The Economist recently published an article discussing how African immigrants (and their children) have been closing the stubbornly persistent racial income gap in America, with African men earning more than their African-American counterparts, and African women earning higher wages than both their African-American and white counterparts.
What it does show is that appeals to “systemic racism”, which is one of the often-used justifications for race or identity-based policy (positive discrimination), rings hollow, especially with the overwhelming success of some Asian groups who have higher average wages than white Americans.
It seems that America’s inequality, and by extension the racial wealth gap, are products of other factors relating to resources (class), marriage rates and what kind of career paths are chosen. Harvard economist Raj Chetty’s Opportunity Atlas does a great job of using granular data related to census tracts to map this.
This is another piece of evidence that race or identity-based policy has at best a minimal effect in closing racial income and wealth gaps, aside from enriching a small and politically connected elite. In fact, race-based policy in South Africa has coincided with the highest rates of unemployment for black South Africans.
This is not surprising, as we have a very similar situation in Malaysia where their majority known as the Bumiputera (Malay and other indigenous groups) are still behind Indian and Chinese people in Malaysia on income and wealth measures, despite the enactment of the New Economic Policy (NEP) over half a century ago.
The NEP was designed with the same aims and justifications as race-based policy in South Africa. The Bumiputera, on account of the British policy of divide-and-rule, found themselves at the bottom of the economic ladder at the advent of Malaysian freedom from British rule.
The NEP had explicit aims to racially equalize Malaysian society, but like race-based policy in South Africa, it only ended up being a tool for Malaysian elites to enrich themselves, while the majority remained largely in the same position as before.
Downside of quotas
The other downside of quotas in society is that they can and often do have the effect of corroding social trust. They incentivise the best and the brightest amongst those who do not benefit from race-based policy to leave and seek greener pastures elsewhere. This has happened over the years in both Malaysia and South Africa.
As I have noted in other articles, this insistence on trying to fine-tune outcomes in society inevitably leads to a mindset that is antithetical to broad prosperity. Instead of creating an economy that prizes higher job-intensive growth and mobility for everyone (and by extension government meritocracy and technocracy because those two things feed off each other, as Malaysia’s neighbour Singapore has shown in contrast), it creates an economy that redistributes and largely consumes value-creation rather than investing in and multiplying it. It is, as some have noted, a race to the bottom, and one which exacerbates racial resentments.
I think this is why it is instructive to note John Endres’s recent thoughts on the IRR website about Economic Empowerment for the Disadvantaged(EED); a policy alternative to BEE, based on the work of Anthea Jeffery. As the name suggests, the policy points rather to a society which seeks to unveil or include its entire human capital within the matrix of growth, rather than simply engineering outcomes.
Providing opportunities
One is about providing opportunities for individuals to thrive, to contribute to society and to reach their potential. The other focuses on immutable characteristics, and either denies or promotes someone based on them.
Principle aside, judging by a comparison of Malaysia and Singapore, it seems pretty clear to me which way of running a multi-racial and multi-ethnic society works; focusing on what produces wealth, higher incomes and higher standards of living for everyone.
[Image: Bhuwan Bansal on Unsplash]
The views of the writer are not necessarily the views of the Daily Friend or the IRR.
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