Quote of the Day
"The welfare state has done to black Americans what slavery couldn't do, what Jim Crow couldn't do, what the harshest racism couldn't do. And that is to destroy the black family."
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Saturday, January 22, 2011
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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33 Comments:
Well it begs the question, has anything really changed since the Moynihan Report came out 45 years ago?
Fantastic! Thank you Mark.
All too sad, but all too true...
Well it begs the question, has anything really changed since the Moynihan Report came out 45 years ago?
A few things have certainly change:
Illegitimate births per 1,000 live births have gone up. In 1964 we were looking at 23% of all black children being given birth by an unmarried mother versus 72% today.
In 1965 around 30% of poor blacks lived in a household headed by a single female. I believe that the number is over 70% today.
Too many Americans remain in denial (Obama's job approval rating is over 50%):
The Democrats' White Flight
Jan 7 2011
"First among those was Obama's performance. Exactly 75 percent of minority voters said they approved; only 22 percent said they disapproved. Among white voters, just 35 percent approved of the president's performance, while 65 percent disapproved.
The racial gulf was similar when voters were asked whether they believed that Obama's policies would help the nation in the long run. By 70 percent to 22 percent, minorities said yes; by 61 percent to 34 percent, whites said no.
Minorities were almost exactly twice as likely as whites to say that life would be better for the next generation than for their own; whites were considerably more likely to say that it would be more difficult.
And on a question measuring bedrock beliefs about the role of government, the two racial groups again registered almost mirror-image preferences. Sixty percent of minorities said that government should be doing more to solve problems; 63 percent of whites said that government is doing too many things that would be better left to businesses and individuals."
Perhaps, Obama should try to bridge the gap between whites and minorities by appointing Richard Simmons to a new position called "The White Folks Representitive."
When having a child (but no savings or job or husband) entitles one to cash, food, housing, medical care, and educational benefits, it makes perfect sense. Why would a man NOT leave his family if the government will pay for him to do so?
Maybe the fathers are in jail.
People I knew who got assistance needed every penny. Whether daddy was around or not.
That said, redbuds comment is correct.
But his comment does not explain the behavior of some poor men I know who stay with their ( dysgunctional) family when they would clearly be better off (all of them) by ditching their insane wife.
They cannot get or provide the care she needs. If they ditched wifely, she would be institutionalized, and maybe get some help. Instead, The whole family is weighed down by this burden. Even without that problem, they will never be much above get by mode, but with it they are simply doomed. The eventual result will be welfare for three, instead of one.
Go figure.
Minorities, or young Americans in general, are the future slaves of America.
They will support the 80 million retired Baby-Boomers, who will consume instead of produce, and work for foreigners, through exports.
So, the younger generation will need to produce much more than consume, unlike prior generations, to provide government benefits (e.g. Social Security and Medicare) and goods & services (produced in the future time period) to the older generation and foreigners.
"Perhaps, Obama should try to bridge the gap between whites and minorities by appointing Richard Simmons to a new position called "The White Folks Representitive.""...
Hey PT Obama already has a representative working that angle and this guy also has a side job over at TSA...
Maybe the fathers are in jail.
That is another problem. You have a set of drug laws that make it illegal to sell drugs at the same time that they ensure a high margin for the product. People are put in jail for using drugs even though they are not harming others, for selling drugs even though the sales are made to willing customers. Add to that the violence that takes place when protecting one's market or to afford the high prices because of barriers to competition and you have a huge social and economic cost that is totally unnecessary.
One thing that was not mentioned in the article, and thus far in the comments, is the complicity of black leadership in the system.
This system not only enslaved scores of individuals in welfare in-perpetuity, but also empowers a black leadership class that stumps for such welfare.
It is not in the interests of the leadership class to change the system, so they continue to preach ignorance and hate to fill churches and voting booths with willing follwers and voters.
Juandos, yes, the Obamanites are trying.
Also, Obama wants to create an illusion of prosperity through exports:
"Milton Friedman has argued that many of the fears of trade deficits are unfair criticisms in an attempt to push macroeconomic policies favorable to export industries. He states that these deficits are not harmful to the country as the currency always comes back to the country of origin in some form or another.
He continues by informing readers that the "worst case scenario" of the currency never returning to the country of origin is actually the best possible outcome; as the country just purchased goods by exchanging pieces of cheaply made paper. The same result would happen if the exporting country burned the dollars it earned, never returning it to market circulation."
My comment: Foreign debt should be allowed to erode through currency exchange rates, interest rates, and inflation, which is the price export-led economies pay for a higher level of employment.
One thing that was not mentioned in the article, and thus far in the comments, is the complicity of black leadership in the system.
Great point Jason. The black 'leadership' began with good intentions but wound up grasping for power and fighting over the ability to influence some social programs.
This system not only enslaved scores of individuals in welfare in-perpetuity, but also empowers a black leadership class that stumps for such welfare.
The intentions were good at the beginning but in the end the 'leadership' was corrupted and the politics made the reformation of bad programs impossible.
It is not in the interests of the leadership class to change the system, so they continue to preach ignorance and hate to fill churches and voting booths with willing follwers and voters.
I agree. If things improve many mediocre individuals with limited intelligence and matching work habits would lose status and power over others.
Foreign debt should be allowed to erode through currency exchange rates, interest rates, and inflation, which is the price export-led economies pay for a higher level of employment.
Having inflation rob workers and savers of purchasing power just so that the government can have a partial default by other means is not a good idea. What the world needs is honest money that cannot be created by counterfeiting governments and central banks and laws that permit individuals to decide what to use as a monetary media.
Peak if left with no other option, devaluing debt by devaluing currency is possible, The problem is and always will be when would you stop? If a short term action is taken in the greater context of growth and spending cuts WITH DISCIPLINE, maybe. If it is just more of the same pushing-the-turd-around-the-floor Washington politics, then good luck with that.
Jason,
"Peak if left with no other option, devaluing debt by devaluing currency is possible..."
What other option do you see? Government revenue takes three forms: taxing, borrowing, and printing money.
Borrowing to roll over prior debt has just about reached its limit. Interest payments are now a large part of the national budget.
Taxpayers wouldn't tolerate the levels of taxation necessary to make any meaningful reductions in debt, which would most likely reduce total tax revenue in any case.
That leaves the printing press. Why do you suppose other countries are questioning the continued use of the USD as a reserve currency?
Another option not talked about much is outright default. It's hard to say how that would work out.
Ron H, outright default is an option. I don't like it, for two reasons:
1. The whole moral aspect of not paying bills.
2. The utter catastrophe that will be unleashed as the $14T (probably more then) T-Bill market goes "earth-shattering kaboom" before our eyes.
But partial default is possible. Or more likely re-organization of debts. We may not like it, but it is an option.
My point is: I don't have a lot of faith that our elected officials have the discipline to cut spending as we print our way out of the hole.
Do you?
Jason,
"Do you?"
No. I haven't seen government spending discipline in my lifetime.
That's why it's important to call or write your representative and instruct them to vote against raising the debt limit.
It's ridiculous to have a limit if it can be raised any time you bump against it.
Enslaved by welfare is a little strong. Trapped in a situation and neighborhood with little opportunity, few skills, and bad schools. Welfare is more subsistence salvation than overseer. That the welfare system treats people intrusively, and is mostly unable to promote clients out of the system is largely the result of efforts by those who think it cannot work and therefore cannot stomach it when it does, or support the funding that might allow parts of it to succeed.
For them, its failure is a self fulfilling prophecy with no alternative other than auto bootstrap propulsion, which for many welfare clients, amount to expecting them to get ahead by multiplying by zero.
Welfare is a mess. Underfunded, over worked, and poorly managed.
What is the alternative?
Jason, it will continue as long as foreign countries export too much or import too little, or until the U.S. adopts an inferior trade policy.
The U.S. has no control over foreign economic policies. If foreign countries, trading with the U.S., want to export deflation, earn relatively low interest rates, and exchange more dollars for their currencies, that's their choice.
Some foreign countries prefer a stronger segment of the economy or a stronger government in exchange for a weaker overall economy.
Another option not talked about much is outright default. It's hard to say how that would work out.
One way or another, default is inevitable because the US has way too much debt and too many unfunded liabilities. It cannot support the warfare/welfare programs for very much longer.
Enslaved by welfare is a little strong. Trapped in a situation and neighborhood with little opportunity, few skills, and bad schools.
But it is the welfare programs that are responsible for the bad neighbourhoods with little opportunity and the bad schools. And why should someone work hard to obtain skills when the government rewards idleness and punishes working?
The U.S. has no control over foreign economic policies. If foreign countries, trading with the U.S., want to export deflation, earn relatively low interest rates, and exchange more dollars for their currencies, that's their choice.
And it is good for their trading partners where citizens get to increase their standard of living through subsidies by people who are poorer than they are. What exactly is the problem with getting something that you value highly for a very low price?
Some foreign countries prefer a stronger segment of the economy or a stronger government in exchange for a weaker overall economy.
Again that is not a problem. Supporting some favoured exporter does not help a country strengthen its overall economy and certainly does not help workers, consumers, and taxpayers that must subsidize the favoured group.
One way or another, default is inevitable because the US has way too much debt and too many unfunded liabilities. It cannot support the warfare/welfare programs for very much longer.
Van, the fact you can state this so casually AND the fact that I have 75% certainty this will happen should shake us to our core. The T-bill market collapsing would make the housing crisis look like a neighborhood bank closing - banks could cease to function for months.
The only thing that gives me any comfort at all are the legions of very capable people that still exist in America. If these people are given a chance to lead in such a crisis, America can emerge in some sort of shape to survive and thrive.
However, if the liberal apologist, "progressive", "populists" are still in a position to determine who would lead such an effort...it will be an ugly unlike anything since the civil war.
Peak Trader: "They will support the 80 million retired Baby-Boomers, who will consume instead of produce, and work for foreigners, through exports."
I agree that 150 million or so American workers will pay social security and medicare taxes which benefit Boomers. But that's not the complete picture, is it?
A significant number of Boomers - perhhaps a third - will be employers of those younger workers. In some cases those Boomer employers will run the businesses which employ the younger workers. In most cases, though, Boomers as direct and indirect shareholders of corporations will pay other younger workers to run the businesses for them.
The capital which Boomers have collectively accumulated is and will be enormous. Employing that capital to earn profits is, as I see it, producing just as much as is the employment of one's labor to earn wages.
But it is the welfare programs that are responsible for the bad neighbourhoods with little opportunity and the bad schools.
=================================
How so? All those things predated the welfare system.
Bad schools are the result of them being funded locally, with the funds coming from economically poor areas, you get poor schools.
Until we find some other way to pay for education, education for poor folks is going to be a trap.
Provide vouchers, and let private schools fight for the money. See how fast those neighborhoods get the kind of schools that work for those neighborhoods.
And why should someone work hard to obtain skills when the government rewards idleness and punishes working?
=============================
Because the rewards are pitifully small compared to what you and I make by working. even poor people cansee that.
Hydra: "Bad schools are the result of them being funded locally, with the funds coming from economically poor areas, you get poor schools."
Not sure about other states, but here in Texas wealthy school districts are required to send funds to poor districts. The Texas Supreme Court forced this revenue sharing in a 1989 ruling. We refer to Texas school funding as the "Robin Hood" system (take from the rich and give to the poor).
FYI, Dallas Independent School District has the most African-American and Latino students of any school district in north Texas. It's spending per student is higher than the more affluent school districts in north Texas.
Did the higher spending in DISD result in better student performance? Hardly. Dallas has the highest dropout rate of all large cities in the nation (cities with 1 MM + population).
Van, the fact you can state this so casually AND the fact that I have 75% certainty this will happen should shake us to our core. The T-bill market collapsing would make the housing crisis look like a neighborhood bank closing - banks could cease to function for months.
The failed banks should stay closed because the banking system created the problem. We should not live in a world where governments can rob us of savings and productivity by counterfeiting fiduciary media of exchange without penalty.
The only thing that gives me any comfort at all are the legions of very capable people that still exist in America. If these people are given a chance to lead in such a crisis, America can emerge in some sort of shape to survive and thrive.
Most people are smart enough to figure out what is in their interest and act accordingly. So they will emerge out of a crisis and do what they have to do in order to survive and eventually thrive. But there is a part of the population that has become dependent on the state and is in no shape to come through a crisis intact. It is this chunk that usually acts as the base of some extremist party that will see totalitarianism as the solution to a problem what will be blamed on the market even though the market had nothing to do with it.
However, if the liberal apologist, "progressive", "populists" are still in a position to determine who would lead such an effort...it will be an ugly unlike anything since the civil war.
Sorry but both the neocons and the progressives present a danger. In fact, given the much higher intelligence of the neocons I would argue that it is their statist vision that will carry the day.
I agree with John McWhorter that the war on drugs has a lot to do with it as well.
More whites smoke Marijuana, but more blacks are imprisoned for it.
Bad schools are the result of them being funded locally, with the funds coming from economically poor areas, you get poor schools.
Your foolishness is astounding. Bad schools are the result of having top down control of a system in which parents are powerless and children are trapped.
If people living on $2 a day can afford to finance their kids' education there is no reason that public schools that get $10,000 per student can't provide a decent education. Of course, in the former case the schools compete and are answerable to the parents while in the latter they are dominated by school boards and trustees who are totally unaccountable.
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