A tax you say? Maybe that’s why demoncraps love it so much.
Violent crime is a confiscatory wealth tax.
Michael Barone
“What gives urgency to debates about race in America today — and what drives the reparations movement, are two basic facts,” Walter Russell Mead writes in the Wall Street Journal.
The first, he says, is that “the median white household has a net worth of $171,000, roughly ten times the median net worth of black households.” The second is that that gap “is essentially unchanged from the levels of 1962.” Like Mead, I find the case for reparations unpersuasive, and for reasons that go beyond those he mentions.
For one thing, dollar measures of wealth, such as Mead’s and the ones reported annually by the Federal Reserve, can be very misleading. Wealth accumulation is a lifelong process that tends to peak between ages 55 and 64. After 65, people begin to spend it down. So one way to gauge wealth accumulation is to look at the data for people in that older age group. Another way is to compare the progress toward wealth accumulation by those in younger age groups compared to their counterparts in the past.
Consider that blacks are, on average, younger than whites, and you can see how figures that include all age groups indiscriminately are less useful. Likewise, blacks are less likely to live in married households, which tend to accumulate more wealth than households headed by single or divorced parents.
Still, assuming the basic validity of the 10-1 gap that Mead mentions in white versus black wealth, why is that gap as large as it is?
Most wealth is accumulated in one of two forms — residential real estate and financial instruments. In both areas, blacks face significant difficulties in accumulating wealth.
Blacks’ lower average incomes explain their tendency to accumulate less in financial instruments than whites. It takes money, money you don’t need to spend immediately on necessities, to purchase financial instruments.
As for residential real estate, despite open housing laws and the dispersion of many blacks into non-black-majority neighborhoods, most American blacks still live in majority-black neighborhoods with higher rates of violent crime than other neighborhoods. Violent crime depresses housing values.
How much? Not just marginally. The gap that Mead cites, $117,000 median wealth for whites and just $11,700 for blacks, is not dissimilar to the gap in housing values for similar structures between many black neighborhoods in Detroit (to take one example) and one of its modest-income largely white suburbs. Compare Zillow values for Roseville in Macomb County ($119,331) to, just a couple of miles away, Detroit ZIP code 48234 ($27,541).
“Violence and crime are a confiscatory tax on what people would otherwise earn and accumulate over a lifetime,” I wrote in a Washington Examiner column earlier this month. It is a fact, tragic and regrettable, that blacks are much more likely than non-blacks to commit violent crimes, and violent crime rates in heavily black neighborhoods tend to be much higher than average. It’s also a very costly problem because homebuyers are simply not willing to spend as much money (and to invest as much in what may be their greatest opportunity for wealth accumulation) on houses in neighborhoods with violent crime rates 10 times or 15 times higher than the alternatives.
To be sure, the sharp reduction in violent crime rates since 1990 has increased the housing values in heavily black neighborhoods, thus increasing wealth accumulation by black Americans over that period. Further reductions in violent crime rates could go some distance toward enabling black Americans to accumulate wealth and perhaps narrow the wealth gap that Mead describes.
Increasing violent crime rates, one possible result of the Black Lives Matter protests, violent rioting, and consequent police reticence, could have the opposite effect, as it did after the violent rioting of half a century ago.