The current level of conversation about reparations,
particularly on the national stage, is probably
greater than anything that might have been taking
place in the United States since the reconstruction
era. Reparations as a way to make amends for the
atrocities of slavery and to reduce the persistent
wealth gap has recently gained momentum.
14 trillion dollars in reparation is an appropriate
statement. Black Americans possess two point six
percent of the nation's wealth, but make up 13 percent
of the population. That racial wealth gap is a
starting place for any reparations program.
A number of states, towns and institutions have begun
to grapple with the idea.
As of August 12, one forty two Congress members have
co-sponsored H.R.
40, the bill that establishes a commission to study
reparations. That is compared to only two in 2014.
Even Joe Biden has said he supports the bill.
But a real program could be costly.
This hardly seems the time to burden the economy with
more debt, more taxes.
Essentially, what you want to do is stimulate economic
growth for all our benefit.
This is not small money.
This is a trillion dollars that we're talking about
more or less.
Separate social program for this entity that you've
carved out that you called black people.
I'm against that. The US is far from a concrete
national compensation plan.
Still months of racial justice protests push the
concept to the center of the national debate.
In the event that it becomes a reality.
What would a potential reparations program look like?
And can the U.S. afford it?
Black Americans lag behind whites in almost every
category of economic well-being.
They are far less likely to be employed, own their
home, inherit money, accumulate wealth, and earn as
much as white counterparts.
The median net worth of a white household is one
hundred seventy one thousand dollars.
For blacks, is just a bit over seventeen thousand
dollars. There is the whole ecosystem of segregation
having created the lack of opportunity ladders,
whether it's through underfunded schools, over-policed
neighborhoods. We have embedded residential home
values in race.
So, your home is worth more if you live in a mostly
white neighborhood. The best we can do is in fact to
erase racial wealth differences in the United States
by building black asset positions to a level that is
similar to the average wealth held by white
Americans. What do we want?
When do we want it? Now. Though reparations has been
studied. Practicality has often taken a backseat to
morality. Scholars who have worked on calculating
compensation, don't always agree.
For about 30 years, William Darity has discussed the
rationale and design of reparations.
Today, he says it will cost the United States
government between 10 trillion dollars and 12 trillion
dollars. To put that in perspective, in 2019.
The US GDP was about twenty one and a half trillion
dollars. The share of wealth in the possession of
black Americans ought to match at least match the
share of the population.
A more conservative estimate looks at the 40 million
acres that should have been allocated to the four
million freedmen. The present value of that land is
about one and a half to two trillion dollars.
If above thirty five million black Americans are
eligible, the minimum estimate would amount to between
forty thousand dollars and sixty thousand dollars per
person. Darity argues that as the culpable party, the
government needs to foot the bill.
The federal government has the capacity to create new
resources in this way.
Congress could direct the Federal Reserve to create a
fund of some sorts as well.
Either as a complement or as the entire basis for
funding this project, especially since it can be
conducted over the course of ten years.
But I think that the one thing that we have to be very
careful about with any new federal expenditure program
is what are the inflationary risks?
All government money has to come from somewhere else.
Now, it could sort of borrow that money.
I mean, it essentially printed, which right now the
interest rates are very low, but they're not going to
always be. And we do have long run obligations in
terms like Social Security and Medicare that we're
going to have to meet someday.
So and we're running up huge deficits and huge amounts
of debt in order to deal with the COVID crisis.
Given all of that, simply adding more debt on top of
it doesn't strike me as being a particularly fiscally
prudent course of action.
Inflation and the cost of adding to the national debt
are two of the biggest barriers to extending or
expanding federal programs.
To avoid inflation, Darity proposes trust accounts or
some form of an endowment where the recipient can
spend the percentage of the money on an annual basis,
and keep the rest in an interest earning account.
The idea is that the amounts of those direct payments
should be sufficient to eliminate racial wealth
differences in the course of the decade.
We think that the delivery of funds to individuals is
the most precise and accurate way to address the
wealth differential.
Wealth does not fall from the sky.
It's not as if there exist a fixed amount of wealth is
simply there and we have to decide who has it.
Wealth is created, wealth is generated.
The real issue here are differences between the
populations in the capacity to generate wealth.
If you redistribute, you may have a short term impact.
But in the long run, unless the differences in these
populations, in their capacity to generate wealth, to
start businesses, to effectively take risks, to save
and accumulate within their families, unless those
factors are addressed, the underlying structure will
push you back into a situation of inequality again.
You could simply tax that money, in which case you're
simply taking money out of the pockets of some people
and putting it in pockets of other people.
That's not increasing wealth at all.
Now, it will make some people better off who don't
have savings, that don't have financial assets today,
but it's going to come at the expense of the economy
as a whole. Compensation programs can take many forms.
In nineteen eighty eight descendants of Japanese
Americans forced into internment camps during World
War Two received twenty thousand dollars each.
Germany has paid over 70 billion dollars to more than
eight hundred thousand Holocaust victims.
Reparations programs for descendants of slaves could
adopt a single method or several at once.
One example is baby bonds.
While the idea won't replace reparations, Darrick
Hamilton argues that they can act as a powerful
complement. These accounts would be targeted at poor
children and help them pay for college, buy a home or
start a business. One is a retrospective economic and
racial justice program to pay a debt and also close
the racial wealth gap. And the other one is
prospective in the sense that it ensures that in a
race conscious way, everyone will in perpetuity have
access to capital and it works toward mitigating
concentrations in the future of wealth.
According to Hamilton, baby bonds would increase by a
guaranteed annual rate of two percent and the initial
deposit would be between twenty five thousand dollars
and sixty thousand dollars, depending on the financial
situation of the child.
One study argues the policy could decrease the racial
wealth gap by more than 10 fold.
It's based on the presumption that there are about four
million babies born each year.
And if you seeded every account at about twenty five
thousand dollars, then twenty five times four million.
And then you add some infrastructure costs of running
the program so the baby bonds would cost less than one
hundred billion dollars a year.
And then one could talk about that in the scale of
what we currently spend.
So one hundred billion is about two percent of federal
expenditures now. It is much less than we spend with
our tax policy on subsidizing the assets of the
wealthy. So if one were to think about the cost of
baby bonds, the scale of other asset expenditures, it
pales in comparison.
This is sort of a precursor of a universal basic income
in the sense that it's going to people regardless of
qualifications. It may have some means testing to it.
It may not, depending on the on how the program is
actually played out.
The country has been discussing reparations one way or
another since slavery officially ended in 1865.
But the protests following George Floyds killing have
trusted racial inequality to the forefront.
According to a recent Reuters poll, one in five
Americans support the idea that the country use
taxpayer money to pay damages to descendants of
slaves. A 2009 Gallup poll found a twenty nine percent
are in favor of such a program.
In that same survey, 16 percent of whites were in
favor of cash payments.
That number has to be put in context because when
Michael Dawson and Ravana Popoff did a survey in the
year 2000 about American attitudes towards
reparations, they found that only four percent of
white Americans were in favor of reparations for Black
Americans. And so it does represent somewhat of a sea
change from the proportion that existed in the year
2000. We also have evidence that close to half of
millennials are actually in favor of reparations for
Black Americans. We may be in a moment where the
conversation can be pushed forward in a far more
positive way. If you want to tackle problems of
disadvantage and social exclusion, don't do it in
terms of race. I think that's very bad for the
country. I think it's of the wrong way to think about
social obligation to each other.
We're not tied to each other because we belong to
these different racial groups.
Even if you don't care about justice for black
Americans, I think if you care about the soul of
America, reparations will heal all of us.
Local efforts to fund reparations are starting to
develop. Recently, the City Council of mostly white
Asheville, North Carolina, voted to apologize for
slavery and offer funding to help black homeowners and
businesses. Evanston, Illinois, made a similar move in
2019 using tax proceeds from recreational cannabis
sales to fund the program.
I can't be sure that even a more optimistic moment will
actually translate into a full and comprehensive
reparations program.
But the present moment seems to afford more of an
opportunity to move forward than any moment I've
experienced in my lifetime.