The Economics of Reparations: Why Congress Should Meet Ta-Nehisi Coates’s Modest Demand

MAY 21, 2014

The Economics of Reparations: Why Congress Should Meet Ta-Nehisi Coates’s Modest Demand

By  @dannyvinik

IIn the newest issue of The Atlantic, Ta-Nehisi Coates makes the case for slavery reparations. “The idea of reparations is frightening not simply because we might lack the ability to pay,” Coates writes. “The idea of reparations threatens something much deeper—America’s heritage, history, and standing in the world.” The piece is provocative, but short on details: It doesn’t put a number to what black Americans are owed, and it doesn’t provide a specific prescription for how to make reparations. Rather, Coates simply recommends that Congress passRepresentative John Conyers’s bill for a “Congressional study of slavery.”

But now that Coates has re-ignited this debate, it’s worth considering the practical implications. How much money, for instance, is due to black America? How should that money be distributed? Who should be eligible for it? Perhaps those are questions that a Congressional study could answer. What academic evidence we have provides an incomplete but sobering assessment of the costs of centuries of slavery, Jim Crow, and state-sanctioned discrimination.

How much should reparations be?

As Coates explains in his piece, reparations must compensate African Americans for more than just the centuries of slavery in the United States. After slavery was abolished, whites frequently lynched black Americans and seized their property. A 2001 Associated Press investigation, which Coates cites, found 406 cases where black landowners had their farms seized in the early-to-mid 20th century—more than 24,000 acres of land were stolen. Housing discrimination, which has been one of the largest obstacles to African Americans’ building wealth, still exists today.

Larry Neal, an economist at the University of Illinois, calculated the difference between the wages that slaves would have received from 1620 to 1840, minus estimated maintenance costs spent by slave owners, and reached a total of $1.4 trillion in 1983 dollars. At an annual rate of interest of 5 percent, that’s more than $6.5 trillion in 2014—just in lost wages. In a separate estimate in 1983, James Marketti calculated it at $2.1 trillion, equal to $10 trillion today. In 1989, economists Bernadette Chachere and Gerald Udinsky estimated that labor market discrimination between 1929 and 1969 cost black Americans $1.6 trillion.

These estimates don’t include the physical harms of slavery, lost educational and wealth-building opportunities, or the cost of the discrimination that persists today. But it’s clear the magnitude of reparations would be in the trillions of dollars. For perspective, the federal government last year spent $3.5 trillion and GDP was $16.6 trillion.

 

What form should reparations take?

In a 2005 article, economists William A. Darity Jr. and Dania Frank proposed five different ways to make reparations. The first approach is lump-sum payments. This is the most direct form of reparations, but it does not correct for the decades of lost human capital. The second is to aggregate the reparation funds and allow African Americans to apply for grants for different asset-building projects. These projects could promote homeownership or education, for instance. Under this thinking, reparations should be more than one-time payments, but should build the human and wealth capital that black Americans struggled to gain over the past few centuries.

A third approach would be to give vouchers for a certain monetary value to black Americans. This mirrors the goal of the second approach, but with a focus on building financial assets. “Thus reparations could function as an avenue to undertake a racial redistribution of wealth akin to the mechanism used in Malaysia to build corporate ownership among the native Malays,” Darity and Frank write. “In that case, shares of stock were purchased by the state and placed in a trust for subsequent allocation to the native Malays.”

Fourth, the government could give African Americans in-kind reparations—free medical insurance or guaranteed college education, for instance. Finally, the fifth approach “would be to use reparations to build entirely new institutions to promote collective well-being in the black community.” Darity and Frank don’t elaborate on the potential structure for those institutions. Congress could also combine any or all of these approaches.

Who should be eligible to collect reparations?

READ THE FULL ARTICLE

How to address the Insanity that is the Congress

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THIS IS HOW YOU  Start to Block the ability of CONGRESS to take the American people hostage

A Congressional Reform Act of 2013 bill which includes, but are not limited to the following provisions.

1. No Tenure / No Pension/ Term limitations to no more than 3.

A Congressman/woman collects a salary while in office and receives no pay when they’re out of office.

2. Congress (past, present & future) participates in Social Security.

All funds in the Congressional retirement fund move to the Social Security system immediately. All future funds flow into the Social Security system and Congress participates with the American people. It may not be used for any other purpose.

3. Congress can purchase their own retirement plan, just as all Americans do or through the same system as other federal employees.

4. Congress will no longer vote themselves a pay raise. Congressional pay will rise by the lower of CPI or 3%.

5. Congress loses their current health care system and participates in the same health care system as the American people.

6. Congress must equally abide by all laws they impose on the American people.

7. All contracts with past and present Congressmen/women are void effective 12/31/13. The American people did not make this contract with Congressmen/women.

8. Public funded election campaigns with limits. No other provision, no private or individual funding.

Congressmen/women made all these contracts for themselves. Serving in Congress is an honor not a career. The Founding Fathers envisioned citizen legislators, so ours should serve their term(s), then go home and back to work.

If each person contacts a minimum of twenty people then it will only take three days for most people (in the U.S. ) to receive the message. Don’t you think it’s time?

Thanks to Derek Oronhde for passing on some of this from Warren Buffet. I can’t authenticate that he in fact is distributing this, but the ideas are good.

Why Race Matters in the Government Shutdown

COLORLINES NEWS FOR ACTION

Why Race Matters in the Government Shutdown

 

Speaker of the House John Boehner (R-OH) arrives for a Republican Conference meeting at the U.S. Capitol September 30, 2013. Photo: Chip Somodevilla/Getty Images

by Imara Jones

Tuesday, October 1 2013

The shutdown of the federal government which began at midnight today is a body blow to our economy that could prove difficult to bear. Coming on the heels of the automatic budget cuts of sequestration, which are already forecast to cost 750,000 jobs this year, and three years of an anemic economic recovery, the furlough of almost a million federal workers is just not what the economy needs right now. The shutdown was touched off by a Senate vote yesterday to turn down a measure that would have kept the government operating for 10 weeks in exchange for a one year delay in Obamacare.

Given that the federal government contributes one out of seven dollars to annual economic output by making critical investments in key areas such as health, education, food security and housing, it will be hard to find an American who won’t be touched by this freeze in government activities, especially if it lasts for more than a few short days.

As the parts of the government affected by the shutdown disproportionately impact economic opportunity programs for the working poor, historically marginalized communities are likely to the feel the effects of a shutdown acutely as time goes on.

What’s particularly distressing about the shuttering of the government is that it comes at a time when unemployment remains in the double digits for blacks and Latinos. As the Center for American Progress points out, federal, state and local governments since 2008 have eliminated 750,000 public sector jobs. Given unionization and strong anti-discriminatory hiring practices, people of color are more likely to have jobs in the public sector. This is particularly true for African-Americans, and it’s why joblessness remains so stubborn in communities of color.

The truth is that people of color represent a larger proportion of the federal workforce than the workforce overall. According to the Washington Post, 35 percent of federal workers are non-White versus 30 percent of all workers.  This means that a shutdown will only add to the economic woes and employment worries in communities of color.

To be clear, not all of the more than four million federal workers will be told to stay home. Men and women in the armed forces make up close to half of all those on the federal payroll. Given special legislation to exempt them from the shutdown passed by Congress yesterday, they will be on the job and receive pay.

But over 800,000 of the remaining two million civilian workers will be barred from work. Those deemed “essential” to maintain the “safety of human life or protection of property” in critical positions will work but not receive pay. Either way, the bottom line is that two million Americans and the families that rely on them will not receive a paycheck during the period of the shutdown.

The key question though is “how much of this will really hurt?” The answer depends on how long it goes on.

If the federal government is up and running by the end of next week, the impact will be minimal. But should it last for more than 10 days or so, it will begin to bite.  Economic forecasts underscore the point.

As Bloomberg reports, Mark Zandi, former economic advisor to John McCain and chief economist at Moody’s, calculates that a shutdown of a few days would be negligible, but one of two weeks would cut economic growth for the last three months of this year by 10 percent. Any longer than that and the economy would be on its way back to recession.

Adding to the potential pain and uncertainty of it all is the sheer scale of government activities that will be curtailed, each touching on vital areas of economic life necessary for the country to function. With guidance from agency submissions to the White House, here’s a sampling of the way things could look if the shutdown persists into next week.

Health needs delayed: The 110 million Americans already in Medicare—the government health program for the elderly—and Medicaid—the federal and state partnership to provide health insurance to the working poor and their children—will continue to receive the services and treatment that they need. However new applications to these programs will be delayed until the government reopens.

Impaired ability to fight disease: The Centers for Disease Control will scale back the monitoring of the spread of infectious diseases and the National Institutes of Health will do the same for critical research into life-saving treatments until the lights come back on.

More people hungry:  The Supplemental Nutrition Assistance Program (SNAP), commonly referred to as food stamps, will continue to provide its $33 of weekly assistance to the 48 million Americans who currently receive it. However, the Women Infants and Children Program (WIC)—which covers seven million children and infants, and their mothers—will temporarily end. The program will restart once the government reopens.

Poor kids set back: Funds for the one million children in Head Start will technically expire today, but only a smattering of locations will be forced to immediately close their doors. However, more programs will run out of money and come under pressure the longer this goes on. The same is true for Title I education grants, which provide badly needed assistance to 20 million children in the nation’s poorest school districts. Also, review of new student loan and federal grant applications will be delayed.

Housing at risk:  The Federal Housing Administration, which underwrites four out of every 10 mortgages in the United States and is crucial for working families entering the housing market, will not process new home loans during an extended shutdown. Housing vouchers for the working poor and the homeless will also be at risk the longer this goes on.

More immigration delays:  Border patrols and enforcement will continue during the shutdown, but new visa and citizenship applications will be stalled until the government is back to work.

The essential point is that the partial closing of the government is potentially a huge setback for both the broader economy and economic justice at a crucial moment.

Though Congressional Republicans and their allied tea party organizations don’t see it that way.

Former Republican vice chairman and head of the American Conservative Union, Al Cardenas, told the Center for American Progress’ Thinkprogress blog this past weekend that he was “convinced” that there “would not be” any negative economic fallout from the shutdown. If the government is closed for a just a few days, he might very well be right.

But as I argued last week, the GOP and tea party outlook on a government shutdown is not about economic evidence, it’s about advancing an overall ideology. Until that changes, millions of Americans might very well have reason to worry.

http://colorlines.com/archives/2013/10/how_the_government_shutdown.html