Tag Archive for NBER

The Aftermath of Riots

Detroit's Decline And Bankruptcy Were Indeed Due To Its Riots - Plural!

Apologists for the 1967 Detroit rioters and the feeble responses of Mayor Cavanagh and Governor Romney to that mayhem usually start off by noting that Detroit’s population and economy peaked in the early 1950’s. The implication being that the 1967 riots were just another incident in the long running, preordained decline of Detroit. Detroit’s population did peak in the early 1950’s, but its economy continued to grow right up to the 1967 riots due to productivity increases. And Detroit’s economic decline was not preordained, it was very much the consequence of both of its two major 20th Century riots.

The National Bureau of Economic Research (NBER) also studied the aftermath of the 1960’s riots in urban America, specifically their effects upon African-American economic well being. Two key NBER Working Papers examine the effects of the 1960’s riots on African-American income, employment, and real estate holdings. Unsurprisingly, these NBER Working Papers found the effects were decisively negative. Surprisingly, these NBER Working Papers found the adverse economic effects actually accelerated over time, with the worst hits coming well into the following decade.

The deceit in the apologists’ chronology of the decline of Detroit is their failure to mention or consider the June 1943 race riot in Detroit. The 1943 Detroit riot was unequivocally a race riot and its deaths and injuries were on a scale quite comparable to the 1967 Detroit riots. During the 1943 Detroit riots, 34 people were killed and 433 were wounded. Property destruction was then estimated at $ 2 million ($28.3 million in 2017 US dollars), but this estimate is probably quite low due to lower casualty insurance coverage rates at that time. By comparison, 43 people were killed and 1,189 were wounded during the 1967 Detroit riots. Property destruction in the 1967 riots is disputed, but was somewhere around $ 50 million ($ 366.7 million in 2017 US dollars).

The different ratios of deaths and injuries to property damage in the two 20th Century Detroit riots also reflects the fundamental difference in their basic character. The 1943 riot was most certainly a race riot whose participants targeted people, but not much property. The 1967 Detroit riots were an all out economic attack on small businesses, but 1967 rioters did not target people to any particular degree.

Prior to the 1967 Detroit riots, the 1943 Detroit race riot was tied with the 1965 Watts riot for the second worst American riot death toll during the 20th Century, and probably tied with Watts for the third worst American riot death toll of all time. The 1943 Detroit race riot had only been surpassed in death toll during the 20th Century by the 1921 Tulsa race riot at the time of the 1967 Detroit riots. The 1943 Detroit race riot has not been studied by academia or covered by the media in much detail because it exposed New Deal incompetence and reflected very poorly on the American war effort underway at the time.

The 1943 race riot certainly did affect the thinking of Detroit residents and Detroit’s economic actors well into the 1950’s. Most of them lived through those 1943 race riots and were intimately familiar with the the racial tensions it revealed, even if they were not much publicized. You need to consider the causality issue underlying the decline of Detroit’s population during the 1950’s.

Were the factors usually cited for Detroit’s population decline in the 1950’s sui generis, or a response to the 1943 riots?

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Why Riot?

What causes a riot in urban America?

The news media, social scientists, and political scientists are eager to offer up the usual stale left wing bromides on urban riots, but at best those bromides are based upon a lot of anecdotes rather than hard data. The plural of anecdote is not data. The disingenuousness of their bromides arises from the clash of facts with their committed leftist politics.  Economists were far less political, at least 25 years ago.

A pair of economists working under the aegis of the National Bureau of Economic Research (NBER) applied linear regression computation modeling to various community statistics from a broad range of cities to determine which underlying issues cause riots and, further, to determine their intensity. Their results are a real eye opener and run contrary to the drivel being peddled by the media and academics on this 50th anniversary of the Detroit riots.

The National Bureau of Economic Research is a private nonprofit research organization which distributes its work product to financial officials and the public around the world. NBER is best known as the official arbiter of the start and end dates of economic recessions in the United States, a not uncontroversial subject. Its economists have run the gamut from the good (Milton Friedman, Wassily Leontief), to the bad (Austan Goolsbee), to the ugly (Paul Krugman). As a fun side note, it is comforting to know that an economists’ organization as august as NBER can lose money on their financial portfolio. No crony capitalists there!

The NBER divides its research into 20 programs; one of which is ‘Labor Studies’. Denise DiPasquale and Edward L. Glaeser produced NBER Working Paper 5456, The L.A. Riot and the Economics of Urban Unrest on behalf of the NBER Labor Studies Program. This paper was written after the Los Angeles riots of 1992, but its research reaches back into the 1960’s and across the world to construct its data base.

The DiPasquale/Glaeser study has two major components: a cross-national study which covers urban rioting around the world (including the U.S.), and a cross-city study which covers urban rioting across just the U.S. They assembled data sets on a large number of cities which included dependent variables representing the frequency of riots and the intensity of riots, along with many independent variables suggested by previous studies as being responsible for the frequency and intensity of those riots – poverty, unemployment, ethnic composition, and so on.

You Betcha! (13)Nuh Uh.(0)