Join Roger Ream ’76 in this week’s Liberty + Leadership Podcast as he speaks with esteemed scholar and author, Dr. Rachel Ferguson. Roger and Rachel discuss her book “Black Liberation Through the Marketplace: Hope, Heartbreak, and the Promise of America,” the fundamentals of classical liberalism, and the power of social capital. They also explore the sad reality of how government can create problems that government can’t fix.

At Concordia University Chicago Dr. Rachel Ferguson is the director of the Free Enterprise Center, assistant dean of the College of Business, and professor of Business Ethics. She is also an affiliate scholar with the Acton Institute and was a visiting fellow at the Eudaimonia Institute. Rachel’s writing has been featured in “Discourse Magazine,” “Law and Liberty,” “EconLib,” the Acton Power Blog, and “The Journal of Markets and Morality.”

In her hometown of St. Louis, Rachel is actively involved in community building and empowering marginalized entrepreneurs through LOVEtheLOU and Gateway 2 Flourishing. She is a graduate of Lindenwood University, where she earned a bachelor’s degree in philosophy, and received her Ph.D. in philosophy with a focus on political and economic philosophy from Saint Louis University.

Episode Transcript

The transcript below is lightly edited for clarity.

Roger Ream [00:00:00] Hello and welcome. I’m Roger Ream and this is the Liberty + Leadership Podcast, a conversation with TFAS alumni, supporters, faculty and friends who are making a real impact in public policy, business, philanthropy, law and journalism. Today, I’m joined by Dr. Rachel Ferguson. Dr. Ferguson is an esteemed scholar and author and co-author with Marcus Witcher of the book “Black Liberation Through the Marketplace: Hope, Heartbreak and the Promise of America,” which discusses the history and successes of black Americans. Dr. Ferguson is in Washington, D.C. today to deliver the annual Lev Dobriansky lecture on Political Economy to our TFAS summer students. She will be discussing the themes of her new book with our academic director Anne Bradley tonight. Today, it’s my pleasure to talk with Dr. Ferguson about the same subject as well as some other topics. Well, good afternoon, Dr. Ferguson. It’s good to be with you. As I mentioned in my introduction, you’ll be giving the Lev Dobriansky lecture tonight. This is a very special program that we’ve been sponsoring for more than 25 years. I think the first person to give the lecture was Dr. James Buchanan.

Dr. Rachel Ferguson [00:01:21] Oh, wow. I’m honored.

Roger Ream [00:01:25] We’ve had Gordon Tullock, Bill Easterly, Walter Williams and Mancur Olson in the early years and we’ve continued this tradition. Lev Dobriansky was someone very important to us. She was a longtime Professor at Georgetown University and was our Founding Director of our first program in 1970 and stayed with us until the eighties, when he was appointed the U.S. Ambassador to the Bahamas by President Reagan. Not a bad place to be the Ambassador, I’m sure, but he’s an important person and we’ve continued this lecture in his name. Well, I know you’ll be talking about some of these topics of your book tonight “Black Liberation through the Marketplace.” It’s an outstanding book published in 2022. What was the motivation behind writing this book?

Dr. Rachel Ferguson [00:02:18] I think the main motivation is that, you know, Marcus and I are both very serious classical liberal scholars. We’ve been in the Liberty movement all our adult lives. And as someone who was, you know, living very near Ferguson, Missouri, getting involved with helping the entrepreneurs there to rebuild their businesses after the unrest and things like that, I thought those of us who are in the movement know about all these amazing classical liberal insights into issues of race and discrimination. Gary Becker’s point, right? The stuff about zoning, the stuff about property rights. We are aware of all of this, but no one’s put it together in one place. And so, when people think about race and discrimination, they immediately think of the left. The left cares about this and other people don’t, right? Libertarians don’t or conservatives don’t. We want to say: “No, actually, we have a ton, right? We have a ton of work on this, but we didn’t necessarily host conferences called liberty and racial discrimination. So, by putting it all together in one book, we tried to show there’s a strong classical liberal stand for the rights of minorities, including black Americans, and it’s made a big difference in the history of black lives.

Roger Ream [00:03:27] How do you go about co-authoring a book? How do you define your roles? Did you each write a chapter? How do you collaborate in a case like that?

Dr. Rachel Ferguson [00:03:37] Great question. So, I’m the philosopher, Marcus is the historian. There’s no way I could have written a book without a historian of this level.

Roger Ream [00:03:44] It’s probably such a good book because you didn’t have an economist.

Dr. Rachel Ferguson [00:03:51] What we did is, you know, the book was really my idea, so I wrote most of it. Marcus really focused on the detailed history chapters, having to do both with black atrocities and with black entrepreneurship, where you get down into some of the great narratives and stories of black success. So, he focused on those chapters, and then I would send him all my chapters, right? Sometimes we’d farm it out, you know, to other friends: “check me, make sure I’m not saying anything crazy because I’m not a historian,” and make it defensible. I’m more of a big idea person, Marcus is a detailed person, so we worked really, well together in that regard, which was wonderful. He was just so encouraging. I’d send him a chapter and he’d say: “Rachel, this is really good.” So, it gave me energy to go on to the next one. So, so that was how we did the exchange. We worked so well together that we’re now talking about a follow up book. So, very excited about that.

Roger Ream [00:04:48] Wonderful. I did notice in the acknowledgments at the back of the book, you express your appreciation to TFAS Senior Scholar Jim Otteson, who had you at Wake Forest for a while and it’s just an outstanding Scholar and Director of Centers and things like that. So, I’m glad. I guess he played some role in helping you with that.

Dr. Rachel Ferguson [00:05:10] Oh, I would say he played the main role, because what Jim did is he said: “Rachel, do you want to come, and I’ll buy out a semester of your teaching and you can write a book.” So, I had that level of focus where I didn’t have to work it in, in between all my classes. I could just really get down to business writing the book. So, I’m extremely grateful to Jim for that and of course, for all his amazing work defending liberty.

Roger Ream [00:05:33] We can never get enough of him at TFAS.

Dr. Rachel Ferguson [00:05:35] He’s fantastic.

Roger Ream [00:05:35] Now at Notre Dame, of course. You talk about classical liberalism. I might start off by talking about capitalism. It has a bad reputation, according to surveys, at least typically among young people. What about for black Americans? Do you think capitalism is in the interests of black Americans? And then we’ll dig down from there.

Dr. Rachel Ferguson [00:05:57] Yeah, well, of course, there’s some confusion over the term capitalism. So, it depends. There’s crony capitalism, which of course, I’m against, and that’s where established interests sort of take advantage of their connections with politicians in order to set up whether it’s regulations or subsidies or whatever it might be that allows them to shut out competitors and that doesn’t encourage a competitive market. So, we don’t like crony capitalism, but if by capitalism we mean a free market, one in which not that winners and losers are chosen by the state, but rather by the consumers, then I think, yes, it’s very much in the interests of black Americans. In fact, I don’t think that’s an unusual view among black Americans. I think we saw that when it was Biden versus Bernie in South Carolina, right? We saw that when it was up to the black vote, it was Biden, not Bernie. There’s not that much interest in socialism in black America. I think there’s a strong entrepreneurial drive. So, even if there may be an interest in a thicker welfare state or something like that, in general, black Americans are very pro-capitalist, pro-market, pro-entrepreneurial.

Roger Ream [00:07:02] Is that opportunity available to most black Americans in our society, which is, I guess mostly capitalist? I know it’s a mixed bag, but we’ll say mostly capitalist.

Dr. Rachel Ferguson [00:07:13] Yes, I think it’s very much available. The reason we know that is because over half of black Americans are middle class. Today, of course, we have stratospherically wealthy black Americans as well. Not Mark Zuckerberg levels, right? So, we still have a way to go. But, you know, I think it can be confusing because black Americans are overrepresented under the poverty line. So, we have about 10% of white Americans that are under the poverty line and about 20% of black Americans. We dipped below for the first time from 2017 to 2019 right before COVID, which I think did have to do with lowering the corporate tax rate. That’s what Jason Riley said in Black Boom, anyway. That was his opinion. But we’re back up to 20%. So, because there’s that overrepresentation, people can get the impression that there’s some sort of assumption that black people are poor, but the fact that you have overrepresentation among the poor does not mean that black people in general are poor. This just isn’t true. Black Americans have made incredible strides, particularly regarding income. I think the really sticking point now is wealth. So, what we see is that black wealth is still flat, and we want to think about how to encourage wealth accumulation in the black community. But, you know, we’re still dealing with the racial hangover of Jim Crow. We’re not that far out. So, we have some catching up to do, but we are on a positive trajectory.

Roger Ream [00:08:41] So, in your book, you talk a lot about classical liberalism.

Dr. Rachel Ferguson [00:08:44] Yes.

Roger Ream [00:08:44] Classical liberal. Could you define that what you mean by classical liberal? You do devote some time, and I think chapter one to that concept, and it’s a very good chapter. I recommend that chapter alone.

Dr. Rachel Ferguson [00:08:56] Oh, thank you. So, of course the term liberal is also confusing because we Americans use it in a totally unusual way. We use it in a way that is not true in the rest of the world to mean something like center left, but liberal comes from the Latin word Lieber, which means free, and it has to do with having a form of government who considers the role of government or the primary role of government to be the protection of individual freedom. So, classical liberalism refers to that, and we might distinguish it from welfare liberalism, let’s say, of John Rawls or someone like that, more of a 20th century development. So, when we talk about classical liberalism, I try to keep it very simple in the book. I discuss a couple of basic institutions such as private property, but of course that includes my property and myself. So, I own my labor. I can contract that out for whatever price I choose, etc. My freedom of contract is very important so I can contract with whom I please as much as I please, and my equal protection of the rule of just laws. So, if we take. Those into account. We have a political system which has a very minimal government. There are such things as public goods problems and externality problems. Those are goods that we do need, but that the market won’t provide because of free rider issues and things like that. And so, for instance, national defense would be the classic example there, or maybe pollution when it comes to externalities, but mostly the government is quite minimal. It’s going to be dealing with police and courts and so forth. And other than that, you want civil society to step in. So, a classical liberal mindset is one in which you want to encourage thick civil society institutions of church and voluntary organization and family and so forth, and then you really want to value what the market can do. That’s another form of voluntary exchange just like civil society is. So, we are very hopeful about what the market can do, and we think we’ve got good evidence for our hope, given the fact that we now have 8% abject poverty in the in the globe, which is unheard of in human history. Things are going very, very well in that regard, although a lot of people don’t know that, but it’s true. So, we think that there could be a renaissance of classical liberal thought if we were able to appreciate all its accomplishments.

Roger Ream [00:11:14] So, the classical liberal society is close to what you could say the framers of our Constitution were trying to put into place. However, they left blacks out of it. Obviously, not entirely. They included the eventual elimination of the slave trade, and many of the framers wanted to abolish slavery while even owning slaves. I remember reading something written by David Boies from the Cato Institute. It was an event there where it tends to be libertarians who often say: “You know, we created this great free society in 1787 in this country, and then ever since then, governments grow and it’s gone downhill,” and Clarence Thomas was at the meeting and said: “Well, actually, things are better in America for a lot of us than they were 250 years ago.” Talk about that. I mean, Frederick Douglass, Martin Luther King talked about the American founding in a positive way, but it hadn’t been fulfilled for black Americans, and you get into that some in this book.

Dr. Rachel Ferguson [00:12:22] Yes, that’s one of the arguments that I want to make is to not give in to the temptation, which I think perhaps the 1619 project gives into this temptation to think that because of our terrible racial history, which we roundly condemn and talk about in very stark terms in the book, but to give in to the temptation to think that that means that the whole project is not worth pursuing. I think that the black pro-constitutional tradition shows that. I mean, going all the way back to people like Prince Hall, who argued for black freedom based on the values of the American project, people like Phillis Wheatley, the same thing. And, of course, Frederick Douglass, who turned against his own teacher, William Lloyd Garrison, you know, who wanted to give up on the Constitution because of the compromise with slavers, and Frederick Douglass said: “No, the Constitution is a great liberty document. It’s not the Constitution that’s the problem. It’s whether Americans have the honor. They have honor enough and courage enough to live up to their constitution,” and then, of course, Martin Luther King Jr. talked about the blank check that we’re now bringing to the bank, you know, to cash. So, I think that’s always been the leverage that oppressed minorities have had in the United States, is that we made very bold, revolutionary at the time claims about the equality of all men. And, you know, I make the point in the book, you know, no one said this about Brazil. Brazil brought in ten times as many West Africans as the United States did, and no one’s really calling them hypocritical because they didn’t make those kinds of claims. We were the hypocrites because we made the high claims. So, there’s something wonderful about the fact that America has always had to answer to its own sort of high regard for individual liberty.

Roger Ream [00:14:02] Did you find in the classical liberal tradition much concern about the plight of black Americans?

Dr. Rachel Ferguson [00:14:10] This was one of the most amazing discoveries that I made in writing the book. Being in the Liberty movement for 25 years, I would have thought I would have known a lot of this, but I didn’t. So, we don’t talk about it enough, guys. We need to talk about it more. But for instance, the whole group of William Lloyd Garrison, Harriet Beecher Stowe, that whole crowd, they were all followers of Richard Cobden in England. You know, who was the anti-clerical, right? A free trader. The idea was that we wanted to use coercion as little as possible. So, that’s true when it comes to, obviously slavery, which is inherently coercive, but also things like tariffs, which is also inherently coercive, and Frederick Douglass went to England. He studied under Cobden. He studied the corn laws as a as a kind of template for the he way that he was going to work on abolition. So, little did I know that there was not only a whole strand of pro-black, classical, liberal thought, but also that it was quite effective. It was an important part of the black story. This continues into the NAACP. You have a couple of the major founders who are serious classical liberals. One of the three mothers of libertarianism, Rose Wilder Lane, wrote for the largest African American newspaper in the United States with George Schuyler, who was an anti-communist, black editor. She said she’d found her people at the Pittsburgh Courier, and she wrote against zoning. She wrote against lynching. It was all these individualist, pro-black kinds of arguments. You see the same thing with somewhat heterodox thinkers like Zora Neale Hurston, who has the strong individualist strand in her thought. That’s always made her a little controversial. So, what we found and what we’re planning to write another book on soon is quite a strong tradition of pro-black thought in the classical liberal school, and we also have found that we really don’t have a lot of virulent racists in the classical liberal tradition. You find some obviously in the old southern agrarian conservative kind of tradition, and you certainly find it in progressivism, right? You have the terrible Woodrow Wilson and much of the eugenicist tradition coming out of progressivism, but you really don’t have too many among classical liberals, which we’re very encouraged by.

Roger Ream [00:16:34] Well, as that progressive tradition was information and becoming more into power in this country was also a time prior to that and through that where black entrepreneurship was also growing in this country, and there was a tremendous amount of that, I guess, I don’t know if it’s the 19 tens, 1920s, but talk about entrepreneurship in the black community historically and the role that may have played in blacks beginning to accumulate some wealth.

Dr. Rachel Ferguson [00:17:05] Yes, absolutely. Marcus and I talk about the long civil rights movement because we think that DuBois’s way of sort of presenting a desire for economic clout like Booker T. Washington had as almost opposed to a desire for political rights. We think that’s a terrible way of approaching black history. That’s not how Booker T. Washington himself thought. Obviously, he had to be a little careful with his words. He’s in the Deep South. Assassins were sent to kill him, and people threatened to burn down Tuskegee, etc. So, he had to be very careful, but behind the scenes, Booker T. Washington is certainly fighting for political rights. He’s funding all kinds of important cases, such as the Pullman car company case. But Washington knows that black Americans have to build their economic clout. He’s coming out of Hampton Institute, where there was such an emphasis on property rights, on owning property and building that kind of middle- and upper-income black class that would be able to lift the rest of the race. In fact, they did. He was right. So, the National Negro Business League and that whole concept of black self-help where black businesses come together, they support each other, they network with one another. Many of the fraternal associations were wonderful areas for networking. The black church itself, right? Of course, was sort of the hub of it all. The cultural womb of black America. People were working on these things together and lifting one another up in such a way that you can have the Madam C.J. Walker and the Annie Malone’s, who are employing thousands upon thousands of people to sell haircare products, making them middle class. Madam C.J. Walker gives the NAACP the largest give they ever get. So, the point is, is that there’s an actual a coalescence of growth of entrepreneurial ism and business clout with the growth of political rights. These two things go together. Washington knew and the Washington played the long game. That’s how we see it.

Roger Ream [00:19:06] Well, then what happened? I mean, you have growing black entrepreneurship. You have these, as you said, very strong fraternal orders, civil society, the black church playing a very role. You write about those in various chapters of this book. That’s all growing up. There’s a positive move forward. Of course, Jim Crow still exists and other things, but why didn’t that continue? I mean, the obviously black churches did to a certain extent, maybe not to the extent they served a different purpose at different points in history. The fraternal societies seem to have been weakened. What’s going on?

Dr. Rachel Ferguson [00:19:45] What a great question. So, one of the one of the contrasts I draw here is between the period from 1948 to 1966. We see black poverty cut in half in this period because there was so much good investment into education, family structure, civil society that had occurred, and when that fifties boom happens, black America is able to ride that boom and really be moving towards middle class life, and you really see that flattening out in the 1970s. So, that whole question of what happened, what happened to family structure, why is the black church so much weaker, why are these civil society institutions going? I think there’s a lot going on. So, let me just mention a few things. But I will say primarily, I blame the States.

Roger Ream [00:20:34] The States? The State, or the States?

Dr. Rachel Ferguson [00:20:35] The States. The federal government is really the big bad Wolf, in this situation, because what you see are things like the chipping away of property rights through the federal and contract rights, through the actions of the Federal Housing Administration. So, not just black people, but immigrants and others were affected by redlining practices which didn’t allow banks to make mortgage loans to people. I mean, they literally said no. And there are stories in the wonderful book “The Color of Law” by Richard Rothstein, where banks and developers had their deal and they were ready to go, and the government comes in and says: “You may not do this.” So, it’s incredibly discouraging. But on the heels of that, you have urban renewal and the federal highway system. This is so destructive, it really can’t be overstated, and once again, it affects black Americans and other groups. Other immigrant groups are also affected. So, what you have are these wonderful main streets. You have these up-and-coming neighborhoods. They may look poor to a middle-class white person of the time, but they were socially mobile. They were moving up, and when the quote unquote “urban renewal,” which James Baldwin called “Negro removal.” Eminent domain abuse came through and just flattened these neighborhoods, scattered the people to the four winds. Highways were run through major cities and of course, the poorest areas were chosen. So, they were mowed down right at the cusp of crossing over the line right economically into real success. I think what we need to consider here is that it’s not just your house, right? It’s not just your church. It’s not just your business. It’s the whole network that you’ve built in the neighborhood. Right? It’s the civil society capital, the social capital that’s destroyed. Now you’re in a second ghetto. You’re scattered from many of the people that you know you’ve been networked with. And if you’re behind a highway, you’re also economically isolated. Right. So, literally ghettoized in a certain way. Those who got out, those who could get out did get out leaving the ones who were the least networked in the least able left, really to have all those social investments squandered. So, it’s incredibly depressing. Of course, conservatives have, I think, been correct in pointing out the perverse incentives of the welfare state. This is another huge element of this story. This hits the black family very hard, I think, because they were the most vulnerable. But slowly over time, it’s hit other kinds of families just as hard. And so out-of-wedlock births are very high among black Americans, but also extremely high among Latino Americans and already much higher among white Americans than they were when Daniel Patrick Moynihan was so worried about it. And that is worrying because marriage and family structure contributes to wealth accumulation in really major ways. So, a lot of good things got stopped in a way that is just tragic, really, to think about, and it’s going to take a lot of work to recover.

Roger Ream [00:23:37] I would guess with fraternal organizations, you had the working of, I guess, Gresham’s Law that Bad Bunny drives out good money. In this case, I guess government played a role in driving fraternal organizations down because it came in to try to supplant them with government programs.

Dr. Rachel Ferguson [00:24:00] Yes. So, one of the points that we make, you know, the term maybe to think about here is the crowd out effect. So, if you have a fraternal organization, let’s say, whose primary role is to provide a kind of insurance, if you get sick, they’ll cover you. If you die, they’ll help your way with your funeral expenses, things like that. It was a kind of early form of social insurance.

Roger Ream [00:24:22] And those are those were strong in the black community?

Dr. Rachel Ferguson [00:24:25] Literally as many as half of black men in the United States were members of the Black Elks or organizations like this. So, they were hugely strong, and into this day, there’s more going on in the black community with fraternal organizations that you have in the white community, but still much, much weaker than they were. I think one of the points we try to make is that there’s a kind of ripple effect. So, you have a primary focus of an organization, but there’s all these secondary benefits, right? You’re getting to know one another. You’re networking. Maybe I know you well enough to give you a zero-interest loan because I really believe in your business idea or something like that. Once Social Security and that kind of New Deal government interventions come into play, when you take away the primary purpose of the organization, oftentimes the organization disappears, but you also lose all those secondary benefits, right? So, once again, it’s the destruction of social capital, and I think you can absolutely say that that’s what happened.

Roger Ream [00:25:22] Why do you think black churches played such a key role before and yet today they don’t seem to be fulfilling that same role? What impacted the black church? Was it the fact that they were scattering these communities and through the highway and urban renewal programs, or were there other things at play there? I mean, we’ve seen a diminishment of all religious practice in our society, so that was going on as well.

Dr. Rachel Ferguson [00:25:53] Yes, so I always like to quote Glenn Loury, who says: “Social science is harder than physics.” So, there’s so many things going on here at once: what’s causing what? I’ve thought a lot about the black church, which is still definitely there, still a force but weaker than it was, and I think the causality goes the opposite way from how many people think. So, you’ll often hear conservatives complain about the black church and say, well, why are marriage rates so low or why is out-of-wedlock births so high? You know, if so, many black people still identify themselves as Christian, still identify with the black church, what happened there? I think that the family was weakened first. Families is what uphold strong churches. So, once you created such a perverse incentive for fathers to be out of the home, there’s other parts of the story, too. For instance, unions, which were very racist until the last possible minute, finally let black people in. But by then, they had pushed wages up so high that the jobs went to automation and so forth faster than I think they would have otherwise. So, black very few black men were able to make that transition, you know, for manual labor to do white collar labor, that puts black men in a tough position regarding black women who are being trained for professional jobs like nursing and teaching. There’s a lot of sexual politics being affected by these economic things. And so, what I think happened is you have the black community getting hit with everything I just mentioned, right? The destruction of social capital, the perverse incentives of the welfare state, the union jobs and even the contraception shock, which we haven’t discussed. This is all hitting the community at once. They’re the most vulnerable ones. The family falls first, it happens very fast between the sixties and seventies, and then what is the church supposed to do, right? The basic structural part of a society is a family. And so, once you’ve undermined the family, that really, really makes it hard for the church to function as well as it did.

Roger Ream [00:27:58] Has there been good work done by economists about the motives behind pushing for higher minimum wages, having a racial dimension to them?

Dr. Rachel Ferguson [00:28:09] Yes. So, the work that I drew upon for this section was Illiberal Reformers by Thomas Lee Leonard, who goes back and looks at the textbooks of the time at the turn of the century, right around then when eugenics was extremely popular, and of course, most Americans don’t realize how popular it was. So, we talk about people like Margaret Sanger, but Margaret Sanger was just one of many.

Roger Ream [00:28:32] Founder of Planned Parenthood.

Dr. Rachel Ferguson [00:28:33] Yes, Founder of Planned Parenthood, but she is completely normal for her time. She’s writing letters with John Maynard Keynes about eugenics, and he’s saying: “Now that we’ve solved the quantity problem, we can move on to the quality problem,” and he calls eugenics the zenith of modern science. So, this is a huge fad among social scientists all over the world, and so what we see is that the economists are in on this as well. They’re thinking about how to encourage the growth of sort of the Aryan family and discourage the growth of black and immigrant families. So, they want to raise wages artificially high, very high, so that the only people that anybody’s going to be willing to pay this wage to are going to be obviously English speaking, you know, well-groomed, etc., white American males. They’re not going to pay their wives; they’re not going to pay their immigrant or black neighbors. So, not only is that the theory, but that’s made quite clear in the text. It’s shocking in a way, how open the economists are about saying:  “We want a decent played these groups so that they will fade away out of our society.”

Roger Ream [00:29:45] You talk some in here about the importance of culture for the spontaneous evolution of market exchange. I guess, I want to ask the question: how do we now move forward from this point? We’ve seen just this destruction of the family. High levels of out-of-wedlock birth, fatherless families, dependency on the welfare state, a growth of government, regulation of the economy. Do you have thoughts about how we help lift minority communities in this country, black and Latino and others, and yeah, and give them opportunity for success and fulfillment of the American promise?

Dr. Rachel Ferguson [00:30:35] I have a few things to say about that. So, one thing I would say, I love to think of the great classical liberal Ludwig von Mises, who thought at the time that classical liberalism was dead, there was fascism and communism, and nobody cared about classical liberalism anymore, but he said: “I’m just going to keep telling the truth.” So, I think for those of us who still believe in small government and still believe in free markets, I think we need to keep telling the truth. You know, supply and demand laws don’t change just because it’s not popular to talk about now. So, I think in terms of things like government regulation, we just need to keep pushing forward with what we know to be the case. But I think when it comes to working with these communities that have been so badly destabilized, the phrase I often use is that the state can cause problems that the state cannot fix. And so, what that means is that we must change our mindset, get away from the progressive addiction to central planning. There’s such a desire for there to be a push button solution to something that really requires a spontaneous order solution, meaning it has to come up from below. And so, what I talk about in the book is neighborhood stabilization. This is a kind of thinking that’s been going on for decades. John Perkins of the Christian Community Development Association, Robert Lipton’s wonderful book “Toxic Charity” about the work he did in Atlanta. Brian Finkel’s book “When Helping Hurts” of course, the great Bob Woodson in Washington, DC. What we find are people who have been thinking about what you do when a neighborhood has become so destabilized that there are, for instance, over 20% empty houses in the neighborhood. Maybe there’s very little employment, a lot of government dependency, very little marriage, etc., and what they found is that it really takes 8 to 10 years to stabilize a block. You need someone with an almost missionary heart, whether it’s a person from the neighborhood or from outside, who’s willing to dedicate themselves to gaining the trust of the neighbors, living with people, walking through life with people, and what you find is that if that practitioner comes in with the attitude that the neighbors actually know what they want for their block, they actually have a vision for their own life. It’s just that they’ve kind of been voiceless, right? They’ve sort of given up hope because of the milieu. What you’re able to do is simply empower them, simply listen to them, right? Simply help them get organized, but really subjugate your own ideas about what is happening to the neighborhood to their ideas, because they’re the ones who know. And we’ve seen amazing success with this model. Eight to ten years might seem like a long time, but we’ve been doing these destructive progressive policies for 60 years. And they’re getting worse, not better. So, better to just get on the ground and start investing in these kinds of projects, but what that means for us as donors, as members of churches and mission boards, volunteers, is that we need to flip our philanthropic mindset and think more about how we can invest in charity that raises people’s dignity and helps them to become self-sufficient as opposed to things that make us feel good, but it’s sort of like drive by poverty, tourism. And so, there’s a kind of spiritual discipline involved in saying no to things that are going to create dependency, you know, maybe help you get through till next Tuesday, but not really be transformative for you. And putting the time and love that it takes into something that’s going to be transformative.

Roger Ream [00:34:06] That’s excellent. We developed a program at TFAS in 1999. We held it at Indiana University’s Indianapolis campus, IUPUI, and it was called the Institute on Philanthropy and Voluntary Service. The inspiration was our one of our founders and our long time president, my predecessor, David Jones, he came from a small town in West Virginia, and he used to tell the story of, you know, if they needed a little league field for the kids to play on, the American Legion post would go out and clean a vacant lot up and put up a backstop and bases and build a little field. They wouldn’t look to Washington, D.C. to get a grant. We purposely didn’t do it in Washington, D.C., because we didn’t want to focus on the federal government. We wanted on local committee, and Indianapolis has a lot of great charities and local philanthropy, and for ten years we would put students in small nonprofit organizations, community charities, and try to impress on them that lesson that the true solutions are Tocqueville solutions found at the local level of people solving problems. Eventually, that program ended and hopefully not permanently, because I think that’s a lesson that too many young people think you look to Washington for solutions. You’re involved in something in Missouri, LOVEtheLOU. Is that part of this? Tell us about that organization.

Dr. Rachel Ferguson [00:35:39] LOVEtheLOU is a neighborhood stabilization organization run by my friend Lucas Rouggly, who moved on to Enright Boulevard about 12 years ago. Took him about six years for everybody to get used to him being there, and believe that he wasn’t going to leave, was not going to abandon them even if his van got stolen a couple of times, but he stuck to it. He’s now in his second neighborhood. Enright has been stabilized, which means not only that, it’s full of beautiful community gardens and many of the houses have been rehabbed, but it means that students are going to college or getting jobs. They’re not joining gangs; they’re not going to jail. Many of the adults are now stabilized as well. And so that neighborhood is on its way. One of the women who was involved in LOVEtheLOU, Tawana, is really sort of running that end of things now, and so he’s handed it over to her in many ways. And then the new neighborhood, which is right between Martin Luther King Jr. Avenue and Paige Avenue in Saint Louis, we now have a resource center with a church and community center that’s bringing four neighborhoods together. This is where Chuck Berry and Tina Turner and some of these great singers came from, and where they were discovered. And yet, you go down there, and you wouldn’t know it. Right? You wouldn’t know that there’s such this amazing history. And so, there’s a lot of work to do in terms of breaking down some of the invisible sort of territorial barriers between neighbors and things like that, but what we find is that if you stick around and you love people and you don’t give up, many of those things begin to fade over time and people begin to trust you. They begin to tell you their hopes and dreams, and soon you can help them start businesses. You can help them get into good jobs and begin to stabilize their lives. So, I tell some success stories in the book about, you know, Michelle, who started pimped out pickles, which are these great flavored pickles. They’re delicious, and they’re in all the grocery stores in Saint Louis now. Or Tiffany, who’s started her own in-home daycare. What do you need? You need a network of people just like you and I have and take for granted. Right. Somebody you call when you don’t understand taxes, somebody you call when you need to figure out QuickBooks. You need that, but in an area where it’s gone. And so, we as middle- and upper-income people don’t necessarily have to move to the inner city like Lucas Ruggley did. That’s his special calling, but we can be the network that he brings in as mentors, as somebody that that can be relied upon for these inner-city entrepreneurs, for these young men, for young dads who are trying to raise their kids and do something different from what their dads did.

Roger Ream [00:38:14] Do you sometimes have to take on government created barriers to entry? I hear the stories of the Institute for Justice of regulations that prevent people from starting a salon that’s going to braid hair, making caskets for funerals and rights, all sorts of things that the state wants licensing or creates these barriers. Have you had to tackle some of those?

Dr. Rachel Ferguson [00:38:40] Oh, yeah. Absolutely. We had the Institute for Justice come in Page Dale, which is a tough neighborhood where once Eric Schmidt had dealt with the taxation by citation problem with driving, where people were just getting ticketed to support the police. They switched to citing people for things in their houses. So, if you had a basketball hoop in the front yard your shades weren’t right, it was ridiculous and people were getting thousands of dollars in fines, then when they couldn’t pay, and they would be too afraid to go to court and then they’d get worse fines, and it was snowballing. And the Institute for Justice came in and successfully sued Page down. So, yes, we’ve absolutely experienced that. Big shout out to my friends at the Freedom Center of Missouri who do economic justice cases in Missouri as well.

Roger Ream [00:39:26] Oh, good. Well, what would you say about whether markets incentivize good behavior and moral behavior? Do markets play a role in incentivizing the proper behavior among people? Maybe that’s another reason why markets could be a positive for low-income people, for all of us, really?

Dr. Rachel Ferguson [00:39:53] Yes, absolutely. So, I’m a big Aristotelian. I love Aristotle. One of the points he makes when he talks about virtues is that some things that you may not think of when you think of virtues really are virtues. So, what do I mean? When we think of virtue, we think of these big, you know, courage, right? These big, great sounding things, but you need things like friendliness, you need polite etiquette. Why? Because it’s smoothest, greases the wheels of social interaction. And so, what markets do is they help us to tolerate one another to put up with one another, but also to kind of be, you know, does it matter if it’s a little fake? That’s okay. We don’t we don’t want everybody to tell everybody else what they think. You know, I think of Russo saying, oh, you know, we’re all so artificial and it’s not authentic. And I’m thinking: “Do you know how terrible it would be if we all came right out and said what we thought about everybody? That would be awful. We’d be at war with one another,” right? So, there’s nothing wrong with repressing some of that, you know, when you’re out in the world. And so, markets encourage us to deal with one another, whether I like you or not, whether you’re part of my group or not. Whether your part of my religious community or my family ties or my neighborhood, I’m still going to do business with you because we’ve got exchange for mutual advantage. So, I think sometimes that subtle sort of virtue can be taken for granted because it has a dispersed effect, right? So, it’s not like the courageous soldier who goes in and dies for his country, and you can point at his sacrifice. Instead, it’s just all these little things that we do throughout every day, making contracts with one another, waving at each other in traffic, talking to the guy who’s checking you out at the grocery store. Those sorts of habits of interaction play an incredible role in having a peaceful society that lends itself to advantageous exchange and makes we make one another richer, but it’s easy to miss.

Roger Ream [00:41:49] So, markets encourage that behavior. Do they also disincentivize discriminatory behavior at the same time?

Dr. Rachel Ferguson [00:41:57] That’s certainly Gary Becker’s idea. Yeah. So, there’s a little bit of a debate between Robert Higgs and Gary Becker, where Gary Becker is talking about the fact that you must pay to discriminate. There’s a cost. If somebody is not as polished as somebody else, you might be able to pay them a little less, but bring them in and it can be advantageous for both of you if you want to discriminate against them for not being as polished or not having as good of language skills or whatever it might be, then you’ll have to pay for that, right, by hiring someone at a higher rate. So, I think Becker’s right and Higgs thinks Becker’s right, but Higgs just says: “Don’t let that make you think that markets will magically solve all discrimination, because the fact is, sometimes people are so prejudiced that they will pay,” and you saw that, right? You saw that in the post emancipation economy. However, Higgs’s wonderful book that I draw on a lot on the post emancipation economy, he does point out that in order to maintain that discrimination in the South and the rise of white supremacy, they did have to put in a ton of laws. They tried to form cartels so people couldn’t leave and work for somebody else and beat up their shares. It didn’t work because cartels are unstable. They had to pass municipal laws, state laws, federal laws to try and keep people apart who would naturally live together. So, on the one hand, yes, people can be that prejudiced and really pay the price for it, but on the other hand, they often really can’t maintain it unless they can bring coercion in to keep it going, and that’s what was so evil about the Jim Crow laws and the and the whole reign of white supremacy is that it was actually embracing a kind of big government, government intervention sort of attitude so that you could make something happen that wasn’t naturally happening.

Roger Ream [00:43:51] Interesting. Well, this has been great. You’re at Chicago Concordia but living in the St. Louis area and the students at Concordia who take your classes are certainly fortunate.

Dr. Rachel Ferguson [00:44:04] Oh, thank you. I hope they agree.

Roger Ream [00:44:05] As will be our students tonight at George Mason University’s Mason Square campus when they get to hear you tonight with Anne Bradley. So, thank you so much for joining me today on this Liberty and Leadership podcast. Rachel, it’s been great. I recommend very much that everyone find this book on Amazon or elsewhere published by Emancipation Press.

Dr. Rachel Ferguson [00:44:32] That’s right. The same publisher that publishes Bob Woodson.

Roger Ream [00:44:35] It’s “Black Liberation through the Marketplace: Hope, Heartbreak and the Promise of America.” Thank you, Rachel.

Dr. Rachel Ferguson [00:44:43] Thank you.

Roger Ream [00:44:44] Thank you for listening to the Liberty and Leadership podcast. Please don’t forget to subscribe, download, like or share the show on Apple, Spotify or YouTube or wherever you listen to your podcast. If you like this episode, I ask you to rate and review it. And if you have a comment or question for the show, please drop us an email at podcast@TFAS.org. The Liberty and Leadership Podcast is produced at kglobal studios in Washington, D.C. I’m your host, Roger Ream, and until next time, show courage in things large and small.

About the Podcast

TFAS has reached more than 46,000 students and professionals through academic programs, fellowships and seminars. Representing more than 140 countries, TFAS alumni are courageous leaders throughout the world forging careers in politics, government, public policy, business, philanthropy, law and the media.

Join TFAS President Roger Ream ’76 as he reconnects with these outstanding alumni to share experiences, swap career stories, and find out what makes their leadership journey unique. With prominent congressmen, judges and journalists among the mix, each episode is sure to excite your interest in what makes TFAS special.

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