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Problems with Theories on the Black-White Wealth Gap

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Tags Media and CulturePoverty


The wealth gap between white and black Americans is frequently discussed. Today it’s becoming popular to attribute disparities to black culture. Clearly all cultures are not equal, but can the subculture of some black American communities explain variations within the wealth gap?

For instance, fifty people in an inner-city neighborhood may engage in maladaptive activities; however, their actions are atypical of the broader black community. Discussing this issue is quite complicated since black culture is not monolithic. The culture of upper-class black Americans is different from that of their working-class peers. There are even subtle differences among various people from the working classes. Notwithstanding such nuances, the culture thesis is gaining widespread acceptance.

A popular view is that impoverished black Americans have developed a counterculture to cope with the realities of their environment. In many of his publications, the preeminent sociologist William Julius Wilson propounds that due to isolation from mainstream society inner-city blacks have devised a warped worldview to make sense of their realities. In an environment bereft of legitimate opportunity structures, deferring gratification appears impractical. Investing in the future seems illogical when the available evidence suggests that your prospects will not be different from your grandparents'. As such people may resort to illicit activities to satisfy their immediate priorities. Unfortunately, the allure of street life can be so great that some shun formal employment in favor of garnering street credit. Speaking to the Harvard Gazette, Wilson said: “Researchers find that for some young men, the draw of the street is so powerful they cannot avail themselves of legitimate employment opportunities when they become available.”

Where self-control is not valued, it’s easy to fathom a young man’s preference for the thrill of street exploits over the rigidity of a formal workplace. Studies have demonstrated a strong relationship between self-control and success, so the strength of the culture thesis is understandable.

However, though useful for understanding some inner-city residents, this theory has obvious shortfalls. We are told that black people in distressed communities might have less wealth than whites, but there is no explanation as to why even among higher-income groups blacks are still trailing whites. Identifying structural barriers as a possible cause also fails to yield an answer, because they transcend race. Occupational licensing and zoning, for example, are class-based barriers. Furthermore, entrepreneurs often complain that regulations impede business development, so exposure to barriers is universal. Neither can we blame discrimination considering that other groups outearn white Americans.

Cultural theorists are sensible to highlight the pernicious effects of inner-city subcultures on the life chances of black citizens, yet they are just skimming the surface. Moreover, when we review the data it becomes apparent that culture is important, so clearly the problem is that theorists are avoiding the more salient issues.

As Lawrence Mead ably points out in his recent paper "Poverty and Culture":

Attempts to attribute long term poverty to social barriers, such as racial discrimination or lack of jobs, have failed. Some scholars now attribute poverty to culture in the sense that many poor become disillusioned and no longer seek to advance themselves. More plausible is cultural difference. The United States has an individualist culture, derived from Europe, where most people seek to achieve personal goals. Racial minorities, however, all come from non-Western cultures where most people seek to adjust to outside conditions rather than seeking change….These differences best explain why minorities—especially blacks and Hispanics—typically respond only weakly to chances to get ahead through education and work, and also why crime and other social problems run high in low-income areas….The black middle class has converted to an individualist style and thus advanced, but most blacks have not.

Mead’s analysis is a bit deeper than that of other scholars, though several questions remain unanswered. For example, critics may assert that Asian Americans are from collectivist cultures, however they outperform white Americans in terms of earnings. Therefore, Mead’s argument could be exaggerated. Despite sounding interesting, this critique is superficial. Immigrants tend to be educated and highly ambitious and Asian Americans are no exception. As a result, people who migrate from collectivist cultures to America will succeed due to levels of education and work ethic. Mead’s thesis can withstand some criticisms but missing from his argument is a breakdown of individualistic traits.

Middle-class black Americans are still not as individualistic as their white colleagues. Individualistic individuals are more likely to take risks and express less fear of the unknown. So it is unsurprising that research suggests that black Americans are less inclined to invest in risky assets. All investors know that investing is a gamble, so this venture automatically selects those willing to embrace an uncertain future. Thus research suggests that relatively fewer blacks than whites embody this "Promethean spirit" of the West. Even the richest black Americans are relatively hesitant to invest in volatile assets.

Further, we cannot appreciate the intricacies of individualism without acknowledging that it has multiple dimensions. Indeed, scholars have delineated the distinction between horizontal individualism and vertical individualism. Whereas people in the former category strive to be different, vertical individualistic people are interested in being exceptional. Research by Meera Komarraju and Kevin Cockley suggests that African Americans score higher on the former. To truly be an individualist one must not fear breaking traditions in the quest to transform society. Carnegie, Rockefeller, and modern tycoons were unafraid of critics dismissing them as impractical or weird; if they had cared about the rantings of detractors, we would not have innovations.

In retrospect, the challenge to black progress is not only the dysfunctional culture of the inner city but also a limited appetite for radical individualism. Meanwhile, intellectuals encouraging blacks to shun Western culture must be ignored. A greater orientation toward more risk taking and exceptional thinking would likely do much toward helping to close the wealth gap.


Contact Lipton Matthews

Lipton Matthews is a researcher, business analyst, and contributor to Mises.org, The Federalist, and the Jamaica Gleaner. He may be contacted at lo_matthews@yahoo.com or twitter @matthewslipton

Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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