Persistent Disparity: Race and Economic Inequality in the United States Since 1945.

By William A. Darity, Jr. and Samuel L. Myers, Jr. Cheltenham, UK: Edward Elgar, 1998; Pp. xiii, 191. $70.00.

This important book comes to grips with the relationship between racial discrimination, black-white income differentials, and the larger phenomenon of rising income and wealth inequality in the United States. The prevailing literature has treated these topics separately. In Becker's (1957) famous model, discrimination is a matter of preferences, substantially fixed and immutable. Meanwhile, the recently predominant line of inquiry into rising inequality in incomes has emphasized the role of technological change, particularly the hypothesis of "skill-bias" in new technologies, associated by some authors with the spread of computers in the workplace. These lines of argument coexist but do not interact, the implication being that the observed rise in black-white inequality during the 1980s did not reflect any increase in discrimination.

Darity and Myers point, at first, to the correspondence between rising inequalities of income and wealth in the general population and to the accelerating political and legal assaults on racial preferences in hiring and education. They show that despite these assaults, the relative educational attainment of black wage earners rose. On this account, racial wage differentials should have narrowed, but they did not.

The authors then set out to establish whether the deteriorating relative economic position of black families can be explained by deteriorating characteristics of black households, particularly the rising proportion of black families headed by low-skilled females. Again, they say no. Female headedness in black families did increase in the 1980s, and this increase was dominated by a rising proportion of low-skilled women. The authors argue, however, that two factors were even worse for black families: the declining relative economic position of all families headed by unskilled young women and more important, a further differential decline in the economic position of such families that are black.

Thus, after controlling for changing relative characteristics of black and white households, relative incomes of black households still declined. Conclusion: Similarly situated black households did worse than their white counterparts. Implication: Discrimination, in any practical definition of the term, increased.

But why? Discrimination, Darity and Myers argue, is endogenous to the larger distribution of income. When general inequality rises, so does the intensity of competition for higher income employments. Racial tensions therefore also increase: Any categorical distinction becomes a differentiator to exploit, and any remedial program aimed at reducing group differential becomes a threat. Conversely, people become more tolerant of affirmative action and so forth when a general increase in equality reduces the opportunity cost of racial preferences. In the 1980s, general inequality rose, and consequently so did race discrimination.

Most of Persistent Disparity is given over to an exegesis of the multiple literatures on intergroup and intragroup income inequality. Darity and Myers treat, in rough sequence, general inequality in the American income distribution, the decline in race inequality from 1948 through 1975 and subsequent increase, the role of education, and the role of family structure. (Much of their argument is technical, and no detailed attempt to judge it can be made here.) There follow several concluding chapters that deal with policy recommendations.

Why did inequality increase? Darity and Myers join an increasing chorus of critics of the notion of a "skills mismatch hypothesis" or increase in relative demand for highly educated workers. They review the evidence pointing in a different direction, toward the hypothesis of "institutional failure" articulated by Howell (1997). With the collapse in blue-collar jobs for low-skilled white men and the consequent decline in unionization, those workers were crowded into a tier of jobs previously held in some part by black men. Blacks were therefore pushed further down on an already elongated ladder.

Criticism of the "skills-mismatch" view of rising black-white differentials after 1975 leads to a need to reexamine the prevailing explanation of declining race income differentials before that time. Darity and Myers reexamine the conventional view attributing that improvement to improved relative education among blacks. They find, first of all, that the improvement is questionable: Analyses comparing wages across racial groups omitted zero-earners, who tend to come from among the poorest blacks but from among the richer whites; adding in zero-earners pushes the deterioration of black economic position back from the late 1970s to the late 1960s. The turning point thus corresponds to the beginning of increasing inequality in general.

We are left, then, with a central proposition: Inequality between the races is not, at the end of the day, a matter of race first and foremost. It is, rather, a matter of relative position in a general distribution. When that distribution is fairly compact, as in the mid- and late 1960s, racial mobility increases. When the distribution elongates, relative disadvantage becomes more important, and resistance to racial mobility - discrimination - increases.

One might think that this leads to a dual-policy conclusion: Affirmative action and other policies to reduce interracial disparities, yes - but only in the context of a general reduction in inequality in the larger economy. Without such a general move to egalitarianism, racial preference policies are destined to fail politically.

Yet this is not, in fact, the direction Darity and Myers actually take. Instead, at the close of the book they take a radical turn, offering closing arguments for redistribution of wealth and political power, for reparations. They point to, and criticize, the antidrug policies that criminalize large numbers of black men and put them in prison. They even nod sympathetically toward proposals for dual citizenship for black Americans in African countries.

Faced with these arguments, this reviewer finds himself in the traditional dilemma of the white liberal. What to do with radical demands for race-based redistribution? One cannot argue with the underlying proposition: Nothing incremental, small-scale, or gradual is likely to erase black-white income differentials, let alone wealth differentials. And the appalling effect of present penal policies, particularly in the implementation of the drug war, on the political and social status of the black male population in America is a serious issue that deserves much more attention than it receives, even here.

And yet, what exactly is it that entitles present American citizens labeled "black" - but in many cases of mixed racial and immigrant heritage postdating slavery - to wealth transfers on account of their race? Racial oppression is a general feature of our past. Is the heritage of slavery more onerous than that of genocide, suffered by native Americans? How does it rank against the Exclusion Acts and related indignities suffered by Chinese? (Does my Chinese daughter deserve compensation for that?) For that matter, what of the oppression undoubtedly suffered by many predominantly white communities, including immigrants and workers?

I prefer the logic of Darity and Myers' own arguments to their conclusions. Racial and general justice are inseparable. Therefore, the way forward toward racial justice must begin with a general narrowing of income and wealth differentials. In that context, specifically race-based preferences are indeed justified, as are a wide array of preferences aimed at other distinct disadvantaged communities - whether identified by race, by region, or by economic class. Such programs are not, in fact, "preferences." They are best viewed as democratizing offsets to the pervasive preferences enjoyed by traditionally privileged groups.

But, in the end, such policies will only succeed in a society far more equal than the United States today. And such a society must have as its ultimate goal, in some distant but honest sense, to be free of race distinction.

References

Becker, Gary. 1957. The economics of discrimination. Chicago: University of Chicago Press.

Howell, David. 1997. Institutional failure and the American worker. Annandale-on-Hudson, NY: Bard Publications Office and Jerome Levy Economics Institute.

James K. Galbraith University of Texas at Austin