Place, not race, is wrong medicine: rush towards place-based economic solutions could do more harm than good.

If a recent Wall Street Journal article is correct, "place, not race," may become the next catchphrase in the government's affirmative-action program. And if this new fad should catch on as the main strategy for assisting historically exploited minorities, we can expect continued failure in solving the problem of racial inequality in American economic life.

According to the article, one of the main motives for the new approach is to mollify white critics of race-based remedies. But government racial policies of the past three decades were more concerned with ending racial inequality, a direct result of centuries of exploitation and discrimination, and less concerned with appeasing the advantaged white population. Policies were not only intended to end abominable, discriminatory practices, but also to eliminate the continuing impact of these practices on current and future generations.

So-called race-based set-asides incorporated in the policies of the past three decades were never based on race, but on the historic disadvantages that minorities had experienced in this country. These policies did not single out black people or other historically exploited minorities because of their race. Rather, they were singled out so policies could promote an end to racism, racial discrimination and the economic inequality that African Americans and others continue to experience because of their historic exploitation.

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Black Americans and other historically exploited minorities currently have real disadvantages that prevent their equal participation in the American economy. Namely, they own less human and non-human capital and have less than proportionate control and influence over economic decisions. These disadvantages are for the most part a direct consequence of historic racial exploitation. As a result, they cannot be addressed without employing racially explicit policies to correct the racial disadvantages that have resulted from history. No one, least of all African Americans, should feel any compulsion to apologize for this.

Admittedly, the racially explicit policies of the recent past have not had overwhelming success in correcting the inherited disadvantages of African Americans and other historically exploited minorities. Despite these policies, income, wealth and ownership disparities not only remain large but may have even worsened over the last two decades. However, these policies have not failed because they are racially focused. They have failed because they have not been sufficiently large-scale and because they have not been sufficiently focused on the true causes of the economic disadvantages of minorities.

The problems with predominantly minority neighborhoods, ghettos or slums are not problems of location. The inhabitants of these places suffer because they have severe economic disadvantages because of their race. Show me a place occupied by poor, historically exploited minority people, and I will show you a place that will experience severe socioeconomic problems no matter where it is located. The economic problems of African Americans and other minorities decidedly result from their racial history and can only be addressed by race-specific policies.

The key to minority development is the creation of equal ownership of business and human and nonhuman capital among minorities. Indeed it is only through such a strategy that minorities can become independent and self-reliant. If and when ownership is equalized, minorities will have little need for racial set-asides or racial remedies. Thus, the litmus test for new policy proposals to deal with racial inequality in economic life should be whether or not they result in significant amelioration in the businesses and human and non-human capital. Any policy that fails to address this issue will fail to advance the cause of racial equality in economic life.