the lockdown uh was a real gut punch to these communities well thanks for that jason and thanks for those great questions joe i want to bring steve on uh um and we're in the interest of time i want to uh you know approach his questions as a bit of a lightning round so we'll try and uh keep our answers uh to 60 seconds and uh you know hopefully uh you know get them in under time so steve thank you yeah great thanks um so we we have seen different policies to encourage investment and development in poorer communities the most recent iteration being opportunity zones but we also know there is a potential for these policies to accelerate gentrification and facilitate wealth extraction in your opinion what are the best solutions to empower these communities while also preventing displacement and gentrification so glenn why don't you take a practice after well you're tying my hands now you want me to prevent the gentrification and you want me to develop the community you want nobody to be displaced and yet you want economic development i mean i i don't know why i'm uh walking around with a 80-pound weight on my back trying to do her hurdles uh what's so let me just be very clear about it and i apologize for this because i'm challenging the question what's so bad about gentrification what's so bad about displacement i say that with respect you've got space you've got economy and you've got people the people happen to be living in a space the value of which could be significantly enhanced through economic development but it would be different people living there people prepared to take that old building converted into loft apartments uh opened up high-end wine bars on the corner and uh markets and so forth and cater to people who value living very close to the business district in the architecture that's there relative to a population that is incumbent to the area uh over many decades of decay happen to be living in housing that's run down with rents that are low why would i assume that the solution to the development problem needs to respect the constraint that nobody be displaced this placement is not the worst thing in the world displacement is the way of the world steve jason what do you think i i completely agree with that and in terms of these development schemes i i i the history of affirmative action with in in this respect is that the the the blacks who are better off uh usually take advantage of these programs they're always they're always pitched as helping poor blacks but they seldom do they they help um blacks who are already well off become better off and and i think that's what what what you'll see what you'll see happen uh with these games going forward can i just add something because i don't want to leave it there when you displace the people because those loft departments and those wine bars were generating much more economic value you don't just push them aside and don't worry about them you make sure they have the housing voucher or other support that they need to be able to secure decent accommodations in some alternative scenario some of the surplus that you generate from the enhanced development which leads to displacement can be allocated to cushioning the fall for people who have to bear the brunt of that displacement so i mean i'm not i'm not in favor of cold-blooded heartless cat you know wondering [Laughter] well good that that ought to be a nice lead into your last question steve yeah yeah and uh thanks um i my last question was related to reparations i think glenn you provided a spirited response i was curious to get jason's uh thoughts on on this reparations question um you know you know in various forms have been raised as a solution to help the injustices of slavery boss can be viewed as a redistribution of wealth essentially free labor can be interpreted to represent a significant debt owed to african americans to play for reparations that aligns with free market ideals if so what form of value should reparations be returned to african americans i i i like to defer to uh something um a friend and mentor of mine like glenda as well shelby still once said in this area and and shelby stills a race scholar at the hoover institution at stanford university and he once wrote that um suffering can be endured and overcome it cannot be repaid and and that's sort of the view i take with with respect to slavery reparations all the slaves are dead all the slave owners are dead i don't think guilt can be inherited um and and that's my my problem philosophically with with this approach and then there's just the practical side you know i i i dispute a lot of these numbers being used uh to argue that um you know americans economic wealth was was built on slavery um the south was uh the poorest region of the country during slavery continues to be after slavery and that's due and that's true where slavery existed in europe it's true where slavery existed in in the west indies and brazil and so forth um if so i i really have a problem with some of these arguments uh that are made uh in favor of reparations and then there's just you know the very pragmatic matter of how you go about doing it um um given that you know all the slaves are gone and all the slave owners are gone without some serious pushback from the other side i don't think it solves anything and at the end of the day it is simply a wealth redistribution scheme and and the focus needs to be on wealth creation not wealth redistribution if we're going to uh to move forward and help these groups that we want to help well gentlemen thank you thank you steve for those great questions i think we're gonna have to leave it there big uh greg menken back on uh to close us out greg thanks so much everyone thank you professor lowry jason reilly and rafael mangual thank you to our student chapters for being involved this evening uh that was a wonderful fascinating interesting discussion um once again if you're interested in learning more about the adam smith society would like to become a member support the work that we're doing please visit us at adamssmithsociety.com i invite you all to visit stay tuned for future events thank you everyone again for putting this event together and have a wonderful evening thank you good night thank you so much

Channel: Adam Smith Society

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Length: 61min 10sec (3670 seconds)

Published: Thu Nov 12 2020