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 20^th 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 20^th 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 20^th 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 20^th 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?

It is reasonable to assume that the economic consequences of those 1943 riots also accelerated over time and increased over the following decade. That following decade was the 1950’s, precisely when Detroit’s population started to decline. Exactly what the two NBER Working Papers demonstrate for the economic consequences of the 1960’s riots.

Detroit’s 1950’s population loss was actually the first wave of riot-induced ‘white flight’. The complete abandonment of Detroit by whites after the 1967 riots was actually the second and final wave of riot-induced ‘white flight’ from Detroit. Two major riots were simply too many for the remaining Detroit middle class. Even the African-American middle class began its departure from Detroit.

There are many other factors involved in Detroit’s 1950’s decline, but few observers have considered them to be a response to the 1943 riots. This is a serious mistake, if only because it allows the 1967 Detroit riot apologists to shirk assigning accurate responsibility for the disastrous Detroit economic decline which followed the 1967 riots.

Without further ado, here is the NBER’s own introduction to their two Working Papers examining the effects of the 1960’s riots on African-American economic well being.  The hyperlinks to the papers on the NBER introduction web page are dead.  The blue hyperlinks to the papers within this copy of the NBER introduction are hot and get you the papers in their entirety:

How the 1960s’ Riots Hurt African-Americans

“The riots had economically significant negative effects on blacks’ income and employment. Further, those effects may have been larger in the long run – from 1960 to 1980 – than in the short run – from 1960 to 1970.”

“The riots significantly depressed the median value of black-owned property between 1960 and 1970, with little or no rebound in the 1970s.”

Any American of a certain age remembers the race-related riots that tore through U. S. numerous cities in the 1960s. Between 1964 and 1971, civil disturbances (as many as 700, by one count) resulted in large numbers of injuries, deaths, and arrests, as well as considerable property damage, concentrated in predominantly black areas.

Although the United States has experienced race-related civil disturbances throughout its history, the 1960s events were unprecedented in their frequency and scope. Law enforcement authorities took extraordinary measures to end the riots, sometimes including the mobilization of National Guard units. The most deadly riots were in Detroit (1967), Los Angeles (1965), and Newark (1967). Measuring riot severity by also including arrests, injuries, and arson adds Washington (1968) to that list. Particularly following the death of Martin Luther King in April 1968, the riots signaled the end of the carefully orchestrated, non-violent demonstrations of the early Civil Rights Movement.

Social scientists have studied the causes of the riots for a long time. Now two NBER papers by William Collins and Robert Margo instead examine the economic impact of the riots on African-Americans and on the cities where they took place. In the first paper, The Labor Market Effects of the 1960s Riots (NBER Working Paper No. 10243), they find that the riots had economically significant negative effects on blacks’ income and employment. Further, those effects may have been larger in the long run – from 1960 to 1980 – than in the short run – from 1960 to 1970.

Until 1975, the racial gap in average earnings among full-time male workers in the United States narrowed. There were periods of sharp convergence, as in the 1940s, alternating with periods of relative stasis, as in the 1950s and early 1960s. After 1970, racial convergence in earnings slowed markedly, in part because many low-wage black males were no longer engaged in full-time work, the authors note. The proportion of blacks living in high-poverty urban neighborhoods increased as well, and residential segregation led to increasingly poor socioeconomic outcomes among young blacks. In this context, Collins and Margo attempt to detect whether the riots contributed to a downward economic spiral that hurt employment opportunities, incomes, and property values.

Although they characterize their baseline estimates as “tentative,” Collins and Margo find a relative decline in median black family income of approximately 9 percent in cities that experienced severe riots relative to those that did not, controlling for several other relevant city characteristics. There is also some evidence of an adverse effect on adult male employment rates, particularly in the 1970s. Between 1960 and 1980, severe riot cities had relative declines in male employment rates of 4 to 7 percentage points. Individual-level data for the 1970s suggests that this decline was especially large for men under the age of 30.

In the second paper, The Economic Aftermath of the 1960s Riots: Evidence from Property Values (NBER Working Paper No. 10493), William Collins and Robert Margo investigate the influence of riots on central city residential property values, especially black-owned properties. They find that the riots significantly depressed the median value of black-owned property between 1960 and 1970, with little or no rebound in the 1970s. The baseline estimates for severe-riot cities relative to small-or-no-riot cities range from approximately 14 to 20 percent for black-owned properties, and from 6 to 10 percent for all central-city residential properties. Household-level data for the 1970s indicate that the racial gap in property values widened substantially in riot-afflicted cities relative to others.

The exact mechanisms through which the riots affected economic activity over a long period of time are difficult to identify, but a large number of potentially reinforcing channels exist. Property risk might seem higher in central city neighborhoods than before the riots, causing insurance premiums to rise; taxes for income redistribution or more police and fire protection might increase, and municipal bonds may be more difficult to place; retail outlets might close; businesses and employment opportunities might relocate; middle and higher income households might move away; burned out buildings might be an eyesore; and so on. These damaging aspects of riots, the authors find, apparently outweighed outside assistance directed toward the riot areas in the wake of the disturbances.

— David R. Francis

Every American needs to clearly understand that rioting is ‘cutting off your nose to spite your face’. Glamorizing riots as insurrections, rebellions, or uprisings promotes future riots and the most grievous economic costs accrue to the the rioters themselves.

Historical revisionism serves no one’s interests.

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