February 9, 2023

Every so often, some Democrats call for reparations to compensate Black Americans for slavery and other indignities.

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The latest plan comes from San Francisco, where a reparations committee is considering a program that would offer $5 million per qualified Black resident.

Let’s analyze the issue of reparations from the standpoint of morality and practicality.

Most people believe that compensation for misdeeds should come from the people who caused the misdeeds. For example, if John Smith and Joe Brown recklessly damage your car, you expect Smith and Brown (or their insurance companies) to pay for the repairs. Normally, you would not expect the repairs to be financed by the entire town in which you live: That would make no sense.

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What if Joe Brown died shortly after the accident? Would you expect his children or grandchildren to pay you? Probably not. Instead, your claim for compensation would be focused on the surviving reckless driver, John Smith. We can apply this logic to the reparations issue.

Obviously, no person alive today existed during the slave era or as an adult in the subsequent Jim Crow or Ku Klux Klan eras.

However, there are certain responsible entities that existed then and now:

  • The United State government
  • Eleven slave states of the Confederacy plus four union slave states
  • A handful of corporations with origins dating before the end of slavery
  • The Democratic Party

I did not include the Republican Party for a very good reason: It was formed in 1854 by a bunch of abolitionists for the express purpose of ending slavery, which was accomplished at enormous cost 11 years later. On the other hand, the Democratic Party has to be listed for very important reasons, which are explained later.

We have identified four parties or groups of parties that may bear responsibility for slavery and subsequent discrimination. What is the financial liability of each?

How much should be paid by the United States and the slave states?

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Shortly after the war, Gen. William T. Sherman signed an order reserving 400,000 acres of Confederate land, to be used for the allotment of 40 acres to each of thousands of former slaves. Unfortunately, after Republican Abraham Lincoln was assassinated, Democrat Andrew Johnson became president, the offer was rescinded, and the land was reclaimed. 

After the promise of 40 acres was withdrawn there was no large-scale and meaningful program of reparations offered until the 1960s. That is when the nation created affirmative action programs, community reinvestment programs, and augmented welfare programs. Many people believe that those programs were a form of national reparations, and one such person is a Black scholar named John McWhorter. In an interview with CNN’s Don Lemon, he said:

“Affirmative action was reparations. People didn’t use that word, but that’s precisely what it was. The Community Reinvestment Act of 1977 that forced banks to invest in inner cities … that was reparation [although] nobody makes a movie about that…. Welfare was reformed to be easier to get in the late ‘60s— another untold story. It was reparations.”

McWhorter’s views are shared by many others. In an essay in the Harvard Law Review, Mitchell F. Crusto argued: 

“…affirmative action cannot be viewed in a vacuum, it is an intentional remedy for centuries of blatant discrimination against Black people in all aspects of American life.”

After launching the “War on Poverty” President Lyndon Johnson stated that the government needed to pass laws that erase: 

“the consequences of ancient brutality, past injustice, and present prejudice.”

And William Darity and Andrea Mullen, two advocates for reparations, conceded that: 

“…some have argued that social programs like Medicaid, Social Security and other welfare benefits are a form of reparations….”

With regard to affirmative action, it is impossible to estimate the total cost. How do we calculate the cost to our society when thousands of students with relatively high college admission test scores are replaced by students with lower scores?

We can, however, estimate the cost of welfare programs, and the disparity in the amount of such benefits given to black Americans versus white Americans.

In the view of John McWhorter, the government’s “War on Poverty” programs have cost $23 trillion since 1965, with an estimated $1.3 trillion in 2022 alone. In addition, there are state and local welfare programs that cost hundreds of billions of dollars each year, with an estimated $744 billion spent in 2019.

By using published welfare tables from Health & Human Services (FYE 2021, Table 10, Temporary Assistance for Needy Families) and population estimates from the U.S. Census Bureau, we can roughly estimate that a black family is about 4.7 times more likely to receive federal welfare benefits than a white family. Using those ratios and McWhorter’s $23 trillion estimated cost of the War on Poverty, we can conclude that, since 1965, black families have received more welfare benefits than white families in an amount equal to several trillions of dollars. I believe that it would be appropriate to consider this disparity in welfare benefits to be reparations, since those payments were designed to alleviate suffering from prior socioeconomic disadvantage due to racism.

Thus, people who advocate for the payment of reparations should consider the cost of affirmative action programs, and they should carefully calculate the disparate cost of all types of federal and state welfare programs. These programs may fully or partially satisfy any obligation for reparations.

How much should slavery-era corporations pay?

Some companies, or their predecessors, benefitted from the slave trade. For example, Lloyd’s of London has apologized for insuring slave ships, and has recently indicated that it will give financial support to charities that support Black causes.

Here are some other companies that may have a history of involvement with slavery in that era: