Law in Contemporary Society

The Black-white Wealth Gap: The Case For Reparations

-- By AlexanderHohl - 26 Feb 2021

The Origins of Reparations

The idea of reparations is not new. In 1783, Belinda Sutton, an African-born woman, became the first formerly enslaved person to win reparations for her years in bondage. In 1865, at the end of the Civil War, General William T. Sherman made Special Field Order No. 15, issuing 400,000 acres of land stretching along the coast of South Carolina to Florida to the formerly enslaved. The order would have redistributed the roughly 400,000 acres of land, in forty-acre segments, to families of the formerly enslaved. This glimmer of hope for newly freed Blacks was short-lived, however, as after President Lincoln’s assassination in April of 1865, President Andrew Johnson overturned Sherman’s directive. After roughly 200 years of slavery, the annulling of General Sherman’s order to provide the formerly enslaved 40-acre land grants (and a mule) created the indestructible foundation of the racial wealth gap that has widened and persisted to this day. This foundation has been reinforced over centuries through state-sanctioned and institutional discrimination, leaving Black Americans and blackness generally on the economic, social, and political margins, locked away from generational wealth, prosperity, and true freedom.

An Enormous, Overwhelming Wealth Gap - A Brief History

We must begin in 1492, of course. This story begins with genocide and forced acquisition, as European colonizers arrived in what is now the United States, reinventing what it meant to be first-in-time. 1619 brought to the English colony of Virginia the first ship carrying enslaved Africans. What the colonizers left in Africa is not as well known: resources across the African continent that had enabled wealthy African tribes and societies for centuries, which they extracted, along with flesh and blood. The expansion of our great wealth gap by formal state-mandated legislation began in 1662 with Act XII, which legally made the child of an enslaved mother also a slave for life, giving the act of rape a commercial value – for the plantation owners, a low-cost method of growing assets under management.

By 1860, cotton grown and picked by enslaved workers was the nation’s most valuable export. The aggregate value of enslaved people exceeded that of all the railroads and factories in the country. In 1866, a year after the 13th Amendment was ratified, Black Codes are written into law to restrict and criminalize Black people’s labor activity and hopes for prosperity. While the codes allowed for foundational economic rights, such as the right to own property and make contracts, without adequate access to capital, property was out of reach for most Black people. The end of the 19th century represented the enactment of Jim Crow laws, which would persist until 1965, stalking the economic, social, and political trajectory of Blacks in America for a century.

1916 brought hope – a great migration of roughly six million Blacks from the South to Northern cities in the hopes of finding economic opportunity in cities like Chicago, Detroit, and New York. 1921 brought more state-supported violence, as mobs of whites armed with guns, many of which were supplied by local law enforcement, stormed the all-Black Greenwood area of Tulsa, looting and razing “Black Wall Street,” home to 11,000 residents and hundreds of prosperous Black-owned businesses. In 1934, the Federal Housing Administration (FHA) was created, insuring private home mortgages with equitable loans that made homeownership attainable for a larger portion of the country. The prospect of homeownership and wealth generation was hamstrung for Blacks, though, as redlining maps labeled majority-Black neighborhoods as “high-risk” for mortgage lending and racist restrictive covenants barred white homeowners from selling to Blacks. When Social Security was created in 1935, Blacks were last to benefit, as job categories that were excluded from coverage ensured that the majority of Black Americans across the country didn’t qualify. More harmful, the 1944 G.I. Bill was administered such that Black veterans lacked access to the college tuition, low-cost home loans, and unemployment insurance offered to white veterans.

The beginning (in name only) of our country’s heinous practice of mass incarceration begins in 1972 with the War on Drugs, followed-up by similar “Tough on Crime” policies such as the “three strikes rule” and “broken windows policing” under President Clinton. Between 1993 and 2000, the share of subprime mortgages going to households in neighborhoods of color rose from 2% to 18%; Blacks with similar credit profiles and debt-to-income-ratios faced harsher underwriting criteria than their white counterparts or simply weren’t approved. Both Blacks and whites lost significant wealth from 2007-2009 as a result of the financial crisis, but during 2009-2011, the typical white family’s losses slowed to zero, while the average Black family lost an additional 13% of its wealth. A 2019 Federal Reserve study reported that white families have a median and mean family wealth of $188,200 and $983,400, compared to $24,100 and $142,500 for Blacks. Many social economists believe that without policy actions to remedy it, the racial wealth gap will be significantly greater in the next generation

Reparations Theses and A Groundbreaking Vote

Popular theses have included evaluating labor’s share of the slave system’s profits in cotton and tobacco, estimating linear and non-linear income disparities over time, and estimating the value of wealth lost as a result of discriminatory governmental and institutional practices, such as disparities in lending and insurance. Black billionaire and tycoon Robert Smith calls his plan “the two percent solution,” which entails the top ten banks driving two percent of their net income (aggregated, roughly $978 billion) over a ten-year period into black banks and small businesses, enabling what Smith calls, “capital fusion” and healthy reinvestment. Economist Dr. Darity’s perspective is slightly more concrete in terms of value: providing Black Americans, as a baseline, the present value of the 40 acres and a mule, which he values as nearly six trillion dollars. A House committee voted on April 14, 2021 to recommend the creation of a commission to consider providing Black Americans with reparations for slavery in the United States; H.R. 40 – 40, for the unkept promise.

As we have already discussed this draft personally, I can spare you tedious repetition. Given your intended readership, I think that there are more useful topics than ESG in the opening of an essay on the vastest reparative justice project in human history. I suggested also a somewhat broader focus on all the measures of corrective justice and social policy revision involved in making reparations for five hundred years of "the bondsman's unrequited toil" and the violent deprivations of political and economic power that followed the failure of Reconstruction, so that we can see and appreciate that reparations cannot be reduced to one bill paid once, and that we cannot repair all the damage done over half a thousand years within one generation.


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r3 - 16 Apr 2021 - 05:16:49 - AlexanderHohl
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