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Sharing the Prize: The Economics of the Civil Rights Revolution in the American South
The civil rights movement was also a struggle for economic justice, one that until now has not had its own history. Sharing the Prize demonstrates the significant material gains black southerners made―in improved job opportunities, quality of education, and health care―from the 1960s to the 1970s and beyond. Because black advances did not come at the expense of southern whites, Gavin Wright argues, the civil rights struggle was that rarest of social one that benefits both sides. From the beginning, black activists sought economic justice in addition to full legal rights. The southern bus boycotts and lunch counter sit-ins were famous acts of civil disobedience, but they were also demands for jobs in the very services being denied blacks. In the period of enforced desegregation following the passage of the Civil Rights Act of 1964 and the Voting Rights Act of 1965, the wages of southern black workers increased dramatically. Wright’s painstaking documentation of this fact undermines beliefs that government intervention was unnecessary, that discrimination was irrational, and that segregation would gradually disappear once the market was allowed to work. Wright also explains why white southerners defended for so long a system that failed to serve their own best interests. Sharing the Prize makes clear that the material benefits of the civil rights acts of the 1960s are as significant as the moral ones―an especially timely achievement as these monumental pieces of legislation, and the efficacy of governmental intervention more broadly, face new challenges.
368 pages, Hardcover
First published February 1, 2013
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June 6, 2020
There are two predominant views on racism on the Left. One school of thought has it that racism is an extension of or even substitute for class division. In that framework, racism is a fundamentally economic phenomenon. It was created and is perpetuated because it serves the economic interests of the upper class. The problem with that explanation is that, in a lot of cases, racism clearly overruled the economic interests of the upper class. That's half of the main thesis of Sharing the Prize: segregation was costly for employers and consumers, and every demographic in Southern society (though not necessarily every individual or industry) benefitted when the federal government forcibly ended it.
If that's true, though, why did segregation arise in the first place? And why did it persist as long as it did? The other school of thought treats racism as a simple prejudice, which has taken on a life of its own more or less independent of how or why it originated. This view has predominated in the economics literature on discrimination, where it famously lead to the conclusion that in the long term, prejudice will be destroyed by competitive markets. Wright argues that the evidence from desegregation both does and does not prove this argument correct. The second half of his thesis is that white Southerners, including businesspeople, were able to maintain and even entrench segregation as a positive, reformist good because they simply didn't realize that desegregation could be better for them.
I was excited by this point at first because it supports a point I think is broadly overlooked by nearly everyone about economic behavior: economic rationality is culturally mediated. IE, markets don't optimize behavior automatically or universally; they do it by modifying the strategies and techniques and rules of thumb agents use to pursue profit. So if everyone in a society takes it for granted that running a segregated business is the best way to make money, then people won't think of themselves as making a sacrifice for the sake of the white race, or colluding in a cabal whose stability they need to maintain. They'll just think of themselves as pursuing their individual self-interest.
And because both white consumers and white workers held prejudiced preferences, Wright argues, they were, in the short term, right about that. Any factory owner who hired cheaper unskilled black workers would have, and sometimes did, faced strikes from the skilled white workers who they relied on to run their machinery. Any retail store or restaurant that opened their doors to black customers would have, and often did, lose their wealthier white customers to competitors who excluded blacks. In fact, Wright goes so far as to argue that businesses supported legally mandated segregation not because segregation served their interest per se--no business wants to be legally disallowed from serving paying customers--but because it was easier to have the state enforce a policy they already wanted to apply anyway. A tangential factor, mentioned later (presumably because black business owners had little influence in political decisions?), is that black businesses also benefitted from segregation because they didn't have to compete with white stores for black customers. So, according to Wright, segregation didn't persist in spite of market forces eroding it, but because of market forces pushing to expand it.
The problem is that this story doesn't quite answer the nature of the Arrow critique. Bryan Caplan laid it out pretty compellingly in an EconTalk episode on this topic. Maybe it's the case that most business people thought they were pursuing their self-interest by embracing segregation. But it only takes a few mavericks to see that, if labor is your biggest expense, hiring much cheaper black labor is an opportunity to make a huge amount of money. And as soon as one bold business does it, the rest of the industry can't compete unless they do the same. Wright lists substantial economic forces resisting that leap--if black workers were generally uneducated, white workers were recalcitrant, and factory owners prejudiced, it may not have seemed like a viable option. According to Wright, segregation was an alternate stable state for the economy, which required substantial external force to overcome--though once it did, the predictable forces did kick in and businesses embraced desegregation with the same or greater fervor as they had embraced segregation.
I just don't know if I'm quite convinced by that story. Yes, economies evolve, and that means they don't always proceed straight to the best possible arrangement instantly. They can get stuck in local optima and require activation energy to move to higher optima. Sure. But I think Wright is almost certainly missing or underplaying the economic importance of political factors (which can and should also be understood in economic terms). The book feels weirdly incomplete in that sense. Like, he covers labor markets, businesses, schools, voting rights, and shows how in each case blacks benefitted enormously while whites rarely suffered and often benefitted. Whites have adapted their beliefs to support the economically beneficial strategy of hiring, working with, and selling to black people. They have changed their political platforms to attract black voters. They've even, gradually and inconsistently, abandonded openly racist beliefs. But they haven't eliminated a powerful, arguably thriving core of white racist sentiment, one that drives political power and has economic effects.
The one area Wright points to as a failure of desegregation is schools, where federal mandates were successfully pushed back and where economic forces have been insufficient to drive desegregation. But explaining why market forces didn't fix segregated school systems isn't sufficient to explain why segregation persisted and renewed itself when the economic incentives for racism were evaporating elsewhere in society. Whatever that missing factor is presumably explains the persistence of segregation in the first place too. Working class bargaining power comes to mind--maybe white workers saw black workers as a threat to their wages and used unions and savvy lobbying to keep them out even when they would have benefitted capitalists--easier than it should have been because of entrenched prejudice. Maybe it is just a self-perpetuating belief system that reproduces itself despite the costs it imposes on those who hold it, individually and as a class. But I don't think either of those are enough, really.
Anyway, I was disappointed to find Wright so comfortable writing off what seem like important aspects of his topic as "exogenous." But otherwise it's a good and fine book, easy to read, well argued, lots of evidence, making a broadly satisfying and uplifting case that civil rights activism achieved a massive and non-inevitable improvement in the lives of 100+ million people. And I think it has some useful lessons. Activism through state power was crucial to make the initial break but most of the actual gains have been delivered through market forces, and only to the extent they were able to act. Reading this now during the protests was actually a bit discouraging for that reason--the police aren't mentioned in the book, but their deeply ensconced protection from incentives have prevented them from losing their bias in the same way it has for schools. And it's hard to see that there's a superior alternate stable state the protests could easily push us into, winning momentum from support of relevant political and economic agents as we make progress.
If that's true, though, why did segregation arise in the first place? And why did it persist as long as it did? The other school of thought treats racism as a simple prejudice, which has taken on a life of its own more or less independent of how or why it originated. This view has predominated in the economics literature on discrimination, where it famously lead to the conclusion that in the long term, prejudice will be destroyed by competitive markets. Wright argues that the evidence from desegregation both does and does not prove this argument correct. The second half of his thesis is that white Southerners, including businesspeople, were able to maintain and even entrench segregation as a positive, reformist good because they simply didn't realize that desegregation could be better for them.
I was excited by this point at first because it supports a point I think is broadly overlooked by nearly everyone about economic behavior: economic rationality is culturally mediated. IE, markets don't optimize behavior automatically or universally; they do it by modifying the strategies and techniques and rules of thumb agents use to pursue profit. So if everyone in a society takes it for granted that running a segregated business is the best way to make money, then people won't think of themselves as making a sacrifice for the sake of the white race, or colluding in a cabal whose stability they need to maintain. They'll just think of themselves as pursuing their individual self-interest.
And because both white consumers and white workers held prejudiced preferences, Wright argues, they were, in the short term, right about that. Any factory owner who hired cheaper unskilled black workers would have, and sometimes did, faced strikes from the skilled white workers who they relied on to run their machinery. Any retail store or restaurant that opened their doors to black customers would have, and often did, lose their wealthier white customers to competitors who excluded blacks. In fact, Wright goes so far as to argue that businesses supported legally mandated segregation not because segregation served their interest per se--no business wants to be legally disallowed from serving paying customers--but because it was easier to have the state enforce a policy they already wanted to apply anyway. A tangential factor, mentioned later (presumably because black business owners had little influence in political decisions?), is that black businesses also benefitted from segregation because they didn't have to compete with white stores for black customers. So, according to Wright, segregation didn't persist in spite of market forces eroding it, but because of market forces pushing to expand it.
The problem is that this story doesn't quite answer the nature of the Arrow critique. Bryan Caplan laid it out pretty compellingly in an EconTalk episode on this topic. Maybe it's the case that most business people thought they were pursuing their self-interest by embracing segregation. But it only takes a few mavericks to see that, if labor is your biggest expense, hiring much cheaper black labor is an opportunity to make a huge amount of money. And as soon as one bold business does it, the rest of the industry can't compete unless they do the same. Wright lists substantial economic forces resisting that leap--if black workers were generally uneducated, white workers were recalcitrant, and factory owners prejudiced, it may not have seemed like a viable option. According to Wright, segregation was an alternate stable state for the economy, which required substantial external force to overcome--though once it did, the predictable forces did kick in and businesses embraced desegregation with the same or greater fervor as they had embraced segregation.
I just don't know if I'm quite convinced by that story. Yes, economies evolve, and that means they don't always proceed straight to the best possible arrangement instantly. They can get stuck in local optima and require activation energy to move to higher optima. Sure. But I think Wright is almost certainly missing or underplaying the economic importance of political factors (which can and should also be understood in economic terms). The book feels weirdly incomplete in that sense. Like, he covers labor markets, businesses, schools, voting rights, and shows how in each case blacks benefitted enormously while whites rarely suffered and often benefitted. Whites have adapted their beliefs to support the economically beneficial strategy of hiring, working with, and selling to black people. They have changed their political platforms to attract black voters. They've even, gradually and inconsistently, abandonded openly racist beliefs. But they haven't eliminated a powerful, arguably thriving core of white racist sentiment, one that drives political power and has economic effects.
The one area Wright points to as a failure of desegregation is schools, where federal mandates were successfully pushed back and where economic forces have been insufficient to drive desegregation. But explaining why market forces didn't fix segregated school systems isn't sufficient to explain why segregation persisted and renewed itself when the economic incentives for racism were evaporating elsewhere in society. Whatever that missing factor is presumably explains the persistence of segregation in the first place too. Working class bargaining power comes to mind--maybe white workers saw black workers as a threat to their wages and used unions and savvy lobbying to keep them out even when they would have benefitted capitalists--easier than it should have been because of entrenched prejudice. Maybe it is just a self-perpetuating belief system that reproduces itself despite the costs it imposes on those who hold it, individually and as a class. But I don't think either of those are enough, really.
Anyway, I was disappointed to find Wright so comfortable writing off what seem like important aspects of his topic as "exogenous." But otherwise it's a good and fine book, easy to read, well argued, lots of evidence, making a broadly satisfying and uplifting case that civil rights activism achieved a massive and non-inevitable improvement in the lives of 100+ million people. And I think it has some useful lessons. Activism through state power was crucial to make the initial break but most of the actual gains have been delivered through market forces, and only to the extent they were able to act. Reading this now during the protests was actually a bit discouraging for that reason--the police aren't mentioned in the book, but their deeply ensconced protection from incentives have prevented them from losing their bias in the same way it has for schools. And it's hard to see that there's a superior alternate stable state the protests could easily push us into, winning momentum from support of relevant political and economic agents as we make progress.
September 20, 2019
Gavin Wright is a master synthesizer of economic research, and in this book he is in fine fettle, showcasing many original studies, and contributing his own, to create a distinctive vision of the economics of the Jim Crow and Civil Rights eras in the South. His overall argument is well-supported: that the revolution that began with the 1964 Civil Rights Act not only brought immediate and long-lasting improvements for the South's blacks, but also proved an economic boon for the South's white population as well.
Wright first dispels some common misconceptions about the economics of Jim Crow. For one, as late as 1890, unskilled blacks in the South did not get paid less than unskilled whites working the same jobs. It was only after the next twenty years of Jim Crow that a substantial wage gap opened up, but that was largely because blacks got segregated to certain low-end jobs and industries, and whites got segregated to slightly more lucrative industries (textiles) or skilled jobs, so entry-level wages for whites began just where the the level of entry level wages for blacks stopped. Wright also shows that much of this segregation, in both jobs and public accommodations like restaurants, was not due to laws (there were really only two laws for industry, North and South Carolina laws demanding segregation in textile plants, in 1913 and 1915). The truth is the South was stuck in an suboptimal equilibrium, with the lack of potential for black upward mobility and generalized segregation inhibiting investment, education, and economic growth.
The Civil Rights Act of 1964 changed all this, and quickly. Many restaurants that were reluctant to be desegregated (for fear of losing out to competitors in segregated areas), now campaigned to make Title II as comprehensive as possible to avoid segregated competition. The textile industry underwent what some called "the change," going from almost zero black workers to almost a third in ten years. At the same time, personal income growth in the South for both blacks and whites increased rapidly, both relative to the previous trend (they had stagnated since a sudden jump in World War II), and relative to the North. As Wright says, this challenges the conventional view that businesses usually know the public policy that at benefits them the most. In this case, they were opposed or lukewarm to the change, but in the end benefited immensely.
The last part of the book becomes a little tendentious, arguing for the uniformly positive and long-lasting effects of school bussing, economic redistribution programs of the Great Society and so on, where the research doesn't seem to be so uniform, but overall this is a great look at the many consequences, overwhelmingly positive, of the Civil Rights revolution. It's a wonderfully optimistic take on a positive social change.
Wright first dispels some common misconceptions about the economics of Jim Crow. For one, as late as 1890, unskilled blacks in the South did not get paid less than unskilled whites working the same jobs. It was only after the next twenty years of Jim Crow that a substantial wage gap opened up, but that was largely because blacks got segregated to certain low-end jobs and industries, and whites got segregated to slightly more lucrative industries (textiles) or skilled jobs, so entry-level wages for whites began just where the the level of entry level wages for blacks stopped. Wright also shows that much of this segregation, in both jobs and public accommodations like restaurants, was not due to laws (there were really only two laws for industry, North and South Carolina laws demanding segregation in textile plants, in 1913 and 1915). The truth is the South was stuck in an suboptimal equilibrium, with the lack of potential for black upward mobility and generalized segregation inhibiting investment, education, and economic growth.
The Civil Rights Act of 1964 changed all this, and quickly. Many restaurants that were reluctant to be desegregated (for fear of losing out to competitors in segregated areas), now campaigned to make Title II as comprehensive as possible to avoid segregated competition. The textile industry underwent what some called "the change," going from almost zero black workers to almost a third in ten years. At the same time, personal income growth in the South for both blacks and whites increased rapidly, both relative to the previous trend (they had stagnated since a sudden jump in World War II), and relative to the North. As Wright says, this challenges the conventional view that businesses usually know the public policy that at benefits them the most. In this case, they were opposed or lukewarm to the change, but in the end benefited immensely.
The last part of the book becomes a little tendentious, arguing for the uniformly positive and long-lasting effects of school bussing, economic redistribution programs of the Great Society and so on, where the research doesn't seem to be so uniform, but overall this is a great look at the many consequences, overwhelmingly positive, of the Civil Rights revolution. It's a wonderfully optimistic take on a positive social change.
May 10, 2013
Excellent economic history of the consequences of the Civil Rights movement. Wright does a masterful job of weaving quantitative and qualitative analysis, offering new takes on the economic logic of southern white support for Jim Crow and its reluctance to change. He also provides tremendous data on how Civil Rights and Voting Rights Act economically changed the South, providing real economic improvements for african americans and whites alike. A fascinating book all the way around.
July 17, 2017
Narrowly economic for better and worse, this is useful both for its regional focus on the South and its correctives to some understandable and common misconceptions concerning the economic consequences of the Civil Rights movement. On the downside, and re "worse" above, mass incarceration gets just a few sentences in the whole book.
Nonetheless, a solid and important read on the consequences of the Civil Rights movement.
Nonetheless, a solid and important read on the consequences of the Civil Rights movement.
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October 4, 2013http://www.economist.com/news/books-a...
The economic context of the civil-rights movement is still too often ignored. Against many expectations, the civil-rights era brought prosperity. As the South prospered, white wages and employment also rose. Mr Wright argues that government action spurred by the civil-rights movement corrected a misfiring market, generating large economic gains that private companies had been unable to seize on their own.
A southern black middle class may prove a potent political force. Although Mr Wright suggests that the civil-rights movement “extends our sense of what is possible in economic life”, the durability of its gains may yet depend on the outcome of regional political battles. Protecting the movement’s gains will require continued political vigilance.
The economic context of the civil-rights movement is still too often ignored. Against many expectations, the civil-rights era brought prosperity. As the South prospered, white wages and employment also rose. Mr Wright argues that government action spurred by the civil-rights movement corrected a misfiring market, generating large economic gains that private companies had been unable to seize on their own.
A southern black middle class may prove a potent political force. Although Mr Wright suggests that the civil-rights movement “extends our sense of what is possible in economic life”, the durability of its gains may yet depend on the outcome of regional political battles. Protecting the movement’s gains will require continued political vigilance.
This entire review has been hidden because of spoilers.
November 16, 2015
I’m very glad I read this. This book opened my eyes to the ways in which the Civil Rights Revolution was often driven by economic encouragement. The power of the federal government to provide incentives, economic incentives, was more helpful than I realized. This raises implications for work in low-income communities in the states in these days. I’m not sure of all the implications but I know I will be thinking about it more. I was also struck by the unintended consequences of the opening up of white societies in the south. The ways in which there was often a negative effect upon African-American owned businesses. The authors do a good job of showing both the truth and the misunderstandings of those shifts. This is a book that helps me to pay attention both to realities on the ground, and think about incentives that help things change.
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September 20, 2013323.1196 W9494 2013
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