Jason Riley’s Black Boom is a concise, refreshing take on the pre-pandemic Black economy during the Trump presidency. Riley shows that unprecedented job growth between 2017 and 2019 raised Black employment rates and income rates. One might think such a turn of events predictable enough after a huge corporate tax cut, and a spate of regulatory reduction. In Riley’s view, far too many media pundits and economics commentators were caught off-guard by these positive outcomes, because they were paying too much attention to Donald Trump’s bombast, and not enough to plain old policy.
Riley has a regular column in the Wall Street Journal and is most often described as a Black conservative, though he holds several more libertarian positions, as evidenced by his first heavily pro-immigration book, Let Them In. He’s well-known for books like Please Stop Helping Us: How Liberals Make it Harder for Blacks to Succeed, and his recent biography of Thomas Sowell, Maverick. After arguing that Black Americans did far better in the 2017-2019 economy than the typical media account would have led us to believe, he challenges the claim (popular with Trump’s populist base) that Black gains arose from Trump’s tough stance on immigration. At the same time, he denies that gains were due to various states raising the minimum wage. That would help explain away Black flourishing under Trump by giving the credit to left-leaning activists instead.
In the book’s much shorter Part II, Riley offers space to Juan Williams and Wilfred Reilly to offer rebuttals, and he responds to theirs as well.
Williams, a Black journalist and well-known pundit representing the center-left, attempts to make the case that the Black Boom can be entirely understood as a result of the momentum of the economic recovery under Obama, ceding credit neither to Trump nor to Riley’s love of deregulation and tax cuts.
From the center-right comes Wilfred Reilly, a Black political scientist at the University of Kentucky, who rose to prominence with his work on hate-crime hoaxes. I think we can now call him (and his provocative Twitter feed) a fixture among the heterodox Black intellectuals Glenn Loury humorously named the “Black Intellectual Dark Web.”
(Wilfred) Reilly argues that (Jason) Riley has a soft spot for immigration, and doesn’t take seriously enough the concerns of the working class that immigrants lower their wages, take their jobs, and tax our social safety net. This entire conversation takes place within the space of 120 pages, a brisk gloss of the various mainstream takes on the pre-pandemic economy and its effects on Black Americans.
Riley gets the better of his two interlocutors, but, as I will explain in a moment, he may be too dismissive of claims about the far-reaching causal effects of historical racist policies.
First, Riley argues that Black Americans saw lower unemployment rates and higher wages than they did under Obama.
Perhaps more to the point, he draws on economic growth data to show that this can’t be understood as a mere matter of momentum from the economic recovery of the Obama years.
Rather, the performance of the Black economy under Trump defied economists’ expectations by creating hundreds of thousands of new jobs even when we seemed to be at full employment.
Riley doesn’t think these outcomes owe much to Trump as a person, though. Instead, he points to the typical Republican playbook of lower regulations and lower taxes as the cause of the boom, meaning that any Republican who’d been elected would probably have given us similar gains.
The Tax Cuts and Jobs Act of 2017 brought the average corporate tax rate of 35% down to a flat 21%. For context, our pre-2017 rate surpassed any European country’s rate by about ten percentage points. With that kind of punishing tax environment, the U.S. was encouraging corporations to take their investments and their jobs elsewhere.
Lowering the tax rate to something competitive with European countries had the effect of increasing corporate investment and creating (and keeping) jobs. In contrast to the view that Republicans just want to line the pockets of their rich friends, Riley points out that the costs of a high corporate tax rate are mostly borne by employees and customers.
Capital is highly mobile; it’s not difficult to move a corporate headquarters to a new country. But labor is not very mobile.
Most individuals can’t just pick up and leave their homes for a better tax environment, for instance. So, when corporations move to Singapore or Ireland, they just create jobs for those workers instead of American workers.
Juan Williams’ insistence that Trump’s accomplishments can be attributed to Obama doesn’t stand up well against Riley’s arguments. Riley points out that the Obama recovery was extremely slow when compared to other recessions, and those at the lower end of the income spectrum suffered the most, especially those with lower levels of education. Black joblessness got worse under Obama, not better, and Black incomes rose more slowly than white.
Furthermore, Obama broke the record for new, major regulation, at about the rate of one-per-day for eight straight years.
These regulatory burdens can be hard to wrap our heads around because each regulation taken individually can sound reasonable enough, and because we often think only of owners and the effect of extra costs on them.
But stack these regulations up and you can generate costs debilitating enough to stop new small businesses from ever starting in the first place, shut down whole businesses, or at least reduce the ability to hire more people and pay them more.
Trump, by contrast, drew corporate investment back by pulling the trigger on a reform of the tax rate. He also reduced regulatory growth by a third. Many have commented that Trump’s best work was done, not so much by Trump, but by perfectly competent bureaucrats in his administration who had a small government ethos. Not only did incomes start climbing faster for everyone, but Black American income rose at a pace 26% faster than whites. At the same time, top earners were not seeing major gains, which meant that income inequality was going down between 2017 and 2019. While “corporate tax cut” makes it sound like fat-cat CEOs now have a few more gold coins to swim in, Riley points out that most of the excess went straight to benefits for employees and lower prices for consumers, meaning that it too had anti-inequality effects.
In his section on immigration, Riley points to an argument from economist David Henderson: if immigration is so bad for jobs and wages, why don’t we hear those same complaints when women enter the workforce? He believes that immigrants will not hurt those in the workforce, because they contribute economically and often take the very jobs Americans don’t (or won’t) do.
He admits that there will be a small, 3% reduction in wages for those without a high school diploma, since they actually compete with immigrant labor. However, that group is quite small these days; since the 1990s we have significantly reduced the high-school drop-out rate, which now hovers right around 5% regardless of race.
Wilfred Reilly’s objection basically amounts to the claim that the effect of immigration on poorly educated men is still quite bad, and that immigrants use social services at twice the rate of native-born citizens.
But Reilly and Riley don’t, in the end, seem all that far apart on immigration. One is just slightly more upset about it than the other. Riley also makes the helpful point that a majority of Americans of both parties favor legal immigration, and mostly just seem to resent law-breaking.
In the segment on minimum wage, Riley draws on the overwhelming body of data demonstrating that minimum wages have dis-employment effects, a point that progressive eugenicists appealed to in its favor when they invented and lobbied for the idea a hundred years ago.
On the whole, (and speaking as a non-economist), I found Riley’s account quite compelling. It makes sense that he points back to the period between 1940 and 1970 as yet another time in which Black growth outpaced white.
Black Americans have had stretches in which they were genuinely catching up in terms of income, and, counterintuitively, it wasn’t always in periods corresponding to civil rights legislation.
Economic historian Robert Higgs makes the same point in his underappreciated Competition and Coercion:
Blacks in the American Economy 1865-1914. While those emerging from enslavement were starting from a very low point, the Black economy grew at two and a half times the rate of the white economy in the post-Reconstruction period, meaning that many Black Americans were making enough to have expendable income by the turn of the century.
These advances continued despite serious obstacles to Black flourishing set up by genuinely white supremacist municipal and state governments, not to mention their own neighbors.
Similarly, Black Americans saw the greatest gains before the major legal accomplishments of the Civil Rights Movement, largely because they took advantage of the ability to urbanize and made a huge push for education, all while maintaining stable family lives and sharing in the post-war boom. During this period, Black poverty was cut in half, while improvements stalled in the 1970s.
A waning economy and crumbling family structure are certainly part of this story, and one doesn’t have to play blame-the-victim to tell it this way. As my co-author and I argue in Black Liberation Through the Marketplace:
Hope, Heartbreak, and the Promise of America, the prevalence of out-of-wedlock birth hit the Black community first and hardest because they were most vulnerable to the triple whammy of unemployment in manufacturing, the perverse incentives of the welfare state, and the contraception shock.
However, while there’s absolutely no doubt that shifts in family structure make a huge difference, we have to acknowledge that racist policy harmed Black communities, even well into the 1970s.
That’s because two of the most damaging social engineering projects of the last century were taking effect at just this time: urban renewal and the building of the Federal Highway System.
We now know that both of these programs funded municipal governments to purposefully bust up poor but upwardly mobile Black and Latino communities, segregate them from the rest of their local economy with walls of concrete, and mow through their economic centers with claims of eminent domain.
This point need not arise from a leftist political perspective, either. After all, these projects were undertaken in the progressive spirit of central planning, and accounted for the greatest non-war spending that the federal government had ever undertaken. Furthermore, it should surprise no reflective conservative that communities that have been destroyed brick by brick and flung to the four winds, will have some difficulty reconstituting themselves elsewhere. In the time since the huge uptick in Black out-of-wedlock births (reaching 70% today), we’ve found out that Latinos and whites (at 50% and 30%) are not far behind.
The social disruption caused by the sexual revolution and the crowd-out effect of government intervention has come for us all, and the correlation between poverty and broken family structure is so strong only an ideologue could ignore it. So, while I agree with Riley’s derision of over-simplified narratives about racism at the root of everything, we only lose our credibility if we don’t include it as an important contribution to cultural rot, even if at some remove.
Ultimately, this brief primer does an excellent job of reminding us that economic freedom benefits the poor and marginalized the most, and that minorities can be progressing economically in spite of the tasteless rhetoric of our political class.
The takeaway? Focus on principles, not personalities, and don’t believe the hype about a thousand new targeted programs to address inequality.
Good old tax cuts and simplified regulation may sound boring, but sometimes the exciting part isn’t the process, but the outcome.