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Central to the idea of the American Dream lies an assumption that we all have an equal opportunity to generate the kind of wealth that brings meaning to the words “life, liberty and the pursuit of happiness,” boldly penned in the Declaration of Independence. The American Dream portends that with hard work, a person can own a home, start a business, and grow a nest egg for generations to draw upon. This belief, however, has been defied repeatedly by the United States government’s own decrees that denied wealth-building opportunities to Black Americans.
Today, the average white family has roughly 10 times the amount of wealth as the average Black family. White college graduates have over seven times more wealth than Black college graduates. Making the American Dream an equitable reality demands the same U.S. government that denied wealth to Blacks restore that deferred wealth through reparations to their descendants in the form of individual cash payments in the amount that will close the Black-white racial wealth divide. Additionally, reparations should come in the form of wealth-building opportunities that address racial disparities in education, housing, and business ownership.
In 1860, over $3 billion was the value assigned to the physical bodies of enslaved Black Americans to be used as free labor and production. This was more money than was invested in factories and railroads combined. In 1861, the value placed on cotton produced by enslaved Blacks was $250 million. Slavery enriched white slave owners and their descendants, and it fueled the country’s economy while suppressing wealth building for the enslaved. The United States has yet to compensate descendants of enslaved Black Americans for their labor. Nor has the federal government atoned for the lost equity from anti-Black housing, transportation, and business policy. Slavery, Jim Crow segregation, anti-Black practices like redlining, and other discriminatory public policies in criminal justice and education have robbed Black Americans of the opportunities to build wealth (defined as assets minus debt) afforded to their white peers.
Bootstrapping isn’t going to erase racial wealth divides. As economists William “Sandy” Darity and Darrick Hamilton point out in their 2018 report, What We Get Wrong About Closing the Wealth Gap, “Blacks cannot close the racial wealth gap by changing their individual behavior –i.e. by assuming more ‘personal responsibility’ or acquiring the portfolio management insights associated with ‘[financial] literacy.’” In fact, white high school dropouts have more wealth than Black college graduates. Moreover, the racial wealth gap did not result from a lack of labor. Rather, it came from a lack of financial capital.
Not only do racial wealth disparities reveal fallacies in the American Dream, the financial and social consequences are significant and wide-ranging. Wealth is positively correlated with better health, educational, and economic outcomes. Furthermore, assets from homes, stocks, bonds, and retirement savings provide a financial safety net for the inevitable shocks to the economy and personal finances that happen throughout a person’s lifespan.
Recessions impact everyone, but wealth is distributed quite unevenly in the U.S. The woeful inadequacy of a government-sponsored safety net was made apparent in the wake of economic disasters like the 2008 housing crisis and natural ones like Hurricane Katrina in 2005. Those who can draw upon the equity in a home, savings, and securities are able to recover faster after economic downturns than those without wealth. The lack of a social safety net and the racial wealth divide are currently on display amid the COVID-19 crisis. Disparities in access to health care along with inequities in economic policies combine to make Black people more vulnerable to negative consequences than white individuals.
Below, we provide a history of reparations in the United States, missed opportunities to redress the racial wealth gap, and specific details of a viable reparations package for Black Americans.
History of reparations in the United States
Reparations—a system of redress for egregious injustices—are not foreign to the United States. Native Americans have received land and billions of dollars for various benefits and programs for being forcibly exiled from their native lands. For Japanese Americans, $1.5 billion was paid to those who were interned during World War II. Additionally, the United States, via the Marshall Plan, helped to ensure that Jews received reparations for the Holocaust, including making various investments over time. In 1952, West Germany agreed to pay 3.45 billion Deutsche Marks to Holocaust survivors.
Black Americans are the only group that has not received reparations for state-sanctioned racial discrimination, while slavery afforded some white families the ability to accrue tremendous wealth. And, we must note that American slavery was particularly brutal. About 15 percent of the enslaved shipped from Western Africa died during transport. The enslaved were regularly beaten and lynched for frivolous infractions. Slavery also disrupted families as one in three marriages were split up and one in five children were separated from their parents. The case for reparations can be made on economic, social, and moral grounds. The United States had multiple opportunities to atone for slavery—each a missed chance to make the American Dream a reality—but has yet to undertake significant action.
Missed policy opportunities to atone for slavery with reparations
40 Acres and a Mule
The first major opportunity that the United States had and where it should have atoned for slavery was right after the Civil War. Union leaders including General William Sherman concluded that each Black family should receive 40 acres. Sherman signed Field Order 15 and allocated 400,000 acres of confiscated Confederate land to Black families. Additionally, some families were to receive mules left over from the war, hence 40 acres and a mule.
Yet, after President Abraham Lincoln’s assassination, President Andrew Johnson reversed Field Order 15 and returned land back to former slave owners. Instead of giving Blacks the means to support themselves, the federal government empowered former enslavers. For example, in Washington D.C., slave owners were actually paid reparations for lost property—the formally enslaved. This practice was also common in nearby states. Many Black Americans with limited work options returned as sharecroppers to till the same land for the very slave owners to whom they were once enslaved. Slave owners not only made money off the chattel enslavement of Black Americans, but they then made money multiple times over off the land that the formerly enslaved had no choice but to work.
The New Deal
There’s never a bad time to do what’s morally right, but the United States has had prime opportunities to atone for slavery. In the 1930s, the United States was reeling from the 1929 stock market crash and was firmly engulfed in the Great Depression. The Franklin Roosevelt administration implemented a series of policies as part of his New Deal legislation, estimated to cost roughly $50 billion then, to catapult the country out of depression. Current estimates price the New Deal at about $50 trillion.
Two particular policies of the New Deal fell short in redressing American’s racial wrongs—the G.I. Bill and Social Security. Though white and Black Americans fought in WWII, Black veterans could not redeem their post-war benefits like their white peers. While the G.I. Bill was mandated federally, it was implemented locally. The presence of racial housing covenants and redlining among local municipalities prohibited Blacks from utilizing federal benefits. White soldiers were afforded the opportunity to build wealth by sending themselves and their children to college and by obtaining housing and small business grants.
Regarding Social Security, two key professions that would have improved equity in America were excluded from the legislation—domestic and farm workers. These omissions effectively excluded 60 percent of Blacks across the U.S. and 75 percent in southern states who worked in these occupations. Roosevelt bargained these exclusionary provisions in the legislation on the backs of Black veterans and workers in order to propel mostly white America out of the Great Depression.
There are other policies and practices that contributed to racial wealth gap. Government-sanctioned discrimination related to the 1862 Homestead Act, redlining, restrictive covenants, and convict leasing blocked Blacks from the ability to gain wealth at similar rates as whites. Separate from slavery, damages should be awarded to Black people who were harmed by these policies and practices.
Today, the average white family has roughly 10 times the amount of wealth as the average Black family. White college graduates have over seven times more wealth than Black college graduates. Making the American Dream an equitable reality demands the same U.S. government that denied wealth to Blacks restore that deferred wealth through reparations to their descendants in the form of individual cash payments in the amount that will close the Black-white racial wealth divide. Additionally, reparations should come in the form of wealth-building opportunities that address racial disparities in education, housing, and business ownership.
In 1860, over $3 billion was the value assigned to the physical bodies of enslaved Black Americans to be used as free labor and production. This was more money than was invested in factories and railroads combined. In 1861, the value placed on cotton produced by enslaved Blacks was $250 million. Slavery enriched white slave owners and their descendants, and it fueled the country’s economy while suppressing wealth building for the enslaved. The United States has yet to compensate descendants of enslaved Black Americans for their labor. Nor has the federal government atoned for the lost equity from anti-Black housing, transportation, and business policy. Slavery, Jim Crow segregation, anti-Black practices like redlining, and other discriminatory public policies in criminal justice and education have robbed Black Americans of the opportunities to build wealth (defined as assets minus debt) afforded to their white peers.
Bootstrapping isn’t going to erase racial wealth divides. As economists William “Sandy” Darity and Darrick Hamilton point out in their 2018 report, What We Get Wrong About Closing the Wealth Gap, “Blacks cannot close the racial wealth gap by changing their individual behavior –i.e. by assuming more ‘personal responsibility’ or acquiring the portfolio management insights associated with ‘[financial] literacy.’” In fact, white high school dropouts have more wealth than Black college graduates. Moreover, the racial wealth gap did not result from a lack of labor. Rather, it came from a lack of financial capital.
Not only do racial wealth disparities reveal fallacies in the American Dream, the financial and social consequences are significant and wide-ranging. Wealth is positively correlated with better health, educational, and economic outcomes. Furthermore, assets from homes, stocks, bonds, and retirement savings provide a financial safety net for the inevitable shocks to the economy and personal finances that happen throughout a person’s lifespan.
Recessions impact everyone, but wealth is distributed quite unevenly in the U.S. The woeful inadequacy of a government-sponsored safety net was made apparent in the wake of economic disasters like the 2008 housing crisis and natural ones like Hurricane Katrina in 2005. Those who can draw upon the equity in a home, savings, and securities are able to recover faster after economic downturns than those without wealth. The lack of a social safety net and the racial wealth divide are currently on display amid the COVID-19 crisis. Disparities in access to health care along with inequities in economic policies combine to make Black people more vulnerable to negative consequences than white individuals.
Below, we provide a history of reparations in the United States, missed opportunities to redress the racial wealth gap, and specific details of a viable reparations package for Black Americans.
History of reparations in the United States
Reparations—a system of redress for egregious injustices—are not foreign to the United States. Native Americans have received land and billions of dollars for various benefits and programs for being forcibly exiled from their native lands. For Japanese Americans, $1.5 billion was paid to those who were interned during World War II. Additionally, the United States, via the Marshall Plan, helped to ensure that Jews received reparations for the Holocaust, including making various investments over time. In 1952, West Germany agreed to pay 3.45 billion Deutsche Marks to Holocaust survivors.
Black Americans are the only group that has not received reparations for state-sanctioned racial discrimination, while slavery afforded some white families the ability to accrue tremendous wealth. And, we must note that American slavery was particularly brutal. About 15 percent of the enslaved shipped from Western Africa died during transport. The enslaved were regularly beaten and lynched for frivolous infractions. Slavery also disrupted families as one in three marriages were split up and one in five children were separated from their parents. The case for reparations can be made on economic, social, and moral grounds. The United States had multiple opportunities to atone for slavery—each a missed chance to make the American Dream a reality—but has yet to undertake significant action.
Missed policy opportunities to atone for slavery with reparations
40 Acres and a Mule
The first major opportunity that the United States had and where it should have atoned for slavery was right after the Civil War. Union leaders including General William Sherman concluded that each Black family should receive 40 acres. Sherman signed Field Order 15 and allocated 400,000 acres of confiscated Confederate land to Black families. Additionally, some families were to receive mules left over from the war, hence 40 acres and a mule.
Yet, after President Abraham Lincoln’s assassination, President Andrew Johnson reversed Field Order 15 and returned land back to former slave owners. Instead of giving Blacks the means to support themselves, the federal government empowered former enslavers. For example, in Washington D.C., slave owners were actually paid reparations for lost property—the formally enslaved. This practice was also common in nearby states. Many Black Americans with limited work options returned as sharecroppers to till the same land for the very slave owners to whom they were once enslaved. Slave owners not only made money off the chattel enslavement of Black Americans, but they then made money multiple times over off the land that the formerly enslaved had no choice but to work.
The New Deal
There’s never a bad time to do what’s morally right, but the United States has had prime opportunities to atone for slavery. In the 1930s, the United States was reeling from the 1929 stock market crash and was firmly engulfed in the Great Depression. The Franklin Roosevelt administration implemented a series of policies as part of his New Deal legislation, estimated to cost roughly $50 billion then, to catapult the country out of depression. Current estimates price the New Deal at about $50 trillion.
Two particular policies of the New Deal fell short in redressing American’s racial wrongs—the G.I. Bill and Social Security. Though white and Black Americans fought in WWII, Black veterans could not redeem their post-war benefits like their white peers. While the G.I. Bill was mandated federally, it was implemented locally. The presence of racial housing covenants and redlining among local municipalities prohibited Blacks from utilizing federal benefits. White soldiers were afforded the opportunity to build wealth by sending themselves and their children to college and by obtaining housing and small business grants.
Regarding Social Security, two key professions that would have improved equity in America were excluded from the legislation—domestic and farm workers. These omissions effectively excluded 60 percent of Blacks across the U.S. and 75 percent in southern states who worked in these occupations. Roosevelt bargained these exclusionary provisions in the legislation on the backs of Black veterans and workers in order to propel mostly white America out of the Great Depression.
There are other policies and practices that contributed to racial wealth gap. Government-sanctioned discrimination related to the 1862 Homestead Act, redlining, restrictive covenants, and convict leasing blocked Blacks from the ability to gain wealth at similar rates as whites. Separate from slavery, damages should be awarded to Black people who were harmed by these policies and practices.
