Walter E. Williams
An American economist, commentator, and author of Liberty Versus the Tyranny of Socialism
Latest from Walter E. Williams
As if more proof were needed about the minimum wage's devastating effects, yet another study has reached the same conclusion. Last week, two labor economists, Professors William Even (Miami University of Ohio) and David Macpherson (Trinity University), released a study for the Washington, D.C.-based Employment Policies Institute titled "Unequal Harm: Racial Disparities in the Employment Consequences of Minimum Wage Increases."
During the peak of what has been dubbed the Great Recession, the unemployment rate for young adults (16 to 24 years of age) as a whole rose to above 27 percent. The unemployment rate for black young adults was almost 50 percent, but for young black males, it was 55 percent.
Here's a non-rocket science question: If you expect a reduced harvest of wheat, corn, rice or any other commodity some time in the future, what would be the wise thing to do about your consumption today? I bet that the average person would answer: Consume less now so that more will be available in the future.
But how in the world can people be encouraged to consume less now? Enter the futures market, which consists of a worldwide group of millions upon millions of traders, often called speculators. Speculators, betting on a future shortage, buy up wheat, corn and rice today in the hopes of making money selling it for a higher price when the bad harvest hits. As speculators buy more and more wheat, corn and rice, they drive up today's prices. As today's price gets higher, people consume less, but more importantly, people do the intelligent thing without bureaucratic edicts. The vital role of the futures trader, or speculator, is to allocate goods over different time periods. And, it's not just wheat, corn and rice that must be allocated over time but all commodities including oil.
Smugglers are heroes of sorts. The essence of what a smuggler offers is: "Government tyrants want to either prevent or interfere with peaceable voluntary exchange among individuals. I can reduce the impact of that interference." Let's look at smuggling, keeping in mind that not everything illegal is immoral and not everything legal is moral.
Leading up to our War of Independence, the British, under the Navigation Acts, had levied taxes on a wide range of imports. One of those taxes was on molasses imported from non-British islands. John Hancock, whose flamboyant signature graces our Declaration of Independence, had a thriving business smuggling an estimated 1.5 million gallons of molasses a year. His smuggling practices financed much of the resistance to British authority. In fact, a joke of the time was "Sam Adams writes the letters (to newspapers) and John Hancock pays the postage."
The average American, as parent, student and taxpayer, has little idea of the academic rot at so many of our colleges. Save for a tiny handful of the nation's colleges, what distinguishes one college from another is the magnitude of that rot.
One of the best sources of information about our colleges is the New York City-based Manhattan Institute's quarterly Web magazine, Minding the Campus, edited by John Leo, former columnist for U.S. News & World Report.
I've often said that I wish there were some humane way to get rid of the rich. If you asked why, I'd answer that getting rid of the rich would save us from distraction by leftist hustlers promoting the politics of envy. Not having the rich to fret over might enable us to better focus our energies on what's in the best interest of the 99.99 percent of the rest of us. Let's look at some facts about the rich laid out by Bill Whittle citing statistics on his RealClearPolitics video "Eat the Rich."
This year, Congress will spend $3.7 trillion dollars. That turns out to be about $10 billion per day. Can we prey upon the rich to cough up the money? According to IRS statistics, roughly 2 percent of U.S. households have an income of $250,000 and above. By the way, $250,000 per year hardly qualifies one as being rich. It's not even yacht and Learjet money. All told, households earning $250,000 and above account for 25 percent, or $1.97 trillion, of the nearly $8 trillion of total household income. If Congress imposed a 100 percent tax, taking all earnings above $250,000 per year, it would yield the princely sum of $1.4 trillion. That would keep the government running for 141 days, but there's a problem because there are 224 more days left in the year.
The terms affirmative action, equal representation, preferential treatment and quotas just don't sell well. The intellectual elite and their media, government and corporate enthusiasts have come up with diversity, a seemingly benign term that's a cover for racially discriminatory policy. They call for college campuses, corporate offices and government agencies to "look like America."
Part of looking like America means if blacks are 13 percent of the population, they should be 13 percent of college students and professors, corporate managers and government employees. Behind this vision of justice is the silly notion that but for the fact of discrimination, we'd be distributed equally by race across incomes, education, occupations and other outcomes. There is absolutely no evidence that statistical proportionality is the norm anywhere on Earth; however, much of our thinking, laws and public policy is based upon proportionality being the norm. Let's look at some racial differences whilst thinking about their causes and possible remedies.
One of the requirements to become a Dayton, Ohio police officer is to successfully pass the city's two-part written examination. Applicants must correctly answer 57 of 86 questions on the first part (66 percent) and 73 of 102 (72 percent) on the second part. Dayton's Civil Service Board reported that 490 candidates passed the November 2010 written test, 57 of whom were black. About 231 of the roughly 1,100 test takers were black.
The U.S. Department of Justice, led by Attorney General Eric Holder, rejected the results of Dayton's Civil Service examination because not enough blacks passed. The DOJ has ordered the city to lower the passing score. The lowered passing grade requires candidates to answer 50 of 86 (58 percent) questions correctly on the first part and 64 of 102 (63 percent) of questions on the second. The DOJ-approved scoring policy requires potential police officers to earn the equivalent of an "F" on the first part and a "D" on the second. Based on the DOJ-imposed passing scores, a total of 748 people, 258 more than before, were reported passing the exam. Unreported was just how many of the 258 are black.
Economic lunacy abounds, and often the most learned, including Nobel Laureates, are its primary victims. The most recent example of economic lunacy is found in a Huffington Post article titled "The Silver Lining of Japan's Quake" written by Nathan Gardels, editor of New Perspectives Quarterly, who has also written articles for The Wall Street Journal, Los Angeles Times, New York Times and Washington Post.
Mr. Gardels says, "No one — least of all someone like myself who has experienced the existential terror of California's regular tremors and knows the big one is coming here next — would minimize the grief, suffering and disruption caused by Japan's massive earthquake and tsunami. But if one can look past the devastation, there is a silver lining. The need to rebuild a large swath of Japan will create huge opportunities for domestic economic growth, particularly in energy-efficient technologies, while also stimulating global demand and hastening the integration of East Asia. ... By taking Japan's mature economy down a notch, Mother Nature has accomplished what fiscal policy and the central bank could not."
Within the past decade, I've written three columns titled "Deception 101," "Stubborn Ignorance," and "Exploiting Public Ignorance," all explaining which branch of the federal government has taxing and spending authority. How can academics, politicians, news media people and ordinary citizens get away with statements such as "Reagan's budget deficits," "Clinton's budget surplus," "Bush's budget deficits and tax cuts" or "Obama's tax increases"? Which branch of government has taxing and spending authority is not a matter of rocket science, but people continue to make these statements. The only explanation that I come up with is incurable ignorance, willful deception or just plain stupidity; if there's another answer, I would like to hear it.
Let's look at the facts. Article I, Section 7 of the U.S. Constitution reads: "All bills for raising revenue shall originate in the House of Representatives; but the Senate may propose or concur with amendments as on other Bills." Our Constitution grants the president absolutely no authority to raise or lower taxes. The president is permitted to propose tax measures or veto them. Congress can ignore proposals and override vetoes.
Whether Americans realize it or not, the last decade's path of congressional spending is unsustainable. Spending must be reined in, but what spending should be cut? The Republican majority in the House of Representatives fear being booted out of office and are understandably timid. Their rule for whom to cut appears to be: Look around to see who are the politically weak handout recipients.
The problem is that those cuts won't put much of a dent in overall spending. The absolute last thing a Republican or Democrat congressmen wants to do is to cut handouts to, and thereby anger, recipients who vote in large numbers. To spare myself ugly mail, I'm not going to mention that handout group, but members of Congress know of whom I speak.
With all of the union strife in Wisconsin, Indiana and New Jersey, and indications of more to come, it might be time to shed a bit of light on unions as an economic unit.
First, let's get one important matter out of the way. I value freedom of association, and non-association, even in ways that are not always popular and often deemed despicable. I support a person's right to be a member or not be a member of a labor union. From my view, the only controversy regarding unions is what should they be permitted and not permitted to do.
According to the Department of Labor, most union members today work for state, local and federal government. Close to 40 percent of public employees are unionized. As such, they represent a powerful political force in elections. If you're a candidate for governor, mayor or city councilman, you surely want the votes and campaign contributions from public employee unions. In my view, that's no problem. The problem arises after you win office and sit down to bargain over the pay and working conditions with unions who voted for you.
It is truly disgusting for me to hear politicians, national and international talking heads and pseudo-academics praising the Middle East stirrings as democracy movements. We also hear democracy as the description of our own political system. Like the founders of our nation, I find democracy and majority rule a contemptible form of government.
You say, "Whoa, Williams, you really have to explain yourself this time!"
Why is it that Egyptians do well in the U.S. but not Egypt? We could make that same observation and pose that same question about Nigerians, Cambodians, Jamaicans and others of the underdeveloped world who migrate to the U.S. Until recently, we could make the same observation about Indians in India, and the Chinese citizens of the People's Republic of China, but not Chinese citizens of Hong Kong and Taiwan.
Let's look at Egypt. According to various reports, about 40 percent of Egypt's 80 million people live on or below the $2 per-day poverty line set by the World Bank. Unemployment is estimated to be twice the official rate pegged at 10 percent.
Much of Egypt's economic problems are directly related to government interference and control that have resulted in weak institutions vital to prosperity. Hernando De Soto, president of Peru's Institute for Liberty and Democracy (www.ild.org.pe), laid out much of Egypt's problem in his Wall Street Journal article (Feb. 3, 2011), "Egypt's Economic Apartheid." More than 90 percent of Egyptians hold their property without legal title.
Sam Kazman's "Drug Approvals and Deadly Delays" article in the Journal of American Physicians and Surgeons (Winter 2010), tells a story about how the U.S. Food and Drug Administration's policies have led to the deaths of tens of thousands of Americans. Let's look at how it happens.
During the FDA's drug approval process, it confronts the possibility of two errors. If the FDA approves a drug that turns out to have unanticipated, dangerous side effects, people will suffer. Similarly, if the FDA denies or delays the marketing of a perfectly safe and beneficial drug, people will also suffer. Both errors cause medical harm.
Kazman argues that from a political point of view, there's a huge difference between the errors. People who are injured by incorrectly approved drugs will know that they are victims of FDA mistakes. Their suffering makes headlines. FDA officials face unfavorable publicity and perhaps congressional hearings.
In my "Black Education Disaster" column (12/22/10), I presented National Assessment of Educational Progress test data that demonstrated that an average black high school graduate had a level of reading, writing and math proficiency of a white seventh- or eighth-grader. The public education establishment bears part of the responsibility for this disaster, but a greater portion is borne by black students and their parents, many of whom who are alien and hostile to the education process.
Let's look at the education environment in many schools and ask how conducive it is to the education process. According to the National Center for Education Statistics, nationally during 2007-2008, more than 145,000 teachers were physically attacked. Six percent of big-city schools report verbal abuse of teachers and 18 percent report non-verbal disrespect for teachers.
An earlier NCES study found that 18 percent of the nation's schools accounted for 75 percent of the reported incidents of violence, and 6.6 percent accounted for 50 percent. So far as serious violence, murder and rapes, 1.9 percent of schools reported 50 percent of the incidents. The preponderance of school violence occurs in big-city schools attended by black students.
National debt is over $14 trillion, the federal budget deficit is $1.4 trillion and, depending on whose estimates are used, the unfunded liability or indebtedness of the federal government (mostly in the form of obligations for Social Security, Medicare, Medicaid and prescription drugs) is estimated to be between $60 and $100 trillion.
Those entitlements along with others account for nearly 60 percent of federal spending. They are what Congress calls mandatory or non-discretionary spending. Then there's discretionary spending, half of which is for national defense. Each year, non-discretionary spending consumes a higher and higher percent of the federal budget.
Some Americans have strong, sometimes unyielding preferences for Mac computers, while most others have similarly strong preferences for PCs and wouldn't be caught dead using a Mac. Some Americans love classical music and hate rock and roll. Others have opposite preferences, loving rock and roll and consider classical music as hoity-toity junk. Then there are those among us who love football and Western movies, and find golf and cooking shows to be less than manly. Despite these, and many other strong preferences, there's little or no conflict. When's the last time you heard of rock and roll lovers in conflict with classical music lovers, or Mac lovers in conflict with PC lovers, or football lovers in conflict with golf lovers? It seldom if ever happens. When there's market allocation of resources and peaceable, voluntary exchange, people have their preferences satisfied and are able to live in peace with one another.
Think what might be the case if it were a political decision of whether there'd be football or golf watched on TV, whether we used Macs or PCs and whether we listened to classical music or rock and roll. Everyone had to comply with the politically made decision or suffer the pain of fines or imprisonment. Football lovers would be lined up against golf lovers, Mac lovers against PC lovers and rock and rollers against classical music lovers. People who previously lived in peace with one another would now be in conflict.
Here's the House of Representatives new rule: "A bill or joint resolution may not be introduced unless the sponsor has submitted for printing in the Congressional Record a statement citing as specifically as practicable the power or powers granted to Congress in the Constitution to enact the bill or joint resolution." Unless a congressional bill or resolution meets this requirement, it cannot be introduced.
If the House of Representatives had the courage to follow through on this rule, their ability to spend and confer legislative favors would be virtually eliminated. Also, if the rule were to be applied to existing law, they'd wind up repealing at least two-thirds to three-quarters of congressional spending.
Harvard University Professor Stephan Thernstrom's recent essay, "Minorities in College—-Good News, But...," in Minding the Campus (11/4/10), a website sponsored by the New York-based Manhattan Institute, commented on the results of the most recent National Assessment of Education Progress test: The scores "mean that black students aged 17 do not read with any greater facility than whites who are four years younger and still in junior high. ... Exactly the same glaring gaps appear in NAEP's tests of basic mathematics skills."
Thernstrom asks, "If we put a randomly-selected group of 100 eighth-graders and another of 100 twelfth-graders in a typical college, would we expect the first group to perform as well as the second?" In other words, is it reasonable to expect a college freshman of any race with the equivalent of an eighth-grade education to compete successfully with those having a twelfth-grade education?
Dr. Thomas Sowell, in "Dismantling America," said in reference to President Obama, "That such an administration could be elected in the first place, headed by a man whose only qualifications to be president of the United States at a dangerous time in the history of the world were rhetoric, style and symbolism — and whose animus against the values and institutions of America had been demonstrated repeatedly over a period of decades beforehand — speaks volumes about the inadequacies of our educational system and the degeneration of our culture." Obama is by no means unique; his characteristics are shared by other Americans, but what is unique is that no other time in our history would such a person been elected president. That says a lot about the degeneration of our culture, values, thinking abilities and acceptance of what's no less than tyranny. As Sowell says, "Barack Obama is unlike any other President of the United States in having come from a background of decades of associations and alliances with people who resent this country and its people." In 2008, Americans voted for Obama's change. Let's look at some of it.
Obama's Health and Human Services Secretary Kathleen Sebelius threatened that there would be "zero tolerance" for "misinformation" in response to an insurance company executive who said that ObamaCare would create costs that force up health insurance premiums. That's not only an attack on our constitutionally guaranteed free speech rights but an official threat against people who express views damaging to the administration.