President Joe Biden was inaugurated yesterday as the 46th president of the United States of America. As The Economist reports, his administration looks set to be the most diverse ever, for more than 60% of his first hundred White House employees are women, while 54% are ‘non-white’. His cabinet is also more mixed in terms of race and gender than any in the past.

In addition, the incoming economic policy team has already signalled its intention to structure US economic policy around issues such as ‘race, gender, and climate change’, rather than ‘traditional indicators’ like GDP and deficit ratios. 

The Biden-Harris administration seems likely, thus, to give increasing emphasis to critical race theory (CRT). This is an anti-capitalist ideology that mobilises around racial identity to polarise and divide, exaggerates the importance of racism, and blames ‘white supremacy’ for all black-white disparities.

According to CRT, racism is the ‘normal’ and everyday experience of all black people in America. It is so woven into the warp and woof of US society, so CRT claims, that most individuals are unable to recognise its pernicious effects. Those effects are nevertheless all pervasive, for racism permeates every interaction, poisons every relationship, and constantly oppresses black people in its determination to preserve ‘white privilege’ and prop up ‘white systemic power’.

According to one of CRT’s main apostles, Ibram X. Kendi, professor at Boston University and author of a best-selling book on How to be an Antiracist, the only antidote to racism is to insist on policies that create ‘equity’ in every sphere. 

On this view, neither equality before the law nor equality of opportunity can suffice. Instead the goal must be demographic representivity. This requires proportionately equal outcomes for whites and blacks not only in employment, state contracts, and university admissions but also on such markers as income, wealth, school expulsions, stop-and-frisk policies, and various other policing and criminal justice interventions.  

There may be many in the new administration who agree with the CRT demand for equity in every sphere. And who think that the Democratic Party’s new-found control of Congress and the presidency provides a vital opportunity to shift from already wide-ranging affirmative action policies towards yet more intrusive CRT programmes. 

Significant consequences

Any such shift in the US could have significant consequences for South Africa. Here, the ruling African National Congress (ANC) has long demanded demographic representivity in many fields, with black economic empowerment (BEE) its flagship policy towards this goal. A strong CRT focus from the Biden administration could encourage the ANC to intensify its BEE interventions.

The ANC depicts BEE as a vital instrument of redress and an effective antidote to black poverty and inter-racial inequality. In practice, however, BEE benefits only the relative elite, while harming the great majority. BEE is thus the main reason for widening inequality within the black population – and also for the country’s worsening score on the Gini coefficient.

Official figures on South Africa’s income distribution illustrate the point. In 2015 the bottom 40% among black South Africans obtained a mere 3.7% of national income, which was very much the same as the 3.4% this group had gained in 2006. By contrast, the top 10% among blacks gained 26% of national income (up from 19% in 2006), while the remaining 50% of blacks obtained 22% of the total (up from 16% in 2006). 

If so-called ‘coloureds’ and ‘Indians’ are taken into account as well, the top 10% among black South Africans (as broadly defined) obtained 32% of national income in 2015. By contrast, the top 10% among whites gained 11% (down from 18% in 2006) – or three times less.

This decline among the white top 10% is ignored by the ANC, as it contradicts its narrative of unbroken white privilege and economic power since 1994. More serious still is the ANC’s refusal to acknowledge that BEE does not work for the bottom 40% of black South Africans – whose share of national income has stagnated even as BEE policies have been ever more stringently applied.

The picture is similar in the US, despite more than 50 years of affirmative action in employment and elsewhere. According to Bertrand Cooper of the People’s Policy Project, a left-leaning think tank founded in 2017, ‘the Black poor are not only on an unequal footing with wealthy Whites but with wealthy Blacks as well… The Black upper-class possesses a median wealth 19 times greater than the race-wide median. If we compare the top and bottom, we find that the Black upper-class has 1 382 times as much wealth as the Black poor.’ 

Cruel bait-and-switch game

As economist Thomas Sowell of Stanford University’s Hoover Institution has long pointed out: ‘Race-based set asides have amounted to no more than a cruel bait-and-switch game in which the conditions of poor blacks are used to garner preferences that ultimately benefit upper-income blacks’. 

In the US, the CRT’s rigid pursuit of ‘equity’ in every field ignores not only this reality but also the substantial practical barriers impeding black upward mobility. Among these, reports The Economist, is ‘the racial achievement gap on test scores between black and white students’. This gap has declined over time, but still amounts to ‘roughly two to four years of learning’. 

Other barriers to black advancement include the collapse of family life, which now afflicts some 70% of African-American children; a heavy reliance on welfare; high rates of crime; and a street culture that discounts education, challenges authority, and celebrates violence.

CRT also ignores the rapid reduction in black poverty that took place in the US well before the adoption of the Civil Rights Act of 1964. As Sowell writes, the black poverty rate per household halved between 1940 and 1960, dropping from 87 percent to 47 percent. In the same period, black-white disparities narrowed sharply on income, educational attainment, home-ownership, and many other factors.

Notes Manhattan Institute senior fellow Jason L Riley in his 2017 book False Black Power?, ‘the gaps were shrinking at unprecedented rates that have never been repeated, even during the era of affirmative action’. This is ‘a history that seriously undermines the notion that racism is an all-purpose explanation for social inequality, or that blacks can’t progress without special treatment’. It is not surprising, thus, that CRT prefers to drop this history down the equivalent of George Orwell’s ‘memory hole’.  

‘Silent revolution’

The picture is similar in South Africa. The biggest factor in ending apartheid was not the ruthless people’s war waged by the ANC from 1984 to 1994 to secure its hegemony, but rather what IRR policy fellow John Kane-Berman has described as South Africa’s ‘silent revolution’. 

As Kane-Berman records, a shortage of white skills in the 1970s and 1980s – coupled with the rapid expansion of black labour and consumer power – in time secured equal trade union and home ownership rights for blacks. These changes increased black earnings and assets and helped put paid to job reservation, influx control, and residential segregation. Economic interdependence and pragmatic policy shifts also undermined the apartheid edifice, making the continued political exclusion of the black majority ever more untenable.

This silent revolution has likewise been dropped down the memory hole. The ANC prefers to ignore the signal achievements of millions of ordinary black people in climbing up the economic ladder while rendering apartheid increasingly unworkable. It also persists in its pretence that BEE provides redress and ‘equity’ for the black majority. 

Most black South Africans are not fooled, however. According to the latest IRR opinion poll, carried out in late 2020, only 4% of black respondents see ‘more BEE and affirmative action in employment’ as the best ways to get ahead. By contrast, some 72% regard ‘more jobs and better education’ as the keys to upward mobility.

The Covid-19 pandemic and prolonged lockdown restrictions have further crippled the country’s economy, pushing it closer to collapse. Reform has never been more urgent. But real change cannot come – whether to Eskom, Transnet, the public service, or the broader business environment – without unshackling the country from the leg-iron of BEE.

False premises and empty promises

For decades, many in the media, universities, civil society, and the corporate sector have endorsed the false premises and empty promises of BEE. But Sowell is correct in diagnosing racial set-asides as a ‘cruel bait-and-switch game’ that helps the rich and harms the poor. 

It is time to call a halt. Once BEE has been jettisoned, effective mechanisms to empower the disadvantaged can readily be found. This can be done on a race-neutral basis that unites rather than divides. This would provide a far better model for the Biden administration – and also for many other countries with a genuine desire for the advancement of the poor.

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