In 1964, the editors of the Saturday Review asked twenty seven esteemed men and women of letters this question, “what books published during the past four decades most significantly altered the direction of [the American] society?” Gunnar Myrdal’s An American Dilemma received more votes than any other books except John Maynard Keynes’ The General Theory of Employment, Interest and Money. Today, Keynes and his general theory still enjoy a reputation at the household level. On the contrary, few people in the young generation are aware of Myrdal’s book. Many Ph.D. students of economics have never heard of Myrdal or his book, although this great Swedish scholar shared the Nobel Prize in economics with Hayek in 1974. The fading fame of Myrdal’s work in the United States is due to the fact that the problem of racial relations has disappeared from the center of public debate since the 1970s. However, this by no means implies that the racial problem in America has been solved.
Myrdal and the Dilemma: An Anecdote
In late 1935, in the middle of the Great Depression, the Carnegie Corporation decided to conduct an in-depth study of Afro-Americans. The next year, the Corporation started an intensive search for a social scientist of unquestioned talent and stature to direct this study. American scholars, both black and white, were excluded from the list of candidates, because they were thought to have too much prejudice to write an objective and fresh study. The list of potential directors became even shorter when the Carnegie Corporation narrowed it down to European scholars from countries with scientific traditions but without imperialistic interests. The search then focused on Scandinavia and Switzerland. Eventually, the Swedish economist Gunnar Myrdal was selected as the director of this project. Starting from 1938, Myrdal and his associates worked comprehensively on the “Negro problem,” which culminated in the publication of the one-and-half-thousand-page classic An American Dilemma in 1944.
According to Myrdal, the American dilemma of his time referred to the co-existence of the American liberal ideals and the miserable situation of blacks. On the one hand, enshrined in the American creed is the belief that people are created equal and have human rights; on the other hand, blacks, as one tenth of the population, were treated as an inferior race and were denied numerous civil and political rights. Myrdal’s encyclopedic study covers every aspect of black-white relations in the Unites States up to his time. He frankly concluded that the “Negro problem” is a “white man’s problem.” That is, whites as a collective were responsible for the disadvantageous situation in which blacks were trapped. Myrdal’s work had a great influence on the American civil rights movement. Today, after more than fifty years since the publication of Myrdal’s book, it is hard for us to appreciate fully the extent of his boldness. Mrydal’s work, and especially the history he documented, should not be forgotten.
Black-White Relations: from the Civil War to the Civil Rights Movement
In the one hundred years from the Civil War to the civil rights movement, black-white relations in the United States were characterized by legalized racial discrimination.
In the nineteenth century, most blacks lived in the rural south. After the Civil War, the Thirteenth Amendment of the United States constitution outlawed the slavery system. During the Reconstruction period (1865-1877), some attempts were made to extend various civil rights fully to African Americans, which led to the Civil Rights Acts of 1866, 1870, 1871 and 1875. These acts granted African Americans such freedoms as the right to sue and be sued, to testify in the court, and to hold personal property and real estate. The 1875 Civil Rights Act attempted to guarantee to the African Americans those social rights that were still withheld. It penalized innkeepers, proprietors of public establishments and owners of public conveyances for discriminating against blacks in public accommodations, but the Act was invalidated by the United States Supreme Court in 1883 on the ground that not being discriminated against in public accommodations was not properly a civil right and hence it was not a field for federal legislation.
After the Reconstruction, whites soon regained their dominance in the south. The southern states and municipalities started to pass a series of statutes that would wipe out many rights newly acquired by blacks. Those statutes were the so-called Jim Crow Laws, named after a black character in minstrel shows. Blacks were forced to attend separate schools and colleges, to occupy special sections in railway cars and buses, and to use separate public facilities; they were forbidden to sit with whites in most places of public amusement. In 1896, the Supreme Court decided in Plessy v. Ferguson that “separate but equal” public facilities were legal, putting a federal stamp of approval on the Jim Crow system. This decision caused a boom of Jim Crow Laws in the south. In 1908 (Berea College v. Kentucky) the Supreme Court held that a state could legally forbid a college, even a private institution, to teach whites and blacks at the same time and place. The period of 1900 to 1920 extended racial segregation to all public transportation and education facilities, even to hospitals, churches and jails. By the end of World War I, blacks and whites in the south were rigidly separated by law. The Jim Crow system would govern the southern states until after the World War II.
At the turn of the twentieth century, blacks started a massive migration from the rural south to the northern industrial bases, such as Chicago, Cleveland and Detroit. This migration was on the one hand due to the harsh living conditions in the rural south after several years of unfavorable climate; on the other hand, the number of immigrants arriving in America from Europe declined because of the two World Wars, which created a demand for blacks as unskilled labors.
Separation between blacks and whites in the north was characterized by residential segregation. When blacks moved into northern cities, they first settled down in some neighborhoods with low socio-economic conditions. As the fraction of blacks became higher in a neighborhood, whites began to move out at an accelerating rate so as to avoid contacts with blacks. Some neighborhoods soon became predominantly black. As the black population grew, they need to move to nearby white neighborhoods. However, whites tried many things to resist the “invasion” by blacks. They threatened their potential black invaders; they bombed their first black neighbors (Drake and Cayton, 1945). In many white neighborhoods, landlords signed agreements that prohibited the sale of properties to blacks. These were the so-called “restrictive covenants,” which were enforceable by law. The use of restrictive covenants was extensive. For example, in Chicago, it was estimated that eighty per cent of the city was covered by such agreements (Myrdal, 1944). As a result, blacks lived in overcrowded ghettos, where housing cost was artificially high due to limited supply (Hirsch, 1983).
Some government policies in the 1930s were believed to strengthen and widen, rather than to mitigate, residential segregation. The Federal Housing Administration, in effect, extended credits to blacks only if they built or bought in black neighborhoods and to whites only if they built in white areas that were under covenant not to rent or sell to blacks. The United States Housing Authority and its local affiliates, under the public (whites’) pressure, were forced to build separate housing projects for blacks and whites (Myrdal, 1944). America’s entry into the Second World War brought full mobilization and a shortage of factory workers in the north. In response to the new demand for labor, black migration from south to the north soared during the 1940s. The new migrants arrived in cities plagued by intense housing shortages and vacancy rates below one per cent. Population density within black ghettos increased to incredible heights, where people were described as “piling up” (Duncan and Duncan, 1957). This stage in the process of ghetto formation increased black isolation to an extreme, and from this time forward African Americans in large northern cities were effectively removed — socially and spatially — from the rest of American society. In northern cities, residential segregation reached such a high level in the 1940s that an integrated neighborhood was extremely rare to find. Although without extensive Jim Crow Laws, blacks and whites attended different schools, went to different hospitals, and frequented different parks. These were natural results of residential segregation. Throughout the United States — in both southern and northern cities — the ghetto had become an enduring, permanent feature of the residential structure of black community by 1940, and the spatial isolation of blacks still had another thirty years to increase (Cutler et al 1999). In 1970, an average black person in Chicago lived in a neighborhood where 89.2% of the residents were blacks. This fraction was 85.1% in St. Louis, 88.0% in Atlanta, and 84.8% in Baltimore. Over all northern cities in 1970, an average black person lived in a neighborhood that was 73.5% black; this number was 76.4% in southern cities (Massey and Denton, 1993). Although we often see neighborhoods like Chinatown, “small Italy” and Jewish ghettos, the level of concentration and isolation of any other ethnic group is far from being comparable to the situation of blacks.
Decades of segregation resulted in economic deprivation, social isolation and psychological alienation of blacks. A bitter fruit of this was a series of urban riots in the 1960s. The violence began in Birmingham, Alabama in the summer of 1963. The Los Angles riot of August 1965 caused $35 million worth of damage and left 4,000 injured and 34 dead. After sporadic violence in Chicago and Cleveland in the summer of 1966, a convulsive wave of mob violence erupted during July and August of 1967, when black ghettos in sixty American cities exploded in a cataclysm of frustration and rage. The violence was particularly destructive in Detroit, Newark and Milwaukee. Martin Luther King’s assassination in April of 1968 ignited riots in more than one hundred and twenty cities all over the United States (U.S. National Advisory Commission on Civil Disorders, 1988).
Starting from the 1930s, blacks enjoyed a somewhat improved economic status and became more assertive of their rights. Also, influenced by Myrdal’s work and the like, the general public became more concerned with the welfare of blacks. In 1948, President Truman issued a directive calling for an end to segregation in the armed force. In the same year, the U.S. Supreme Court struck down state enforcement of restrictive covenants in Shelley v. Kraemer. In 1954, the Supreme Court took a momentous step in Brown v. Board of Education by ruling that all segregation in public schools is “inherently unequal” and that all laws barring blacks from attending public schools with white pupils are unconstitutional. In this landmark case, Chief Justice Warren cited Myrdal for evidence. From 1955 to 1956, Martin Luther King, Jr. led blacks in Montgomery, Alabama in a boycott against the municipal bus system, which ended after the Supreme Court nullified the laws of Alabama requiring segregation on buses. The Jim Crow system was breaking down. However, the process of change was never smooth and peaceful. Southern whites often responded to desegregation with violence and federal troops were sometimes needed to preserve order and protect blacks, notably at Little Rock, Arkansas (1957), Oxford, Mississippi (1962), and Selma, Alabama (1965). In the late 1950s and 1960s, the civil rights movement led by Martin Luther King, Jr. and the executive leadership of President Johnson encouraged the passage of the most comprehensive civil rights legislation to date, the Civil Rights Act of 1964. It prohibited discrimination in voting, education, and access to public facilities. Title VI of the act barred the use of federal funds for segregated programs and schools, which alone enabled more than twenty per cent of black students in the south to study in integrated schools. In early 1965, the Voting Rights Act was passed, through which the federal government became more actively involved in enforcing the political enfranchisement of blacks. The issue of housing segregation was dealt with in the Civil Rights Act of 1968 (Fair Housing Act), which contained a clause barring discrimination against blacks in the sale or rental of most housing.
Persistence of Segregation: from 1970 to Present
Civil rights laws put an end to many forms of legalized segregation and paved the way for some improvement in blacks’ position. The evidence for this improvement includes a substantial increase in the number of blacks in professional, technical, managerial and administrative positions since the early 1960s; a near doubling of blacks in colleges and universities between 1970 and 1980; and a large increase in home ownership among blacks. Twice as many black families were earning a middle-class income in 1982 as in 1960. Furthermore, the number of blacks elected to public offices more than tripled during the 1970s (Oliver and Shapiro, 1995). However, residential segregation between blacks and whites remains at an extremely high levels in the thirty years after the passage of the Fair Housing Act.
Due to the Fair Housing Act, explicit discrimination against blacks became rare in housing market. In the early 1970s, many black families left the urban ghettos and moved into predominantly white suburban areas. People saw this as a sign of the reversal of residential segregation. However, the reversal never happened.
It is true that more and more whites tend to believe that they don’t have the right to keep blacks out of their neighborhoods. But this does not mean more and more whites like to live with black neighbors. Racial prejudice may still be in many whites’ mind. Since the 1960s, the force sustaining residential segregation has changed (Cutler et al, 1999). In the 1940s, whites could simply shut blacks out of their neighborhoods through restrictive covenants or other discriminatory barriers. As a consequence, blacks were packed into overcrowded residential areas, and they had to pay higher price or rent for equivalent housing (Weaver, 1948). After the removal of the discriminatory barriers, blacks could move to anywhere within their price range. What many whites did then was to run away whenever blacks came. Today, many whites are willing, and are able, to pay a premium to live in a predominantly white neighborhood. Equivalent housing in white areas commands a higher rent (Kiel and Zabel, 1996). More vacancies are found in black neighborhoods, contrary to the situation found four decades ago. By bidding up the price of housing, many white neighborhoods again effectively shut out blacks, because blacks are unwilling, or unable, to pay the premium to buy entry into white neighborhoods. The suburbanization of blacks in the 1970s only resulted in the shift of the color line and the expansion of ghettos. In the 1990s, residential segregation remains at its extreme, which is described by sociologists as “hypersegregation” and “American Apartheid” (Massey and Denton, 1993).
According to a number of researchers, the economic status of blacks compared to that of whites has, on average, deteriorated since the early 1970s (Oliver and Sharpiro, 1995). Black unemployment rates are more than twice those of whites. Black youths also have more than twice the jobless rate as white youths. Nearly one out of three blacks lives in poverty, compared with fewer than one in ten whites. Nearly one in four blacks remains outside private health insurance or Medicaid coverage. Infant mortality rates have been dropping steadily since 1940 for all Americans, but the odds of dying shortly after birth are consistently twice as high for blacks as for whites. Close to half of all black children officially live in poor households. More than sixty per cent of black babies were born with a single mother. A majority of black children live in families that include their mother but not their father (Oliver and Shapiro, 1995). Generations of spatial isolation and psychological alienation generate a culture in black ghettos, which is defined in opposition to the basic ideals and values of American society. For example, some smart black students have to intentionally flunk some exams so as to be accepted by other black students as friends (Fordham and Ogbu, 1986).
The current generation of black children are luckier than their grandparents, because they face much less explicit discrimination based on their skin color. However, there is one disadvantageous position that most of them still cannot avoid: they will grow up in a predominantly black neighborhood, where the typical socio-economic characteristics are high poverty, welfare dependence, single parenthood, high mortality rate, school dropouts, drug abuse, high crime rate, lack of job opportunities, high unemployment rate, and an alienated culture (Wilson 1987, Massey and Denton 1993). Today, in black ghettos is a concentration of almost all social and economic problems that the United States has. What is worse is that the mainstream society becomes more and more indifferent to this reality. Since blacks have acquired their civil and political rights, many whites tend to think blacks’ problems are now their own problems. Many whites pretend not to see the problems by intentionally staying away from black communities. The American dilemma is not solved. It only takes a different form now. Fifty-six years ago, Myrdal regarded the “Negro problem” as America’s greatest failure. This remains true today. At the end of his 1944 book, Myrdal challenged the United States: “America is free to choose whether the Negro shall remain her liability or become her opportunity.” This choice is still there.
Histories Make Men Wise: A Remark
Many people around the world admire the liberal ideals in the American creed. At the same time, we see in America the most mature democratic system and market economy. It is tempting to think that a democratic system and a market economy guarantee the realization of liberal ideals. What we see in the history of black-white relations in the United States is a caveat. The one-hundred-year history from the Civil War to the civil rights movement is an example of the “tyranny of majority” by which whites as a group discriminated against blacks through legal means. After the civil rights movement, blacks were thrown into free markets. However, it is well-known that market cannot solve the problem of economic inequality that blacks inherited from a long history. The housing market has replaced institutionalized discrimination as a driving force behind residential segregation. When black ghettos magnify the social and economic problems through reciprocal spillovers of negative externalities, the market economy can do nothing but see the poverty culture perpetuating. The experience of blacks in the United States over the one hundred years before the civil rights movement is a failure of modern democracy. (Indeed, the subtitle of Myrdal’s book is “The Negro Problem and Modern Democracy.”) Their experience over the past thirty years is an inherent failure of market economy. Surely we do not judge a country by looking into its dirtiest corner, and we should not judge democracy and market economy by highlighting their failures. However, I think the bitter history of black-white relations in the United States deserves some deep thoughts of the learned.
(The author is a Ph.D. candidate in economics at Johns Hopkins University. This article is written based on the background knowledge of a research project conducted at the Brookings Institution in the summer of 1999.)
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