Black Journal; 38; Blackonomics

The following program is from NET. The recent wage and price freeze imposed by President Nixon has had national and international repercussions and has directly touched every man and woman in

this country. Economics is an extremely complicated subject. The effects of the freeze on poor people and blacks, a large percentage of whom are poor, will be the topic of our discussion with three leading black economists. With me in the studio, Robert Brown, director of the New York-based Black Economic Research Center and founder and publisher of the Review of Black Political Economy. Dr. Dunbar McLaren, a former economist for the Federal Office of Price Administration, an economic consultant, and a founder of Freedom National Bank. He has recently secured a charter for a second black bank in New York. Dr. Carl Gregory is a professor of economics and management at Oakland University in Detroit. He is a consultant to the Center for Afro-American and African Studies at the University of Michigan and an organizer of the first black bank in Detroit. Brother Brown? Tony, you mentioned the wage and price freeze that President Nixon imposed last August. I would like to put it in a

broader context. But President Nixon gave us last August what is called the New Economic Policy that had three aspects to it, only one of which was the wage and price freeze. There were also an international thrust to it and a fiscal thrust. And I'd like to just summarize what those are for our listeners. The wage price freeze, of course, is a thing that is most well-known by the average public because, of course, it affects them so directly. The international aspects of it, however, I think in a much longer range perspective may prove to be even more important. The wage price freeze, there were two elements to the international aspect of the President's New Economic Policy. One was the freeing of the dollar from gold. And the second was the imposition of a 10% surcharge on imports coming into the United States. And I think as we talk today, we will want to discuss some of the implications of both of those. Then of equal or perhaps even more important, important than the international aspects

were the fiscal aspects of the President's New Economic Policy. And there were several facets to that. There was the tax facet in which the President removed the excise tax on automobiles. He imposed a, or let me say he removed, or made possibly a reduction in the exemptions and the personal income tax. He didn't exactly remove it. The legislation had already been written to remove or to lower this personal income tax exemption, but he asked the Congress to advance it by one year. And thirdly, he gave businesses a 10% investment tax credit, a 10% for the next year to be reduced 5% in subsequent year. And then there was still another major aspect to the fiscal portion of the New Economic Policy. And that was an effort to cut federal spending. And this took the form of four different types of programs, or perhaps I should say request, because it requires a congressional approval to implement these proposals. One was a 25% overall cut in federal payrolls, a cut in the foreign aid program, and a

postponement of action on his revenue sharing plan, and also postponement of action on his welfare reform bill, more properly called the Family Assistance Plan. So I think in talking about the President's policy, we have to look at all of these rather than just at the wage price freeze, which, while perhaps the most dramatic is not necessarily the most important aspect of the program. Dr. McLaren? Economics is simply a statement of how we live. I recall a definition which was given by one of my economics professors when I was in school. I'll never forget. It's simply the way a man earns his living and spends what he earns. So if we approach it from the point of view that everything that we do, everything that we buy, everything that every wage that we make, is influenced by the laws of economics, we will find it not so awesome. It has to do with why, for instance, a court of milk sells for 59 cents one day, and then a

week from then it sells for 63 cents. These follow certain patterns and certain rules and regulations, and the most general of which is known as the law of supply and demand. Dr. Gregory? Tony, Mr. Nixon's new economic policy as originally proposed in August was designed, I think, primarily to reduce the pressure on the dollar abroad and the less than inflationary pressures. Although he said the job development was an important objective, it's clear I think that Mr. Nixon gave priority to deflation and a more stable dollar. The major needs of the black community are the need for power, wealth, and income. Nothing in Mr. Nixon's new economic proposals as originally presented in August will reduce significantly the grossly unequal

distribution of power and wealth. Indeed, the distribution could well worsen for among other things, creditors rather than debtors gain from abated inflation. Persons without taxable incomes gain nothing directly from tax reductions, although their secondary effects. Tax credits for investments, goods, purchases will benefit few blacks directly, but will increase the profits of many whites. There will no doubt be an increase in the number of man hours of labor employed as a result of the increased exports and import substitutes and added spending from the proceeds of tax cuts. Much of this impact and new jobs however will be offset by the cut and spending as proposed in August that Professor Brown referred to. It will also be offset by the existing employed being hired for longer hours rather than resorting to new employment and

things as moonlight lighting and also this will be offset by increased productivity. It seems to me that any policies which are to improve substantially the lot of blacks and the poor must include large-scale urban and rural community development programs, education, training and human resource and development and other public service programs, wealth transfers, meaningful minority business development and capital accumulation programs, as well as other techniques for attacking structural unemployment, massive job creation at a living wage and the elimination of barriers to equal opportunity. Mr. Nixon's new economic policy as proposed in August does none of these things nor indeed was it intended to do so. His policy will however increase the level of employment somewhat and although blacks will share in the added jobs

their unemployment rate will still be twice that of for whites. For the hundreds of thousands of blacks will not be counted as unemployed since they have already given up hope of finding jobs and still hundreds of thousands of others will have jobs but they'll be under employed and not making a living wage. Thus the Nixon proposals will probably leave largely unchanged the relative status of blacks although improving the absolute status. What is inflation? Inflation is a situation where you have constantly rising prices. Now prices is simply the value of a commodity expressed in terms of a monetary unit in our case as dollars. So if you have high prices you have cheap dollars which means the dollar has lost a lot of its value but by as brother Brown has said by being tied to the gold standard where we had to

maintain a certain official rate of the dollar where in the marketplace it was really had a lower value. This made the economy our economy lag and non-competitive with other economies abroad and even at home we couldn't compete. So inflation I think maybe you have a better definition and a more succinct one but I think it's just one in which you have a high prices in proportion to the wages and the labor that you have the payment and this makes it very difficult for a person to keep up with it particularly when you have what we call an inflationary spiral where in the prices rise higher and then you try to get a higher wage and you try for your segment of the economy labor tries to increase its and segment our its portion and one portion labor tries to do it and you just find out that you're earning $200 a week and you're not living as well as your parents did on $25 a week. Now

what this means though is that for those who have the dollars you know those dollars will buy fewer goods but for those who are unemployed and who don't have the incomes and so on although the power of what little income they have is reduced the greater need is for more income as far as the bi-communist concern the the more he and us problem is that of unemployment rather than inflation. If the major problem of the American economy is inflation what is there in the mixture of things that makes unemployment a major economic problem to blacks. Now it depends upon how you who defines the problem the major problem to Mr. Nixon is that inflation I think the major problem from the point of view of the of the socio-economic welfare the entire population is

a combination of the problems that come about as a result of unemployment very unequal distribution of income as well as inflation all three are major problems. You see the price stability is very important to the poor man particularly the stability of prices from day to day if the housewife has to go to the supermarket and each week she finds a two-cent increase in the price of the goods that she buys there the oatmeal the bread and this that another it's going to affect her very greatly much more greatly than such a creeping price spiral for the rich man the reason basically is because poor people have to spend a larger proportion of that income for purchases a man

who is making a a hundred and fifty dollars a week perhaps spend spends our ninety percent of that just on living whereas a man who earns fifteen hundred dollars a week can live on maybe fifteen percent or ten percent of his income and therefore these price increases are particularly nefarious to the little man combined with that is a hammer effect that the poor man the poor person and the black has the greatest leg in getting wage increases to compensate for these price increases because we constitute the smallest number of persons in the unions who have the power we are disorganized we are unable to force these increases therefore we have the double hammer hit in the black man of the

fact that the prices on the things that he spends are rising constantly and he can't increase his wages but that's really not just a product of the Nixon administration's policy it has always been true it's just the fact that power tends to protect itself and I think that that was one of the major failings of the Nixon program in its early days particularly was to include consultation with persons who represent these groups he announced that he was going to talk with speak with industry labor agriculture and all of those proponents but not never at the date of this taping at least has he spoken about speaking with our consumer representatives for instance consumer advocates

like Natalie as it were with this unorganized labor as it were with the poverty persons and we built up minority groups with minority groups and even if we might be a modest with black economists you do not have I think that political freedom and economic freedom are sort of like the upper and the lower levers of a pair of shares that go together I don't think you can have a free economy in Russia for instance are that you could you could have a regulated economy here because political freedom means a freedom to you know freedom of choice of where you want to live where you want to work how you want to vote and so on economic freedom comparable it means the freedom of choice of job

whether or not you want to go in a particular type of business and so on now if you have regimentation of one you must almost necessarily have regimentation of other in the context of your theory as to this economic order and freedom of politics and as it relates to economy we're a black people statistically if you want to approach that way or any other way where are they yeah where are we you mean in terms of which system we prefer are we having economic and political freedom do we have economic or political freedom it's a very interesting question I rather feel that our political freedom is has outpaced our economic freedom would you not particularly agree particular about employment I think it's a great deal of freedom in either of those two capacities economic or political we have the myth of one man one vote in the political system however everybody knows that that to the extent that you're

able to to command the mass media to the extent that you're able to raise large numbers of funds you can increase your exposure you have a much better chance of getting into office so in that sense it may better be characterized as one dollar one vote rather than one man one vote so that instead of having political system we have an economic system both in the political sphere I'm slaying and in the economics we're in addition to that in the economics fair when when a people such as black people find that that their their average family income is is 60% of the average income of the majority group that they're twice the frequently found among the unemployed that take almost any social statistic that has a negative impact on social welfare you'll find that almost invariably blacks are rep rep represented disproportionately in a

case like that I can't agree that that there is free freedom what could I find out something that too because I too would not like the audience to think that I subscribe to Dunbar's views on this particular point I feel for example that the freedoms which Dunbar talks about are very elusive are very questionable for people in American society and I'm referring not only to black people I think in general for instance when he says that you have the freedom to live where you want to and to have the job or profession you want this is good theory but for instance our center is doing a lot of work in the south and we know what's happened in the south in recent years the for a variety of reasons the mechanization of agriculture which is a preceded very rapidly in recent years combined perhaps with the getting of the vote by blacks which has meant some political pressures too but just the sheer economic pressures have forced blacks to leave the south by the millions and most of these people did not want to leave the south they did not want to

move into Harlem and into New York and into bed styluson and that sort of thing push out they had the freedom of course as your system theorizes to stay there and starve or to come here this is a system you are subscribing to and saying that you support I have great doubts about it now I would not be prepared to say it's my system I you know I'm sort of an economist but I'm a great critic of the capitalistic system let me ask you this as a black economist now you the one who raised the point that Nixon should have had the consultation of a black economist you're black economists no black economist obviously was considered or selected well that's how you squared that with your lesson that's an example of the lack of our freedom of our lack of political freedom here and the fact that we have not been recognized and he made a very valid point Greg made a very valid point point in this system money is power and I think one has to recognize that if you had enough money would it change substantial I think so I think if you'd contributed

$250,000 to Nixon campaign I think that you feel that if you had enough money you could live anywhere you want it oh no but I could certainly come closer to it than in my present circumstance in other words races rather rather irrelevant in terms let me say this to you do you think that they want for instance to have all of a black to entertain us on television and and so on like that do you think that's just benevolence or is it a fact that these people are attractions and make money what about the sports world for God's sake I mean or if you took all the I counted a bet I was looking at the basketball other than the other night and I think there was one white player how many basketball how many basketball teams the black zone how many football teams now you get into the point you see we are now in under this system we still are not off the plantation we are simply off the agricultural plantation and own to the industrial plantation instead of having for instance a need for the so-called House of Niggas and Field Niggas we have a

need in this economy and now for the industrial workers who are with the farming the field hands and we have a need for the clerical workers while Wall Street couldn't function without all those black girls punching those keys you know and so forth and now they're about to skip the key punch system just as we've learned that they're about to skip key punch and cut it out for taping the direct taping in the computerized so we are constantly as blacks serving two roles in this economy and we've got to fight our way out of that box those two roles are first we provide the basic manpower now obviously you have to be trained to read in order to work in a in a capitalist economy cotton picker didn't need to know how to read he just needed to know how to pick that cotton is better that he didn't know how to read when they came when it came time away so the question is that we now have got to get ourselves out of that box of being at the bottom of the economy because we are

going to be constantly constantly dealt out is it true that black people in the United States spend more money than the gross national product of Canada that I think it's true and I'm all so I've been able to $30 billion a year in any one's estimation is there is there is there is there is it anyone's estimation is is there anything we can do is black people since we have I'm sure agreed on our powerlessness economically whatever other philosophical differences are is there anything we can do in terms of funneling or developing this 30 billion dollars which is larger than the gross national product of Canada into developing I think one two three because I think well I think in theory there's a great deal that could be done I perhaps have been knocking around a little too long to be very sanguine about the possibilities black people do have a good bit of money passing through their

hands but the difficulties in mobilizing this money are very great I think it's somewhat misleading as a matter of fact to compare the total income of the black population in America with the gross national product of Canada because one might jump to the conclusion that therefore why can't we do what Canada does the fact of the matter is that there is I think an excessive emphasis on income and much too little attention to wealth it's true that Canada's gross national product may just be parallel to ours but Canada also owns all the resources of Canada well perhaps not all of them but most of Canada belongs to the Canadians and they have a base upon which to work on the other hand the 30 billion dollars that passes through American hands is used for food and for clothing and for shelter it's just income it has no wealth base upon which to build and very little surplus left for savings you see it's only when we can build a surplus of some sort and have a wealth base an asset base which we do not have and which while conceivably we could do it by saving a

little bit from from our earnings it's not very easy to do and they also have sovereignty and they control their own institutions can I get your remarks oh yeah well certainly I agree with Bob on that but what is more important is it's the first thing we've got to do is to recognize that this is the one we got to do ourselves dependent upon Washington and and so-called black capitalism we got to forget it we could get the laws repealed for several rights we can get equal educational opportunities and so forth but you you are not going to get any white man to put you into the business to compete with him and we might as well recognize that now with only people in the world who tried to start a revolution and have it financed the people by the people that we revolt against you can't do that they aren't going to do it so we've got to forget this tokenism of black capitalism you can never have black

capitalism until you have black capital and by that I mean of course black control capital and I think that what we're trying to do here with these banks is to do some of that Dr. Gregory we have one minute yeah so I think that that the funds that the thirty-bill billion that we have offers some possibility for leverage but I concur with Bob Brown that the comparison with Canada is utterly misleading I emphasize the fact that they have sovereignty they develop they determine their own institutions are you telling me that if if if if blacks spent thirty billion dollars with one another it wouldn't it wouldn't be a lot of leakages are the black community if ideally there were no leakages suppose all black people bought the groceries from blacks all black people did basically what others do of course deals with the question that I was speaking to how can we buy our automobiles from blacks unless we had automobile that's what I'm saying to look at the income with ignoring the

wealth or the lack of wealth the lack of assets is very misleading you see so we must accumulate enough money that we can become producers and I can be accumulated up money when as you said they're inherent structural well if we have black banks if we have black banks service yeah that's right if we have black banks which are providing services to white businesses and white institutions institutions we can control their money just as they have controlled our money and the cultural identification is very important here I would like to dissociate myself from any suggestion of optimism which may be heard in the remarks in my two compatriots when you ask how can we do it I'm very skeptical that we can do it well I'm a succinct remark what do you say this that we can never do it if we start out with an air of defeat defeat ism there were times when it was inconceivable to my parents that we would be going to white schools and eating in white restaurants so I think it may not have come in our lifetime but I think that we've got to start now we've got

to start like the Jews did and when you find five million Jews here owning about ten times of what maybe fifty times the wealth that we have we can do it and I hope that you share that the gaps are too large to be offset completely by our effort alone we're going to have to to get some resources from the outside but I don't think the gap will be narrowed in there unless we make decisions that define the directions and the rate of progress but we're going to need resources from elsewhere thank you very much we've been talking with three black economists on one of the most interesting things that you can probably talk about and that is money I use money what it's for and how it governs your life I don't think we've come to any definite conclusion I believe the differences in philosophy are webed together with the concept that economics could be if properly understood a tool in the liberation struggle by people

you do