Good Intentions Bring Terrible Results

What’s holding back black Americans? Government, not discrimination

Image credit: Washington Times

by James A. Bacon

After nearly a half-century of government-led exertion to lift black Americans out of poverty, how are they faring? New data and research tell the story. According to census data, 26 percent of blacks, compared with 10 percent of whites, lived in poverty in 2009. The unemployment rate for blacks is 16.7 percent, more than twice the rate for whites. And a study by the Pew Charitable Trusts Economic Mobility Project finds that black men in the middle class are 37 percent more likely than white men to tumble down into the bottom 30 percent of income earners.

A recent study by the Economic Policy Institute concludes that wealth destruction suffered by Americans during the Great Recession hurt blacks more than others. According to “The State of Working America’s Wealth,” the median net worth of black households slid to $2,200, compared with the median net worth of whites at $97,900. Forty percent of black households had zero or negative net worth.

Liberals, race hustlers and others committed to the idea that America is an unjust society in need of remediation have a ready explanation: Blacks continue to suffer discrimination. Racism may be more subtle than when Bull Connor unleashed the dogs upon civil rights marchers, they say, but it is still pervasive and damaging. Yet that narrative is getting harder and harder to maintain. Indeed, it is dawning upon many that blacks remain mired in poverty precisely because their political leaders have looked to government for salvation. And government – far from rescuing blacks from poverty – has kept them trapped in it.

Uncle Sam still transfers hundreds of billions of dollars yearly to the poor and downtrodden in the form of Medicaid, the Children’s Health Insurance program, nutritional assistance (food stamps), Temporary Assistance for Needy Families, the Earned Income Tax Credit, fuel assistance and a host of narrow-bore programs aimed at ameliorating the hardships of poverty. Social scientists have long warned of the corrosive effect of welfare upon black Americans’ family structure, self-reliance and initiative.

If that’s where government “help” ended, the condition of blacks today might not be as dire. But one reason blacks suffered such devastating financial losses in recent years is that much of their net worth was tied up in real estate. When the housing market imploded and equity values collapsed, much of their net worth evaporated. While people of all races experienced equity losses, black homeowners suffered more than others. A 2010 study by the Center for Responsible Lending found that among recent borrowers, 8 percent of blacks and Hispanics, compared with 4.5 percent of whites, had lost their homes to foreclosures. (Of course, the foreclosure crisis is far from over – those percentages have climbed higher since.)

While the causes of the housing bubble are complex – low interest rates, financial innovations on Wall Street and a general decline in lending standards fed the frenzy – government policy played a supporting role. Under a bipartisan banner of promoting homeownership, government agencies encouraged subprime lending to households that had no business having mortgages. Then, after the crash, Obama administration policy prolonged the financial agonies of homeowners facing foreclosure through a mortgage-modification program that spared some homeowners but caused others to deplete their savings by making payments they couldn’t afford.

The latest canard is the notion that everyone should be entitled to a college education. President Obama has ramped up loans and grants for college students to unprecedented levels. Unfortunately, no one seems to be checking how many are graduating. Many Americans, including blacks in disproportionate numbers, are not academically prepared for college and never make it through. The result is a silent college dropout crisis. States a recent study from the American Institutes for Research: “Much of the cost of dropping out is borne by individual students, who may have accumulated large debts in their unsuccessful pursuit of a career.”

In tacit acknowledgment that there is a big problem, the Obama administration is targeting for-profit colleges, where tuition costs and defaults tend to run higher, for criticism. But the underlying premise, that government should help pay for anyone to get a college education, is as flawed as the premise that everyone should own a house. The result of good intentions gone awry is a generation of college dropouts living in modern-day indentured servitude.

The do-gooders have all the best of intentions, of course. They just don’t pay attention to results. In the name of compassion, they keep blacks hooked on initiative-sapping welfare dependency. In the name of building the American dream, they promote home ownership for people who lack the financial wherewithal to keep up payments. In the name of equal opportunity, they dispense college loans to people who will never graduate. Lord, deliver us from those who would save us.

This column was published originally in the Washington Times.

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12 responses to “Good Intentions Bring Terrible Results”

  1. Jim’s narratives are getting more and more complex …

    but I actually agree with SOME of the points:

    1. – “helping” people who are financially illiterate is going to backfire
    2. – costly entitlements to provide housing and food to those who cannot get jobs is a big problem

    the vast, vast majority of black people with jobs pay their mortgages.

    we’re talking about factory workers, police and firemen, armed services, etc..

    the problem is that when fully 1/2 of their population does not graduate from high school or graduate but are functionally illiterate than the problems with entitlements are begin..and continue….

    we seem to be quite happy with blaming these failure on their parents and then walking away… but then later on carp incessantly about their food stamps, housing vouchers and MedicAid.

    I never quite get to the point about what solutions are being advocated – just carping..

  2. “We Do Not Blame CRA”

    ” An email from one of the authors of Reckless Endangerment, Josh Rosner, pushes back against my post on the book and how it is being used by conservatives to try to blame the financial crisis on Fannie, Freddie, the CRA, and Democrats”

  3. Solutions? The first thing you do when you have a headache is stop banging your head against the wall. The first thing you do when you want to reduce poverty is stop doing the stuff that creates poverty.

    The greatest gains that African-Americans made in income and net worth compared to whites in the the U.S. came in the 1940s and 1950s before the government decided to “help” them. Once the Great Society began, African American progress almost came to a halt. Half the A-A population joined the American mainstream; the other half got trapped in a welfare-dependent underclass.

  4. Peter Galuszka Avatar
    Peter Galuszka

    Whatever happened to Bill Clinton’s major change sin welfare in the mid 1990s? Forgotten? Never happened?

    And, statements such as this give me the creeps: “But the underlying premise, that government should help pay for anyone to get a college education, is as flawed as the premise that everyone should own a house.”

    Who the hell is Jim Bacon to sit back and pontificate about who has the right to join the middle class? A little history lesson, Jimbo,just after WW II, there wouldn’t have been much of a middle class unless the federal government had started allowing vets to get mortgages through VA loans.

    I bet there was some Jim Bacon-type back then saying, “But how do you know that sergeant’s qualified — He’s Italian. This corporal has a Polish sounding last name — rental only.”

    You keep hitting these themes that African -AMericans are somehow inherently unworthy or they’re being screwed by the government or both. AS Larry G points out, the overwhelming majority of blacks who own homes are current on their mortgages.

    So you the hell are you to sit back and judge? It’s as if you are begging people the label you as racist.

    Peter Galuszka

  5. Something is amiss. The old explanation was that whites were prejudiced against everybody who wasn’t white. That seemed to explain the condition of African Americans, the push back against illegal immigration. etc.

    But a funny thing happened on the way to the Kim Chee …

    Asian Americans have eclipsed everybody in terms of statistical success.

    How did this happen in a society where whitey hates everybody who isn’t white?

    Answer: Many in the Asian American community actually believe in the American dream. They work their asses off. It is common in Northern Virginia for Korean Americans to send their kids to summer tutoring all summer long so they are better prepared for next year’s classes.

    Hmmm … work hard and get ahead. What a concept.

    The plight of African Americans is terrible. The inner cities are becoming third world nations. And it’s not just Detroit. Parts of Baltimore are a disaster zone.

    However, blaming white racism for the problems seems pretty absurd given the success of the Asian American community. And remember, liberal hero Franklin Roosevelt rounded up Japanse Americans and put them into internment camps 70 years ago. Asian Americans have hardly gotten a free ride. They just have persevered and prevailed.

    I see Asian Americans’ success as an example to all Americans, including myself and my children.

    Now, why are African-Americans in such a different spot?

  6. this is much more complex than race alone but I’d be the first to admit that we have urban areas with black majors, police, school, etc and still serious problems and (as far as I know) …not urban areas with “Asian” mayors, police chief, school superintendents….and … much less or virtually non-existent problems of a similar kind with those of Asian heritage.

    and to mix this up a little bit – we have a Hispanic culture that does not do well in our schools according to NCLB sub-group scores but is willing to do whatever work it takes to earn a living and not (as far as I know) expect/utilize entitlements at a high level.

    But – if we accept the basic narrative here (and I don’t have major disagreements) – then I’m not sure what direction we’re advocating for solutions.

  7. Peter, I’m not judging. I’m observing. We all share the same goal, of creating a society in which African-Americans can participate in fully. But how many decades does it take before we realize that the “Great Society” approach to combating poverty isn’t working? How many lives do we have to ruin by peddling housing and student indebtedness for people who can’t handle the debt?

    As to your statement that I’m acting as if I have the right to pontificate who has the “right” to join the middle class, that’s absurd. I am questioning the effectiveness of the liberal toolkit of anti-poverty solutions. I am arguing that Great Society programs might make white liberals feel good about themselves, but 45 years of it has done precious little for blacks. One day, you need to grapple with that reality.

    Larry, your question about “which direction we’re advocating for solutions” presupposes that the solution lies with well-meaning white people working through the political system, and not blacks themselves. Like Groveton says, the Asians in America have done very well for themselves by cultivating the virtues of hard work and self reliance. Maybe African Americans should start looking to the Asian community for solutions, not to the government.

  8. Peter Galuszka Avatar
    Peter Galuszka

    The Great Society approach was successful on several fronts.

    It gave Blacks the right to vote especially in places they were directly blocked such as in the Deep South with its literacy tests (just for blacks) and other hurdles.

    It helped young kids in ghettos and in poor rural areas draw a beat on their education.

    It helped renovate some of the worst slums conditions in cities and towns throughout the U.S. Some atrocities were created, such as what I-95 and its white backers did to Jackson Ward, but a lot of blight was cleared.

    It opened up de facto whites-only schools to blacks and other minorities.

    It helped older people get a shot at medical care they otherwise could not afford.

    It set the stage for pollution clean up although the real work was done by Republican Richard Nixon.

    Steve Pearlstein in the Wash Post has a great column this SUnday about how the latest batch of GOPers are somewhat lacking in reality. They refuse to admit that back in the 1960s, our cities were in flames, our schools were a mess, skies were filthy and rivers were polluted. I remember driving into Pittsburgh in the mid 1960s and it was like going from day into night — at high noon.

    Right wing zealots are negating this history. Never happened. Let’s get rid of the EPA and everything else.


  9. I agree with Peter that the right has lost its way with conservation. Most of the old time righties were sensitive to conservation issues. Nixon was indeed almost a zealot on conservation, much to his credit.

    Bob McDonnell’s record is poor on conservation. And others, like Bob Goodlatte, have an abysmal record.

    The right needs to get back to the idea that conservatism strongly implies conservation. Leaving a strong fiscal environment to our children and grand-children is important. So is leaving a strong physical environment.

    It’s too bad that conservation has gotten caught up in the global climate change debate. Even if climate change were proven incorrect tomorrow there still would be an enormous amount of work to do on our environment.

  10. ” U.S. poverty rate reaches 15.1 percent”

    ” The news was particularly bad for blacks, Hispanics, children and women. The poverty rate for Hispanics climbed to 26.6 percent from 25.3 percent, and for blacks it increased to 27.4 percent from 25.8 percent. For whites, the poverty rate in 2010 was 9.9 percent, a half percentage point increase from the previous year. Meanwhile, 12.1 percent of Asian Americans fell below the poverty line in 2010, which was statistically unchanged from 2009.”

    sounds like more than a “black’ problem to me….

    in terms of “what to do about it”… ” the solution lies with well-meaning white people working through the political system, and not blacks themselves.”

    the face of poverty is overwhelmingly kids… white, black and hispanic… (but not asian usually)….

    Is the solution to let them handle it?

  11. LarryG:

    We do not understand the underlying structure of the American economy anymore. Recessions used to be “V” shaped, now they are either “U” shaped or (perhaps) “L” shaped.

    I support Obama’s “Hail Mary pass” with his latest jobs program. Why? For the same reason I support the Charlottesville bypass and Rail to Dulles – when things start to get desperate you have to try new ideas. There’s isn’t time for more “spreadsheet analysis”. You have to take the best idea you have and run with it.

    I am afraid that the only answer to the years of sloth and neglect from our political leadership may be dramatic change. Reagan correctly accused Carter of fostering a malaise and famously asked, “Are you better off today than you were four years ago.”. He won the election, cut taxes and the economy (which had been in the tank for a decade) restarted. Yes, yes … I know he raised the deficit with uncontrolled spending. However, he did kick start the economy after years of misery.

    Obama is trying it the Roosevelt way. Public works. Government initiated employment.

    Maybe it will work, maybe not.

    But, at least he’s trying something.

    Gotta give him that.

    As for poverty – increased employment will help. However, we need a much better understanding of the structural issues in the economy to make any long term progress. Our recessions are getting more frequent and they are taking longer to correct.

    Something has changed.

  12. the thing that strikes me is what Conservatives would do about this.

    we know what the liberals want to do..

    As long as we have EMTALA, MedicAid, housing vouchers, food stamps, subsidized school lunches – all tied to poverty level (of which 15%) now are …. what would Conservatives do about it?

    my perception is that those on the right would, once in power, move to cut benefits….

    I don’t see any other vision from them since now days – they are basically anti-govt and consider anything done by the govt (except for the military) as wasteful, corrupt and inefficient.

    their answer is LESS govt and LESS entitlements and ultimately more police and prisons…

    Obama is in a hell of a mess not of his creation… the only option that he appears to have is to have to govt attempt to do “something” whereas it’s pretty clear that the other side believes that cutting taxes, getting rid of regulations and denying entitlements is the answer.

    the Prez has a jobs proposal. As expected the GOP does not like it but what is their competitive alternative proposal other than “no”?

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