Samuelson`s Slip-Up on Inequality

"Poverty
is a serious problem, but inequality is not …"
 

Robert J.
Samuelson

"Indifferent
to Inequality?"

Newsweek,
May 7, 2001

Bob Samuelson, Newsweek`s
economics pundit, is both an acute thinker and a brave
one. He`s one of the very few neo-cons to warn
repeatedly about the ill effects of our current system
of mass immigration. Surprisingly, though, he misses
the point in his latest column when he claims that
America`s growing inequality in wealth doesn`t matter.
In reality, inequality
poses the single largest long-term political threat to
the free market policies
he advocates.

Samuelson points out that the rise in economic
inequality hasn`t lead to a corresponding rise in
class animosity. No – in contemporary America, wealth
inequality typically leads instead to racial
animosity. If African-Americans were able to make as
much money as Asian-Americans, then black-white
relations would look a lot like Asian-white relations.
There would still be competition and conflicts, of
course, just as there are between families – because racial
groups are extended families
.
Yet, blacks would be far less bitter and quick to
blame whites for their shortcoming if, like Asian-Americans, they had fewer shortcomings. 

Similarly, blacks might not vote as a bloc for
quotas, higher taxes, and bigger government payrolls
if they could succeed in the free market as well as
Asian-Americans.

Mestizos tracing their ancestry to Mexico and
Central America are the wild cards in America`s
future. Currently, their illegitimacy and crime rates,
as well as their SAT and IQ scores, tend to fall
in-between African-Americans and whites. The most
optimistic scenario is that they will follow the
Italian-American route – after several generations,
winding up solidly in America`s mainstream. Few tasks
should be given a higher national priority than making
sure that our current Mestizo-Americans evolve in this
direction rather than toward African-American
norms. 

Of course, Italian-Americans benefited economically
by the 1924 cutoff in immigration. The law of supply
and demand explains that the wages of, say, Italian-American marble masons would tend to rise once there
was no new supply of marble masons getting off the
boat from Sicily each year. 

I went to high school with an Italian-American
fellow who spent his summers cutting marble with his
brothers in their dad`s business. Their family had
been in marble since, maybe, Michelangelo`s day. The
three brothers swore that their generation would be
different. They`d get normal American office jobs and
leave behind this hard, gritty but technically
demanding work. They tried it, but after a few years
the three brothers went back to the family craft after
their father offered to double their office salaries
to come to work for him as master marble masons. The
last time I talked to my old classmate, he`d taken
over his father`s firm. He was charging a movie studio
executive with a Caligula-complex $1.5 million for the
marble going into his new Hollywood Hills
palace. 

Not surprisingly, my friend is a Republican. 

In contrast to this success story, continued
immigration from Latin America holds down the wages of
earlier mestizo immigrants. Latino gardeners, for
instance, will continue to make dismal wages as long
as there is an endless supply of similarly skilled
immigrants arriving each year from Mexico. Samuelson
pointed out last year, "An
increase of 10 percent in new immigrants

can reduce the wages of earlier immigrants by 9 or 10
percent, says a report from the Urban Institute in
Washington." 

Not surprisingly, Hispanics vote strongly
Democratic.

Libertarians and their fellow travelers are
rightfully leery of most proposals for cutting
inequality, since these generally entail pervasive
government intrusions into the market. This would
corrupt Americans by placing too much power in the
hands of politicians, luring more citizens into
careers in the political rackets and away from
economically and morally productive lives. 

Fortunately, there is one win-win policy that would
reduce inequality in America, yet preserve the free
market and the virtues of hard work and self-reliance
that it inculcates. The least corrupting way to ensure
that capitalism does not commit political suicide by
generating too much inequality is to impose strict controls to keep out
unskilled immigrants

This would nudge the supply and demand balance in
the direction of favoring America`s less skilled
workers – yet allow the free market free reign within
America.


[Steve Sailer [email
him] is founder of the Human Biodiversity Institute and


movie critic
for


The American Conservative
.
His website


www.iSteve.blogspot.com
features his daily
blog.]

April 16,
2001