Prometheus 6

The book is Fighting Poverty in the US and Europe: A World of Difference., by Alberto Alesina and Edward Glaeser.

I read a reaction to a review in The Economist by Robert Tagorda at Priorities and Frivolities. The review opens with this:

An important new book traces the links between politics, racial diversity and the generosity of the state

NOTHING better encapsulates the different attitudes of America and Europe to the poor than a table towards the end of Alberto Alesina's and Edward Glaeser's remarkable book*, due to be published later this month. It compares the prevalence of three beliefs: that the poor are trapped in poverty; that luck determines income; and that the poor are lazy. The first is held by only 29% of Americans but by 60% of citizens of the European Union; the second, by 30% of Americans and 54% of Europeans; and the third, by contrast, by 60% of Americans and 24% of Europeans.

Mr Alesina and Mr Glaeser, both Harvard economists, are doing what the best in their profession do well these days: seeking to explain society not merely with conventional economic tools but with analysis of institutions, geography and social behaviour. They begin with the observation that America and Europe differ strikingly in their willingness to allow government to redistribute income from rich to poor. Government spending in the United States is about 30% of GDP; in continental Europe, where it includes most health-care spending, it is about 45%. Almost two-thirds of this spending is on welfare. Americans, by contrast, are much more likely to give money privately. They appear to have given $691 per head in charitable donations in 2000, compared with contributions of $141 in Britain and a mere $57 in Europe as a whole.

What explains the difference in welfare systems?

Toward the end of the review, The Economist says:

The other half of the explanation lies in America's racial diversity. In spite of 20 years of unprecedented immigration, European countries, particularly smaller ones like Portugal and those of Scandinavia, are still highly racially homogenous. America, by contrast, has great diversity, which is especially wide in some states. In addition, the poor in America are disproportionately non-white. Non-Hispanic whites are 71% of America's population but only 46% of the poor.

Racial diversity in individual states is correlated with the generosity of welfare. For instance, the authors find that in 1990 Aid to Families with Dependent Children ranged from over $800 per family per month in mainly white Alaska to less than $150 in Alabama and Mississippi, where almost one-third of the population is black. Even after adjustment for inter-state differences in average incomes, the correlation with race remained strong. Across countries, too, racial diversity goes with low government spending on poverty relief.

The reason, argue the authors, is that “race matters”, and they marshal statistical evidence, much of it from opinion surveys, to back this up. People are likely to support welfare if they live close to recipients of their own race; but are antipathetic if they live near recipients from another race. The divergent attitudes of Europeans and Americans to the poor are underwritten by the fact that the poor in Europe tend to be ethnically the same as most other folk. In America, their skin is often a different colour.

The authors say that “political entrepreneurs”, eager to use race as an excuse to turn the poor against redistribution, shape attitudes to race and to poverty. At different times, America has had its share. Is Europe immune? Look at the successes of the likes of Jörg Haider and Pim Fortuyn, and wonder. The recent evolution of Europe as a destination of mass migration, much more ethnically diverse than America's in most of the past century, will test the durability of the European welfare state.

Mr. Tagorda isn't happy with this suggestion, but it doesn't surprise me. Diversity as an end unto itself is not a solution for racism. In fact ending racism, that irrational visceral distaste for a segment of humanity will not resolve all the problems caused by race.

See, there's an emotional reaction to racism that causes physical friction damage. Then there's the economic damage of being less wealthy as a community as a specific result of government action. And there's the two cultures that formed under the influence of racism, neither of which is what it could have been had not the specific decisions that created the legal and social structures underpinning slavery been created.

But. back to the subject at hand. Mr. Tagorda gave some links to a couple of academic papers that lend some support to the book's thesis but reserves judgment until reading the whole book, which is wise. But the premise makes sense, matches my own observations. Makes sense to a couple of other folks as well.

Too bad we're still not really ready to come clean on this race thing.