Reparations Would Help Close Wealth Gap in America

06/04/2015 04:59 pm ET | Updated Jun 04, 2016

The questions around reparations to descendants of slaves in America often trigger strident conversations. These discussions lay bare how race continues to affect the nation - despite the unfounded protestations by Americans that race holds little relevance to their lives. The "coded racial appeals" that Ian Haney Lopez has written in his informative book, "Dog Whistle Politics: How Coded Racial Appeals Have Reinvented Racism & Wrecked The Middle Class," is must reading for all Americans and provides a foundation for how racism endures and evolves.

In this week's guest blog, Michael Holzman provides additional thought suggesting the moral debt America owes to African Americans. Some may read his piece and dismiss the argument as absurd. Many thoughtful pieces have been written on the topic. One salient essay was written by Ta-Nehisi Coates of "The Atlantic" for their 2014 cover story.

I concur that a discussion of reparations would open the nation to a deeper understanding of the vestiges of racism, which affect our institutions and for that matter the soul of America. It has been said that beauty is born of suffering and wisdom is the child of grief. The wisdom of our shared American culture emerges from the common struggles of the past, present and future.

The beauty of the nation lies in the diverse fabrics which when woven carefully create a splendid mosaic of cultures, races and beliefs. This mosaic can only be strengthened by a deeper understanding of how yesterday and today's structural racism hinder progress for us all tomorrow.

The academic achievement gap or income gap may get the headlines, but for sheer outrage, you can't beat the racial inequity of America's wealth gap.
That's because wealth -- the total value of assets, from houses and cars to bank accounts and investments -- barely exists for black families in the United States. The median wealth of non-Hispanic black households dropped by more than one-third between 2010 and 2013, to $13,700, according to the Pew Research Center, citing Federal Reserve data. Meanwhile, in 2013 the average white household wealth was 13 times greater -- $141,900 -- than that of black households, up from eight times greater than black households in 2010, Pew reported.
Wealth is crucial for mobility. A family with a house and investments gives its children a good start in life -- a boost up the ladder, as it were. Wealth also means there is property, real and financial, to leave to those children through inheritance. This is how white parents help their children "do better" than they did on the wealth meter. Not so with black families. The number of black families with negative wealth -- more debt than assets -- vastly outnumbers the Oprahs of this world: Approximately 35 percent of African-American households have a zero or negative net worth, according to Pew. A few months of unemployment can wipe them out. As a consequence, black children are unlikely to earn and own more than their parents, greasing their slide down the wealth ladder.
Home ownership is a key to wealth. More than 70 percent of white households own their homes, compared with just 43 percent of black families, according to the U.S. Census 2013 American Community Survey. The federal government is culpable, dating to the Jim Crow era of the twentieth century. Mortgage guarantees were made available for whites only under legislation passed during the Franklin Roosevelt administration that established the Federal Housing Authority. When the post-war housing boom arrived, the suburbs filled with FHA-mortgage houses populated by whites, and segregation became the moral imperative of home ownership. The prices of these houses gradually increased and by the 1960s, became significant sources of white wealth. By comparison, the majority of black families were (and are) renters, their incomes wasted from month to month in rent, with nothing to build equity and, as a result, wealth and mobility for their children. The inner cities became segregated, with little investment in schools and other resources. Even today, the average value of a black-owned house is $123,000, while a white-owned house is valued at nearly $175,000.
The wealth-gap statistics are disturbing, but their results are indisputable: A lack of educational opportunities, extraordinary incarceration rates, and overt racism have destroyed families and prevented millions of black Americans from fulfilling their potential.
For this reason, the moral case for reparations is at least as strong for African Americans who have been terrorized in their own country as it was for Japanese Americans who were interned during World War II and eventually received monetary payments from the American government.
Restitution also is in the responsibility of the private sector. Businesses have come forward to acknowledge their role in slavery and torture, and some have made financial amends. Though public, the French national railway compensated Holocaust survivors for the railway's role in transporting Jews who were sent to concentration camps. American insurance companies, banks and other corporations have been identified as profiting from slavery. Even the judicial system appreciates the wisdom of reparations. In the case In Re African-American Slave Descendants Litigation. appeals of Deadria Farmer-Paellmann, et al., and Timothy Hurdle, et al, 471 F.3d 754 (2006), Circuit Court Appellate Judge Richard Posner said the problem is how to calculate damages from ancestral slavery for their descendants: "There is no way to determine that a given black American today is worse off by a specific, calculable sum of money (or monetized emotional harm) as a result of the conduct of one or more of the defendants,"  he said.
Judge Posner raised a good point. If legal action against Aetna, Citibank, JP Morgan Chase and other corporations that once supported the slave trade succeeds in recovering significant funds, then how are these funds to be calculated and most effectively distributed to the descendants of enslaved Africans?
One possibility would be to establish a Federal Black Housing Administration (FBHA) to guarantee mortgages for those able to establish they are descendants from enslaved Africans. The administrative regulations of the FBHA would support housing in resource-rich neighborhoods, with good schools and good transportation -- circumstances proven to improve educational outcomes, even for black children living in poverty. The FHA has a history of supporting underserved populations -- including veterans -- through such incentives as low- to no-cash down-payments, relaxed qualifications to buy, and flexibility on closing costs and other features. 

These programs lift families up and help them to create wealth. Mortgage guarantees for descendants of enslaved Africans fit that tradition.
Much has been written about the cost of reparations. Scenarios vary and estimates can rise to hundreds of trillions of dollars. We can, however, take Judge Posner's advice and make a calculation. Considering the differences in value of home owned by whites and blacks, and the percentage of white and black families living in homes they own, we can estimate $1 trillion -- or approximately $70,000 for every black household -- is needed to close the housing wealth gap. This would meet the test of a quantifiable harm for the case for reparations.
In any event, there is little doubt that mortgage guarantees for African Americans would create better, stronger neighborhoods and ease the penalty for living in America while Black.

Eric J. Cooper is the founder and president of the National Urban Alliance for Effective Education, a nonprofit professional development organization that provides student-focused professional development, advocacy and organizational guidance to accelerate student achievement. He can be reached at He tweets as @ECooper4556.

Michael Holzman is a research and author. He has served as consultant to numerous foundations and is the author of the Schott Foundation's series "Public Education and Black Male Students: A State Report Card." His latest book is The Chains of Black America.