U.S., World Need Unifying Leaders With Massive Approach to Racial, Economic Justice
June 5 — The U.S. and world need unifying leaders, not dividers like Trump, even more so with the protests in the U.S., and the rising tension between the U.S. and China.
Unifying leadership must address both the ongoing headline situations and the key underlying issues, which are massive income/wealth inequality, and the lack of societal respect for those at the bottom of their distribution.
Black unemployment in May was 16.8%, the highest since 1984, significantly higher than white 12.4%. The black rate actually rose 0.1 percentage points while the white rate fell 1.8 points. The overall rate unexpectedly fell from 14.7% in April to 13.3% , a broader measure from 22.8% to 21.2%. 22.1 million jobs were lost in April and May combined.
Because of a major “misclassification error,” the BLS says the official rate would have been about three percentage points higher than reported, which didn’t stop the S&P 500 from going up 2.6% today.
Median white household net worth, which is not skewed by the most wealthy, is nearly ten times that of blacks, see above chart, taken from this February 27 Brookings article. The data only goes through 2016, when black net worth, already very low, was well below that of 2000, no progress had been made, relatively or absolutely.
The picture is even harsher when looking at the young and low income, who in general have great economic difficulty, but blacks even more so. These two charts show that black households whose head is under 45 years have almost no net worth while whites have about $100k. The same with black families below the 60th percentile of income, almost no net worth.
The Brookings article notes, “Family wealth allows people (especially young adults who have recently entered the labor force) to access housing in safe neighborhoods with good schools, thereby enhancing the prospects of their own children.”
“There is no single, simple explanation for the racial wealth gap. It is not explained away by differences in educational attainment.” “The Black-white wealth gap reflects a society that has not and does not afford equality of opportunity to all its citizens.”
Black life expectancy has always been worse than whites, see chart below, and while the gap is closing, part of that reflects life expectancy of white males actually declining due to the opioid epidemic.
Low-income people, which African-Americans disproportionately comprise, have dramatically shorter lives. According to this June 15, 2019 Economist article, “Life expectancy at the 90th percentile is 83.1 years compared with 73.1 years at the 10th. In Chicago, census tracts a few miles apart can differ in average life expectancies by two decades.” Perhaps similar in and around Washington, D.C.
U.S. Must Go Far Beyond Police, Criminal Justice Reform
The murder of George Floyd shows the immediate need to prevent such things from ever happening again. There must be police reform, police must be demilitarized, and the criminal justice system has to stop incarcerating so many people of color.
Obama is a unifying leader. If he could run in an election against Trump at this moment, he would win in a landslide. He is also a reformist. I’ve heard him talk recently about the need to vote in state and local elections to achieve police reform. That’s urgently needed, but so is far more.
Liberal economists like the ones who would serve in a Biden administration are also reformists. Their big idea right now is Federal aid to state and local governments. That’s also badly needed. But so is the need to think much, much bigger.
Unprecedented monetary and fiscal stimulus has just spurred the biggest 50-day rally in the S&P 500 since 1952. As Trump crowed on Fox on Wednesday, “the stock market is booming,” approaching all-time highs today, while 110,522 people have died of Covid-19 in the U.S. this year on his watch. According to this May 27 article, “Black Americans represent 13% of the population in all areas in the U.S. releasing COVID mortality data, but they have suffered 25% of deaths.”
If the Fed can print trillions of dollars to buy financial assets since late March which mainly benefits the wealthy who own much of them, then why can’t it print trillions for the real economy to help real people? A card-carrying member of the financial elite, Mohamed El-Erian, said on CNBC on June 1, “Stop focusing on just boosting asset prices, and focus on the real economy, on people, rather than on markets.”
E.g., there is an obvious need for massive construction of affordable, environmentally friendly new housing. A nation as wealthy as the U.S. should have no one living in substandard housing. Look at how much brand new housing China has built in the last ten years.
But to do something similar in the U.S., white urban liberals strongly in favor of ending police violence against blacks must overcome their entrenched NIMBY (not in my backyard) opposition to such lower-income housing, notorious in very liberal urban strongholds like San Francisco.
Suburban white liberals get mortgage interest tax deductions, and the U.S. government has long supported the mortgage market. Increasing African-American home ownership would greatly increase black generational wealth and upward mobility.
There are many other things the government can and must fund, infrastructure is always mentioned, which the GOP Senate won’t consider in a new stimulus bill.
This includes Medicare for All (MFA), which would greatly help people of color. Yet older white liberals in nice suburbs, especially women, who are strongly against Trump and police brutality, and even urban African-Americans, neither of whom went for Sanders and his MFA, or for Warren and her MFA version when she was willing to keep government-subsidized private health insurance, instead heavily supported Biden in the primaries.
How to “Pay For” Everything That Must Be Done
Because of Covid-19, I don’t know when it will be safe to actually start to build what’s needed, no one does, but real plans should at least be made now, not just vague aspirations.
But how does the U.S. “pay for” all this and more? Luckily there is an economist on Biden’s economy working group, Stephanie Kelton, who was picked by Sanders, according to this May 13 Vox article. Kelton is a leading MMTer, her new book, “The Deficit Myth,” comes out June 9 and explains how the U.S. can afford the huge programs it absolutely needs, a must read right now.
When Congress passed the huge $2.2 stimulus bill, I posted an article March 26 titled “Stimulus Bill Historic Paradigm Shift, “We Are All MMTers Now,”” which started: “The U.S has potentially entered the Age of Modern Monetary Theory (MMT) with the deficit-busting stimulus bill, which would follow the two previous political/economic paradigm shifts, the Age of FDR/Keynes from 1932 to 1980, and the Age of Reagan/Friedman from 1980 to 2008.”
Internationally, I previously floated the idea a year ago on June 25, 2019 and May 29, 2019 that in response to Trump’s trade/tech war China’s Xi should offer to include the U.S. in his Belt and Road Initiative (BRI) to massively build infrastructure, clean energy, housing etc. around the world.
That idea may have sounded absurd when I floated it, even more so in the extremely chilly U.S.-China relationship now, but perhaps not more absurd then when the U.S. offered to Stalin to join the Marshall Plan to reconstruct Europe after WW II at the beginning of that cold war. The global economy badly needs some big ideas to kick start it right now. At the very least, end Trump’s trade/tech war on China.
Marc Andreessen, a famous Silicon Valley venture capitalist, posted a blog on April 18 titled “It’s Time to Build,” which should be a national slogan. He included “a few thousand new zero-emission nuclear reactors,” which Bill Gates knows all about, I would suggest perhaps done in conjunction with Xi’s BRI in Africa. Again white liberals have to get over their NIMBY and technology biases about such ideas in the Green New Deal to help people of color.
I’m not sure exactly how many unarmed African-Americans have been murdered by police, as were George Floyd and Breonna Taylor, I’ve never seen a number on the many protest signs, videos and articles. One is too many.
My guess is the number of blacks whose lives have been significantly shortened or seriously harmed by the lack of affordable, quality healthcare, housing, education, food and good jobs/income to buy them may be at least a million times more, not a typo.
Michelle Obama has said: “When they go low, we go high.” Liberal politicians, liberal media and liberal economists must stop being obsessed with Trump’s never ending divisive attacks, that’s what he’s running on, and instead focus on real solutions to massive income/wealth inequality and racial injustice.
Make America and World Awesome, MAWA
John Furlan
