Paul L. Caron

Monday, January 11, 2016

Smith:  How Bad Tax Policy Helped Kill Mike Brown

Smith (2015)TaxProf Blog op-ed:   How Bad Tax Policies Helped Kill Mike Brown, How “Starving the Beast” Created the Black Lives Matter Movement, by Andre L. Smith (Widener-Delaware):*

Hyper-aggressive enforcement of municipal codes for the purpose of collecting more fees from poor, predominately black people in places like Ferguson, Missouri, stems fairly directly from insufficient tax revenue on the federal, state and local level. In a very real sense, bad tax policy spawned the Black Lives Matter Movement. Researchers from the Institute of Policy Studies, Bob Lord and Karen Dolan, make the connection in Will Any Presidential Candidate Connect Federal Tax Policy and Police Killings?

“Starving the Beast” as some conservatives have called it is designed to reduce the size of government by depriving those institutions of revenue they need to implement well-functioning school systems and social programs. Bad for poor people, obviously, reducing the size of government helps give well-to-do people a greater advantage in society in at least two ways, by saving them tax dollars as well as giving their privately educated kids a greater advantage over those who rely on public schooling. The wealthy can get along just fine in the short run without anti-poverty programs and other governmental services, except that in the long run all of us have will have to deal with declining domestic tranquility.

But, rather than end those programs, as starving the beast is designed to do, municipalities all over the country are increasingly trying to fill their budgetary gaps by collecting more and more fees (“informal taxes”) from the poor themselves. Consider the fact that we are witnessing the resurrection of debtors’ prisons, where poor citizens are being incarcerated if they cannot pay fines relating to petty municipal code violations, including improperly registered bicycles and window blinds. Instead of raising taxes on the well-to-do, who are arguably subsidized most by well-functioning government institutions, municipalities are placing a greater share of the costs of government on their poor and black citizens. This hyper-policing taxes poor, black people not just out of their money, but also their liberty and dignity as well. In the most egregious cases, people are losing their lives. It is in this sense that tax policy killed Mike Brown.

The recent spate of media-recognized killings and the protests consequent cannot all be attributed to greater municipal code enforcement. It seems clear, however, that balancing state and municipal budgets on the backs of the black and poor leads to more aggressive police efforts, which leads to greater informal resistance from individuals in the community who have been specifically subjected, which leads to more aggressive police tactics, which leads to more injuries, deaths, lawsuits and media coverage, which has ultimately led to a Black Lives Matter Movement.

Interest Convergence and Post Racialism?

Despite the prevalence of anti-discrimination laws, we find ourselves in the 21st century with an increasing racial wealth gap and a race-based protest movement approaching the intensity of those from the 1950s and 60s. As Rodney King asked after his beating at the hands of the Los Angeles Police Department, “Why can’t we all just get along?”

According to Derrick Bell, white people willingly fight against racism when it is in their interest to do so. For Bell it is no mere coincidence that they fought for civil rights at the same time that television threatened to expose the United States as an anti-meritocratic system during the height of the Cold War when the United States and the Soviet Union were competing for the hearts and minds of the “Third World”.

Overt racism impairs America’s image as both moral leader of the world and land of equal opportunity. Moreover, national corporations benefited greatly from civil rights laws that prohibited discrimination in sales and hiring. According to Nobel laureate, Gary Becker, firms that do not discriminate operate more efficiently than those that do, and thus will eventually put ‘racist’ firms out of business. Therefore, it is very much in white peoples’ interest to squelch indiscreet advocacy for white supremacy.

However, racism as group subordination has less to do with overt racial discrimination and intimidation and more to do with an unjust distribution of wealth and power. Carlton Waterhouse argues that racism is given a false caricature as Nazi skinheads and the Klu Klux Klan. Of course these sorts are racist in nature. But, as we are seeing in reference to police killings of unarmed black suspects, that racial subordination is maintained by ordinary people, in this case police officers who are otherwise very useful to ‘typically fair-minded’ white people. While police officers are facing more intense scrutiny, let us not forget that is grand juries of ‘typically fair-minded’ citizens who are failing to indict rogue officers.

Consider that Black cops don’t shoot unarmed white suspects, not because they are more well-intentioned people, not because they are better police officers, but because they are scared of what the white community will do to all of us if they did. Racism is as much a question of power and economics as it is an affront to abstract justice.

The post-racialist might argue that anti-discrimination laws made the market fair and balanced, and that the racial wealth gap, theretofore, is widening because Blacks have not committed to an ethos of thrift and hard work. There are even Black people, particularly of the “black conservative” ilk, who tend to agree with the contention that too many black people have retained a “slave mentality”, where avoiding work and sabotaging operations is no longer a revolutionary act yet falsely considered such because of the legacy of slavery.

But consider a game of Monopoly in which one of the players is prevented from rolling the dice and going around the board, while all the other players participate freely. Then imagine that after fifteen or twenty rounds, the excluded player is let in the game to play under the same rules. Is the game fair now? Of course not, because the other players have accumulated money and property to use at their disposal, while the excluded player must make do primarily with a small salary (that doesn’t rise with inflation) and the cheapest properties still left available, if any. It’s little wonder why some people turn “Free Parking” into a lottery, and going to “Jail” becomes a viable option when a player knows they don’t have enough to get around the board without going bankrupt.

Without reparations or affirmative action to even the playing field, not only will the excluded player find it hard to compete, they will in most cases be put out of the game entirely. Every so often, a player with skill, cunning and some luck will overcome the initial circumstance and mount a successful challenge. Their success does not mean that others who were not so fortunate were lazy or slothful or immoral.

The Monopoly example is intended to show that, even with anti-discrimination laws, accumulated capital is a huge factor towards whether an individual can enter a lucrative market. Similarly, Daria Roithmayr highlights rules implemented by the National Association of Realtors designed to “lock in” segregation and inequality. We should add to that intellectual and social capital, by products of financial capital. Juan Perea wrote an excellent law review article describing how the GI Bill and other 20th century antipoverty programs helped poor and middle class whites buy houses and obtain education, while Blacks were largely excluded. Parea and Roithmayr are describing “Institutional Racism”, where racial socio-economic disparities continue because of institutions that maintain the status quo more so than individuals who advocate expressly for white supremacy.

This puts justice minded white people in a very uncomfortable position. To accept that the maldistribution of wealth in the United States at this present date is still due to slavery and segregation means that the status quo is racist all by itself, that the wealth, power and privileges enjoyed by even the most progressive minded white people may be undeserved to some unknowable extent. Ignoring this is the essence of so-called “white privilege.”

Post Racialism as a ruse, as racism itself, as the defense of institutionalized white socio-economic-political supremacy.

Interest Divergence and Tax Policy

Gary Becker, mentioned earlier, argued that the free market would end racism. He believed that civil rights law prohibiting discrimination were unnecessary because firms that exclude consumers and discriminate against qualified black workers would, in the long run, be driven from the marketplace because of their relative inefficiency. In theory, racist firms would have less revenue and higher operating costs than egalitarian firms. Fellow economist John Donahue added that while civil rights laws might be considered inefficient government interference in the short run, the long-term benefits probably outweigh the short term costs. Donahue likened civil rights laws against discrimination to taking a road that leads to the highway even though it starts off in the opposite direction to where you are going.

But in addition to Interest Convergence Theory, Professor Bell also wrote in Faces at the Bottom of the Well that racism is permanent: There will always be important social dynamics where the interests of whites and blacks are divergent. Bell offered a vignette where he imagined white people, if given a chance, would vote in favor of trading all of America’s Black people to aliens in exchange for cures to all kinds of deadly diseases, like cancer. They will fight racism when it is in their interest to do so, he posited, and engage in racial subordination also when it is in their interest to do so. The Framers capitulating to slavery in order to craft our Constitution hardens the point. White people have a strong interest in maintaining the image of the United States as a land of opportunity and meritocracy. But they also have a strong interest in maintaining and justifying the racial wealth gap, at least in the “short term”.

Richard Epstein also noticed that the interest of whites and blacks sometimes diverge for reasons having nothing to do with “hatred”. Criticizing Gary Becker’s belief that the free market will end racism, he contended that, if an employer with limited time to spend knows that black people tend to have lower scores than whites, it is economically efficient to exclude all blacks from one’s search, even if it is true that there are some blacks who could do the job as effectively as their white counterparts, i.e., “statistical discrimination.” The person responsible for hiring is primarily out to keep their own job by performing effectively and efficiently and probably finds it irrelevant that blacks have less education because of the legacy of slavery and apartheid and poorly funded schools.

Affirmative Action, like Title IX for women’s rights, is an aspirational project, not intended to punish white males, but to address and correct an improper and unjust foundation—to reduce undeserved privilege. Yet, many whites don’t see it that way. They see it as reducing their rights and privileges. The interests of whites and blacks and women are not aligned when it comes to access to elite education and professions. They diverge and racial tension ensues.

Moreover, Kimberle Crenshaw’s “Intersectionality” acknowledges that the interests of black men and black women are not always aligned—that we could and should talk about asymmetrical market imperfections relating to the intersection of race and gender.

Intra-group homophilly is real, and practically ubiquitous. University of Michigan professor of Group Dynamics, Stephen Garcia, et. al., conducted an experiment where he asked individuals who self-identify with a particular group (any group) would they rather choose (A) where everyone receives $5, or (B) the subject gets $10 and so does everyone who is not a member of the subject’s group, but group members only get $5. The majority of people chose only the $5. No matter the character or kind of the group, they made the economically ‘irrational’ decision to forego their own profit so that the group to which they belong would not be subordinated. When it comes to wealth, the interests of groups diverge quite often.

Consider the well-known concept of NIMBY’s—Not In My Back Yard. People can agree that a community (federal, state or local) may need to do something very useful, but which comes with significant costs as well. For example, everyone in a given community might agree that a new correctional facility or drug treatment center should be built, but no one wants it in their neighborhood. Those with political power are able to avoid the externalities associated with certain projects by placing those burdens on those less politically powerful.

Because whites in the aggregate have more political capital than blacks, people living in predominately black neighborhoods experience what is called ‘environmental racism’, which is not the product of wild, rabid skinheads or neo-Nazi groups. This is racial subordination perpetuated by those seeking merely to do what’s best for themselves and their families. This is what makes racism “sticky”. The motivation is money or self-interest, not “injustice”, “evil” or “intent to discriminate or subordinate”.

As we are now seeing with the Black Lives Matter Movement, the interest of blacks and whites over hyper-aggressive policing are not fully convergent, and therefore the call for police to stop killing unarmed black people is actually controversial. To the extent whites comprise the majority of property owners, and to the extent police killings tend not to occur against property owners, and to the extent police killings are ostensibly in the service of property owners, we should not expect wealthy people or institutions to combat rogue policing in any meaningful way—unless, of course, the protests and the lawsuits cause a harm greater than the benefits relating to aggressive policing.

The inverse of this is referred to as “Affluenza”.

Ultimately, tax policy exacerbates the situation when a “starve the beast” philosophy provides precious little with which states and localities can function, tax revenue declines sharply, and the alternatives are to forego government services or to find ways to extract revenue from the politically powerless. In terms of racial homophilly, it is in white people’s interest to lower taxes, keep government services that produce rents for most everyone, while paying for those services by increasing municipal code enforcement in poor, black neighborhoods. Increasing code enforcement puts police and poor black people in greater conflict and leads to more instances of resistance, brutality and death.

This is how tax policy contributed to the death of Mike Brown. Again, we are not talking about individuals expressly advocating for white supremacy, we are talking about economics, institutional racism and interest divergence.

This Op-Ed is extracted from a larger essay, How Starving the Beast Created the Black Lives Matter Movement. The larger piece situates hyper-aggressive municipal code enforcement and police misconduct within a law-and-economics framework of racism (group subordination) as asymmetrical market imperfections — as asymmetrically distributed transaction costs. Professor Smith is the author of Black Tax: Essays on Tax Law and Racial Economic Justice (Lexington Books, 2015).

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I see a problem with Professor Smith's theory. The police kill Hispanics roughly in proportion to their percentage of the population. Yet the factors he lists as impacting blacks, resulting in disproportionate killings, should impact Hispanics also. Yet they don't. Other factors must be in play.

Posted by: Jack H | Jan 12, 2016 6:52:56 AM

Getting to the moon was a gub'mint program, the Interstates, GPS, National Weather Service, Social Security, Armed Services, State Universities, etc etc. Programs that worked; give credit where credit is due. When Ford produced and sold the Edsel, did anyone seriously suggest the we "kill that beast" and put them out of business. Lots of private, free market enterprises make terrible, horrific economic the airlines and over capacity....courts *the gub'mint" through the Bankruptcy courts restructures them and gets them back into the skies...we don't kill them.

Posted by: Sy Ablelman | Jan 11, 2016 1:44:46 PM

Government is their own worst enemy. Because they rarely defund anything, or admit a program isn't working. Instead, they just layer on a new program, because every program or project they start grows its own constituency. And there's one thing government is really bad at is cutting off a constituency. Even a constituency of one, because those administrators all dread that one will be the one reported on the six o'clock news as becoming destitute or suicidal because "their program" was cut. The media excels at shaming government for not caring for each and every little sparrow that falls, but sucks at keeping them accountable to taxpayers.

Posted by: ruralcounsel | Jan 11, 2016 12:28:12 PM

ACA failures are due to funding cuts? That's a new one. Actually the WH and Progressives in Congress are racing themselves to see who can delay or repeal most funding provisions behind this monstrosity. Want to know who may really starve the public goods beast -- the entitlements beast, Guess who created this one?

Posted by: MG | Jan 11, 2016 11:54:56 AM

Cliff's Notes: It's all whitey's fault.

Because I am sure white privilege forced Mike Brown to violently rob a convenience store and then resist arrest and try to take an officer's weapon. Clearly...

Why do academics and activists like the author always choose to ignore the culture and actions of the "victims?" In a culture where roughly 3/4 of children are born to single parents and education is not a prized commodity by so many, can you really expect anything close to parity of outcomes? Look inward Andre.

Posted by: Todd | Jan 11, 2016 10:38:11 AM

It's also the mantra "the government is the problem." He said that too. Then cynical politicians defund government programs and infrastructure. When a bridge collapses or a school fails or when the Affordable Health Care Act sputters, they say, "The Government can't do anything right." They set up the government to fail! Their own government.

Posted by: Sy Ablelman | Jan 11, 2016 6:48:27 AM

Mike Brown was effectively responsible for his own death, inasmuch as he presented a deadly threat to which the police officer properly and legally responded.

Posted by: Tu Phat | Jan 11, 2016 5:46:26 AM