30.12.04

LEGACY OF THE SIXTIES. Things calculated to make me feel old.
The 1960's are as distant from today as the Great Depression was from the 1960's, and economic historians, including Professor Margo, of Vanderbilt University, are examining the decade's long-term effects.
Virginia Postrel surveys their research, which notes the permanent damage done to Detroit and other cities that had a long hot summer.

The economists start with sociologists' findings on the riots' causes: whether a city had a riot was essentially unpredictable, assuming the city was outside the South (where few riots occurred) and had a substantial African-American population. The sociologists' research, Professor Margo says, suggests that "there was so much racial tension in the air in the 1960's that a riot could happen almost anywhere, anytime."

That unpredictability is bad news for sociologists looking for causes but good news for economists analyzing consequences. It creates a natural experiment, dividing otherwise similar places into those that had riots and those that did not.

In cities with major riots, the economists find that the median black family income dropped by about 9 percent from 1960 to 1970, compared with similar cities without severe riots. This impact on the labor market may have actually been more severe in the long run. From 1960 to 1980, male employment in cities with severe riots dropped four to seven percentage points, compared with otherwise similar cities.

The impact on property values is even more striking. In cities with severe riots, Professors Collins and Margo found, the median value of black-owned homes dropped 14 percent to 20 percent, compared with cities that experienced little or no rioting, from 1960 to 1970. The median value of all central-city homes, regardless of owner, dropped 6 percent, to 10 percent.

The following factoid ought to give pause to people who question the effectiveness of the "Great Society" reforms.
From 1940 to 1970, the value of homes owned and occupied by blacks in central cities jumped to 69 percent of the value of urban homes owned and occupied by whites, from 51 percent. (Home values were rising over this period as well.) By 1990, however, the ratio was down to a mere 53 percent, nearly as low as in 1940.
That information ought be considered in any evaluation of other incomes policies.

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