Why Reparations Are Needed to Close the Racial Wealth Gap

The U.S. government’s debt to emancipated slaves and their descendants is more than 155 years overdue, an economist says.

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The wealth gap between Black and white Americans is too enormous to be remedied through incremental programs. What’s needed are federal reparations.

The reason is essentially twofold: The sheer size of the wealth gap requires massive federal intervention to close it, and justice requires that the U.S. government fulfill its unmet obligations to African American slaves and their descendants.

I’ve written in a previous column about the colossal size of the wealth gap. Briefly, estimates from the Federal Reserve’s 2019 Survey of Consumer Finances indicate that the average Black household had $840,900 less in net worth than the average white household. Black American descendants of people enslaved in the United States constitute 12 percent of the nation’s population but possess less than 2 percent of the nation’s wealth.

A reparations plan for African Americans would be aimed at bringing the share of Black wealth into consistency with the share of the population. Simple arithmetic shows that this would require at least $11 trillion.

International norms suggest that reparations should primarily take the form of direct payments. Examples include Germany’s payments of restitution to the victims of the Holocaust, the U.S. government’s payments to Japanese Americans who were subjected to mass incarceration during World War II, as well as U.S. government payments to families that lost loved ones in the Sept. 11 terrorist attacks. But reparations need not be cash transfers. They could take less liquid forms, like trust accounts or annuities.

In our book, “From Here to Equality,” my wife, Kirsten Mullen, and I suggest that reparations should go to Black American descendants of people enslaved in the United States, including those emancipated at the close of the Civil War and promised 40-acre land grants as restitution for bondage. That promise has never been met.

Coupled with the government’s provision of 160-acre land grants to 1.5 million white families under the Homestead Act of 1862, the denial of restitution to African Americans after the Civil War marked the start of a cumulative, intergenerational process resulting in today’s mammoth racial wealth gap.

The federal government’s culpability extends well beyond those actions, my research and that of many other scholars show. By failing to take action to stop or bring to justice the perpetrators of these offenses, the government effectively sanctioned more than 100 well-documented white terrorist massacres from the end of the Civil War through World War II.

Recent attention has been called to the atrocities that occurred in Wilmington, N.C., in 1898 and in Tulsa, Okla., in 1921. But there were many more. In 1919, known as the “Red Summer,” about 35 massacres occurred in locales as varied as Bisbee, Ariz.; Chicago; Wilmington, Del.; Elaine, Ark.; Washington, D.C.; and Ocoee, Fla. Black lives were lost to white mob violence, and white terrorists seized and appropriated — stole — Black property. All this deepened the racial wealth divide.

Furthermore, in the 20th century, the federal government promoted homeownership in a harshly discriminatory manner that benefited white households and sidelined African Americans. For example, the Federal Housing Administration excluded Black Americans from programs that granted white applicants access to easy credit for home buying. And while the G.I. Bill aided veterans returning from World War II in home buying and business development, these provisions were applied unevenly, often to the detriment of Black people. In short, the federal government fostered white asset ownership and helped build the racial divide in wealth.

The federal government is not only culpable; it is the only government entity capable of meeting the reparations debt. All state and municipal annual budgets combined amount to less than $3.5 trillion. If they were even to attempt to meet a bill of more than $11 trillion collectively, they would have to devote all of their financial resources to reparations for four consecutive years, disabling their ability to provide any services to their constituents.

The federal government’s response to the 2007-9 Great Recession and to the current pandemic demonstrate that it can rapidly mobilize resources and spend huge sums without raising taxes. Federal expenditures to mitigate the economic impact of Covid-19 now exceed $6 trillion. The resources for reparations can be mustered.

But progress so far has been scant. Proposed congressional legislation to establish a commission on African American reparations does not provide assurance that redress would be forthcoming. Among its flaws, the bill, H.R. 40/S. 40, includes no directives that might guide a commission or ensure that it produces a reparations plan capable of eradicating the gulf in wealth.

As a practical matter, our book outlines two criteria that could be used to establish eligibility for receipt of reparations. First, the government could impose a lineage standard: An individual would need to have at least one ancestor who was enslaved in the United States.

Second, there is a need for an identity standard: Reparations recipients would need to show that, for at least 12 years before the enactment of a reparations plan or establishment of a study commission for reparations, they had self-identified as Black, Negro, African American or Afro-American. This criterion would prevent someone who is living as white from suddenly claiming eligibility for reparations when there is a monetary gain to be had from being the descendant of an enslaved person.

Congress would need to authorize the Treasury and the Federal Reserve to make the payments.

Reparations may be summarized as a program of acknowledgment, redress and closure for grievous injustices. Acknowledgment is a culpable party’s admission that it has committed a horrendous wrong, accompanied by a promise to make restitution. Redress is the act of restitution, involving direct compensatory payments to members of a victimized community. Closure is mutual recognition by the culpable party and the victimized community that redress is sufficient and that the account is settled.

The U.S. government has begun the first step, the act of acknowledgment. On July 29, 2008, the House of Representatives declared that the government “apologizes to African Americans on behalf of the people of the United States, for the wrongs committed against them and their ancestors who suffered under slavery and Jim Crow.” The Senate issued a statement with identical language on June 18, 2009.

However, while the House resolution expressed a “commitment to rectify the lingering consequences of the misdeeds committed against African Americans under slavery and Jim Crow and to stop the occurrence of human rights violations in the future,” the Senate was far more cautious. It said that “nothing in this resolution authorizes, supports or serves as a settlement of any claim against the United States.”

Clearly, then, the United States has not come close to providing restitution and is far from achieving closure.

Reparations for Black American descendants of enslaved people in the United States are already more than 155 years overdue. The federal government’s own policies helped to create the racial wealth divide, and it has a responsibility to provide restitution.

William A. Darity Jr. is a professor of economics and the Samuel DuBois Cook distinguished professor of public policy at Duke. He and Kirsten Mullen are the authors of “From Here to Equality: Reparations for Black Americans in the Twenty-First Century” (UNC Press, 2020).

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