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- | Professor Paul Samuelson of MIT | 0:02 |
discusses the current economic scene. | 0:04 | |
This program is produced | 0:07 | |
for Instructional Dynamics Incorporated | 0:08 | |
for the week of April 6th, 1970. | 0:10 | |
- | Today, I'd like to depart from a consideration | 0:14 |
of exactly what's happening to the business cycle, | 0:17 | |
to the gross national product and discuss a problem | 0:21 | |
of very great economic interest | 0:25 | |
and also of a great deal of human interest. | 0:28 | |
I'm referring to the problem of race and economics | 0:32 | |
and in particular to the economics of the black population. | 0:37 | |
This is, of course, a very popular topic. | 0:43 | |
As I speak, I have before me the latest | 0:47 | |
issue of Time Magazine, that's the April 6th. | 0:51 | |
This is a special issue devoted almost exclusively | 0:58 | |
in every one of the departments to the | 1:02 | |
black America, 1970. | 1:07 | |
Earlier, Newsweek had an issue devoted very largely | 1:11 | |
to the problem of black America. | 1:17 | |
This problem has its economic side, | 1:22 | |
and I'd like to speak about that | 1:25 | |
side of the problem. | 1:30 | |
First question is this. | 1:32 | |
Has the | 1:35 | |
American | 1:37 | |
Negro, American non-whites in general, this includes | 1:39 | |
Puerto Ricans, includes Mexicans, | 1:44 | |
first do they have a special problem? | 1:47 | |
Hasn't it always been true that the | 1:50 | |
second people to arrive | 1:55 | |
were at a disadvantage relative to the first people. | 1:57 | |
After the Pilgrims and Puritans, | 2:00 | |
the people of Anglo-Saxon stock, | 2:03 | |
had arrived on these shores, | 2:06 | |
you had a considerable immigration of Germans. | 2:09 | |
You can see this in towns like Cincinnati, | 2:14 | |
you can see it in St. Louis, you can see it in Milwaukee. | 2:17 | |
And, of course, the Germans were the | 2:22 | |
hewers of wood and the drawers of water, | 2:25 | |
and there was a certain amount | 2:28 | |
of discrimination against them. | 2:29 | |
You used to see signs in, | 2:30 | |
let's say, Philadelphia a century ago. | 2:33 | |
Dogs and Germans keep out. | 2:38 | |
Then you had a another wave of migration. | 2:41 | |
The potato famine in Ireland around 1845 | 2:44 | |
brought 100,000s and millions | 2:49 | |
of Irish rural countrymen to this country. | 2:52 | |
The Kennedy's, of course, and many others | 2:57 | |
date back to that migration. | 3:00 | |
Talking to you from Boston, I can, of course, | 3:04 | |
recount the history of the Irish as a | 3:08 | |
ethnic group who were discriminated against by the Yankees. | 3:13 | |
Even a few decades ago, | 3:17 | |
it was something out of order | 3:21 | |
for a, | 3:24 | |
an intelligent, young | 3:25 | |
Irishman from the Greater Boston community | 3:29 | |
to go to Harvard University. | 3:31 | |
He was in a sense being a traitor to his group, | 3:32 | |
and the last cardinal but one, | 3:38 | |
in fact, discouraged that sort of a venture. | 3:41 | |
Then came in the end of the 19th century | 3:48 | |
the Scandinavian migration. | 3:52 | |
If you read the novels of Sinclair Lewis, | 3:55 | |
Main Street for example, you see that a Norski | 3:58 | |
is an object of derision and of contempt. | 4:02 | |
And the Anglo-Saxon folk | 4:06 | |
of the small villages of the Minnesota and the Dakotas | 4:10 | |
look down upon the Swedes and the Norwegians and the Danes | 4:15 | |
in much the same way that the French Canadians | 4:21 | |
are looked down upon, actually, often in Canada. | 4:24 | |
I'm struck if I go to Ottawa, I won't speak of Montreal | 4:30 | |
because that is almost completely French, | 4:33 | |
the Province of Quebec, but if I go to Ottawa, | 4:37 | |
which is on the borderline | 4:40 | |
and I go in the high civil service | 4:43 | |
and I meet the Head of the Central Bank | 4:44 | |
and I meet the Head of the Treasury | 4:46 | |
and I'm at a cocktail party that there are almost no | 4:48 | |
French Canadians there. | 4:52 | |
There are a few tokens of French Canadians. | 4:54 | |
But if I stop at a restaurant, | 4:57 | |
and I peek into the the kitchen to look | 5:00 | |
to see who's doing the dishes there, that person | 5:02 | |
if I hear him speak is almost certain to be speaking French. | 5:05 | |
Then at the very turn of the century came the | 5:11 | |
migration from Southern Europe and from Eastern Europe. | 5:16 | |
The Ellis Island | 5:20 | |
story of the melting pot | 5:23 | |
of the immigrants who arrive and live | 5:26 | |
under very poverty-stricken conditions, work in sweatshops, | 5:29 | |
live in ghettos. | 5:36 | |
But now, I'm telling the story as it used to be told, | 5:39 | |
each of these ethnic groups, although discriminated against | 5:43 | |
in the beginning, if you would only wait has turned out | 5:46 | |
to be absorbed by American society. | 5:50 | |
If I turn to the society pages of the Milwaukee Journal, | 5:53 | |
all of the names of junior-league people, | 5:58 | |
I shouldn't say all | 6:00 | |
but a very great number of them are German. | 6:01 | |
The Germans are not second-class citizens. | 6:04 | |
If I look at the North End | 6:08 | |
of Boston where there's a very large Italian population, | 6:11 | |
somebody told me that in 1910 | 6:14 | |
it was the most densely populated area in the world. | 6:16 | |
That's very hard for me to believe, | 6:19 | |
but at least the story is well-told. | 6:21 | |
According to this story, the grandparents lived there, | 6:25 | |
but the children moved to Somerville and the grandchildren | 6:29 | |
have moved to Lexington and to Concord. | 6:32 | |
If we take the Jewish population, | 6:35 | |
it has always been something of a myth | 6:38 | |
that the Jew is extremely successful in business. | 6:41 | |
If you look at the occupational statistics of | 6:46 | |
1905, | 6:51 | |
1915, you would find that a great number | 6:53 | |
of the Jewish immigrants were working people, | 6:57 | |
often unorganized but increasingly in unions. | 7:00 | |
Well, time has gone by, and a lot of people who used to live | 7:04 | |
on the Lower East Side of New York now live in Long Island, | 7:09 | |
live in New Jersey, live in Westchester County. | 7:13 | |
And, actually, I don't know how authoritative | 7:16 | |
and complete the statistics are, but there is a suggestion | 7:20 | |
that if you go by religious group | 7:24 | |
the Jewish population may now | 7:28 | |
have the highest median income, | 7:30 | |
perhaps even more than the Episcopalians who have perhaps | 7:33 | |
slightly higher incomes than the Presbyterians. | 7:36 | |
And we work our way down through the Protestant Reformation | 7:40 | |
until we get, no longer at the bottom | 7:45 | |
but short of the bottom, the Catholic population. | 7:48 | |
At the very bottom, you have the | 7:53 | |
fundamentalist Protestant rural population, | 7:58 | |
primarily from the South. | 8:02 | |
Of course, at the bottom of that bottom | 8:03 | |
is the Negro population. | 8:06 | |
But why should Puerto Ricans and Negroes worry? | 8:10 | |
There time is coming. | 8:13 | |
They're going through the same transitional period | 8:15 | |
that the Italians, the Jews, the Scandinavians, | 8:17 | |
the Irish, and the Germans went through, | 8:21 | |
and in a little time, they will be living in the suburbs | 8:25 | |
and will have become integrated in the population. | 8:28 | |
I think the story does not have a convincing ring about it | 8:35 | |
because after all the black migration into this country | 8:38 | |
is not of recent origin, and as a matter of fact | 8:44 | |
and this is typical | 8:47 | |
I forgot to mention I believe the American Indian. | 8:49 | |
The American Indian can hardly be regarded | 8:52 | |
as a recent Irishman who in a little time | 8:54 | |
is going to turn into genuine Rotarian American. | 8:56 | |
The American Indian has been here the longest | 9:01 | |
and has certainly not | 9:03 | |
become part of the mainstream of American economic life. | 9:06 | |
So it would appear that the problem of the Puerto Rican, | 9:10 | |
of the American black, of the American Indian, | 9:16 | |
and in the south west and in the far west | 9:21 | |
of the Spanish-speaking Mexican American, | 9:25 | |
it is really something a little bit different. | 9:30 | |
The time period has been too long for us to believe | 9:34 | |
that the process is taking place automatically. | 9:38 | |
So we have belatedly become very conscious of the problem. | 9:42 | |
It started in politics in the Civil Rights Movement, | 9:47 | |
but it has spread into the realm of economics. | 9:52 | |
The question I'd like to discuss today is how important | 9:56 | |
is this from the standpoint of the total economy? | 10:01 | |
That's not the only way of looking at the problem, | 10:06 | |
but it's an important way of looking at the problem. | 10:07 | |
Will our racial | 10:09 | |
disturbances in ferment have macroeconomic implications? | 10:13 | |
I don't know the answer, but I suspect | 10:20 | |
that the answer is in the negative. | 10:22 | |
I know for the last half-dozen years or more, | 10:26 | |
I have been looking at various bits of data | 10:29 | |
to see what the Civil Right Movement | 10:33 | |
will have done to the American economy. | 10:37 | |
I used to do things like the following: | 10:39 | |
I would watch, very carefully, | 10:41 | |
the 12 Federal Reserve Districts in retail sales, | 10:43 | |
and I suspected that when you were having sit-ins | 10:47 | |
in department stores in the South | 10:50 | |
that this would begin to show up in a retardation | 10:52 | |
of the rate of growth of the Southern retail sales | 10:56 | |
in the Atlanta District of the Federal Reserve System | 10:59 | |
in comparison with say the Chicago or Minneapolis District. | 11:01 | |
I have to report to you | 11:07 | |
that I never could find such evidence. | 11:07 | |
Even when the sit-ins were at their peak | 11:10 | |
the Atlanta District, | 11:15 | |
perhaps for quite other reasons, was showing | 11:17 | |
about the most rapid rate of growth of retail sales. | 11:21 | |
So I thought I just have to wait a little while longer, | 11:25 | |
and it will begin to show up in the statistics. | 11:28 | |
But don't hold your breath because I cannot yet report | 11:32 | |
that the troubles in the street, | 11:37 | |
the summer riots, | 11:41 | |
unpleasantnesses | 11:46 | |
have any great macroeconomic significance. | 11:49 | |
One Teamster strike, one postal strike, | 11:53 | |
one sustained railroad strike has a much more obvious effect | 11:57 | |
upon the Federal Reserve Board Index of Production, | 12:03 | |
upon the unemployment rate than any of these things, | 12:06 | |
but that doesn't mean that the only way of looking | 12:09 | |
at a thing to see whether it's important | 12:11 | |
is what it's obvious effects are on upon the GNP. | 12:13 | |
There are many other economic aspects | 12:19 | |
of the problem that are of great interest. | 12:22 | |
Now, the question I would like to ask is | 12:25 | |
has the American Negro, American black | 12:31 | |
been making great progress so that the time has come | 12:36 | |
for, how did the man put it, the "benign neglect" | 12:40 | |
of the problem knowing that the market system | 12:45 | |
is spontaneously working wonders to solve the problem? | 12:50 | |
The evidence on this is a little bit mixed. | 13:00 | |
Of course, to be fair, the "benign neglect" | 13:03 | |
may have had something to do only | 13:09 | |
with the public relations, low-profile aspect | 13:11 | |
that President Nixon was being advised to follow. | 13:16 | |
I'm not interested | 13:21 | |
primarily in politics. | 13:24 | |
It is the case for reasons which needn't concern us today | 13:29 | |
that | 13:34 | |
the black community has been the community | 13:36 | |
most faithful to the Democratic Party, | 13:40 | |
when various ethnic groups from | 13:43 | |
Middle and Eastern Europe | 13:49 | |
have left the ranks of the Democratic Party as solid voters. | 13:50 | |
The blacks have not moved over to the Republican Party. | 13:57 | |
Indeed, a most recent poll showed | 14:02 | |
that only 3% of the black community | 14:06 | |
approves of President Nixon. | 14:10 | |
9% voted for President Nixon more than a year ago, | 14:15 | |
so 2/3 of the voters who voted for Nixon | 14:19 | |
have become somewhat disillusioned with him. | 14:26 | |
That tells us something about national sentiment, | 14:31 | |
tells us something about the competition | 14:34 | |
between the two parties, but it tells us very little | 14:35 | |
about the economic condition of the black community, | 14:39 | |
in terms of the white community. | 14:43 | |
What is the usual mythology? | 14:47 | |
I think the usual mythology is that the black community | 14:50 | |
has been making great progress in recent years. | 14:54 | |
We're 100 years from slavery, a little bit more, | 14:58 | |
and Jim Crow intervened in a big way | 15:02 | |
after the turn of the century, | 15:05 | |
but gradually the American Negro has been gaining | 15:07 | |
on the white population. | 15:12 | |
That notion, I'm afraid, is a myth. | 15:15 | |
What has always been known is that the black community | 15:20 | |
suffered especially in recessions and depressions, | 15:24 | |
and that the black community benefited especially | 15:29 | |
in expansions and in prosperity periods. | 15:33 | |
Indeed, and it makes one cynical, | 15:37 | |
it has been great war periods which have been most important | 15:40 | |
for recorded progress of the black income structure | 15:46 | |
and employment and occupational structure, | 15:51 | |
relative to the white. | 15:54 | |
So that a few years after World War II, | 15:56 | |
it was the case that | 15:59 | |
unemployment among black youth, percentage wise, was lower, | 16:02 | |
I repeat, was lower, percentage wise, | 16:08 | |
than employment among white youths. | 16:11 | |
You know now that that situation has changed. | 16:15 | |
For many years now, | 16:19 | |
really since 1953, the tide began to turn very rapidly | 16:22 | |
against black youth relative to the population at large, | 16:27 | |
and also relative to white youth | 16:34 | |
as far as unemployment is concerned. | 16:36 | |
It has been many times of that of the population at large, | 16:39 | |
so there's no picture for me to report | 16:45 | |
to you of steady, one-way progress. | 16:46 | |
What there has been | 16:50 | |
is the cyclical movement of the business cycle. | 16:54 | |
From this viewpoint, the 1960s | 16:58 | |
must be understood as part of the cyclical picture. | 17:02 | |
Let me, however, summarize what the picture | 17:08 | |
in the 1960s has been, and I think I can't do better | 17:10 | |
than quoting directly to you | 17:15 | |
from the remarks of Governor Andrew F. Brimmer, | 17:19 | |
who was a member of the Board of Governors | 17:23 | |
of the Federal Reserve System. | 17:25 | |
This is from a speech which he made at Tuskegee Institute | 17:28 | |
on Founders Day Convocation, | 17:33 | |
that's in honor of Booker T. Washington. | 17:35 | |
He made this speech on March 22nd, 1970. | 17:38 | |
I should tell you that Andrew Brimmer | 17:42 | |
is an excellent economist. | 17:46 | |
He has a Harvard PhD degree. | 17:49 | |
He has been a professor at some | 17:55 | |
of our large and good universities. | 17:58 | |
I should also add just because it carries some significance | 18:03 | |
for him as a reporter | 18:08 | |
that Doctor Brimmer happens to be black. | 18:10 | |
I'm now quoting from an eminent black scholar | 18:14 | |
in the field of economics, | 18:20 | |
he says the same conclusion concerning the position | 18:23 | |
of the non-white community in the 1960s | 18:29 | |
can be summarized briefly, "One during the 1960s, | 18:32 | |
"Negroes as a group did make significant economic progress. | 18:37 | |
"This can be seen in terms of higher employment | 18:42 | |
"and occupational upgrading as well as | 18:44 | |
"in lower unemployment and a narrowing | 18:47 | |
"of the income gap between Negroes and whites. | 18:49 | |
"Two, however, beneath these overall improvements | 18:53 | |
"another and disturbing trend is also evident. | 18:57 | |
"Within the Negro community itself, | 19:01 | |
"there appears to be a deepening schism | 19:04 | |
"between the able and the less able, | 19:07 | |
"between the well-prepared and those with few skills, | 19:11 | |
"and some blacks might add, | 19:15 | |
"and between the lucky and the unlucky. | 19:19 | |
"Three, this deepening schism can be traced | 19:24 | |
"in a number of ways, including the substantial rise | 19:27 | |
"in the proportion of Negroes employed | 19:30 | |
"in professional and technical jobs, | 19:33 | |
"while the proportion in low-skilled occupations | 19:37 | |
"also edges upward. | 19:39 | |
"It can be traced in the sizeable decline in unemployment, | 19:43 | |
"while the share of Negroes | 19:47 | |
"among the long-term unemployed rises. | 19:48 | |
"It can be traced in the persistence of inequality | 19:54 | |
"and income distribution within the black community, | 19:57 | |
"while a trend toward greater equality is evident | 20:00 | |
"among white families. | 20:03 | |
"This same trend towards greater equality is not evident | 20:07 | |
among black families," according to Doctor Brimmer. | 20:10 | |
"And above all," says Doctor Brimmer, | 20:14 | |
"there's been a dramatic deterioration | 20:17 | |
"in the position of Negro families headed by females." | 20:19 | |
And so he concludes, "In my judgment, this deepening schism | 20:24 | |
"within the black community should interest us | 20:28 | |
"as much as the real progress | 20:31 | |
"that has been made by Negroes as a group." | 20:33 | |
Before going beyond this summary, I'd like to comment on it. | 20:37 | |
It is not clear that this improvement that | 20:43 | |
has been noted here is a longterm improvement. | 20:48 | |
It may simply reflect the fact | 20:52 | |
that during the the 1960s we have had the longest | 20:54 | |
peacetime or wartime | 20:59 | |
business cycle expansion without interruption by recession. | 21:02 | |
We have had the most determined and militant activist, | 21:09 | |
perhaps some of you may say fine-tuning effort | 21:14 | |
by the Federal Reserve, excuse me, by the Federal Government | 21:17 | |
to | 21:21 | |
lead to high employment | 21:24 | |
and as some would say to overfull employment. | 21:27 | |
Much of this behavior in the 1960s may not be | 21:30 | |
maintainable in the steady state. | 21:36 | |
It certainly cannot easily be improved upon | 21:39 | |
because part of the picture that I've been discussing | 21:44 | |
of course we know has been at the expense of inflation. | 21:48 | |
So, it may well be that we are now moving into a period | 21:53 | |
in which we shall pay a number lean years | 21:59 | |
to pay for the fat years, and in which it will be part | 22:03 | |
of public policy to run a more austere economy | 22:08 | |
with a slacker labor market. | 22:13 | |
And precisely the advances of expansion | 22:16 | |
to the black community | 22:21 | |
may go in reverse, | 22:24 | |
and we may be back to the previous situation. | 22:27 | |
"I can summarize the situation pretty well," | 22:30 | |
I'm quoting or paraphrasing my colleague, | 22:35 | |
Professor Lester Thurow of MIT who is an expert | 22:39 | |
in these matters, and he puts it something like this, | 22:43 | |
"Roughly speaking, the black community has 50% the income | 22:46 | |
"of the white community in normal times, | 22:51 | |
"and in very good times this 50% moves up towards 60%, | 22:54 | |
"and very bad times it moves back to 50% again." | 22:59 | |
So, we may have been in only part of this cycle. | 23:02 | |
We've climbed up the hill, | 23:07 | |
but it may not be to a new plateau. | 23:08 | |
It may be a movement downward. | 23:10 | |
Actually, | 23:14 | |
Professor Thurow has to be qualified | 23:16 | |
in one important respect. | 23:18 | |
Doctor Grimmer points out that black families, | 23:21 | |
particularly impoverished ones, have more children | 23:24 | |
per family than do white ones. | 23:28 | |
So, it's an overstatement to say | 23:31 | |
that median per capita black income | 23:33 | |
is between 50 and 60% of that of white. | 23:36 | |
It is a good deal less than that. | 23:39 | |
If we turn to female-headed families, | 23:42 | |
it's more like 36% to 44%. | 23:45 | |
Let me conclude by looking ahead to the future. | 23:51 | |
I suspect that slow progress will be made, | 23:56 | |
and I want to tell you one of the most | 24:00 | |
optimistic aspects of the problem. | 24:03 | |
When an economist analyzes, at whose expense the gains | 24:05 | |
of the black population will come? | 24:10 | |
He does not arrive at the conclusion | 24:13 | |
that poor whites in the South and ethnic white groups | 24:15 | |
in Gary, Indiana and in Cleveland have a lot to lose | 24:19 | |
every time a black person improves his status. | 24:23 | |
There isn't a thick | 24:27 |
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