by John Hawkins | October 20, 2015 12:59 am
20I was pleased to talk with Thomas Sowell about his new book, Wealth, Poverty and Politics: An International Perspective. Here’s a slightly edited transcript of our conversation.
There’s a Henry Hazlitt quote in the book that I hadn’t seen before that I thought was absolutely brilliant. “The poor are not poor because something is withheld from them, but because for whatever reason they are not producing enough.” That’s an extremely important quote, but it might go over a few people’s heads. Could you elaborate on that a bit?
Well, there’s a whole literature out there acting as if when some people don’t make as much money as other people, there’s really some intervention that has prevented it. There was a whole section of the Wall Street Journal a week or so ago with a title of “What’s Holding Women Back in the Workplace.” And so if women are not making as much as men, then clearly there must be some intervention that prevents that — on the implicit assumption that everybody would be making at least approximately equal income with no interventions.
And, of course, it’s not true at all. It’s not even close to being true. There are so many factors that go into production of wealth that this – it’s almost impossible to – that there would be equal production around the world or even in all parts of the given society.
At one point you talk about how the receptivity of cultures can impact wealth and you use the Arab world as an example and how it used to be sort of ahead of the curve and dropped back. Can you discuss that a bit for the audience? I thought that was pretty interesting.
Well, over the centuries different civilizations raise ahead and then fall behind and then roles get reversed. So this was one of the examples of that. The Arab world was not only more advanced in various parts of science, math, and militarily for that matter but as time went on, the West caught up. The difference is that when the Arabs were ahead, the West was willing to learn from the Middle East. But when the West got pulled ahead, the Arabs were no longer willing to learn from the West. It’s tragic.
One example was a study done a few years ago showing that the number of translations into Arabic is just a minute fraction of the number of translations of books into European languages. In other words, they really are not interested in learning that much from the other parts of the world.
It was fascinating to read about Dunbar and the challenging culture in black America. Can you tell people about that?
Yes, one of the painful ironies is that when Chief Justice Earl Warren said that separate educational facilities are inherently unequal — that within walking distance of the Supreme Court where he said that — was an all-black school which had for generations had outstanding academic performances and which at the very moment that he said this, had a higher percentage of its students going off to college than any white public school in the District of Columbia. It shows that the break between reality and what people say. He has been praised to the sky for having said what he said, even though it’s demonstrably false.
Dunbar, for example, gives an idea as far back as 1899 when there were tests given to all the academic high schools – four of them in Washington at the time. Dunbar, the black high school – academic high school, outscored two out of the three white academic high schools. Over the years the first black woman to get a PhD came from Dunbar. The first black man to graduate from Annapolis came from Dunbar. The first black general came from Dunbar. The first black Cabinet member came from Dunbar. And you can run through the list. Charles Drew, who was one of the pioneers in the use of blood plasma, came from Dunbar.
At one time the graduates of Dunbar High School could get into Harvard or Dartmouth without having to take an entrance exam. It was that good and yet within the black community itself, there was hostility to Dunbar. You can imagine, now this is at a time when it’s very hard for blacks to get a decent education of any sort. And here was this school with an outstanding reputation and there was hostility to it. This is really part of a worldwide pattern of resentment of success, even in a situation like this.
That is so interesting. You talk about how things both in America and England started changing in the 60’s. I don’t think most people realize how much – or at least a lot of people don’t realize how much of a difference there was in, say, the out of wedlock birth rates, crime rates, and projects even before and after the 60’s. Could you talk a little bit about that and how, you know, how much of a change there was?
There’s a personal example. I know one of our relatives was able to get into a housing project in the 1940s. We were so proud of him because in those days you had standards for who would and would not be allowed to live in projects. So the fact that he passed all of the requirements was a source of pride to us.
You know, he had a job, he had a good record, he had no police or records of any sort and so forth. Somewhere in the 60’s people began getting non-judgmental about who should be admitted into the housing projects. People who lived in those projects report how, you know, you didn’t see graffiti. On nights when no one could afford air conditioning in those days, people would sleep out on the balconies, out in the yards or anywhere. You know, just to get away from the heat. Old men would be seen in the nearby black community late at night out on the street playing checkers or cards and so on. No one was worried about bullets flying hither and yon.
All of that turned around with dramatic suddenness after the 1960’s. One statistic, during the 1950’s, the homicide rate among non-white males declined by 22%. Immediately in the 19 – that’s the 1950’s. Immediately in the 1960’s that reversed and the homicide rate among non-white males rose by 75%. Venereal diseases like syphilis and gonorrhea were going down through the 1950’s. In the 1960’s that reversed and they shot up. Teenage pregnancy had been going down in the 1950’s. That, too, shot up again.
Labor force participation rates for blacks had been slightly higher than that for whites in every census from 1890 when these data began to 1960, but by 1972 black labor force participation rates were lower than those of whites and the gap kept widening thereafter. I mean the number of things that turned around in the 1960’s and positive trends turned into negative trends is just astonishing.
I tell you what – what’s your theory on why that happened — because I’m sure there are a lot of people who could give a lot of theories. What do you think? Why do – what do you think changed in the 60’s that started taking us in the wrong direction in so many things, you know, economically especially?
Oh, I think it was a difference of the policies based as it must be in a Democratic country and a change of views which then acquires – begins to prevail in public opinion. So people bought the ideas promoted by the intelligentsia and by the Left politicians that poverty is the fault of someone other than the person who’s poor, that we should be non-judgmental and lenient towards criminals and so forth. These are the consequences that followed. In other words people in the 1960’s who were the leaders in thought were promising us progress towards social justice, but what they delivered was, in fact, retrogression toward barbarism.
You talk about tax returns in the book and how it’s not really true that the rich are getting richer and the poor are getting poorer. Can you elaborate a bit on that?
Well, the data that are used are usually data not based upon following particular people over time. It’s data based on following income brackets over time. Of course, the people who are in those brackets are turning – there’s a big turnover. If you look at the quintiles, in every quintile more people leave that quintile in the course of one decade than remain. So the people in there at any given time are all at different stages of their respective careers — some just beginning, others having moved up and others at the peak earning years. So those numbers really don’t tell you anything about people. The kind of data that will tell you are data based on following a given set of human beings over a fixed span of time.
Those two sets of data tell you diametrically opposite things. The first set tells you that the top 20%, 10%, 1%, whatever the number is, their share has gone up over time. But if you look instead at people and you say what happened to the people who were in the bottom 20% as of 1975 and on into 1991, you find that 95% of the people who were in that bottom quintile in 1975 are no longer there.
Is that literally 95%?
Yes, literally. That is only 5% remaining – by 1991 only 5% of the people in that bottom quintile were still there. Twenty nine percent were now in the top quintile. If you break it down to the top 1% and I don’t have the thing in front of my mind, but the actual income of people who were initially in the top 1% at the beginning of a decade – their income went down by something like 25% over a decade whereas the abstract categories income went up. So it’s not that the numbers are inaccurate. The problem is that the words are inaccurate that describe the numbers. They talk as if there is some sort of people whom you can call the rich or who have actually gotten better off some other set of people who are called the poor. But this is totally misleading when people change their positions within one decade much, less over a lifetime. In American society just over half of all American households are in the top 10% at some point or other in their lives usually in their older years. So if you want to resent the top 10%, most Americans would be resenting themselves.
I also note that in your book I think you said at one point or another in their lives 12% of Americans make it into the top 1% for a year.
Yes, yes. It reminds me of a statement I read years ago when someone said, “There are at least 50 colleges who claim to be in the top 25.” You can see that and if you go to the top 400 highest incomes in the country in the course of a decade, I think there are 2,000 people in the top 400. Most of the people who are in that top 400 are in there for only one year out of nine. There’s a whole set of confusion between wealth and income. Wealth is an accumulation and the very highest incomes typically are not annual incomes. They are capital gains realized in a particular year.
So the numbers are totally misleading. I use this as hypothetical example. I know a writer who takes 10 years to write a book and for nine of those years he receives nothing. The tenth year, if he’s successful, which is the exception rather than the rule, then the publisher pays him $100,000. The question is did he really make $100,000 a year or did he make $10,000 a year for each of ten years?
Now if you count that as his annual income, then it’s totally misleading because the next year unless he has another book that he’s spent another ten years on, he’s not going to repeat that.
One thing you said in the book was and I’m quoting, “Poverty, genuine poverty has been the lot of most of the human race for most of the existence of the species.” Do you think Americans have lost sight of that and if so, do you think it’s dangerous for us to just sort of expect that wealth and prosperity are sort of our birthright?
Yes, it is dangerous. People seem to act as if wealth just exists somehow. The only interesting question is how we distribute it. I think that misconception helps the Left tremendously because they can focus all of their attention on the distribution of existing wealth and not ask the question, “How did that wealth come to be produced in the first place?” You can’t just set out policies that would make you feel good as to how income ought to be distributed and impose that by law because that will then have repercussions on how much wealth is going to be produced subsequently. Any number of people have discovered this the hard way.
Maryland, a few years ago, imposed a very high tax on millionaires in order to get more revenue. Well, they got less revenue because millionaires started leaving Maryland. The French have discovered that as well, that when Hollande became the Premier and proposed a 75% tax on wealth above some income level, he suddenly discovered that a lot of Frenchmen were now living across the channel in England or next door in Belgium and so on. In fact, so much of what is talked about in terms of taxing the rich is so unrealistic. It assumes the rich are just going to sit there like sheep waiting to be sheared. Obviously they move their wealth elsewhere. In fact there’s a whole book out now protesting about the fact that so many rich people have so much wealth overseas. Yes, there’s a reason for that. When you raise the tax rates above a certain level, people simply put their money somewhere where it won’t be taxed or won’t be taxed at a higher level.
Yeah, I could tell you it works for everybody. If I could move all of my money overseas and keep from being taxed, I’d do that in a heartbeat. So I don’t blame them. Last question for you, I’m sure everyone will know this. Who’s your pick for President?
Oh Heavens …
You can just give me some people you like if you haven’t settled on a candidate.
Okay, I would think – if I had to make up my list, I think Trey Gowdy would be on it. Governor …
We probably should go with the people that are running because Trey, I don’t think, is going to get in this late date.
No, I would say Bobby Jindal, boy, and then after a certain Governor Kasich, in desperation Governor Bush. I wouldn’t want anybody who has never held public office becoming President of the United States as his first office. We have seen how badly that can turn out over the past six years. The people who are leading in the polls, some of them are fine people. At least one of them is a spoiled brat, but they haven’t been tested in the kind of setting that they’d be facing as the President of the United States. No matter how great people are at rhetoric – rhetoric is not a substitute for experience.
Mr. Sowell, you were outstanding as per usual. Thank you again for doing the interview.
Thank you. Bye-bye.
All right, take care. Goodbye.
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