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The Agenda

NRO’s domestic-policy blog, by Reihan Salam.

Race, Social Networks, and the Inequality Debate



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Jamelle Bouie of The Daily Beast argues that President Obama, and left-liberals more broadly, are discounting the “unique and persistent disadvantages” facing black Americans in their public rhetoric, and that this has led them to make serious policy errors. I find Bouie’s central thesis compelling, though it takes us in different directions. For example, Bouie sees the Medicaid expansion of a paradigmatic example of where a “color-blind,” class-centric approach to inequality has undermined Democratic efforts to achieve egalitarian objectives:

The Medicaid expansion in the Affordable Care Act is supposed to extend health insurance to millions of low-income people who don’t qualify for subsidies. But, because of the Supreme Court’s ruling on the law, this is only possible if each state makes the decision for itself.

In theory, no state would turn down the federal government’s promise of new funding. In practice, Republican states have done exactly that. The people hurt most by this are low-income blacks, and why wouldn’t they be? The region is ruled by a rigid anti-government conservatism that has its roots in slavery and white supremacy. Indeed, if Southern states have large populations of poor blacks who are harmed by the rejection of Obamacare, it’s because—for the bulk of their history—they were explicitly organized to maintain black disadvantage.

Without targeted interventions, these poor blacks are denied a key benefit, which will leave them further behind compared to their white counterparts.

There are, as Avik Roy has argued, many valid reasons for why policymakers might oppose the Medicaid expansion. Joseph Antos of AEI notes that there is no guarantee that the promised federal support for expanding the Medicaid program will materialize, and some states are concerned about the “woodwork effect,” e.g., while the federal government will pick up the tab for newly-eligible beneficiaries, the expectation, which appears to have been borne out, is that the expansion will attract households that had been eligible earlier on, yet which hadn’t signed up for coverage earlier on. Moreover, there are concerns about the quality of Medicaid coverage, though it is fair to be skeptical about these concerns given that only a small handful of states opposed to the expansion have made much progress in crafting superior alternatives.

That said, Bouie makes an important point about relative outcomes, a point that mirrors one of the central arguments the left-liberal Columbia University political scientist and historian Ira Katznelson makes in his landmark book When Affirmative Action Was White. Because the implementation of New Deal and Fair Dear era social programs was so uneven, African Americans in the immediate postwar decades were denied access to many wealth-building opportunities created by, for example, subsidized mortgages. And if you believe that having wealth in some form (housing equity) can better the lives of your children, and make it more likely that they can accumulate assets that they can pass on to their children, you can see how this might prove problematic. Essentially, Bouie is warning that if the Medicaid expansion betters the relative economic position of its beneficiaries in states that accept the expansion relative to states that do not accept it, the result might be the exacerbation of racial gaps in income and wealth over time.

Of course, black families have been migrating from northern and western states to metropolitan areas in the South in large numbers, in part because doing so appears to increase their disposable income (thanks to a combination of low housing costs and, perhaps, lower costs associated with commuting and taxes) and improve their relative economic position (the sociologist Chenoa Flippen has observed that black domestic migrants appear to be moving up in terms of their position in the household income distribution when they move from high-cost northern and western cities to low-cost southern cities). So if you see opposition to the Medicaid expansion as part of a larger strategy to keep southern states low-cost and low-tax, one could make a case that African Americans as a group will still come out ahead. This question strikes me as extremely difficult to answer. Much depends on the value of the Medicaid benefit, which is contested, as Scott Winship reminds us. And it could be that while middle-income black households benefit from living in low-cost southern states, low-income black households, with negligible tax liability, benefit considerably less. The African American population is large and diverse, and policy that measures that benefit some of its members may well harm the interests of others.

All that said, I found Bouie’s argument compelling because African Americans do face unique and persistent disadvantages when it comes to entering the social networks that can facilitate upward mobility, and focusing on income alone can obscure this fact. For example, if Latinos tend to have low income levels but they are somewhat more likely to marry or befriend people who belong to privileged social networks, it is easy to imagine that their relative position will improve over time, and so a snapshot of the present is potentially misleading. If blacks have comparable income levels but are much less likely to marry or befriend people who belong to privileged social networks, it is just as easy to imagine that their relative position will deteriorate over time. Similarly, one can imagine that there are people who belong to privileged social networks yet who’ve chosen, for a variety of reasons, including a preference for non-pecuniary goods over pecuniary goods, to earn low incomes; the position of these people is very different from that of others who are earning as much as they can, but who have found that lack of access to privileged social networks has proven an insuperable obstacle.

Recently, we discussed the phenomenon that racial wage gaps are larger in big cities (like New York) than they are in smaller cities (like Oklahoma City), a finding that researchers Elizabeth Ananat, Shihe Fu and Stephen L. Ross attribute to the fact that bigger cities are home to bigger social networks, and the gap in the size between the social networks non-blacks have access to and those that blacks do have access to are bigger in bigger cities than in smaller cities.

The daunting thing about placing social networks at the heart of our understanding of entrenched poverty is that we can’t simply engineer social networks to our liking, no matter how hard we try, and it would be illiberal to do so regardless. Many of the most popular strategies for engineering social networks, like racial preferences, might actually backfire if the mismatch hypothesis is correct. The best way forward seems to be finding ways to reduce the intense geographical concentration of poverty, which has actually grown worse even as educated African Americans have grown more likely to live in racially mixed neighborhoods. I have argued that more effective crime control strategies and zoning reforms designed to lower housing costs in desirable neighborhoods in high-productivity metropolitan areas are good ways to advance this goal, albeit slowly. I also think that a long-term effort to reduce worklessness in high-poverty neighborhoods is going to be essential to reducing black (but not just black) economic and cultural isolation. These efforts will probably be expensive, and though one hopes that the investments we make will pay off in lower social expenditures, etc., there are no guarantees.

And this is why I think that a focus on entrenched black poverty ought to incline us towards supporting an immigration policy that increases the size of the skilled influx and decreases the size of the less-skilled influx. The reason is that, all other things being equal, young skilled immigrants will pay more in taxes and consume less in services than less-skilled immigrants, thus bolstering our ability to finance social programs designed to benefit poor Americans who are the children and grandchildren of poor Americans. There is a symmetry between the cosmopolitan case for less-skilled immigration as a global anti-poverty strategy and efforts to deracialize the conversation about domestic inequality. If you believe that affluent Americans have the same basic obligations to poor people living in the world’s poorest countries (we’ll leave aside middle-income countries like Mexico, where the case is much weaker) as they do to poor people who are poor in part because of the unique historical circumstances surrounding enslavement and segregation, it makes sense to favor an immigration policy that will reduce the cost of outsourcing household production for high-earners by welcoming some slice of the global poor. If you instead believe that while affluent Americans might have some obligation to poor people in the poorest countries but that their obligation to the native-born multigenerational poor (a group that is disproportionately black, and not coincidentally) is much greater, the idea of using immigration as a tool for mitigating the economic burden associated with providing high-quality services makes more sense. (The caveat is that we are assuming that legal immigration will be limited; my argument is that a larger share of this fixed pie should be skilled rather than less-skilled.)



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