Instead of Reparations, Expand Opportunities for African Americans

Forward-looking reforms can make a greater difference in black lives today, and in the future.

Michael Tanner

Published in

FREOPP.org

30 min readAug 2, 2023

“The wrongs of long ago are much more easily censured than redressed.”—Boccaccio, The Decameron

Executive Summary

From slavery to Jim Crow and beyond, African Americans have been adversely affected by both government policies and private discrimination. That is a primary reason why 26 percent of African Americans live in poverty — compared with just 10 percent of white Americans — and why 36 percent of African-American children are poor. Poverty rates for African Americans exceed those for white Americans regardless of education, work effort, or family structure.

In response, some activists suggest reparations: a form of payment to African Americans to compensate for past mistreatment and to establish a more equal playing field in today’s market economy.

From a political standpoint, reparations are a divisive issue. 80 percent of white Americans are against reparations, while 77 percent of black Americans support them. Most white Americans oppose reparations regardless of age, socioeconomic status, education, or political affiliation. And, a majority of both Asian Americans and Latinos also oppose reparations.

Some proposals for reparations try to address this problem by eschewing the imposition of collective guilt on white Americans, instead offering restitution by the government to black Americans for explicit wrongs perpetrated or condoned by the government.

From a political standpoint, reparations are a divisive issue. 80 percent of white Americans are against reparations, while 77 percent of black Americans support them.

However, evidence shows that — whatever the moral justification for reparations — the practical difficulties of any large-scale reparations program would be virtually impossible to overcome, involving serious questions about who should be compensated, how much, and in what way. For example, 12 percent of black U.S. residents are first-generation immigrants; most of these do not have U.S. ancestors who were subject to slavery or Jim Crow.

Most significantly, the taxes or debt necessary to pay the billions or trillions of dollars in reparation payments would seriously damage the economy and reduce economic growth for everyone. African Americans are unlikely to gain from higher unemployment, slower wage growth, and less entrepreneurship that would result. The goal of any reparative policy should be to move the poor and people of color into the mainstream of a growing economy, not to slow economic growth itself.

In the end, most concrete proposals of reparations seem to boil down to little more than a recycling of traditional tax and spend policies. But social‐welfare programs have a dismal track record when it comes to empowering African Americans. Doubling down on failed programs is not reparative.

Doubling down on failed programs is not reparative. There are wiser policies that would go further toward overcoming the downstream effects of slavery and segregation, including criminal justice reform and greater educational choice.

We should not dismiss the underlying idea of reparations out of hand. Indeed, America has undertaken significant efforts to address the history of unequal treatment for African Americans. Yet, we have not eliminated disparities in economic opportunity.

Reparations are unlikely to do better. There are wiser policies that would go further toward overcoming the downstream effects of slavery and segregation, and would benefit African Americans more substantially. Those policies range from criminal justice reform to greater educational choice, from an end to exclusionary zoning to increased economic development. A push for reparations is likely to be divisive, and, more importantly, will fail to achieve the goals that its advocates desire.

Introduction

Recently, California’s Task Force to Study and Develop Reparation Proposals for African Americans issued a report calling for cash payments of up to $1.2 million to millions of African Americans living or who have lived in the state, based on a sliding scale considering the recipients age and the length of residency in California. (There are roughly 2.3 million black residents of California, not considering former residents who would still qualify).

The California proposal makes remarkably precise calculations of payments owed for a variety of harms done to African Americans throughout the state’s history, including among other things:

$13,619 for each year of residency (based on a 71-year life expectancy) for health care disparities;
$148,099, or $3,366 for each year spent as a resident of the state between 1933 and 1977 for housing discrimination; and
$115,260, or $2,352 for each year of residency during the 49-year period between 1971 and 2020 for mass incarceration and over-policing.

The task force issued the proposal mere months after the San Francisco Board of Supervisors unanimously endorsed an even more extravagant proposal by the city’s African American Reparations Advisory Committee to provide a one-time $5 million payment to every black resident of the city in order to “compensate the affected population for the decades of harms that they have experienced and will redress the economic and opportunity losses that black San Franciscans have endured, collectively, as the result of both intentional decisions and unintended harms perpetuated by city policy.” In addition to this one-time payment, the San Francisco plan would also forgive all credit card and loan debt held by African Americans, invest more heavily in low-income communities, and subsidize lower-income recipients’ income to reflect the area median income — about $97,000 — for at least the next 250 years.

Neither proposal is likely to become law. The numbers discussed are so enormous that they are hard to take seriously. But they are nonetheless emblematic of a growing debate taking place at the federal, state, and local levels across the country. Can and should governments and other institutions compensate African Americans for past government policies that have deprived them of equal treatment and opportunity?

Several local jurisdictions have either discussed or implemented reparations proposals in the last few years, including Amherst and Boston, Mass.; Ashville, N.C.; Detroit, Mich.; Evanston, Ill.; Providence, R.I.; St. Louis, Missouri; and St. Paul, Minn., among others. Several state legislatures have also debated the issue.

Both internationally and within the United States, there are numerous instances of governments providing recompense for past injuries and injustices.

At the federal level, nearly every year Rep. Sheila Jackson Lee (D., Tex.) introduces a bill calling for a commission to study and develop proposals for reparations. The legislation would compile documentary evidence of slavery in the United States; study the role of the federal and state governments in supporting the institution of slavery; analyze discriminatory laws and policies against freed African slaves and their descendants; and recommend ways the United States may recognize and remedy the effects of slavery and discrimination on African Americans, including through a formal apology and compensation (i.e., reparations).

The United States is undergoing a racial reckoning: a debate about coming to terms with some of the more unpleasant aspects of the past. Part of that conversation needs to encompass what, if anything, is owed to African Americans, by whom it is owed, and whether or not the debt can be paid.

The answers to those questions are very complicated and frankly unsatisfying. But there remain questions that we should ask.

Is there a precedent for reparations?

Both internationally and within the United States, there are numerous instances of governments providing recompense for past injuries and injustices.

One of the most obvious cases is the Holocaust. As a result of the Luxembourg Agreements and legislation known as Weidergutmachung (literally, to make good again), Germany agreed to pay compensation for the abuses and crimes of the Nazis. In addition to country-to-country payments to Israel, Germany also agreed to establish a fund to provide direct compensation to Jewish survivors. Survivors could file claims for deprivation of liberty, compulsory labor, involuntary abandonment of their homes, loss of income, loss of professional and educational opportunities, loss of property, and damage to health. Wherever possible, real property was to be restored to its rightful owners, with only limited protections for “good faith” purchasers. Some payments were lump sum, while in other cases, especially for the elderly and disabled, there were annual pensions or other payments. In addition, Germany agreed to pay an additional $1 billion to provide home care and other medical services to an estimated 56,000 elderly Holocaust survivors worldwide.

Other foreign examples of reparations include Canada, which — like the United States — provided restitution to its citizens of Japanese ancestry interned during World War II; New Zealand, which has begun compensating the Māori for land that was taken by colonists; and Japan, which has made payments to Koreans enslaved as “comfort women” during the occupation of that country during World War II. Some also consider South Africa’s Truth and Reconciliation commissions to be a form of non-monetary reparations.

Ronald Reagan signed the Civil Liberties Act of 1988 to compensate Japanese Americans for lost property and other abuses resulting from internment during World War II.

Domestically, the United States also has a history of paying reparations at the federal, state, and local levels of government. In some cases, private parties have also paid reparative sums. In practice, however, most of these efforts have encountered significant problems.

In perhaps the best-known example, Ronald Reagan signed the Civil Liberties Act of 1988 to compensate Japanese Americans for lost property and other abuses resulting from internment during World War II. (Interestingly, this was the second attempt to provide compensation to interned Japanese Americans. The first effort, in 1948, was quite limited.) Notably, the law specifically said that since Japanese Americans were harmed as a group, they should be compensated as a group. Every surviving internee or their immediate descendants could receive a $20,000 lump sum payment. However, many internees had died, and there were other difficulties in determining eligibility. As a result, while roughly 1.2 million Japanese Americans (and some native Alaskans) had been interned, just 82,219 people received reparation payments.

The federal government has also provided reparations to Native Americans for land that was illegally seized from tribes. Congress created the Indian Claims Commission after World War II to pay compensation for tribal land that had been seized by the United States,. The program ran into a number of legal and procedural roadblocks, however, and was dissolved in 1978, having distributed just $1.3 billion, less than the equivalent of $1,000 per Native American. Worse, compensation was not paid directly to Native Americans, but was held in trust accounts because the tribes were not considered “competent to receive such large amounts of money.” Relatively little of the money appears to have directly benefited the intended recipients.

There are also precedents for reparation payments specifically to African Americans. Early in the Obama administration, the Agriculture Department reached a $1.25 billion settlement for years of discrimination against black farmers. And individual states have made reparation payments for past crimes. For instance, in 1994, Florida compensated survivors of the racially motivated Rosewood massacre of 1923; and in 2015, Chicago authorized a $5.5 million reparations package for survivors and their families of a police torture scandal that took place from the 1970s to the 1990s. The Chicago package also included a formal apology, a waiver of tuition for city colleges, a mandate that city schools teach about the incident, and a memorial (as yet unrealized) to victims. Most recently, in 2023, Virginia reauthorized and expanded a program providing compensation for those who lost educational opportunities as a result of “massive resistance” to school desegregation. And, as noted above, a handful of cities, including Evanston, Ill. and Asheville, N. C. have established reparations for past discrimination in housing.

Reparations may still be more the exception than the rule, but they are far from unprecedented.

The case for reparations

The injustices committed against African Americans, beginning with slavery, are manifest. Millions of African-Americans continue to suffer from the aftereffects of those injustices. African Americans are not only disproportionately likely to be poor: a substantial amount of that poverty can be traced to discriminatory government policies. It is appropriate to ask, then, whether the United States owes some form of restitution or reparations to African Americans.

The descendants of the victims of slavery and segregation have clearly suffered as a result of both past and present U.S. policy. This unfair treatment of African Americans could not have occurred without the active participation and acquiescence of the U.S. government. African Americans have suffered injury and loss as a result. These policies have rendered the playing field unlevel, disadvantaging African Americans in everything from education to homeownership, to starting a business, and to passing down inter-generational wealth.

There is a moral case for reparations that cannot simply be waved away.

It’s worth remembering that 26 percent of African Americans live in poverty today, compared with just 10 percent of white Americans, and that 36 percent of African American children are poor. Poverty rates for African Americans exceed those for whites in all categories of education, work effort, and family structure. Unemployment among African Americans is roughly double that for white Americans, and the wealth of a typical black family is just one tenth of that of a typical white family.

It is, obviously, virtually impossible to draw a straight line between any specific act of governmental policy, past or present, and the poverty of any individual African-American. But as in a criminal trial, the weight of circumstantial evidence can accumulate to where the relationship seems clear beyond a reasonable doubt. The circumstantial case that public policy has been a factor in Black poverty is a strong one.

As Rev. Martin Luther King Jr. put it during his 1963 “I have a Dream” speech:

In a sense we have come to our nation’s capital to cash a check. When the architects of our Republic wrote the magnificent words of the Constitution and the Declaration of Independence, they were signing a promissory note to which every American was to fall heir. The note was a promise that all men, yes black and white would be guaranteed the unalienable Rights of Life, Liberty and the pursuit of Happiness…it is obvious today that America has defaulted on this promissory note, insofar as the citizens of color are concerned. Instead of honoring this sacred obligation, America has given the Negro people a bad check, a check which has come back marked insufficient funds.

How much money are we talking about? In the 1970s, the late Julian Simon of the University of Maryland and Larry Neal of the University of Illinois estimated the value of unpaid wages to slaves at $1.4 trillion. In 2019, Willian Darity of Duke University’s Sanford School of Public Policy and Andrea Kirsten Mullen took that figure and compounded it at various interest rates, concluding that the debt to African Americans could be estimated as between $5.7 and $11.4 trillion.

Using a slightly different methodology, economic historian James Marketti calculated the value of lost wages at roughly $2.1 trillion, or more than $10 trillion today assuming accumulated interest and inflation. Thomas Craemer, professor of public policy at the University of Connecticut estimated the debt between $16.4 trillion and $17.7 trillion, based on the “prevailing market wage” and the number of hours enslaved people worked between 1776 and 1865.

Moreover, as Boris Bittker argues in The Case for Black Reparations, the basis for reparations is not, and should not be, solely derived from slavery. The mistreatment of African Americans continued in slavery’s aftermath, through Reconstruction and Jim Crow. That would mean additional claims for compensation. To cite just one example, Bernadette and Gerald Chachere estimated that labor market discrimination cost black Americans $1.6 trillion between 1929 and 1969 alone. That would be nearly $60 trillion in today’s dollars.

Add in pain and suffering, lost educational and wealth building opportunities, and so on, and we are rapidly approaching numbers that are nearly impossible to comprehend.

We should be careful about claims that the overall wealth of white America rests on slavery and Jim Crow, but the impact of past and current racial discrimination on the relative wealth of black and white Americans is hard to deny.

As economists Darrick Hamilton of the New School and William Darity of the University of North Carolina conclude, inheritances and other intergenerational transfers “account for more of the racial wealth gap than any other demographic and socioeconomic indicators.”

As the authors note:

The intergenerational racial wealth gap was structurally created and has virtually nothing to do with individual or racialized choices. The source of inequality is structural, not behavioral — intra-family transfers provide some young adults with capital to purchase a wealth-generating asset like a home, a new business or a debt-free college education that will appreciate over a lifetime. Access to this, non-merit based, seed money is not based on some action or inaction on the part of the individual, but rather the familial position in which they are born.

Housing and education are two areas where it is clearest that white Americans have and continue to benefit from past discrimination against African Americans.

For most American families, their house is the largest single component of their savings. Just 44.9 percent of African-American families own their own home, the lowest homeownership rate of any racial category, and almost 30 percentage points lower than white homeownership. To a large extent, this is the result of deliberate government policy.

A long-term fix to the plight of the African-American community will require more than just doing what we have been doing, but rebranding it as “reparations.”

For example, the Home Owners’ Loan Corporation (HOLC), a government agency created as part of the New Deal to provide low-interest mortgages, insisted that any property it covered must include a clause in the deed forbidding the property’s resale to nonwhites. The HOLC went so far as to draw up color-coded maps ranking American communities on the basis of which ones had too many “inharmonious racial groups.” Areas with large numbers of African Americans were typically outlined in red, hence the term “redlining.”

Even the G.I. Bill, which opened the door to homeownership for millions of white families, failed to have the same effect for African Americans. Although the law was facially neutral with regard to race, its implementation was so problematic that in her book on the topic, Berkeley historian Kathleen Frydl points out that “Black veterans did not experience the same G.I. Bill as white veterans . . . this result did not stem from any direct discrimination in the bill itself. It was a feature of its implementation — and an intended one.” For example, in 1947 only two out of 3200 VA-guaranteed loans in Mississippi went to African Americans. It was not just southern states either. In New York and New Jersey fewer than 100 out of 67,000 VA loans went to non-whites.

Long after these more blatant types of discrimination faded or were prohibited, more subtle forms of redlining remained, defined as the practice of denying or limiting financial services to certain neighborhoods based on racial or ethnic composition without regard to the residents’ qualifications or creditworthiness. The practice was not formally outlawed until the Fair Housing Act in 1968. As discussed below, housing discrimination continues to be a problem today.

As Melvin Oliver and Thomas Shapiro point out in their book Black Wealth/White Wealth:

Locked out of the greatest mass-based opportunity for wealth accumulation in American history, African Americans who desired or were able to afford homeownership found themselves confined to central-city communities where their investments were affected by the “self-fulfilling prophecies” of FHA appraisers: cut off from sources of new investment, their homes and communities deteriorated and lost value in comparison to those homes that FHA appraisers deemed desirable.

This legacy of discrimination in housing still has fallout today. After all, if a family was denied a mortgage in the past because of redlining or other discriminatory practices, then they may not have the family wealth or down payment help to become a homeowner today.

Likewise, policies tying education to one’s residential location force African American children into inferior schools, thus denying them entry into elite colleges. As a result, they do not have the same educational capital to pass on to their children as do many white families. Consider, for example, the significant role played by legacy admissions to many colleges and universities. A 2020 survey of college admission officers found that 56 percent of the top 250 American colleges and universities considered legacy status in their admissions process. But you can’t have legacy status if your parents or grandparents were denied admission to a college because of their race, though this effect is fading as more African Americans attend college, including those who benefited from affirmative action in the past.

Inequitable public policies do therefore play a role in today’s racial wealth gap.

It’s not about white guilt

It is important to understand that reparations are not about the collective punishment of white Americans for the sins of the past.

Most theories of justice encompass the idea of restitution by perpetrators to victims. If I harm you or damage your property, I can be required to compensate you for my actions. As legal scholar Randy Barnett of Georgetown University explains: “for a restitutive remedy for rights violations, one must posit what a crime is: an unjust redistribution of entitlements by force that requires for its rectification a redistribution of entitlements, by force if necessary, from the offender to the victim.”

This poses a problem for the concept of slavery-based reparations since the rights violations in question occurred so far in the past that neither an offender nor a victim can be identified. Both slaveholders and slaves are long dead. Even in the case of more recent rights violations, during Jim Crow for instance, where victims may still be alive, it is difficult to identify individual offenders, their victims, and precise damages. Thus, reparations are difficult to justify under the most frequently cited theory of justice.

But this fundamentally misunderstands the nature and purpose of reparations. Reparations are not a punishment for white Americans, but rather a mechanism for making African Americans whole. As Adjoa Aiyetori, Director of the Institute of Race and Equality at the University of Arkansas-Little Rock notes, “We’re not raising claims that you should pay us because you did something to us 150 years ago. We are saying that we are injured today by the vestiges of slavery, which took away income and property that was rightfully ours.”

The government’s complicity in the maltreatment of African Americans is a crucial point. American governments at all levels were frequently the instruments of that oppression. Therefore, one can impute a type of “corporate” liability to the United States as a whole. Under this theory, all Americans owe reparations to the descendants of victims of slavery, segregation, and other discriminatory policies, not because all Americans are individually responsible for slavery or other abuses, but because we are citizens, and therefore have an admittedly “indirect and vertical,” but nevertheless real membership in the liable group.

Even advocates of reparations are unable to agree on questions of what is owed, by whom, and to whom.

This is a well-established concept of liability. Class action lawsuits do not require every group member to prove injury. Corporations are liable for their conduct, or even the conduct of individual employees, although the ultimate economic cost of that liability may be paid by employees or shareholders who took no part in the blameworthy conduct.

Collective liability for government malfeasance is a long-standing principle of law. To cite a common example, if someone’s car is damaged by a pothole that the city failed to repair, the car owner can seek restitution for his or her damages, even if that requires taxes paid by residents who had nothing to do with road maintenance. When the city pays an award in a negligence or wrongful death case, residents can be taxed to make those payments, though they were nowhere near the incident in question. As in those cases, the involvement of government action in the treatment of African Americans imposes a collective responsibility.

Of course, putting the locus of responsibility on the government does raise another degree of complexity. What level of government bears what degree of responsibility? The federal government versus state governments versus local governments? Slave states versus free states? States, such as California, that allowed slaveholders to bring their slaves into the state? States that enforced the Fugitive Slave Act versus those that refused to cooperate? Federal enforcement of the Fugitive Slave Act and other pro-slavery laws? States where Jim Crow was explicit versus states where it was implicit? A legal proceeding would normally sort through questions of jurisdiction and apportionment of responsibility, but the question of reparations will likely be resolved by legislative bodies, not courts.

The libertarian philosopher Robert Nozick is perhaps best known for his theory of just property rights. As outlined in his Theory of Entitlements, Nozick posits that the distribution of property (or “holdings”) is just when (1) that property was justly acquired and/or (2) that property was transferred as the result of a just process. But significantly, Nozick included a third leg to his theory, and that is a recognition that not all property has been acquired or transferred justly. Therefore, he includes room for “rectification” to set right past injustices in the acquisition and transfer of property .

In advancing the concept of rectification, Nozick particularly noted the theft of land from Native Americans, but the concept would also seem highly relevant to African Americans. Clearly, the original distributions of wealth, and many subsequent transactions, were deeply distorted by slavery, Jim Crow, and ongoing discrimination. Reparations, therefore, would certainly appear to fall under Nozick’s definition of just rectification.

There is, therefore, a philosophical and moral case for reparations that cannot simply be waved away.

Where the case for reparations breaks sown

Whatever the larger moral justification for reparations, the practical difficulties of any large-scale reparations program would be virtually impossible to overcome. After all, even advocates of reparations are unable to agree on questions of what is owed, by whom, and to whom.

Who Pays/Who Benefits?

Most of the examples of reparations for other groups discussed previously — such as for Japanese Americans, European Jews, and black victims of Chicago police torture — were based on providing compensation to the victims of specific acts or their direct descendants. Indeed, as discussed above, most theories of justice involving restitution or compensation require a perpetrator and a victim or victims. However, in the case of African Americans, adopting a perpetrator/victim framework would entail significant difficulties both apportioning responsibility among perpetrators and in determining victimhood, particularly if reparations were based on a broad historical basis such as slavery.

For these reasons, some advocates of reparations suggest abandoning traditional judicial notions of individual or personal liability. Mari Matsuda of Georgetown University Law School argues that victims of racism “necessarily think of themselves as a group, because they are treated and survived as a group.” That is, African Americans were not enslaved, discriminated against, and abused solely as individuals, but because they were part of a group, i.e., because they were black. Therefore, says Matsuda, they should be compensated as members of that group.

Yet, while a case can be made for broad categorical eligibility for reparations, determining eligibility — and distinguishing between dessert and programmatic eligibility — has proven remarkably difficult in practice.

In 2022, California’s reparations task force sparked an uproar when it narrowly voted to limit reparations to direct descendants of enslaved black people. It subsequently revised its proposal to include a “free black person living in the United States prior to the end of the 19th century.” But this categorization would still leave out nearly 20 percent of the state’s 2.5 million Black residents, primarily descendants of post-19th century black immigrants who, nonetheless, experienced anti-black racism and discrimination.

Moreover, as Tony Burroughs, CEO of the Black Genealogy Project, points out, proving descent from slavery is much more difficult than commonly assumed. With so much money potentially at stake, family oral histories are not going to be sufficient to prove ancestry. Yet, there is a sparseness of records from the period, there are few written histories of enslaved peoples, and what records do exist may be inaccurate. Names may have had different spellings 200 years ago or may have changed entirely through the years.

For that matter, how does one define African American? Because race is a social construct and racial categories are necessarily arbitrary, racial qualification alone seems unworkable and implicitly endorses the dangerous fiction that race is biologically legitimate. At least one third of African Americans have some white ancestry. While they would presumably be included in the group of reparation recipients, a bigger issue is for those considered primarily white, roughly four percent of whom have at least some black ancestry. While that may seem like a relatively small percentage, it still amounts to nearly eight million people. The number of Americans who identify as more than one race nearly doubled to 13.5 million people between 2010 and 2020. From here on out, multiracial ancestry is only going to grow. Basing reparations on slave ancestry, therefore, is an invitation to perpetual litigation.

Moreover, limiting reparations to descendants of slavery ignores the significant — and more recent — harm from post-slavery discrimination. As noted above, Jim Crow and the present-day effects of segregation have a significant, and in many cases more demonstrable, impact on racial wealth disparities.

Reparations for past housing discrimination does nothing to eliminate the exclusionary zoning practices that perpetuate housing segregation today. Reparation payments for past police misconduct and over incarceration do not change current police practices. Restitution to those forced to attend segregated schools will not help African American children to escape failing schools today.

Finally, should all African Americans receive reparations equally, regardless of their current economic conditions, or should payments be reserved for the poor? If the former, we would see the spectacle of poor whites being taxed to provide payment to, say, Michael Jordan or Oprah Winfrey. Wealthy African Americans have obviously encountered racism in their lives. On the other hand, targeting only low-income African Americans is contrary to the categorical eligibility discussed above. Under this criteria, reparations become less a matter of justice and more a form of welfare.

Dealing with such issues is why Randall Robinson — considered the intellectual father of the modern reparations movement — and others have suggested that, rather than making slavery the starting point for reparations, payments should be based on specific types of harm. While still problematic, there is definitely a stronger case for basing reparations on specific harms.

As example, there may be a set of payments based on whether a person was forced to attend a segregated school prior to Brown v Board of Education. Virginia took this approach in 2004, setting aside $1 million — with another $1 million contributed by a private donor — in a scholarship fund to finance GED classes, community college, four-year degrees, and master’s programs for state’s black residents harmed by Virginia’s “massive resistance” to school desegregation. As noted above, the fund was quietly expanded this year by Republican Gov. Glenn Youngkin.

Similarly, Ta-Nehisi Coates has suggested reparations based on housing discrimination, since a clear link can be drawn between unfair housing practices and the lack of inheritable wealth in the African-American community. This is the basis for reparations proposals in Asheville, N.C. and Evanston, Ill.

As part of a $10 million general allocation, Evanston established a Restorative Housing Reparations Program in 2021 to provide $400,000 in housing assistance to black residents over the next 10 years. A three percent tax on legal cannabis sales will fund the program. It is designed to compensate for the city’s history of redlining and housing discrimination, although future appropriations may deal with education and economic development.

Meanwhile, Ashville’s reparations plan would not actually provide payments to individuals, but rather calls “forming policy and programs that will establish the creation of generational wealth and address reparations due in the black community,” as well as asking the state legislature and federal government to do the same.

On an even narrower basis, there are also efforts to return or compensate African-American families for property that was illegally seized. The closer in time and more specific the injury, the stronger the case for reparations becomes.

The Payout

There are also serious questions about how reparations would be paid. The easiest and most obvious answer is that all those falling within the appropriate recipient category would receive a cash payment. Indeed, California’s task force specifically calls for cash payments for individuals.

But there is reason to question whether a single lump sum payment would really solve the problems facing the African-American community as a result of slavery and discrimination.

On the one hand, as George Mason economist Tyler Cowen writes, under most classical economic theories, “a gift of cash always makes a person better off.” At the same time, evidence from lottery winners, professional athletes, and recipients of large inheritances show that significant cash windfalls often generate more problems than they solve. This is likely to be especially true for people who have little experience handling large sums of money. Of course, most recipients will do just fine, and a market in financial advice will undoubtedly develop, but at least some are likely to find a short-lived boom followed by a bust, leaving them still without the education, skills, or resources necessary to obtain long-term prosperity. Moreover, the public will be unsympathetic towards efforts to bail out those who are imprudent or are taken advantage of by the unscrupulous.

Smaller payments may avoid these problems but are unlikely to provide recipients with sufficient income to live on by themselves. For the poorest recipients, they may simply end up substituting for existing welfare payments without making the recipient appreciably better off.

Some advocates of reparations, therefore, don’t seek payments to individual African Americans, but rather some sort of payment to benefit the African-American “community” at large. As Molefi Kete Asante, professor of African-American studies at Temple University explains it, “Any reparations remedy should deal with the long-term issues in the African-American community rather than a one time cash payout.” In a similar vein, the San Francisco branch of the NAACP rejected the Reparations Commission’s proposal for individual payments, instead calling for greater investment for education, health care, housing, and economic development.

Reparations advocates offer a wide range of possible avenues for reparations. Charles Ogletree of Harvard Law School argues for a broad job-training and public works program directed at the poor regardless of race. Melanye Price, a professor of Africana studies at Rutgers, calls for greater funding of historically black colleges and for more public health initiatives in black communities. More recently, some activists have promoted a universal basic income as a type of reparations. Others have suggested increases in social welfare spending, school construction, increases in the minimum wage, or infrastructure projects.

In the end, many calls for reparations begin to look like little more than a framework upon which to hang traditional government programs, programs that have long failed to lift African Americans out of poverty or provide them with long-term opportunity.

Shelby Steele, a black conservative, recently argued that the facial case for reparations is compelling if we use “simple logic:”

If simple logic were the only measure of truth in matters of race, reparations for black Americans would make perfect sense. We have endured four centuries of an especially mean and degrading persecution. Slavery, and the regime of segregation that followed it, was dawn-to-dusk, cradle-to-grave oppression. The only argument against reparations would be that no contemporary offer of reparation could ever be sufficient compensation

But Steele goes on to point out:

America has had some 60 years of what might be called reparational social reform — reform meant to uplift not only the poor, but especially those, like black Americans, whose poverty meets the bar of historical grievance. Today we can see what we couldn’t in the ’60s: that this vast array of government programs has failed to lift black Americans to anything like parity with whites. By almost every important measure — educational achievement, out-of-wedlock births, homeownership, divorce rates — blacks are on the losing end of racial disparities.

In fairness, some important reparations advocates, such as Randall Robinson, appear to recognize the failures of existing welfare programs, calling instead for the establishment of a private trust to dispense funds. However, a trust would still be funding the same sort of large-scale social welfare projects that have proven so ineffective. In a sense, a trust fund is more a way to avoid a potentially hostile bureaucracy, than a change in approach.

A long-term fix to the plight of the African-American community will require more than just doing what has been done before, but rebranding it as reparations.

The Cost

We cannot consider paying reparations in a vacuum. The funds to pay reparations must come from somewhere. In the case of the government, the source of such funding would necessarily be debt or taxes. Yet either of those mechanisms — especially given the enormity of the obligations discussed above — would have devastating consequences for the economy and would leave the United States worse off.

The cost of California’s proposed reparations, for example, could exceed $800 billion. To put that in context, that would be nearly 22 percent of the state’s annual GDP, or roughly 2.5 times larger than the state’s entire current budget of $307 billion. This at a time when the state is already facing a $32 billion budget shortfall. Even if spread over time, an idea discussed by the task force, imposing the additional taxes necessary to make good on the task force’s recommendations would devastate the state’s economy and lead to widespread unemployment, as businesses, investors, and entrepreneurs flee the Golden State. That is likely one reason why the task force did not include any specific proposals for how to pay for their plan, leaving that to the legislature.

Paying for reparations at the local level faces even higher hurdles. Lee Ohanian of the Hoover Institution, for instance, estimates that the San Francisco proposal would impose $600,000 in additional taxes on every non-black household in the city. That is quite simply not going to happen.

Even much more targeted and realistic proposals impose costs that would be difficult for most municipalities to bear, which is why most have either avoided discussing costs or have resorted to gimmicks.

At the federal level, Rep. Cori Bush (D., Mo.) has suggested $14 trillion as an appropriate amount. That approaches 54 percent of U.S. GDP and four times more than the entire federal budget. As policymakers fight over the $32 trillion national debt, it is hard to imagine the federal government taking on trillions in additional obligations for such a controversial measure.

Of course, depending on how Congress were to structure a reparations program, these might be net rather than gross costs, since payment of reparations could reduce non-race-specific social welfare spending. However, if the initial payout required federal borrowing, (i.e. increased the deficit) there would also be interest costs. If the initial payout required tax increases, there would be a negative impact on economic growth and tax revenue. Without seeing many more details, we simply don’t know how much reparations would cost.

In the end, many calls for reparations begin to look like little more than a framework upon which to hang traditional government programs, programs that have long failed to lift African Americans out of poverty or provide them with long-term opportunity.

There are also questions about second order economic effects that need to be considered. On the positive side, reparations could result in a new burst of investment and entrepreneurship among African Americans. There is no doubt that a lack of capital has limited African-American business growth. Reparations could help remedy this situation and increase broader economic growth. On the other hand, if reparation payments were significant, they would likely reduce labor force participation by recipients. Moreover, a sudden inflow of cash of this sort will almost certainly increase inflation.

Potential for a Backlash

Reparations are a deeply divisive issue, in part because those would be asked to pay for the sins of the past were not directly responsible for them. Consider the fierce and often toxic debate currently taking place over issues like affirmative action, critical race theory, and how to teach children about race and racism in schools. Adding reparations to this bitter mix would do little to bring Americans together.

Polls show that Americans overwhelmingly oppose reparations, but that obscures a deep racial split on the issue. According to a 2022 Pew poll, for instance, 80 percent of white Americans are against reparations, while 77 percent of black Americans support them. Most white Americans oppose reparations regardless of age, socioeconomic status, education, or political affiliation. And, a majority of both Asian Americans and Latinos also oppose reparations.

In fact, a 2019 Associated Press poll not only showed overwhelming white opposition to reparations, but nearly two-thirds of whites opposed even an apology for slavery.

Just consider how affirmative action, a minor step compared to reparations, has split even liberal constituencies. Even in California, a ballot measure that would have restored race-conscious college admission practices, failed by a 43–57 margin. If the voters in a deep blue state like California won’t support affirmative action, reparations have little chance. Similarly, the Supreme Court just prohibited the use of race in college admissions, citing the Equal Protection Clause of the 14th Amendment and the Civil Rights Act of 1964. Is it seriously likely that the Court would look more favorably on race-based reparations?

While politics need not be zero-sum, political capital is not infinite. Given that a majority of white Americans now believe that anti-white bias is a bigger problem than anti-black bias, a call for reparations will almost certainly further inflame racial tensions without advancing the ball toward the ultimate goal of racial equality. Basing an agenda on reparations unnecessarily limits potential allies while focusing effort and political capital on an unpopular idea that won’t, by itself, alleviate the problems African Americans face.

A better, forward-looking approach

If reparations are not practically viable, how can policymakers make African Americans whole for the harm they have suffered? The answer may lie not in trying and failing to make up for the past, but in changing policies to help create a more equal economic playing field going forward. As the San Francisco NAACP put it, “We strongly believe that creating and funding programs that can improve the lives of those who have been impacted by racism and discrimination is the best path forward toward equality and justice.”

Reparations for past housing discrimination do nothing to eliminate the exclusionary zoning practices that perpetuate housing segregation today.

For instance, reparations for past housing discrimination do nothing to eliminate the exclusionary zoning practices that perpetuate housing segregation today. Reparation payments for past police misconduct and over incarceration do not change current police practices. Restitution to those forced to attend segregated schools will not help African-American children to escape failing schools today.

Obviously, paying reparations and fixing current policy problems are not mutually exclusive, and many reparations proposals also call for current policy changes. But, still, reparations tend to overshadow calls for larger reform and divert scarce political capital. To the degree that reparations spark a backlash, such proposals would likely make other reforms more difficult. Any payment of reparations would be received by many Americans as a signal that their collective obligation to African Americans has been fulfilled, and that any additional reforms are unnecessary. As former president Barack Obama once warned, “I fear that reparations would be an excuse for some to say, ‘We’ve paid our debt,’ and to avoid the much harder work.”

Rather than squander precious political capital on a quixotic push for reparations, we should undertake positive, forward-looking reforms to level the playing field and increase opportunity for African Americans, especially those at the bottom of the economic ladder today.

Yet, there are forward-looking reforms that could make a significant difference in the lives of African Americans today and in the future. These reforms include eliminating exclusionary zoning, reforming the police and reducing mass incarceration, giving parents greater choice and control over schools, and encouraging black entrepreneurship. Importantly, these are reforms that, while particularly beneficial to African Americans, have the added advantage of helping low-income and struggling Americans regardless of race. Therefore, they have the potential for building a large, multiracial, and cross-ideological constituency.

The best way to repair is to reform

We should not dismiss out of hand the idea of providing reparations to African Americans out-of-hand. Although some current proposals are difficult to take seriously, the idea that America owes a moral debt to African Americans for centuries of maltreatment is an enduring one. The past informs the present and inequalities of opportunity for the descendants of victims of slavery and segregation remain.

However, while it is feasible to establish reparations for discrete instances such as the Chicago police torture case, a large-scale historical reparations program would present practical difficulties that are virtually impossible to overcome. Determining who should receive reparations, how much those reparations should be, and how they should be paid would be incredibly divisive. More significantly, the cost of paying significant reparations would have a devastating impact on the economy, leaving the United States as a whole much poorer over the long run.