Two Underlying Economic Arguments Regarding the Current Black Lives Matter Protest and Their Implications

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My fellow economists and I have almost instinctively and correctly predicted that the protests against the murder of George Floyd, a unarmed black man killed by police in Minneapolis, would be fueled by rising economic inequalities due to Covid-19 and turn into a global unrest against wider social inequalities. In both the UK and the US, ethnic minorities are suffering from higher losses of income, even when they contribute a higher percentage of the “key worker” population. The pandemic has unleashed perhaps one of the greatest economic crises since the Great Depression, leaving millions of individuals suffering in grim hardships. With almost all economic activities coming to a halt, fear and anger have proved to be as contagious as the virus itself.

From a liberal point of view, economic inequalities are ancient compared to the pandemic. And “systematic racism” has always been the cause of them. The activists on Instagram would blast the “white supremacists” that systematically “oppress” the black communities. Some refer to the gigantic wealth gap between black and white people: a survey by the Federal Reserve Board in 2017 has found that the median net worth of black American was only one-tenth of non-Hispanic whites, at $17,600 compared with $171,000. This, the activists argue, fully exposes the discrimination black citizens endure: they have a higher unemployment rate and fewer of them work in high-skilled jobs. The poverty rate is higher, which explains the lower standard of living and the higher crime rate. Some have gone further to believe that the prejudice from the employers has tremendously disincentived young black Americans from seeking higher education or employment, which could lead to a vicious poverty cycle that would be arduous to break in future generations. Discrimination, they conclude, is the major reason behind the wealth gap, and so is responsible for the social inequalities, such as the brutal killing of George Floyd.

However, these pieces of evidence have not convinced the conservative congregates. For instance, Larry Elder, a black radio host holds a representative view among the conservatives – that the main challenge faced by the minorities in the US is not discrimination, but the staggering number of single parenthood. According to the Economist, there are nearly 20% more black single parents then the white ones. Elaborating on this figure, Elder argues that this is the true main cause for a higher crime rate for youngsters.

Indeed, families of single parents on average have lower household income and are less able to afford, or more often, myopia to the long-term benefits of consuming merit goods such as education. The underconsumption of such merit goods due to information failure can make the younger generation worse skilled, who would, in turn, have fewer opportunities for employment. As they enter this inevitable poverty trap, the youngsters would grow up to have less income and lower consumer welfare. They might be more likely to commit crimes. Elder believes this holds true for all ethnic groups – he is affirmative that single parenthood is a causal factor of crimes.

Conservatives like Elder also emphasise their beliefs with a basic mathematical concept – that correlation does NOT imply causation in any way. He argues that although being black and the likelihood of being shot dead by the police has a positive correlation, one is not the reason for the other. Instead, they suggest that black Americans are arrested at 2.6 times the per-capita rate of all other Americans, and this ratio is even higher for murder (6.3 times) and robbery (8.1 times). Therefore, police officers tend to be more convinced to open fire towards black suspects for their own safety, instead because of racism believes.

By presenting these arguments in an unbiased way, I wish to leave you the readers to judge for yourselves the validity and credibility of the two contrasting prospectives. But I must point out that there might be another force propelling the current unrest from behind the curtains. By closely examining the movement, one would discover that it peculiarly lacks specific demands. While the overarching slogan swiftly shifted from “Justice for George Floyd” to “Black Lives Matter”, the protesters have yet failed to advocate any tangible, organized and detailed solution to the “systematic racism” they are challenging. Deep down, the momentum might come from the long-simmered polarization of American politics, which I hope to discuss in future articles.

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