William Darity: Racial foundations of income and wealth inequality

Celeste Watkins-Hayes: Welcome to the Racial Foundations of Public Policy Speaker series hosted by the Center for Racial Justice at the Ford School of Public Policy at the University of Michigan. I am Celeste Watkins-Hayes, Director of the Center, Associate Dean for Academic Affairs at the Ford School and a professor of Public Policy and Sociology. At the Ford School, we seek a world in which people are able to achieve their full human potential, regardless of race, ethnicity, gender, sexuality, class, and other categories that have been used to divide and systematically marginalize people. We train leaders here who understand the critical role of public policy in improving our world.

CW: We recognize the power of public policy to bolster or to undercut our life opportunities and experiences, and we see public policy as a critically important tool for us to measure, reflect, historically examine and help us define the way forward. At the Center for Racial Justice we seek to illuminate evidence-based solutions to address deep challenges around racial inequity, and to support the change makers who advocate for sound, just, and fair public policies.

CW: We take an intersectional approach, seeking to expand knowledge and highlight strategies and tools that address the complex intersections between public policy and racism, sexism, homophobia, transphobia, classism, xenophobia and other societal problems. As we examine the fraught histories and consequences of some of our policies and the transformative power of others, we learn a valuable lesson. Effective and just public policy can only be achieved if we bring diverse perspectives to the table.

CW: This fall, the center is featuring a cadre of scholars to participate in virtual conversations on the historical roots and contemporary currents of race and economic, criminal justice, education and immigration policy. We encourage you to review our website at the Center for Racial Justice for the dates of those events. Our next Racial Foundations of Public Policy event will be on Tuesday, October 26th at 4:00 PM, and will feature education scholar, Dr. Rucker Johnson from UC Berkeley. But now, I'm delighted and honored to introduce you to the third speaker for our inaugural Center for Racial Justice Racial Foundations series, Dr. William Sandy Darity Jr.

CW: Dr. Darity is the Samuel DuBois Cook Professor of Public Policy, African and African-American Studies and Economics, and the Director of the Samuel DuBois Cook Center on Social Equity at Duke University. He served as the Chair of the Department of African and African-American studies and was the founding director of the Research Network on Racial and Ethnic Inequality at Duke. Dr. Darity's research focuses on inequality by race, class and ethnicity, stratification, economics, schooling and the racial achievement gap, North South theories of trade and development, skin shade and labor market outcomes, the economics of reparations, the Atlantic Slave Trade and the Industrial Revolution, the history of economics and the social psychological effects of exposure to unemployment. His most recent book, co-authored with A. Kirsten Mullen is From Here to Eternity... Equality... From Here to Equality: Reparations for Black Americans in the 21st Century.

CW: From Here to Equality is the recipient of the inaugural 2021 book prize from the Association of African-American Life and History, and the 2020 Reagan Old North State Award for non-fiction from the North Carolina Literary and Historical Association. Dr. Darity, you have an illustrious career. We are so so honored to have you here. I could not imagine launching a Racial Foundations of Public Policy Series without you, and I mean that sincerely. So it is my honor to be in conversation with you today.

Dr. Darity: Well, you're extremely generous, but this is a mutual admiration society. I've been a tremendous fan of the work that you have done for many, many years.

CW: Thank you so much. I appreciate that. So as an economist, you focus on the historical roots and contemporary disparities related to income and wealth inequality. And one of the hallmarks of your work is as an economist, you nevertheless have a deeply historical perspective to understand contemporary issues. Why is such a lens important? 

DD: Well, I frequently say that the most important field of study is history. And the reason I think that is because it informs everything that we do, not only in the academic world, but also in terms of our real lives. And so I guess some people would say our academic lives are real lives, but there is a difference. And I think it's particularly important in a society where there has been such an extensive degree of dishonesty about what the historical record actually is.

DD: We've had a severe degree of domination of the American narrative by organizations like the United Daughters of the Confederacy and the Daughters of the American Revolution. And this results in the long-term... In a set of beliefs and attitudes that can cause people to invade the nation's capital and to try to execute a coup de tat as what happened on January 6. And so I think that the contestation over the field of history is absolutely critical, and it's vital that we design and develop the most accurate story that we can tell about what has happened in the generations that came before us. And I think that a serious economist can't really do useful work about public policy, about social change, unless they attempt to develop a very serious understanding of the accurate historical record.

CW: And so much of that historical framework is so useful in policy analysis. When I think about my own work on the welfare system, I couldn't understand what was happening with welfare reform as under the Personal Responsibility and Work Opportunity Reconciliation Act, unless I looked at that long history of the system. I couldn't understand the building of a HIV safety net and infrastructure without understanding the history of that system. And you have done so much work trying to understand income and wealth from a historical perspective, and to try to understand what have been some of the major policies that have been critical when we look at income and wealth disparities today. Walk us through that. I use the term policy genealogy. Walk us through that...

DD: Nice.

CW: Policy genealogy, when we think about income and wealth inequality. What are some of the key policies? 

DD: So I think that historically, until the period of the New Deal, American public policy largely focused on what I would like to refer to as asset building strategies. From the New Deal onward, there was a much greater emphasis on what I'd like to refer to as income supplements. And I think it's important in the context of thinking about this idea, that you just mentioned of policy genealogy, to recognize the points at which different types of changes took place in the nature of the policies that the federal government in the United States has pursued. So if we go back to the 19th century, to the period of the end of the Civil War, the federal government was primarily in an asset building mode. And the central asset that was being provided to Americans and to recent immigrants who were not yet necessarily Americans... These are White immigrants from Europe primarily, was land. Land was the central asset that the federal government was essentially handing out. And it was handing out land that had been appropriated from the Native population in the United States. A population that was displaced from their own territories and were moved to other locations.

DD: In fact, it's the period in which we... In the early part of the 19th century, it's the period in which so-called Indian territory is created in what is now modern day Oklahoma. But in that process, the federal government in 1862 introduces a Homestead Act. And the Homestead Act created provisions for 160-acres land grants to be given to families. And approximately 1.5 million White families receive those land grants.

CW: Right.

DD: Your colleague, Trina William Shanks, has done a substantial amount of work on the Homestead Act and, she's probably the foremost expert on the long-term impact of the Homestead Act. And I think she estimates that at least 45 million living White Americans are beneficiaries of the Homestead Act across the generations. So the first asset that's being provided to Americans for the purposes of giving them wealth is land. But unfortunately, the promise of 40-acre land grants... One quarter of the size of the allocations that were provided to White Americans... The promise of 40-acre land grants to the formerly enslaved as restitution for their years of bondage was never met. Now in the 20th century for a substantial period of time, the government's asset building focus was on home ownership instead of on land. And there were a number of policies, including those that were introduced during the course of the New Deal, that were intended to promote home buying, or opportunities for home buying.

DD: And this is the way in which the nation created a substantial degree of upward mobility for many of its citizens and created a middle class. But it did so in such a way that it disproportionately benefited White Americans in a very stark and dramatic way. The New Deal legislation that's relevant... Perhaps the most important piece of the New Deal legislation is associated with the creation of the Federal Housing Administration. And the Federal Housing Administration in conjunction with local banks, crafted a public-private partnership that engaged in a process of what I'd like to refer to as credit starvation towards Black Americans and credit generation for White Americans that facilitated the White American communities' capacity to become home buyers on an extensive scale in homes that were likely to appreciate significantly over time. While the Black community had restricted access to that credit.

DD: And consequently, to the extent that folks were able to purchase homes, they had to buy homes in neighborhoods where appreciation was less likely. And then the final significant phase of this asset building orientation is the GI Bill. It was enacted in the aftermath of World War II, which had provisions to support returning veterans in going to college, getting vocational training, purchasing a farm, investing in a business. And then perhaps most significantly, from the standpoint of 20th century asset building policies, purchasing homes. And again, this was done on a highly discriminatory basis. I've seen estimates that indicate that out of some 65,000 veterans that received benefits in the states of New York and New Jersey, only 100 or so were Black with respect to the home buying benefits. And then in Mississippi, out of about 3500 returning veterans who received home buying benefits only two were Black.

DD: And so there was a real asymmetry in the execution of this program that led to or contributed to the kinds of wealth disparities we observe today. And I guess, my final comment in this genealogy is to say that in the aftermath of the 1950s, much of federal policy has shifted away from a focus on asset building, exclusively towards income supplements. And as a consequence, there has been a perpetuation of this divide in wealth, because income supplement initiatives don't have much to do in terms of affecting the levels of wealth in families and in households.

CW: What are examples of income supplement programs? Are you thinking about... Are you defining those as safety net programs, or is that something else? 

DD: No, I'm thinking of safety net programs and there's a wide range of them.

CW: Right, right. [0:14:47.1] ____ welfare, etcetera, etcetera.

DD: Yeah, you mentioned the change in welfare from what we once knew it as. So it went from AFDC to the program that you mentioned... In both cases, those are income supplements. Unemployment insurance is a form of an income supplement. Food stamps are a form of an income supplement, an in-kind supplement effectively. So we have a set of programs that are in place. And as you described them, they're safety net programs that are intended to assist people who fall into poverty. But the key thing is that these are programs that respond only after you have fallen into poverty. We do not have a social apparatus... A social policy apparatus to prevent people from experiencing poverty in the first place.

CW: In the sense that, in many of our social welfare programs, the fire has to be raging before we install the fire extinguisher. Right? 

DD: Yeah. They're means-tested, and that means that you have to demonstrate that your income has fallen below a certain level before you're eligible to receive the benefits of those programs.

CW: Right. Would you imagine adding a fourth phase in this conversation about land and housing, the GI Bill, income supplements... I guess I would say a fifth phase, and that is the role of, say, tax policy.

DD: Yeah. That's very, very important.

CW: Yeah, and what would you say about that in terms of how that reproduces inequity, in terms of who's paying what, but also how people are able to navigate that system based on the kinds of resources that they have? 

DD: Well, as you know, the law professor, Dorothy Brown, has an excellent book that is on precisely this topic in terms of addressing the racial impact of tax policy. And the book is called the "Whiteness of Wealth", and I encourage folks to take a look at it. But my thinking is, it's only in the context of tax policy that we still have a substantial set of initiatives that the federal government is utilizing to promote asset building. But it's promoting asset building for folks who are already wealthy. And whereas the idea behind the Homestead Act of 1862... The idea behind the GI Bill was to promote wealth accumulation among those who did not necessarily have it already. And so that's a very different set of policies. But there's a number of mechanisms in the tax system that actually enhanced the wealth position of the already affluent. And one of the classic examples is the sacred cow in the tax system, which is the home mortgage deduction.

CW: Okay. Okay.

DD: The greater the value of your home, the more you benefit from the home mortgage deduction.

CW: Right, right. Which is already kind of perpetuating wealth in a lot of ways in terms of who gets rewarded for having resources. So when we go back in time... And I wanna go back to what you call kind of a golden age, a mystic age... And I've try to think about when have policies been proactive about responding to wealth and income disparities. When have they held the greatest promise. Even if the implementation met challenges, when were the moments that we were truly imaginative in terms of income and wealth... Responding to income and wealth inequality. And you write in your book, "From here to Equality" about... I think you called it the mystic era. The Seven...

DD: No, it's actually borrowed from W. E. B. Du Bois and it is The Seven Mystic Years.

CW: The Seven Mystic Years. And it always comes back to Du Bois, doesn't it? 

[chuckle]

CW: Nicole [0:19:19.8] ____ was with us a couple of weeks ago or last week, I think. And we talked about her grounding of the...

DD: Whether it's double consciousness or the third eye... Yeah, it always comes back to Du Bois.

CW: Right, right. Exactly. The grounding of so many of her core concepts, and understanding of criminal justice policy in the understanding of Du Bois. So talk to us about Du Bois's conception of The Seven Mystic Years. What was that era? Tell us about it. And do you see that as the era of... When we had the most promise and had done the most in terms of proactively addressing wealth and income...

DD: If you're talking about inequality between Blacks and Whites...

CW: Okay. Yeah.

DD: Yes, absolutely. That is the only period in which the prospect for true democracy in the United States was actually pursued.

CW: Okay.

DD: And when I say true democracy, I mean, including or incorporating the formerly enslaved or what we now refer to as the Freedman into the national polity as full citizens.

CW: Right, and otherwise known as Reconstruction. So tell us...

DD: That is the Reconstruction era, yeah.

CW: Tell us what the Reconstruction era meant for wealth and income equality? We've talked about in previous masterclass, Racial Foundations conversations about its impact for political participation for Black lawmakers, but so much of Reconstruction was about economic incorporation. Can you tell us about that? 

DD: Yeah, and that was the other side of Reconstruction that was a failed aspect of Reconstruction, which was the whole issue of the provision of land, the vaunted 40 acres.

CW: Yeah.

DD: Which was promised to the Freedmen. There was an expectation that the Freedmen held based upon what they were told, what policymakers were saying that every family would receive, or household of four would receive the equivalent of 40-acre land grants. And so, since there were four million newly emancipated persons in the United States, at minimum, there was an expectation of an allocation of 40 million acres. And what differentiates the potential allocations to the Freedmen from the allocations that were made under the Homestead Act is that the immediate previous owners of the land or possessors of the land that was supposed to go to the Freedman were the former slave holders. Whereas, the land that was allocated under the Homestead Act was land from which the Indigenous Americans had just shortly before been displaced. But there was a sense of justice that was associated with the notion that the land that folks had worked under coercion, should revert to them as their property, as their source of wealth, and that didn't occur.

DD: The process was begun with General Sherman's Special Field Orders Number 15, which provided for initially an allocation of 5.3 million acres of land stretching from the Sea Islands of South Carolina to Northern Florida, bounded by the St. Johns River. And that was an initial allocation that was specified in General Sherman's Special Field Order Number 15. People frequently say that... Or mistakenly think that the allocation was 400,000 acres, but it was actually 5.3 million. What... The 400,000 acres was the amount of land that actually was settled by 40,000 of the Freedmen before President Andrew Johnson abrogated the program altogether. And so, that's the lost promise of the Reconstruction era, but the other side of the lost promise, as you mentioned, is the failure to maintain and sustain full participation by the Freedmen in the electoral process. And that's a consequence of outright violence and terror on the part of the former Confederates. And one might even say that they really weren't former Confederates, because they were still pursuing the Confederate project.

CW: And then I think it's also when we talk about conversations around income and wealth, we also have to talk about debt and the kind of systematic debt creation that happens after this era through systems of sharecropping and other economic practices that render Black folks in particular, constantly in debt to White landowners. Can you talk about what the legacy of that is and of that [0:24:56.5] ____? 

DD: Well, it's interesting, because I've actually heard people say things like, "If you could eliminate student loan debt, you would eliminate the racial wealth gap," and this is absolutely inaccurate. Certainly the question of debt disparities is an important one, but we have to recognize that actually the average level of debt that's held by White Americans is higher than the average level of debt that's held by Black Americans. What's the critical difference is, Black Americans have considerably fewer assets, so that if we were just to do a simple accounting exercise on the nature of the racial wealth gap in the United States, we would find that the greater differential in wealth is attributable to an asset gap rather than to a debt gap. And so, if you were to reduce or eliminate certain significant categories of debt and student loan debt is only one category of debt, you certainly could make some progress towards eliminating or reducing the racial wealth gap, but unless you address the asset differential, you're really not going to be able to close that gap in any significant way.

CW: And how have scholars improved the ways in which they understand the racial wealth gap? You know, there was a time where it was easier to be able to discern the income gap, and therefore, it was really the focus of so many of our policy conversations, of our research, it was all about income inequality, and people had an awareness that there was a wealth inequality, but there was always a question of measurement, how do you measure? Can you talk to us about how we have improved the techniques by which we're able to make these claims around the racial wealth gap? 

DD: Yeah. So there are datasets now that are available, and I think the first point at which micro data on wealth was initially generated in the United States on a national scale, was through the Survey of Consumer Finances. And I believe the first round of the Survey of Consumer Finances occurs either in the late '50s or the early 1960s. We also have the Panel Study of Income Dynamics, which provides us with excellent data about wealth inequality, as well as other aspects of intergenerational transmission effects, which are extremely, extremely important. But interestingly enough, I think it's a couple of scholars in your field who played an important role in shifting attention to wealth in such a way that people finally began to recognize that it was something that was different from income, and that it had very, very different consequences for the quality of people's lives and their opportunity. And I'm thinking of the work of Melvin Oliver and Tom Shapiro...

CW: Yeah.

DD: In their book Black Wealth/White Wealth, I think that was somewhat of a landmark in terms of establishing, that paying attention to wealth had a different set of implications from paying attention to income.

CW: Right, right. And one of the things that is so important for many of our students who are watching this is, when we talk about wealth inequality, so often, there are things that we don't necessarily recognize as replicators of inequity, right? Our parents may pay for our college tuition and leave us debt-free, they may help for a down payment and for a house, they may...

DD: Right. They may give you a car.

CW: Exactly, exactly. So...

DD: They may send you to a summer enrichment camp that gives you a jump on doing chemistry or doing physics as a high school student, and then that gives you access to a more Tony college or university, and then if your parents have the resources, they can make sure that you emerge from college without any of the student debt that we've been talking about. So yeah, those are all ways that I think we tend to overlook or underestimate as factors that contribute to the perpetuation of these types of differences in wealth across racial lines, but also across individuals. Yeah.

CW: And one of the things that you've been very active in is to think about solutions to this. And From Here to Equality really puts forth an argument, a proposal for how we begin to systematically address these inequities. Because I can imagine a student who's watching this to say, "Well, should I refuse the down payment? Should I refuse the assistance of my parents and all of that, if I wanna make a difference?" And what you're arguing is that these dynamics are systemic and therefore we need systemic solutions. So, can you talk to us about the premise of that? 

DD: I don't think individuals should be plagued by the equivalent of survivor's guilt.

CW: Yeah.

DD: Okay? This is not a question of guilt. This is how the society has operated for multiple generations, and so, there needs to be a societal intervention to try to address the kinds of inequalities that have been produced. And they've been produced in large measure by public policy.

CW: Right.

DD: So, if they're a product of public policy, whether it's the Homestead Act or the practices of the Federal Housing Administration or the GI Bill, then it suggests that we need public policy to come into play to try to address those kinds of inequalities. So I think there are two tiers of inequality in wealth that need to be tackled. One tier is what we might refer to as overall or general inequality and wealth. And in that context, I've worked with some other scholars to try to design a plan that we refer to now as the baby bonds proposal, as a way of trying to address overall wealth inequality. And the idea there is that every new born infant would be provided with a trust account that they could access when they reach young adulthood. But the amount of the trust account would vary depending upon the wealth position of the child's family. And so, if it was Bill Gates who had another child, then we'd give them a token trust account of $50, but for children born in the lowest end of the wealth distribution, then their trust accounts would be in the vicinity of $50,000 to $60,000.

DD: And so, this would be a way of creating greater equality in wealth, if you measure the wealth gap at the median, at the middle of the wealth distribution, and that's the premise behind the Baby Bonds proposal. But in the pages of From Here to Equality, we are concerned with the racial wealth gap, and we argue that if you're going to be concerned about the racial wealth gap, you have to focus on the differential in wealth at the mean, or what people customarily think about intuitively as the average rather than the median. Now... And why do I say that? Recognizing that if you're looking at the middle of the distribution, it's not contaminated by the outlying values either at the upper end or the lower end, which is what motivates people to think about the median rather than the mean. But in this context, I think we have to consider the mean rather than the median. We have to take into account the outlying values, and here's why. First, 97% of the wealth that is held by White American households is held by those households that have a net worth above the White median. So if you were to take the middle household in the white distribution of wealth, 50% of the households above them, the half that's above them, have 97% of the White wealth.

CW: Wow.

DD: So if you were to look only at the median household, you would be ignoring a vast amount of the wealth that is held in White households. Now, folks frequently say, "Well, that's only because there's a handful of extraordinarily rich White billionaires." Well, it's true that there's only a handful... There is a handful of extraordinarily rich White billionaires, but that doesn't fully explain the discrepancy that I just mentioned. It runs deeper than just the billionaires or millionaires. One quarter, one quarter of White households has a net worth in excess of $1 million, and it's only...

CW: One quarter? 

DD: One quarter and it's only 4% of black households. So, the disparity is not exclusively due to the fact that there's just a few extraordinarily rich White billionaires.

CW: Right. That's throwing off the whole distribution. Yeah.

DD: Yeah. Yeah.

CW: Yeah, yeah. So, your solution or proposal in here to equality has to do with reparations, and we're gonna talk about that in a minute, but I wanna go back to the Baby Bonds idea, because I think it's very intriguing, and part of what you're suggesting is an approach of what we might call targeting via universalism. The idea of imagining a public policy that targets all and is in a universal public policy for all, but targets marginalized communities within it. Why do you think that approach of targeting within a universal policy approach, the idea that everybody gets the Baby Bond, even Bill Gates's child gets the baby bond, even if it's not the same amount, why do you think that that is important from a kind of, I imagine you're thinking about policy feasibility, and I would love for you to talk about that.

DD: I think there's also a statement of principle that the society is saying that every child has a right to some initial endowment of resources to launch them.

CW: Okay.

DD: And so, it's a universal program, but it's not uniform in the sense that not every child that's born will need the same amount of resources to give them a jumpstart in the wealth accumulation process when they become young adults. And so, the idea is that this is a component of a package of what we might actually call an economic Bill of Rights for the 21st century, and that's why it's treated as something that is universal, that it's applicable to all children, but the important dimension of it is not all children would receive exactly the same amount.

CW: And have you seen a policy that... Have you seen proposals where people have taken this up? Have you seen policies that begin to move in that direction? Do we have anything to be optimistic about in terms of people moving in the direction of that kind of conversation? 

DD: Yeah, in a way, it's unfortunate, but much more so than talking about a substantive program of reparations. And I wanna emphasize, the premise in my thinking is that these are not substitute policies, they are complementary. So one policy, the Baby Bonds policy, is one that's intended to reduce the stress and strain of wealth disparities for all Americans, whereas, the Reparations Project is one that is intended to correct for the immense imbalance of wealth that exists between Blacks and Whites, and we need to introduce both of them. But clearly there's been more interest that's been expressed in pursuing the Baby Bonds proposal. And one illustration is, legislation that Senator Cory Booker has in Congress now for something that he refers to as Opportunity Accounts, which is modeled on the Baby Bonds approach. Maybe one of the central differences is that his plan calibrates the amount of the trust account on the basis of family income rather than family wealth.

CW: Okay.

DD: And I think that that's a decision that was made out of convenience, because we have better access to income information than we do to wealth information, and we would need to begin to introduce different approaches to gathering data about families' resources to be able to correctly measure their wealth position. But another example is, the state of Connecticut, which has adopted something that is roughly the equivalent of the Baby Bonds proposal. So it's out there and has been adopted.

CW: In our political environment, do you have more optimism for this to be adopted at the federal level, or at the state level, in particular kinds of states? And can you talk about the role of the federal government...

DD: This is a case... Unlike my thinking about reparations, this is a case where I think that the adoption of Baby Bonds at the state level creates a useful model for the federal government. And so, I anticipate that at some point, the federal government will have a program like this, and it will be informed by some of the programs that have been adopted at the state level. But I wanna contrast that with my attitude about state and local so-called reparations.

CW: Which are very popular right now, like Evans [0:40:53.0] ____.

DD: It's fascinating, 'cause people used to run away from the idea of reparations and now, many towns and communities are declaring enthusiastically, that they are setting up reparations plans. Let me say why I have reservations about that. So first of all, it's important to establish what a reparations plan should look like, that would be designed to eliminate the racial wealth gap.

CW: Right. And what do we mean by reparations? Yeah, if you could define that, please.

DD: So there are four components of what I think of as a reparations plan. The first is establishing who's eligible, and the eligibility criteria that we describe in, from here to equality is that, an individual would have to demonstrate two things. First, that they have at least one ancestor who was enslaved in the United States. So essentially, they would be demonstrating that they are descendants of the persons who were denied the 40-acre land grants that were promised, so that they are the descendants of the persons for whom the debt was initially incurred. And then the second condition is that, they would have to establish that they self-identified as Black, Negro, African-American or Afro-American for at least 12 years before the adoption of a reparations plan or the adoption of a study commission for reparations. So those are the two eligibility criteria. The second...

CW: Is that because... Before you move on, is that because we know the fluidity of race, and we know that there are people who identify as White, who are actually descendants of slaves, but nevertheless, because they occupy the understood category of Whiteness, have nevertheless, been able to benefit economically in some of the...

DD: That's right, that's right. And they should not be able to come across and say, "Oh well, I have an enslaved ancestors, so I should be eligible for reparations." Not if they've been living as White.

CW: Right. Okay. So that's why those kind of qualifictions...

DD: That's the second... That's the reason for the second criteria.

CW: Okay, wonderful.

DD: Yeah, yeah. And then the second feature of a reparations plan must be a structure that would eliminate the racial wealth gap. And what would that require? Well, we estimate that Black Americans who are descendants of persons enslaved in the United States are about 12% of the nation's population, but possess less than 2% of the nation's wealth. And correspondingly, this means that the average Black household has a net worth that is $840,000 less than the average White household. And so, if we were to bring the Black share of wealth into consistency with the Black share of population, it would require an expenditure of at least $11 trillion.

DD: Now, here's why I get really, really frustrated with people making the claim that they are producing reparations at the state or local level. The combined budgets of all state and local governments in the United States, inclusive of everyone, is less than $3.5 trillion. So for them to get to the $11 trillion mark, they would have to devote their full budgets to a reparations fund for upwards of four years, and not provide any of the services to their constituencies that they are normally obligated to provide.

DD: This is sheer insanity. It has to be the federal government that does this, and that's the third attribute of the program. And the fourth and final is, the distribution of the resources from a reparations fund should take the form of direct payments to eligible recipients. And the premise here is that, that's how it has typically been done for victimized communities, whether it's the German government making payments to the victims of the holocaust, or it's the US government making payments to Japanese-Americans who were unjustly subjected to mass incarceration during World War II. That's how we normally do it, and there should be... There's no reason why it shouldn't be done in the same way, for Black American descendants of persons enslaved in the United States.

CW: So you therefore, have concerns, I would imagine, about programs that are... Reparations conversations that are more programmatically-focused, in terms of increasing education, skills, etcetera, as reparations programs. You would have a fundamental critique of that because your argument is, that's not how it has typically been done. It's typically been done through cash payments.

DD: Yeah. And it is not at all clear that those types of approaches will eliminate the racial wealth gap.

CW: Okay, okay.

DD: That's the target. And so the question is, do you have a policy package that would truly do that? And let me take education as one illustration of... People frequently revert to education as the panacea for all dimensions of racial inequality. But here's a statistic that I think is really compelling, that Black heads of household with a college degree, have two-thirds of the net worth of White heads of household who never finished high school. And so, additional educational attainment, however desirable, and of course, I think it's desirable. I'd be a hypocrite otherwise. However desirable it is, is not going to eliminate the racial wealth gap. It's not going to approximate doing that, because the major factor influencing Black-White differences in wealth is the capacity, the different capacities of Black and White households to transfer resources to the next generation. And it's that intergenerational transmission effect that is critical, and that's what needs to be interrupted in some substantial way, by public policy. And the policy that can interrupt it to such a degree that you eliminate those disparities is a program of reparations.

CW: Going back to your point about that significant gap between Black college-educated individuals and White, you said high school diploma...

DD: No. High school dropouts.

CW: High school dropouts. That disparate, which is just stunning. Every time I hear that statistic, it's just amazing to me. And part of what you're arguing, causes that and the data show it, is the asset differential, which is really important, and I wonder if you could comment on another dynamic that people talk about, which is Black households sharing wealth with family members who don't have access to wealth, so that the wealth transfer isn't happening intergenerationally, it's happening horizontally within one generation as being a Black college-educated person, you're less likely than Whites, to have other Black college-educated family members. Can you talk about that kind of sociological dimension of...

DD: Well, there's actually a couple of economists who have investigated that sociological dimension, and I'm thinking of the work that Darrick Hamilton and Ngina Chiteji have done, on kin networks and the obligations that comparatively more affluent members of Black families have, to support their relatives who have considerably fewer resources. And so, it's actually quite striking that, despite the fact that Black individuals who we might identify as being in the Black middle class, have greater kin obligations, that there's no significant difference in savings rates between Blacks and Whites, at comparable levels of income.

CW: Interesting. Okay, yeah.

DD: Yeah, so somehow, folks are providing assistance to their relatives, but also engaging in a sufficient amount of savings, so that their rate of savings out of a given amount of income is similar to the rate of savings the White households are engaging in, without having the same degree of kin obligations.

CW: Interesting. And there's another really good article about this, by Mary Pattillo and I think Colleen Heflin, called "Poverty in the Family" that looks at this dynamic. Can you talk about other racial groups? As we think about wealth inequality, we often think about wealth and income, vis-à-vis the Asian-American community. I wonder if you can comment on that. We are thinking about the Latinx community, indigenous populations. What are some of the things that we need to think about, take into account? Where do we need more information, more data? If you could just kind of expand and talk about racial wealth and income gaps across other racial groups and what we see there.

DD: Well, I'm gonna focus on wealth differentials and what we know. It's important to say, that the commitment to closing the racial wealth gap on Kirsten Mullen and my part is really, a focus on what we see as the material conditions that would be required for Black Americans to finally have full citizenship in the United States. If we start thinking about the position of the Native American population, it's somewhat difficult to get adequate data at the national level. But if we were to look at, for example, the City of Tulsa, where we conducted a survey under the National Assets Scorecard for Communities of Color project, we find that there are differences in the wealth position of specific tribal communities and there are also differences in the wealth position of individuals who identify with a particular tribe but do not have formal tribal affiliation.

DD: So, there are a couple of tribes in Tulsa, Oklahoma, and I'm talking now, about individuals who have formal tribal affiliation, whose wealth level is actually higher than that of the individuals who self-identify as being a member of that tribe but do not have a formal tribal affiliation. And I suspect that this is attributable to historical conditions that can concern access to land and also to casino rights. And so, there's a very complicated issue in thinking about Native American wealth, as to whether or not individuals are on reservations, they're out of reservations, whether they have a formal tribal affiliation or they do not, and whether or not they're in a tribal community that has access to casino rights or not. So, all of these things come into play.

DD: On average, Asian Americans appear in these metropolitan level studies, generally, to have much higher levels of wealth than other groups, and sometimes including Whites. I think that there's some strong evidence that Asian-American wealth fell more drastically during the course of the Great Recession. And during that period of time, the overall level of wealth that was experienced by Asian Americans actually fell slightly below the level of wealth of Whites. But prior to the Great Recession, Asian Americans had the highest level of wealth. But this is a bit misleading because there's tremendous heterogeneity within the Asian-American population, and the heterogeneity also is spatial. So for example, the Vietnamese population in Los Angeles actually does not have a particularly high level of wealth, but the Vietnamese population based in Washington, DC does.

DD: And if you were to look at, say, the Hmong population or the Cambodian population, they actually are not a particularly high wealth community. But in contrast, there are significant levels of wealth that are held by Japanese Americans in particular, and East Indians as well. So if we start talking about Asians collectively, I think it's a bit misleading, to not disaggregate. And similarly, we need to disaggregate the Latinx community as well. But I would say, overall, the wealth position of the Latinx community looks very similar to that of native Black Americans. However, even though the numbers are very much the same, the historical processes and maybe what you would wanna call the historical genealogy of the wealth positions of each community are quite, quite different.

DD: The Latinx community does not emerge from slavery and receive a promise of 40-acre land grants that's never fulfilled. The Latinx community was not subject to... Its not subjected to the degree of redlining or GI Bill discrimination that occurred with Blacks. And now of course, there are Afro-Latinos who are confronted with the same types of discriminatory practices that so-called non-Hispanic Blacks face. But if we recognize that the phenotypical variation in the Latino community provides significant insulation from that type of discrimination for a large segment of that population, then we have to recognize that the conditions shaping the wealth differentials for Blacks and the Latinx population, are different.

CW: So, that brings me to two questions. One, therefore, how do you respond to wealth differentials experienced by, say, the LatinX community with its diversity? And second, your response reminds me of the work that you've done on skin color and the relationship between skin color and economic resources. So they're different questions, and I'm gonna ask you to respond to both of them.

DD: As I said, I'm an advocate of a baby bonds proposal which would be applicable to all Americans. The notion of reparations is specific to the Black-American community that has ancestors who were enslaved in the United States, and that's because of the specificity of the case that we attempt to build in From Here to Equality. If there are other communities that feel that they have a claim for reparations, I would definitely encourage them to write a book like From Here to Equality, but that's not the case that we're making in our book. And so, I can't speak to the claims for reparations that other communities might have. But the baby bonds proposal would be applicable to everyone, and so it would also be inclusive of the Latinx community. Yeah, I'm not sure there's more I can say on that.

CW: No. I hear what you're saying. Yeah.

DD: But with respect to colorism, it's interesting. There's strong evidence that color differences within the Black community are connected to differences in earnings and income, but there's not strong evidence that we found in... Now, I have to say, it's only a single location. But we did a study in Los Angeles where we looked at... We interviewed people, but we did it in a face-to-face manner. And so, the interviewers were able to code the individual's skin shade. And then we ask asked folks if we could take their photograph, and about half of the respondents out of about 600 gave us permission to do that. But we were then able to try to investigate what the relationship is between skin shade and earnings, and what the relationship is between skin shade and wealth. And we actually did not find a significant relationship among individuals who self-identified as Black, we didn't find a significant relationship between skin shade and wealth. We did find a significant relationship between skin shade and earnings.

CW: Interesting. And can you say a little bit more about that? Because, as I interpret that, that means that the physical phenotypical proximity to whiteness is actually a driver of greater access to income resources. It has an implication for what you're able to earn in terms of your phenotypical... Even if you're Black but have that phenotypical look, then it has implications for income.

DD: Yeah, it's consistent with other research that we have done previously that suggests the degree of discrimination faced by lighter-skinned Black men is less than the degree of discrimination that's faced by darker-complexioned Black men. So there is variation in that sense. But we don't find any significant variation with respect to wealth in the Los Angeles case, which is the only location in which we've done such a study. And that's interesting, because it would suggest that the problem of intergenerational transmission of resources applies to virtually all Black people regardless of their phenotype.

CW: Right.

DD: Yeah. And this is also another piece of evidence that suggest that there is a disjuncture between income accumulation and wealth accumulation.

CW: Can you help me answer some of the questions from the audience? So one question we have... And I may... We have a number of questions here. How have recent stimulus policies over the last 19 months, since From Here to Equality was published, along with the deep inequities further exposed by COVID-19 and widespread response to the murder of George Floyd, influenced and aided in the discussions about and promotion of reparations for Black Americans? Would you consider the pandemic our newest crossroads moment? 

DD: Oh, that's interesting, given the crossroads that we talk about in the book. I'll have to say maybe. The crossroads that we identify in the book are all retrospective, and we'll have to see if there are some opportunities that are lost in this particular moment, because the moment is still ongoing. But I will say that there have been two dimensions of the pandemic and the international outcry over George Floyd's murder that have appeared to be supportive of the reparations effort. The first is the huge expenditures that the federal government has undertaken to address the economic problems and crises that have been associated with the pandemic demonstrates that the federal government certainly could finance the reparations plan. So the experience with the pandemic is an experience that permits us to begin to tell people that they can take the how will you pay for it question off the table all together.

CW: In terms of the stimulus conversations? 

DD: That's right.

CW: Even with the current debates happening now and the kind of last couple of hold-outs on the Democratic side who have really been pushing arguments about cost and etcetera...

DD: Yeah, but they're wedded to a vision of fiscal finance that they find politically useful, but it has no connection to reality.

CW: Okay.

DD: The federal government basically has spent $6 trillion within the course of the past year, and they did so without raising taxes. Okay, so... We should really rethink [1:05:00.4] ____.

CW: Right, it's opened up the idea of what's possible. Yeah, it's really... It's opened up the idea of what's possible. Yeah, yeah.

DD: And then the second thing is that I think that these tragedies have actually created a greater receptiveness to reparations. So I'm thinking first of the fact that in the year 2000, when Michael Dawson and Ravana Popoff did a survey of Americans concerning their attitudes about reparations, that only 4% of White Americans endorsed monetary payments to Black Americans as an act of reparative justice. In 2018, that percentage was up to 16; still not spectacularly high, but substantially higher than 4%. And then today the percentage appears to be about 30. So I don't know if it's a sustainable momentum, but things are moving in the right direction, and so it gives me some sense of optimism about the future, whether or not this is something that actually occurs in my own lifetime. It seems like the direction is quite different from what it was, say, only four or five years ago.

CW: Okay, interesting. Our next question. Dr. Darity discussed the land provision as a social provision given to mostly White individuals. Can he talk more about how policy has prevented Black people and other people of color from ownership and generational wealth building through similar tactics? Does he anticipate a growth in success of shared ownership, cooperative ownership development, and community land trusts as a mechanism to build wealth for low-income people of color? 

DD: Well, no. I'm thinking that you get rid of the wealth gap by getting rid of the wealth gap. You're going to increase the wealth position of all Black Americans by giving them an allocation that would create a situation in which the average level of Black wealth would be equivalent to the average level of White wealth in the United States. And other kinds of strategies are indirect. Now, if individuals want to form land trusts or cooperative arrangements and make use of the funds that they receive from reparations payments, then by all means, do so. We've got some folks who are saying that they want to repatriate to the continent. Well, if they wanna use their reparations funds to do that, then they should be able to do that. But I think it has to be a matter of discretion for each of the eligible recipients what's done with the funds. So if this particular individual wants to organize a cooperative with a group of similarly resourced Black Americans, a reparations program would give people the opportunity to do that because they would have a very different set of options with a significantly higher level of wealth.

CW: And you know what I read also into this question, what it made me think about, is we've talked about places where public policy has been active in bolstering the wealth of Whites proactively and restricting that access to Blacks, and in some cases other people of color, but we also have to note the ways in which the federal government has not provided legal protections when wealth was built by Blacks. And I wonder if you can talk about instances in which public policy did not respond to the detriment of wealth-building. And I'm thinking... We know the very well-known example now of Oklahoma and kind of Black Wall Street, but I wonder if you can talk about how public policy has at some point removed itself or refused to enforce equal justice under the law, or refused to create remedies when massive wealth stealing has happened. Can you talk a little bit about that role for public policy? 

DD: Well, the federal government has effectively sanctioned upwards of 100 massacres that took place from the end of the Civil War into World War II, White massacres that took Black lives and either destroyed or resulted in the seizure of Black-owned property by the white terrorists. And so, Tulsa, Oklahoma in 1921 is a single illustration of a pattern of White violence that was intended to prevent Blacks from participating in the political process, but also intended to make it possible for Whites to take possession of the property that they had won in hard-earned fashion. So yes, there is an issue of whether or not property would be protected.

DD: If we go back to the aftermath of the Civil War and the whole issue surrounding the land reform and 40 acres, had that land actually been allocated, it would have been essential for the Union Army to remain in the South for at least a full generation and/or arm Blacks so that they could protect themselves from the predations of the White terrorists. In effect, if you had made that land allocation, it would have been essential to protect that land allocation. And I would say, similarly, if we had a reparations plan in the United States in the modern era, we would have to be prepared for the fact that there's going to be 30% of the population that will be so resistant to any policy that substantially improves the condition of Black Americans that they may resort to violence, and so preparations would have to be made to anticipate that type of behavior.

DD: It is interesting that there was a tremendous amount of information out there that signaled that there was going to be an attempted coup d'état in Washington on January 6th, but it was largely ignored. And similarly, we have evidence that there was extensive preparation for the Tulsa Massacre. There was extensive preparation underway for the Wilmington Massacre in North Carolina of 1898. In the Wilmington case, according to David Zucchino, efforts were made to get the state's governor as well as the President, President McKinley, to take steps to prevent that event from taking place, and no one bothered. So there was a sanction by inaction, ultimately.

CW: Sanction by an action, that's key for policy discussions, and it's an important concept to kinda lift up. Okay, next question. To what extent are reparations to Black Americans a global issue? Or to Blacks, I would say, a global issue? Are there other examples of successful restitutions across the globe, or could the US set an example for other previously slave-owning countries to follow, and we might argue colonizing countries as well? Why hasn't the UN intervened in American affairs since becoming aware of this issue? So to me, this argument is also about... Think about responding to colonialism as well. So talk to us about the global case, or your ideas about the global case for reparations.

DD: Well, the UN actually has had a task force that has recommended reparations in the United States. So... But that's all they can do. They don't have the capacity to compel any individual government to do anything. But they are attempting to use the force of moral suasion in support of reparations. So that's the most the UN can actually do, but it's been done. With respect to the question of diaspora-wide reparations, in the work that Kirsten and I have done, we've focused on the notion that individual communities within the diaspora should make claims on the appropriate perpetrator. And so, in the context of the United States, we think that the debt that is owed is embodied in the failure to provide the 40 acres, and that creates the foundation for the case for reparations that Black Americans who are descendants of US slavery have with the US government. But in parallel fashion, the Congo has a compelling case to be made against Belgium. '90s.

DD: The countries of the Caribbean, particularly the former British colonies like Trinidad and Tobago or Jamaica, have a case against the United Kingdom. The Haitians have a case against France. They have a powerful case against France, because France compelled Haiti to pay reparations to them, which is just incredible. And so, I know of no instance where countries where slavery was practiced have received reparations from the nations that perpetrated their enslavement. Now, we do have this peculiar instance where, after more than a century, despite the fact that this country paid reparations to victims of the Holocaust, finally after more than a century, Germany says it's going to do something on behalf of the Nama and the Herero people in Southern Africa who were subjected to genocidal violence by the Germans. Now, I think that the Nama and the Herero people are not satisfied with the offer that Germany is putting forward. But if that were to occur, I think that would be the very first instance of reparations of some form, inadequate though it may be, being made for colonial oppression.

CW: What made the cases that were successfully executed for reparations distinct from the case for Black Americans, Nazi Germany, the reparations pay to Japanese Americans? What made those cases distinct such that those groups... That their victims did receive the internment of Japanese Americans, and then what happened in Nazi Germany, what made those cases successful in terms of the case for reparations? 

DD: So it's interesting to know that in the case of Germany, and now we're specifically talking about West Germany, that I think less than 20% of the German population actually was in favor of reparations for the victims of the Holocaust. But it happened anyway. And I think one of the major reasons it happened was because the German government agreed to engage in negotiations with Israel, because they recognized that taking this step would permit them to re-enter the community of nations as a legitimate partner. That they were in a position of ostracization, and they wanted to get past that. It's also interesting to note that they did make monetary payments, but they have never made a formal apology.

DD: So it's fairly clear that this was a reparations plan that was adopted without passion and enthusiasm on the part of most Germans. So the why, I think is simply because of the practicalities of international politics from the standpoint of Germany's leadership in the immediate aftermath of the war. What about the Japanese-Americans receiving reparations payments from the US government? Well, the Japanese-American case is an interesting one, both in terms of certain dimensions of serendipity, but also in terms of the effort that the Japanese-American community themselves made.

DD: They undertook a powerful lobbying effort to receive some form of reparative justice, and they had to come up to an agreement that was not uniformly held that a component or a part of their reparations agreement would have to include monetary payments. There was a dispute within the Japanese American community over that, just as there was a dispute, in the Jewish-American community over whether or not they were going to seek monetary payments. But in the case of the Japanese Americans, they received an apology and they received monetary payments. But I think this was a consequence of the intensity of the lobbying effort that they undertook, and also the fact that there was a Republican senator and a Democratic Party representative who was Japanese, who were strong friends. While the Japanese-American representative was incarcerated with his family, he became close friends with the Republican Senator through a Boy Scout jamboree. And so they collaborated across party lines to support the Japanese-American reparations project, so that's serendipity from the standpoint of what made it possible.

CW: Your proposal for reparations is very much about the role of government, and it goes back to that original broken policy promise around 40 acres. But I wonder, when you think about the role of the private sector, when you think about the wealth that was gained by corporations, when you've seen conversations among colleges and universities, Georgetown being one, around universities that were built on the labor of slaves and thinking about some form of reparations through tuition benefits, etcetera, do you not... Would you not call those reparations? 

DD: That is harder than the reparations. [chuckle]

CW: That's something else. Right. That's something else. That are also trying to respond to some economic inequities, but you would not call that reparations, it sounds like you reserve that term for... You have a very clear specificity around your use of that term.

DD: Yeah, I think that we have to be proprietary about the term and we have to limit it in the context of reparations for Black-American descendants of the US slavery, to elimination of the racial wealth gap, which is a product of historical policies that produce that type of disparity. And college scholarships are not going to eliminate the racial wealth gap. But that's somewhat different, from the question as to whether or not private individuals or organizations or state and local governments for that matter, should be involved in financing reparations or funding reparations. And I certainly don't have any aversion to them supplementing a federal reparations fund with additional resources, but it would be very difficult to compel them to do so. And the reason why it would be very difficult to compel them to do so is that most of the actions and practices they undertook, especially during the period of enslavement, were legal.

CW: Right. Yeah. Within that context. Right.

DD: Highly immoral but they were legal. And so if we were going to address the question of who is responsible for the legality of those immoral practices, we have to turn back to the federal government again, and that's why we say that the federal government is the culpable party. But it's also the capable party, because only the federal government has the capacity to amass the types of resources that can really penetrate and eliminate the racial wealth gap.

CW: So, Sandy at the Ford School, we've been engaged in conversations as a faculty, just to switch gears a little bit towards our last question about what anti-racist teaching looks like? And diversifying what we teach and how we teach broadly, particularly within a school of public policy, because what our conversation has so clearly demonstrated, is the enormous role of public policy in setting the terms by which we all operate for not just our generation, but generations to come, so we've been having a conversation around, what does anti-racist teaching look like, particularly in the policy school context, how do we diversify what and how we teach, how can we better educate our students? To be thinking about these ideas as we craft our syllabi and introduce core frameworks and ideas? Facilitate discussion in the classroom. What advice would you give us as we think about these issues, what does it mean to offer policy education in context... With a lens towards anti-racism? 

DD: Wow. [chuckle] That's a tough one. I'm not sure. One of the big issues always when we think about this pedagogically is the question of whether or not the emphasis should be on designing new courses that have not been available previously that have a focus on, say, race and policy or something along those lines, versus... And these are not mutually exclusive strategies, but people tend to think about them as somewhat separate versus how you integrate the analysis of race and policy into your existing classes. And I think it's probably good to try to do both, but I think it may be a richer experience for the students to have new class opportunities that are taught by people who are deeply experts in that area. I think it's really, really hard for faculty members who have not really studied this issue to just inject the module into their class and expect that to be something that's effective and sufficient. So unless they undergo, not sensitivity training, but research experience in the area, so that they'll truly be knowledgeable about the subject matter. So I guess I lean more in the direction of developing new curricular offerings and hiring new faculty members who have expertise in those areas, to the extent that you may not already have an adequate complement of faculty members who can do that.

CW: Dr. Sandy Darity, thank you so much. This was such an informative discussion, so rich in terms of its historical context and discussion of policy genealogies and the current state of the data, and how we can bring all that together to grapple with some really important ideas. Thank you so much for your research career, your authorship of so many different important ideas in the fields of policy studies and econ, but I should also add sociology, former President of the Association of Black Sociologists, you've been everywhere. So thank you so much for contributing to this Racial Foundations of Public Policy Series. Thank you so much to our audience for joining us today in this conversation. And we encourage you to join us next time with Dr. Rucker Johnson, who will be with us on October 26. Sandy, Dr. Darity, thank you so much. Thank you so much.

DD: I've been honored to join you. It's a great series. Thank you for having me.

CW: You are welcome. Thank you. Good evening everyone. Take care. Bye-bye.