Thursday, July 3, 2008

Reverse Reparations

"A United for a Fair Economy estimate in January put the wealth loss for people of color at between $164 billion and $213 billion, roughly half of the nation's overall loss."

Kai Wright, "The Subprime Swindle: How the mortgage industry stole black America's hard-won wealth," The Nation, July 14, 2008

One estimate for slavery reparations due for forced labor in the U.S. between 1619 and 1865 is 100 trillion dollars or more. Of course this big number has to be divided up between European colonizers before 1776 and between public and private sectors and everyone else who benefited. Conservative commentator David Horowitz even argues that "If slave labor created wealth for Americans, then obviously it has created wealth for black Americans as well.." Not so obvious to me.

While real discussions about reparations are for the most part stalled, here comes the mortgage industry and takes another big bite of black wealth through the foreclosure meltdown. Lenders answered redlining (the withdrawal of credit)from neighborhoods of color with the targeting of predatory credit to these same neighborhoods for home purchases and, more importantly,refinancings. Although black homeownership trails white homeownersip by some 20 percent, blacks more often have their accumulated wealth anchored in the homes they own.

"There's growing evidence that the subprime mortgage industry may have both benefited from and contributed to racial segregation in the United States."

Shankar, Vedantam, "Subprime Mortgages and Race: A Bit of Good News May Be Illusory," Washington Post, June 30, 2008.

The broken illusion is that subprime lending opened up homeownership opportunities. But a court suit filed by the City of Baltimore argues that "two-thirds of Wells Fargo's foreclosures in Baltimore were in areas that were more than 60 percent African American, whereas only 15.6 percent were in areas that were less than 20 percent African American."

Racial targeting of subprime loans and the resultant foreclosures takes another cut of black wealth by deflating home values in neighborhoods of color by creating more boarded up buildings and all that concentrated housing abandonment entails.

2 comments:

James said...

Bob, you write that it's "not so obvious" to you that slavery created wealth for black Americans, as well as white.

It's obvious to me. The free labor of slavery, and related businesses like slave trading, provided a huge boost to the colonial (later the U.S.) economy, which has been multiplied many times over in the years since.

More importantly, cheap slave-produced commodities and the surplus capital generated by slavery and the slave trade fueled our early industrialization, in such sectors as textiles. The impact of that economic activity on the U.S. economy, and standard of living, today can't be overestimated, especially as the U.S. might have fallen permanently behind if it hadn't managed to industrialize when it did.

This means that all Americans today benefit from a higher standard of living than they otherwise would.

Of course, different Americans benefit to a greater or lesser degree, with blacks, on average, fairing far worse. And the reason for that is the tremendous harm done to the enslaved population and passed on to their descendants.

None of this is an argument against reparations. It is, in fact, a way of showing that white Americans, regardless of when their families arrived in this country or what they were doing generations ago, have benefited significantly from slavery.

Bob Giloth said...

Good point. I was focused on the relative benefit. Thanks for taking the time to clarify this important issue.