When Affirmative Action was White, by Ira Katznelson

Economic historians often refer to the period from World War II to the mid 1970’s as the “Great Compression.” During that period, US inequality plunged to its lowest level ever, before reversing. In an earlier Econamici, “The Wedge,” I attributed this plunge to an unprecedented set of redistributive policies: In 1935, Social Security began providing pensions–at first, necessarily, entirely to people who had not paid into the system. During the war, the military provided technical training for millions of men and women otherwise lacking the opportunity. For the poorest, it provided crash literacy programs. After the war, Congress enacted generous GI benefits, including college, health care, and loans to purchase homes or start businesses.

Expenditures on these programs took a huge fraction of GDP compared to social spending today. Marginal tax rates during WW II were 94%. By 1948, a staggering 15% of the federal budget was devoted to the GI bill.

But, according to historian Ira Katznelson, these and related programs were quite deliberately designed to exclude blacks. So much so, that during the same period of the Great Compression, inequality between blacks and whites increased substantially.

Why and how did these historic national redistributive programs exclude blacks?

Why is easy. These programs, initiated by the Democratic Party, required the cooperation of southern Democratic legislators. These men, although eager to bring federal funds to the poor and backward South, nonetheless saw a threat to the southern “way of life,” which depended on cheap black labor. As a South Carolina Senator proclaimed in response to proposed fair labor standards legislation: “Any man on this floor who has sense enough to read the English language knows that the main object of this bill is, by human legislation, to overcome the great gift of God to the South.”

How was more subtle. Southern legislators employed two key strategies: classification of beneficiaries and local administration.

Before World War II, most southern blacks worked on farms or as maids. So, at the insistence of Southern legislators, the original 1935 Social Security legislation excluded farm and domestic labor. The effect was to exclude 65 percent of blacks nationally, and 70 to 80 percent in the South. Not until 1954, under a Republican administration, was Social Security extended to all workers. Unemployment and workmen’s compensation insurance likewise originally excluded domestic and farm workers.

During World War II, the US military remained segregated. Facilities for black recruits, mostly in the South, provided limited and inferior training compared to white facilities. Black servicemen complained they were being employed as servants and ditch diggers. Black men were almost entirely excluded from training as pilots, as black women were excluded from training as nurses.

After World War II, Southern legislators insisted that local agencies administer the distribution of GI benefits. Southern administrators steered returning black soldiers to inferior segregated colleges or to outright fraudulent job training programs. Southern bankers processed GI mortgage loan applications, “redlining” black neighborhoods–charging higher rates or refusing loans altogether. Veterans’ hospitals remained segregated until 1948.

In these and many other ways, federal programs boosted millions of poor whites into the home-owning middle class, leaving blacks further behind. According to Katznelson, the Democratic Party made a “Faustian bargain” with its southern members: abandoning core values of equity to gain generous benefits for the white working class majority.

Today, whites often resent “affirmative action” for blacks. The link appears too weak between blacks in general and remote slavery or past discrimination.

But consider: during World War II, Japanese Americans were rounded up and sent to desert internment camps; as direct victims of bad public policy they eventually did receive (miserly) compensation. Likewise, the Democratic Party’s “bargain” created identifiable victims. Many are still alive. Their families today still lack the assets, education and financial security of equivalent whites.

Katznelson proposes that were it recast as a response to “white affirmative action,” black affirmative action would gain greater legitimacy and sympathy.

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