Rebirth of Reason


Crime and Poverty, Part I
by William Scott Dwyer

Does poverty cause crime, or is it crime that promotes poverty?

The hallmark of capitalism is its respect for individual rights, including property rights, of which crimes such as assault and robbery are cardinal violations. Such crimes interfere with the peaceful operation of the free market, and accordingly diminish the benefits of capitalism. Given the high crime rate in the inner city, black residents benefit far less from capitalism than they otherwise would, and are less well off economically. It is by violating the principles of a safe and productive society that crime promotes poverty.

Crime impoverishes both perpetrator and victim. Despite the loot that a criminal gains from crime, he risks retaliation by his victims, rival criminals or the police. And once he becomes an ex-convict, it becomes far more difficult for him to find a job. The criminal records and resulting unemployment that young criminals create for themselves severely undercut their chances for success later in life. Even if youthful offenders are never caught or imprisoned, their preoccupation with crime and with gang violence interferes with their schooling and their preparation for future employment.

Crime also impoverishes both the criminal's and the victim's family. A father who is murdered or in jail is incapable of providing for his wife and children, thereby depriving them of a source of income. The high rates of incarceration and of intra-racial murder among African American men are a principal cause of the large number of female-headed households in the inner city. These single-parent families are poorer and less stable, because they lack fatherly support. A reduction in crime would return to them a missing source of earned income.

Although poor families have often coped with poverty by operating small, family owned businesses, this option is unavailable to the family whose father is dead or in jail and whose children are in constant trouble with the law. Were it not for the instability of the African American family, many African Americans could avail themselves of the small business opportunities that now go to Korean, Arab and East Indian immigrants as well as to blacks from the Caribbean Islands, Haiti and Ethiopia.

Crime also promotes poverty by raising prices in black communities, since inner-city merchants must raise their prices in response to the losses they suffer from shop-lifting and other crimes against their businesses. The higher that prices are relative to income, the lower is the standard of living. Inner-city blacks have a lower standard of living, in part because they pay higher prices for food and merchandise than do people living in white neighborhoods with lower rates of crime.

Malcolm X attributes this difference in prices not to the higher rate of crime in the black community but to racist exploitation by white merchants whom he calls "bloodsuckers". Louis Farrakhan uses the same epithet to refer to Jews and to enterprising immigrants who have owned and operated many inner-city businesses. He states:

"Many of the Jews who owned the homes, the apartments in the black community, the stores in the black community, we considered them bloodsuckers because they took from our community and built their community but didn't offer anything back to our community. And when the Jews left, the Palestinian Arabs came, Koreans came, Vietnamese, other ethnic and racial groups came, and they took out of our community but they never put back into our community.

"And so this is a type of . . . why we call them bloodsuckers of the poor. And that's not a bad description if you suck the life, the economic life out of a community, and give nothing back, then you are a bloodsucker."

Give nothing back? Where does Farrakhan think that the goods and services in the inner-city are coming from -- if not from the very merchants whom he reviles? Not only are black consumers getting something back from the merchants whom Farrakhan labels "bloodsuckers"; they are getting back more than they give up. The goods and services consumers receive must be worth more to them than the money they exchange for them, otherwise they wouldn't exchange the money for the goods and services. As professor Michael Levin observes, "Every time a black buys a suit from a Jewish clothier or vegetables from a Korean grocer, every time he gives a ring to a pawnbroker in exchange for ready money, he is made better off."

The explanation for the higher prices in black communities is not "bloodsucking" merchants, but bloodsucking criminals who prey on inner-city businesses. If anyone is sucking "the economic life out of a community" by taking and not giving back, it is these predators. They are the exploiters -- they are the ones responsible for the higher prices -- because inner-city merchants are forced to raise their prices just in order to pay for the higher costs of crime. These costs involve such things as replacement of stolen goods, repair of damaged property, hiring of security guards to prevent shoplifting, and even the installation of bulletproof plexiglas shields to protect against armed robbery. Although insurance may provide some compensation, these merchants must also pay sharply higher premiums, and may in some cases be unable to get insurance.

Another reason for the higher prices is that when merchandise is stolen or destroyed, the supply of goods available for sale is reduced, and prices increase in accordance with the laws of supply and demand. It is an economic truism that if the demand stays the same but the supply is reduced, the price increases. The reason for the increase is that it does not take as low a price to sell fewer goods as it does to sell more, since customers tend to buy more at a lower price than at a higher price. Consequently, the less of a product that a merchant has to sell, assuming that the demand for it remains constant, the higher are the prices at which he can sell the entire supply.

Such are the reasons for the higher prices paid by black consumers in the inner-city. These higher prices are not a sign of racial discrimination, a fact that is further confirmed by the higher prices that black merchants charge their inner-city customers. Far from reflecting "capitalist exploitation", the higher prices in black neighborhoods are a legitimate response by the merchants to their own exploitation at the hands of vandals, thieves and robbers. Far from being anti-social and anti-consumer, a rise in prices under these circumstances is socially beneficial and pro-consumer, because it allows merchants to replace what is stolen or destroyed, to protect their property, to remain in business, and to continue serving their customers.

However, if the prices a merchant must charge to offset his losses are higher than his customers are willing and able to pay, then he will be forced to close his doors. The result will be fewer businesses and less competition, causing prices to rise even more. It is ironic that the self-defeating acts of vandalism, theft and robbery that are ultimately responsible for the higher prices occur in the very neighborhoods whose residents can least afford to pay these prices or to travel elsewhere for what they need.

Inner-city riots magnify these problems by wiping out businesses on a massive scale. Between 1964 and 1968, 329 riots involving five hundred thousand black participants erupted in 257 cities throughout the United States, killing or injuring 8,000 people. The most notorious of these riots was the one in Watts in 1965. Yet even that orgy of senseless violence, which worsened poverty in the area for decades thereafter, pales by comparison to the riot in South Central Los Angeles, following the Rodney King verdict. In the latter outbreak, rioters burned more than 5,300 buildings, destroyed 1,700 businesses, and caused 800 million dollars in property damage. In Korea Town itself, 80 percent of the businesses were damaged, and all told, 1,839 Korean businesses were burned or looted.

Such riots not only damage and destroy local businesses; they also discourage these businesses from remaining or returning, reduce the number and competition of businesses that do remain, and make goods and services that much scarcer -- all of which add to the rise in prices. This dramatic reduction in business activity also reduces employment opportunities, thereby adding to the unemployment problem already plaguing black communities. It is difficult to imagine a better method of increasing poverty among the inner-city poor than the wholesale destruction of urban commerce.

The riot in South Central Los Angeles was supposedly a protest against the acquittal of the police for the allegedly racist beating of Rodney King. Yet the riot itself was far worse than the alleged racism and injustice it was supposed to be condemning. In the very act of protesting racism, the rioters were themselves practicing racism by trashing and looting over a thousand businesses of the "wrong" color -- not black owned -- and by assaulting people of the "wrong" race -- Asian and white. In the very act of protesting injustice, the rioters were themselves practicing injustice by violating the civil rights of well over two thousand innocent people. In the five days of rioting that followed the acquittal, 58 people were killed, and more than 2,300 were shot, stabbed, burned, beaten or maimed -- 227 of them critically -- with many left permanently disfigured or disabled.

But instead of condemning the rioters for their racist, hypocritical violence, black liberals came rushing to their defense. Professor Cornel West termed the riot a "display of justified social rage", and Representative Maxine Waters, from South Central Los Angeles, called it a "justified rebellion" and defended it in response to probing questions from 60 Minutes journalist Leslie Stahl. The scapegoats were, of course, white racism, economic "exploitation", and police brutality. A similar rationalization was offered by Martin Luther King, Jr. in 1964, when he stated:

"A profound judgment of today's riots was expressed by Victor Hugo a century ago. He said, "If a soul is left in darkness, sins will be committed. The guilty one is not he who commits the sin, but he who causes the darkness."

Cornel West and Maxine Waters were merely keeping the faith, after all these years. The faith is that whatever sins blacks commit in the name of fighting racism, "the guilty ones" are not the sinners but the "racist white establishment." Black leaders even blamed the Rodney King riot on a lack of educational opportunity, when in fact Los Angeles has nine community colleges (one in the Central Los Angeles area), requiring no high school diploma, charging $5 per unit, and offering low-interest loans. No excuse was spared in order to avoid "blaming the victim". The real victims were, of course, the poor black residents of the area who afterwards had no businesses to serve them.

To be continued . . .

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