On Reparations

The concept of slave reparations is based on tort laws which are usually addressed by state courts throughout the United States.  If I kill someone while driving under the influence of alcohol, I am liable for a host of criminal and civil punishments.  Tort laws guide the civil case in which I may be held responsible for remediating the economic damage done to my victim’s family.  In a drunk driving case, a forensic accountant would calculate the present value of the future income the victim would have earned throughout his career had he lived.  Depending on the case circumstances I would be ordered to pay that amount to the victim’s survivors. The civil punishment may be the least of my worries given the larger criminal liability, but it exists – such cases are brought every day in every state throughout the country.

Slavery is an obvious tort, as well as an obvious crime.  Slavery existed in the United States for 246 years, between 1619 and 1865.  From the first 20 slaves brought to America’s shores in 1619 to the 4.2 million slaves “freed” at the end of the Civil War in 1865, millions of individuals had their labor stolen from them much as in the same way as the drunken driving victim in the above example had his life stolen.  These people were kidnapped from their homes in Africa, or were descendants of those abducted.  They did not choose to be slaves and to the extent they worked on the farms in the southern U.S. states, they worked under the threat of either corporal punishment or execution. 

If I kidnapped an individual today and forced him under the threat of death to work for me with no pay, I would suffer criminal and civil consequences similar to the drunken driver above.  Depending on the state I could be sentenced from 5 to 20 years in prison and also be liable for civil damages.  If I died before the state caught me then the criminal charges would be moot, but the civil case would survive me, with my estate being held responsible for compensatory and punitive damages to my victim.

This is the core of the argument for slave reparations.  The fact of damages is incontrovertible.  Slavery happened.  We know when, we have general census figures for the number of slaves alive in America during the institution’s two and a half century lifespan, and we can estimate a typical farmworker’s salary at the time.  Such calculations have been made by various people in the past resulting in estimates generally between $5 trillion and $15 trillion in current dollars.  It would be difficult to argue against the legitimacy of reparation claims since they are the equivalent of tort cases in modern day courts.  If liability is demonstrated in court and the forensic accountant’s calculations are judged to be reasonable, then economic damages are awarded.  The defendant may not always be able to pay, but that is irrelevant to the legal judgment that payment is due.

We built a model to calculate slavery’s lost wages using the following facts and assumptions:

• The model runs from 1619 to 1865

• Historical census data for slaves is available at ten-year intervals between the 17^th and 19^th centuries. We estimated the number of slaves in America in each of the intervening years by adding the average number of slaves to reach the next data point.  For example, the census tells us there were 27,806 slaves alive in America in 1700 and 41,844 in 1710, or an annual increase of 1,404 slaves per year. For the intervening years between 1700 and 1710, we added 1,404 people to the population each year.

• We based compensations on records of free farm workers’ hourly and annual salaries in the north which ranged from 15 cents per day in the 1600s to 75 cents per day by 1865.

• Compensation was based on a non-boarder worker.  It is arguable that the room and board supplied by plantation owners was well below what would have been provided to a free worker in the north, but we’ll say that if this is true then reparation amounts are understated.

• By multiplying the number of slaves by their annual salaries (based on 310 work days per year) we estimated the total lost wages of the slave group for each year between 1619 and 1865.

• These wages were brought forward to the year 2022 using three rates of return, 2.5% per year, 3.0 percent per year, and 6.0% percent per year.

The entire model will not fit in this space.  An excerpt (at 2.5%) is shown below:

YEAR            SLAVE POP    ANNUAL WAGE            LOST WAGES                       @ 2022

1619                              20                   $46.50                            $930                $19,507,459

1620                            148                   $46.76                         $6,906              $141,327,510

1621                            275                   $47.01                       $12,947              $258,505,396

…

…

…

1863                  4,093,309                 $224.75          $919,971,128      $46,651,841,901

1864                  4,139,825                 $226.30          $936,842,379      $46,348,668,291

1865                  4,186,341                 $227.85         $953,857,831     $46,039,491,266                 

Total damage in historical dollars = $32.61 billion

Total damage in 2022 dollars (grown at 2.5% per year) = $4.75 trillion

Total damage in 2022 dollars (grown at 3.0% per year) = $14.46 trillion

Total damage in 2022 dollars (grown at 6.0% per year) = $53.46 quadrillion                    

Unadjusted lost wages amounted to $32.6 billion.  That is the amount that would have actually been paid out each year between 1619 and 1865 had those workers been free and compensated fairly.

Depending on state law and case circumstances, civil damages include a return to the damaged party for being deprived of the funds between the damage date and the date reparations are made.  These damages include inflation as well as a real return for things like lost investment opportunities.     Calculating the present value of damages is a normal step in the calculation of lost wages or lost profits.

We were surprised at how sensitive the model is to changes in the rate of return used to calculate the present value of lost wages in 2022.  If a 2.5% annual rate of return is used, then the present amount owed is $4.75 trillion, just within the lower range of prior reparations calculations.  A 3.0% rate would put 2022 damages at $14.59 trillion, at the upper end of prior reparation calculations.

However, if a higher rate of return is used at 6.0%, then the present value of lost wages reaches $53.46 quadrillion (that is, $53,460,000,000,000,000).  This is a lesson in the power of compound annual returns.  While 6.0% might be a high rate of return to use in the 1600s and 1700s, it is a fairly low return rate over the past 100 years when the average annual total return on the market has been 10.5%.  The present value amounts are incomprehensibly high because the damages keep mounting each year that no reparation is made.  It’s been over 400 years since slavery began in the United States, and 157 years since the end of the Civil War.  Damages have been growing all that time.

Clearly, no one is going to pay anyone $53.46 quadrillion whether it is warranted or not.  No such amount exists.  But if the concept of economic damages is so legitimized in our current legal system, then why has no attempt been made to bring the reparations case to court?

As high as the economic damages are, it warrants mentioning that the damages to the black population did not end in 1865.  Jim Crow ruled the south well into my own lifetime.  It would be another 100 years after the Civil War before the civil rights movement even began the process of altering the lot of not just the black population in the former slave states, but actually throughout all of America.  Although the civil rights laws of the 1960s may have addressed the most egregious oppressive practices, they did little to level the playing field between the races; as a result, the polarity between white wealth and black wealth exists well into the 21^st century.  While this polarity is cited by racists as an example of black deficiency, the reality of economic oppression against blacks throughout the period between 1865 and 2022 is extremely well-documented. 

Citing this documentation would be a massive undertaking and beyond the scope of this piece.  However, one such example conveys how unpublicized events in American history have had a devastating effect on black wealth into the 21^st century.

The administration of Franklin Delano Roosevelt is famous for two efforts: 1) lifting the U.S. economy out of the crippling depression of the 1930s; and 2) defeating fascism in World War II.  As part of the former effort, FDR initiated numerous programs to get the American working family back on its feet.  One of FDR’s insights involved home ownership.  Prior to his administration, home mortgages were rare.  People in America bought homes the same way they bought a pair of shoes – with cash.  As a result, very few people – very few very rich people – owned their own homes.  The majority of citizens rented their homes because there was no way for a working person to save enough money to pay cash for a house.

To help create and vitalize a middle class, the FDR administration expanded the first financial instruments that acted like modern day mortgages – long term loans through which a buyer would pay a small, affordable amount each month, enabling him over 30 years to own his own property.  These loans were guaranteed by the federal government which made them palatable to the financial institutions through which they were granted.  FDR first created the Home Owners Loan Corporation to eradicate predatory loans and then, through the National Housing Act, created the Federal Housing Administration in 1934.

There was one problem with FDR’s mortgage programs.  They were not available to black people.  Any black people.  Even if a black person demonstrated job security, stable income, references, etc. he was barred, as a matter of policy, from participating in this federal loan program.  In fact, loan applications for any housing in neighborhoods that had any black population were redlined.  It was an example of institutionalized racism that, although unmentioned in virtual all of today’s history books, had the effect of excluding, en masse, the American black population from the middle class.  Similar exclusions were affected against black veterans of World War II – many benefits were extended to soldiers who survived the war, assuming they were not black.[i]

When my own parents passed away in the late 20^th century, they had, as a result of their middle-class life, an almost negligible amount of cash or stocks in their estate.  They did however have one major asset to bequeath – the home they spent their adult lives buying.  They passed this house on to their children, giving us a head-start in the process of wealth accumulation.  Most of my parents’ black contemporaries had no such option.  They were forced to rent their homes with the result that when they passed, their estates had no such key asset.

I could continue with a history lesson in job discrimination, educational discrimination, etc.  The point is that that the harm done to America’s black population began actually before 1619, persisted through 1865, through 1964, and right up to the present day.  Whether the economic damages due to redress that harm are considered to be $4.75 trillion or $53.5 quadrillion, the number is light.  In reality, the damage is incalculable.

Some Relevant Facts

Slavery in America predated the 1619 arrival of the 20 African slaves in Jamestown, Virginia.  The practice of indentured servitude was common throughout the colonies up through the 18^th century.  The difference was that indentured servants included people of many races whose labor was forced as a payback for a debt that was owed or some other liability that required a settlement.  Even the 20 slaves abducted from Africa in 1619 were indentured servants.  The important difference between slavery and indentured servitude is that indentured servitude had a sunset provision.  After a period of months or years the indentured servant’s debt was repaid and he/she became a free man, albeit a free man with few prospects.  For example, if a debtor in England could not pay his debt, it was not uncommon for the liability to be sold to plantation owner in the American south or a household in the north where the liability would be paid off through uncompensated labor. In fact, in the 17^th and early 18^th centuries, there were white indentured servants working on farms in the south next to black slaves.

It was not long though before slavery became a purely racial practice because of a practical labor issue: white farm workers in the south tended to get sick and die at rates well above black slaves.  Although there was no science at the time which told them why, the reality was that the mosquito had as great an effect on slavery in America as racism.  Where whites were felled by yellow fever and malaria in the warmer southern states, blacks were not.  The reason is that the blacks taken from western Africa had a natural resistance to mosquito-born diseases that had been built up over centuries of exposure whereas white European indentured servants enjoyed no such protection.[ii]  Through sheer observation and a desire for profits, plantation owners opted to exclusively acquire black slaves from Africa.  By the mid-18^th century, black slavery was the norm.

Also, contrary to popular perception, slavery was not exclusive to the southern states.  Slavery existed in the northern states, either in the form of indentured servitude, or as actual slavery.  It was not until the early 19^th century that slavery and indentured servitude was outlawed in the north.

It is important to note that there was a clear distinction between indentured servitude and slavery.  Indentured servants, especially of white European descent, were treated with far more respect than black slaves.  Indentured servants tended to be treated like any other employee, with the one distinction that they did not receive compensation.  Black slaves were treated in most respects with a racial contempt that many times defied economic self-interest.  In short, it should be clear that this essay is not attempting to equate indentured servitude with slavery.

Who Gets the Money?

This is where the reparations case and the drunk driver case part ways.  In the drunk driver case, you have an identified guilty defendant and an identified damaged plaintiff.  There are no such identities with the reparations controversy.

First, who receives these funds?  Obviously, all the people who experienced slavery are dead.  If our justice system allows that the damage done to the slaves survives the slaves themselves, then reparations are owed to their survivors.  Surely, there exist African Americans who can document their family histories back to ancestors who were slaves.  But most descendants of slaves cannot make such connections due to one of the more insidious aspects of slavery.  Families were divided through sales and slave auctions and few records remain which would allow someone to trace his family lineage.  The starting point for this research would begin with the 4.2 million slaves who were alive in 1865.  Tragically, for the most part, we do not know their names and we do not have their DNA.  Consequently, believing you are a descendant of a slave is one thing, and proving it in a court of law is another.

Aside from the few who have documented a family history to ancestral slaves, most African-Americans, and even some white Americans don’t have a clear picture of if they are descended from slaves, and if so, what percentage of their parentage were slaves.  If I go back 7 generations to the early 19^th century, I have 128 ancestors at the great-great-great-great-great grandparent level.  As a descendant of white Europeans, I’ve been able to put names on 2 of those 128 ancestors.  The research gets unwieldy very quickly even with families that benefit from online computer records.  I have a family name, but that only accounts for one of my male lineages.  Three of my grandparents were not born with my family name.  Of my 128 ancestors in the early 1800s, only one of them had my family name.

The point is that aside from a few people alive today who have documentation, many African Americans, even those who are sure they are descended from slaves since they know their ancestors did not immigrate to America over the past 150 years, cannot prove it.  In the process of paying reparations, it is likely that a court would require proof of a link to slavery to have standing as a plaintiff.  Even if a person can prove slave ascendancy, at what percentage is it?  Maybe only 50 of those 128 ancestors were slaves.  Is that a consideration in the amount paid out in damages? 

And so on.  One can imagine how many ways an attorney for the defense could skewer a case made by a current-day plaintiff bringing a reparation case in court.

Who Pays the Money?

The assumption throughout the reparation controversy over the years has been that the U.S. Federal Government would be the defendant in the case.  Legally however, tort cases fall under the jurisdiction of the states.  States in the north may be expected to argue that they were free-states, did not allow or agree with slavery, and indeed spent the blood of their citizens to end it (although even northern states allowed slavery up until the early 1800s).  A citizen like myself would probably argue that reparations are someone else’s problem – neither I nor my ancestors owned slaves, we have always lived in a northern free state, and actually moved here after slavery ended, so there’s no blaming me.  Without culpability, why should I have to pay taxes to fund reparations?  If reparations are to be paid, let the cases be heard in South Carolina and Kentucky courthouses and let those state governments pay.

This is where the argument over the identity of the defendant (the payor) gets as complicated as the argument over the identity of the plaintiff (the slave descendant).  My family has enjoyed the benefits of living in the United States for at least the past 125 years.  When my grandfather moved here in 1895, the United States, which turned out to be the biggest, most expensive, most beautiful country in the world was already built.  We contributed a little bit over the past 125 years, but we moved into a pretty nice country at the beginning and no one ever charged us admission.

Many different people in many different circumstances built the United States.  We reserve several different days in the calendar year to remember our war veterans who fought and died in wars so that my family could move here and live in peace.  We reserve a day to remember the labor of workers who have built, and continue to build, the country. The sacrifices made by a myriad of U.S. citizens who predated my family are too numerous to list.

Obviously one of those groups who predated my family who helped build the U.S. is the black slave population.  It is estimated that 80.0% of the U.S. total economic output in the mid-1800s had slave labor as an input.  Cotton fed the textile mills in the north which made clothing for all U.S. citizens.  Farm produce from slave states fed the people in the north as well as the south.  This provided the U.S. with a competitive advantage over other developed countries that did not have slave labor.  When you don’t have to pay wages, you can price your product on the market pretty competitively.

Modern-day globalism provides a parallel to the U.S. in the 19^th century.  In the 20^th century, the U.S. shifted its industrial base to Mexico, then China, and then southeast Asia.  The shift occurred because workers in those countries were paid a small fraction of what unionized U.S. workers were paid.  The result is that prior to 2022, inflation in the United States was basically nil for 40 years. Since companies in Mexico, China, etc. paid so little for labor and virtually nothing for health benefits, their products, even after being shipped back to the U.S., were far cheaper than if they had been manufactured here.

Basically, this is what happened in international trade in the 18^th and 19^th centuries.  More than that, slavery kept prices to a minimum throughout the country for the entire period of slavery.

It would be absurd to say that the U.S. was built entirely on the backs of slaves.  Many factors contributed to modern day America – favorable climate, abundant natural resources, the rule of law, physical isolation from malevolent world powers, and so on.  However, it would be equally absurd to suggest that slavery is not among those building blocks.  It is, and the fact that it is legitimizes that fact that reparations are a liability born not just by the plantation owners who committed the crimes, not just by the heirs of those slaveowners, and not just by the residents of the former slave states.  It is a liability born by us all.

Awareness of U.S. History

Not surprisingly, the percentage of white Americans who are in favor of paying reparations is small, at about 10.0% to 15%.  But the polls should be considered in light of the public’s awareness of U.S. history.  I’ve always considered myself an aware, well-educated, citizen.  Recent events though remind me that I’ve never walked a mile in a slave’s shoes nor have I walked a mile in a modern-day black man’s shoes.  Consider just a few lessons about the black experience that I learned late in life – lessons that are conspicuously absent from the many history books I studied in high school, college, and graduate school.

It was on a trip to Colonial Williamsburg, Virginia (the replica of the colonial town north of Newport News, VA) in my 40s where I was shown in a physical way how slaves were transported on ships from west Africa to the United States.  The tour guide made 15 of us tourists line up front to back (my stomach touched the back of the man in front of me, ditto with the guy behind me), first standing up, then lying on the ground – then they asked us to imagine being packed like that on a slave ship without a break for a two-month trip across the Atlantic.  It was in my 50s that I first learned about the destruction of the black community of Tulsa in 1921 where a 35-square block black community was burned to the ground by their white neighbors resulting in an estimated 100 to 200 deaths.  It was in my 60s when I first learned about the exclusion of the black population from the federal mortgage program while reading an economics book on the history of housing in the United States.  What have these lessons learned late in life taught me?  They’ve taught me that what I do know about the black experience in the United States is dwarfed by what I don’t know.  Why did I have to wait 30 years after my formal schooling to learn about these critical events in U.S. history?

And yet, there is a popular movement in the U.S. today to erase what is called “critical race theory” which is, in effect, the teaching of U.S. history.  Despite its odd name, CRT is an attempt to teach that the truth of America is far more than learning the causes and effects of the ten or so wars we’ve engaged in since 1775 (i.e., the substance of what I was taught in U.S. history classes in school).  There are things we’ve forgotten, or never knew, and our lives are not the better for it.  The history of the black population in America is, for all intents and purposes, absent from our history books.  Sadly, the current-day Republican Party has seized the CRT term and weaponized it into a race whistle; upwards of 40 states have, or are working toward, outlawing the teaching of CRT or anything remotely resembling it in schools.  God forbid a white child should learn about what happened in Tulsa, Oklahoma on May 31 and June 1, 1921.

Conclusion

The intent of this essay is to establish the fact of economic damages from the slave era and a range for the amount of those damages.  A discussion of who pays, who receives, and in what form those payments could be made is beyond the scope of my expertise.  The irony is that the harm caused by slavery and its aftermath is so profound and so pervasive, with economic damages so enormous, that a reckoning of the damages has never been seriously considered by a country that has so many other ways of spending money.  The sheer magnitude of the sin has mandated its repression.

The U.S. though, has gone beyond repression.  Today, we insist on teaching only part of our truth.  In our court system, we make witnesses swear not only to tell the truth, but “the whole truth,” since anything less than the whole truth is the equivalent of a lie.  Our ability to lie to ourselves is the thing that threatens the foundation of our country.

There was an HBO movie released in 2019 which dramatized the tragedy of the meltdown at the Chernobyl nuclear power plant in Ukraine in 1986.  In the closing scene, the principal nuclear physicist who had been put in charge of remediating the disaster was testifying at a Russian government hearing about the causes of the accident.  He had been told by the KGB authorities not to in any way blame the Soviet government for the disaster.  Knowing that his own life expectancy was limited due to radiation poisoning, he decided during his testimony to ignore his KGB handlers.  He testified, “Every lie we tell incurs a debt to the truth.  Sooner or later that debt is paid.”

It’s later in America.    

• John Barton

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[i] Aaron Glantz, Homewreckers, Chapter 14, pages 183-193.

[ii] Charles Mann, 1493