Black Reparations Parsed

Monday, July 6, 2020
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In the midst of today’s heightened racial unrest, the calls for black reparations have become more insistent. In their recent book, From Here to Equality: Reparations for Black Americans in the Twenty-First Century, William A. Darity Jr. and A. Kirsten Mullen write: “Racism and discrimination have perpetually crippled black economic opportunities.” The offenses cited are slavery, legal segregation under Jim Crow, and more contentiously, “ongoing discrimination and stigmatization.” Their book figured centrally in a recent article in the New York Times Magazine by Nikole Hannah-Jones, who launched the highly controversial 1619 Project. In her piece, “What is Owed,” she makes this claim:

Reparations are not about punishing white Americans, and white Americans are not the ones who would pay for them. It does not matter if your ancestors engaged in slavery or if you just immigrated here two weeks ago. Reparations are a societal obligation in a nation where our Constitution sanctioned slavery, Congress passed laws protecting it and our federal government initiated, condoned and practiced legal racial segregation and discrimination against black Americans until half a century ago. And so it is the federal government that pays.

In addition to a vigorous commitment to legal protections against discrimination and targeted investment in segregated communities, Hannah-Jones insists that reparations must include “individual cash payments to descendants of the enslaved in order to close the wealth gap.”

Nothing can justify slavery or Jim Crow. But the case for cash reparations cannot be made by merely pointing to these egregious wrongs. It is also critical to identify a causal connection between past wrongs and the current situation. In other words, it’s crucial to draw a straight line from slavery and Jim Crow to the current disadvantages suffered by black Americans.

When I wrote about this topic in 2004, I argued that the necessary causal connection could not be made under a theory of tortious conduct or unjust enrichment. The former requires that a person who inflicts harm on another provide compensation for the loss. The latter requires that anyone who receives some benefit that was not intended as a gift is required to compensate the transferor to negate his or her undeserved gain. Today, that causal connection continues to be tenuous at best, weakening the case for reparations. 

Darity and Mullen claim that slavery, racism, and discrimination have “perpetually” crippled opportunities for black Americans. But a closer look at the historical record reveals a more complicated story. A century and a half has passed since the abolition of slavery and 55 years since the passage of the Civil Rights Act of 1964 and the Voting Rights Act of 1965, both of which transformed American society for the better. Throughout this entire period, the fortunes of African Americans have gone up and down, attributable to events that are much less tied to slavery, but instead linked to politics, legislation, and legal rulings.

One topic of vital importance is how black unemployment rates have varied over the years. It is often overlooked that in 1948, at the height of segregation, the unemployment rate for black teenagers was lower than it was for white teenagers and remained so until the mid-1950s. The key economic driver was that the minimum wage was low enough that it did not act as a barrier to employment for black workers. Black youth unemployment soared  once higher minimum wage laws went into effect. Slavery and Jim Crow had little to do with a shift driven by labor regulation. It gets matters backwards to condemn the opposition to minimum wage laws as racist, as some do, when increases in minimum wage laws have worked to impose heavier burdens on black workers. And the teenagers so disadvantaged are likely to experience reduced employment prospects even after they reach their maturity.

The same analysis applies to the strong union movement in the United States, where federal legislation often hurt black workers’ opportunities for economic progress. In 1926, Congress passed the Railway Labor Act of 1926, which forced formerly independent black workers in their own unions to become minority members in white-dominated unions. The Supreme Court intervened in 1944 in Steele v. Louisville Railroad by imposing a duty of fair representation on the white union leadership to protect their minority members. But such measures were largely ineffective in neutralizing the ability of white-dominated unions to give plum positions to white workers through explicit racial preferences.

Even though Section 703 of the Civil Rights Act of 1964 ended racial discrimination by unions as well as employers, it did so only by explicitly preserving the seniority obtained by white workers before passage of the Act, which meant that the white beneficiaries of employment discrimination kept their positions. Meanwhile, the pressure to integrate workforces took their maximum toll on younger white workers who had committed no acts of discrimination. These topsy-turvy results were no legacy of slavery or Jim Crow, but the direct consequence of the elaborate political compromises needed to secure passage of the 1964 Act, which in turn was necessitated by the adoption of collective bargaining arrangements in the 1920s and 1930s. Ironically, the explicitly colorblind language of Title VII of the Civil Rights Act served in the short-run as an impediment against the adoption of private affirmative action programs to help disadvantaged minority workers until the late 1970s, when United Steelworkers v. Weber carved out an exception to the colorblind rule to allow for affirmative action programs.  

Even today, in an age of union decline, the structural features of the labor market determine the dominant patterns of income and employment among African Americans. Though Democrats may hate Donald Trump, his relatively laissez-faire labor policies resulted in both lower minority unemployment and stronger wage growth before COVID-19 than in the progressive Obama administration.

The case for black reparations flounders on yet another issue. Hannah-Jones asserts that the reparations in question will not be paid by individuals, but by the federal government. This proposition makes no sense. The United States is an abstract entity that is only capable of raising revenues through taxation and borrowing. Revenues spent by the government will eventually be borne by some large fraction of the total population—i.e. by individuals. So is it fair to ask the descendants of the hundreds of thousands of Union soldiers who were killed or wounded in the Civil War to foot the bill? Should recent immigrants from Cuba, Croatia, India, Mexico, Nigeria or Somalia have to pay for the failures of the Reconstruction period? Are the Jewish and Italian immigrants who escaped persecution in their homelands between 1880 and 1914 responsible for the rise of Jim Crow?

In dealing with this problem, Darity and Mullen claim that what is needed to set matters right is not just financial redress, but also acknowledgement, which “involves recognition and admission of the wrong by the perpetrators or beneficiaries of the injustice.” None of the current citizens of the United States were the perpetrators of slavery and few people alive today were responsible for Jim Crow. Nor does the term “perpetrator” remotely describe the millions of individuals who found salvation on these shores as immigrants, whether a hundred years or two weeks ago. The perpetrators of slavery and Jim Crow are dead, and their liabilities died with them.

But what about the supposed living “beneficiaries of the injustice”? This indignant claim assumes that the system of slavery and Jim Crow exploited the labor of black people to create an economy that enriched the white population as a whole. But the economic situation does not provide any support for a theory of unjust enrichment. Slavery was a system that benefitted slaveowners specifically. Their exploitation of slaves did not work for the benefit of the national population at that time or later. The same is true of Jim Crow. In fact, these institutions actually deprived millions of Americans of the benefits of unregulated labor markets with full black participation. Exactly how things would have worked out under freer labor markets is unclear, but it is simply wrong to assume that a set of corrupt institutions that shrunk the productive capacity of the nation somehow benefitted the public at large. 

Of course, reparations have been given for national wrongs at other times. But the circumstances and the claims were different. The forced internment of 120,000 individuals of Japanese origin during World War II was shamefully defended in the 1944 case of Korematsu v. United States by Justice Hugo Black—and it was mercifully overruled in 2018 in Trump v. Hawaii. In 1990, reparations of $20,000 were paid to over 82,000 surviving internees—not to their descendants. After World War II, German reparations were paid to individual survivors of the Holocaust and to the state of Israel. In both cases, reparations were paid for the specific actions of a government at a specific time to the specific victims involved. In today’s case, the reparations would be paid for harms resulting from many federal, state, local, and private actions that occurred over a period of several hundred years.

On top of that, it’s not clear who exactly the recipients of such compensation should be. The group of potential recipients includes tens of millions of African Americans with complex lineages due to immigration and intermarriage over the last 155 years. The sensible limitations on both the Japanese and Jewish cases speak to the dangers of extending the logic of reparations to cases in which it is no longer possible to punish the perpetrators, tax the beneficiaries, or even define the class of victims.

Everyone in the United States should be fully cognizant of the evils of racism and their long-lasting legacy. But by the same token, flawed policy choices today could undo much of the racial progress that has been made to date. It is just wrong to think that institutional racism currently pervades every government agency, business organization, or educational institution— most of which have worked notably hard to eradicate racial discrimination and to promote equality.


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