AFRICANGLOBE – The average income of the top 1% in the United States is approaching $400,000. Half that will put a person in the top 5% of all incomes. The mid-point is at about $75,000. Those are national figures, for all groups. The distribution is quite different for the Black population, for which the top 5% averages $145,000 and the mid-point is at $51,000. The lowest 20% of Black incomes averages $16,000, as compared to $28,000 for White Americans. This is an artifact of a lack of educational opportunities, extraordinary incarceration rates and overt racism. There is, in effect, a racial penalty in regard to the incomes of Black Americans and as income inequality worsens for all Americans, the gap between the average Black family and the top 1% or 0.1% of White families becomes ever wider yet.
But income inequality, bad as it is, is not as bad as inequality of wealth. Wealth is crucial for mobility. A family with a house and some investments can give its children a good start in life, a boost up the ladder, as it were, and eventually pass their property, real and financial, onto those children. Most White families are able in this way to help their children to eventually surpass them in income and wealth. With Black families it is another story. For one thing, there is hardly such a thing as Black wealth. The Black families with negative wealth, more debt than assets, vastly outnumber the Oprahs of this world. The median net wealth of Black American families is two or three thousand dollars—something a month or two of unemployment will wipe out. As a consequence, there is hardly such a thing as Black mobility. Black children are unlikely to earn more, own more, than their parents and often slide down the income and wealth ladders.
The key to the lack of Black wealth and intergenerational mobility is houses. Seventy percent of White households live in their own homes, as compared to 43% of Black families. Why is that? The roots of this situation can be found in the Jim Crow decades of the twentieth century. In order to get the bill authorizing the Federal Housing Authority through Congress, President Roosevelt had to let the (White) Southern members of his coalition put in a provision making its mortgage guarantees available only to Whites. When the post-war housing boom arrived, the suburbs were filled with houses with FHA mortgages guaranteed for White families alone. The prices of these houses gradually increased and by the 1960s they constituted significant sources of White wealth, while the majority of Black families were (and are) renters, their incomes wasted from month to month in rent, with nothing going to build equity, the basis for intergenerational wealth and mobility. As White families moved to the suburbs, the inner cities became Black, segregated, with little investment in schools and other resources. It is not then surprising that the average value of a Black-owned house is just $123,000, while that of a White-owned house is nearly $175,000 and while approximately 70% of White families live in their own homes, the percentage for Black families is just 43%. (All data from the U.S. Census unless otherwise indicated.)
Given the differences in the value of houses and in the percentages of households living in houses they own, we can calculate that the cost for Black America to close both gaps in this basis for wealth and intergenerational mobility is almost exactly one trillion dollars. That is a lot of money, but viewed in national perspective, it is less than $70,000 for each Black household.
The next questions are: Where is this money to come from and how is it to be distributed?
The moral case for restitution for the injuries of slavery is at least as strong as those for the American internment of Japanese Americans during World War II or those for German actions during that war, both of which have been recognized and expressed, at least in part, with monetary payments. And just as the French national railway company has paid Holocaust survivors compensation for transporting people to Nazi death camps, so various American insurance companies, banks and other corporations have been identified as profiting from slavery. In the case In Re African-American Slave Descendants Litigation. appeals of Deadria Farmer-Paellmann, et al., and Timothy Hurdle, et al, 471 F.3d 754 (7th Cir. 2006), Judge Posner, in refusing the case without prejudice, stated that the sticking point was how to calculate damages from ancestral slavery for specific living individuals: “There is no way to determine that a given Black American today is worse off by a specific, calculatable sum of money (or monetized emotional harm) as a result of the conduct of one or more of the defendants.”
The income and wealth differentials presented here may meet Judge Posner’s criteria.
If so, and if legal action against such large corporations as Aetna, Citibank, and JP Morgan Chase formerly involved in the slave trade are successful in recovering significant funds, how are these to be most effectively distributed in order to produce an appropriate remedy, as the lawyers say, for the harm continuing to be suffered by the descendants of enslaved Africans? One possibility would be to simply reverse the New Deal compromise concerning the FHA and establish a Federal Black Housing Administration (FBHA), which would guarantee mortgages for those able to establish their descent from enslaved Africans. The administrative regulations of the FBHA would be written in such a way as to support housing in resource-rich neighborhoods, with good schools and good transportation, circumstances which have been shown to improve educational outcomes even for those Black children whose family incomes are below the poverty line.
The mortgage guarantees themselves would not require anything like a trillion dollars. Insurance policies cost a relatively small percentage of the value they insure (otherwise no one would buy them). The capital needed by the FHA to insure mortgages is normally estimated at 2% of the amount of the mortgages. On that basis, the FBHA could insure a trillion dollars worth of mortgages for ]$20 billion, leaving a wide margin for a lower level of recovery of funds and, as importantly, for other programs, such as scholarships and improvements in schools, to reduce the penalty for living in America while Black.
By: Michael Holzman