Kathleen Geier,  June 9, 2014

Racial Inequality and the Economics of Reparations

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In The Atlantic this month, Ta-Nehisi Coates has a powerful essay making the case for reparations. Coates’s piece doesn’t dwell on the specifics of how a reparations policy would work. His aim, instead, is to launch a broader public consideration of the lingering impact of our white supremacist history on the condition of black Americans today. Coates’s emphasis is on the ways in which black economic inequality is qualitatively different from other types of inequality in our society. In a subsequent blog post about the essay, he described that inequality this way:

It was the branding of black people as outside of American society, outside of American law, and outside of the American social contract. And this branding was done even as black people pledged fealty to the state, paid taxes to the state, and died for the state. This was high-tech robbery, plunder at the systemic level.

Coates’s piece focuses on housing policy—specifically, on redlining. In the pre-civil rights era, the federal government denied Federal Housing Administration mortgages to residents of minority neighborhoods. Instead, black families who wanted to buy homes had to purchase them through predatory “contract sellers.” These practices devastated their ability to accumulate wealth through home ownership.

The Fair Housing Act of 1968 ended redlining by the federal government, but when the victims of this discriminatory practice sought recompense through the courts in the 1960s and the 1970s, they were unsuccessful. As The New Republic’s David Dayen points out, the government-enabled redlining of the past has a modern analogue in today’s subprime mortgage lenders, which have flourished because the government has been reluctant to regulate them. Subprime lenders’ predatory practices have decimated countless families and communites of color. As Dayen notes:

Research by Atif Mian and Amir Sufi shows higher unemployment rates in communities with the biggest decline in housing prices and the most foreclosures, and persistent, long-term unemployment affects lifetime earning potential. Additional research shows that foreclosures increase suicide rates, create health problems for the affected families and lead to public health crises.

Housing policy is one of many areas where the profound racial inequities of the past managed to reconstitute themselves in new forms. In the past, colleges were allowed to discriminate on the basis of race. Today, that’s illegal, but black students are disproportionately shunted into under-regulated, for-profit institutions, which leave them with mountains of debt and useless degrees. Many black workers lacked coverage under New Deal labor policies like the minimum wage, which excluded domestic and agricultural workers. Today, many more black Americans have minimum wage coverage. The bad news is that they are overrepresented among minimum wage earners (PDF)—at a time when the real value of the minimum wage has plummeted from its 1968 peak.

“The past devours the future,” writes Thomas Piketty, in the single most haunting sentence of Capital in the Twenty-First Century. The accumulated weight of 350 years of brutal American apartheid has inexorably molded our present, and will continue to lay a heavy hand on our future—how could it not? The election of our nation’s first black president was a triumph, but the narrative of racial progress it implied was in many ways a misleading one. The Nation’s Gary Younge recently argued that “the truth about race in America” is that “it’s getting worse, not better.” I fear that he is right. Soaring economic inequality and the neoliberal politics fueling it have hurt most of us, but the groups harmed most of all are those who were the most deeply and most systematically disadvantaged to begin with.

The signs that we are moving backward on race are everywhere. Take our wretched Supreme Court (please!). Not only is the court turning back the clock where voting rights and affirmative action are concerned, it’s also handed down a host of economic rulings that disproportionately hurt black Americans, including decisions that allow states to opt out of the Medicaid provision of the Affordable Care Act and make it more difficult for victims and their advocates to go after predatory payday lenders.

An array of alarming statistics testify to persistent, and in some cases worsening, inequality between black and white Americans. The median wealth of white households is twenty times that of black households, a gap that nearly doubled during the Great Recession. Black people are 2.7 times more likely to be poor than white people, and the black unemployment rate is 2.2 times that of whites.

A recent paper from the Center for Economic and Policy Research found that in 2013, 12.4 percent of black college graduates between ages twenty-two and twenty-seven were unemployed, and over half were underemployed (PDF). Black men are more than six times as likely to be as incarcerated as white men, and that shocking racial incarceration gap is growing even wider. Our schools are essentially being re-segregated, and today students of color are more likely to attend majority-minority schools than they were a generation ago.

In light of these ominous trends, Coates’s call for Americans to take a good, hard look at the way the white supremacist systems of the past have created our racially unequal present comes at a particularly opportune time. Let’s hope his intervention marks a genuine wake-the-hell-up moment rather than the first installment in yet another dreary “dialogue” on race. We have had many dialogues on race in this country; the problem with these exercises in moral uplift is that they never lead anywhere. But when it comes to racial inequality, the goal should be to stop the impotent hand-wringing and start doing something. What would that “something” require?

Coates is deliberately vague about what form reparations might take. Reparations of any sort are a frankly utopian political project in our current political context. The moral case for reparations is crystal clear; but the political question of how to organize and build support for such a program is not. In a country as racially divided as our own, it’s hard to see how a race-specific policy would be politically viable. There are also countless thorny practical questions about implementing a race-specific policy, beginning with the issue of who would qualify for it.

That’s why I favor Harvard Law professor Charles Ogletree’s approach. Ogletree argues for reparations in the form of a more broadly based social democratic agenda that, says Coates in his essay, “takes racial justice as its mission but includes the poor of all races.” A campaign demanding economic redistribution and social justice through, say, ending the drug war, ending mass incarceration, and enacting a direct public jobs program, would disproportionately benefit black Americans (PDF). But since poor and working people of every class would also stand to gain, such a program would be less divisive than one targeted solely at blacks.

The other alternative, of course, is to reject any form of reparations, even the indirect social democratic kind. My question is, then what? Achieving formal legal equality for black Americans was essential, but fifty-one years after the passage of the Civil Rights Act, it’s clear that it was hardly enough. To achieve true racial equality in our country, the structural economic issues must be addressed as well. That, ultimately, is what the case for reparations is all about.

Kathleen Geier is a Chicago-based writer. Her work has appeared in The Nation, The New Republic, The Washington MonthlyBookforum, Salon, and other publications. Find her on Twitter: @Kathy_Gee

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