In California, activists are pushing for the state to pay reparations to black people, citing the racial wealth gap. A California State Senate committee has voted 6-to-1 to create a reparations fund that would eventually cost billions of dollars. Senate Bill 1331 would draw 6% of state budget reserves to pay for policies to compensate descendants of enslaved Black people or descendants of a free Black person living in America before the end of the 19th century, even if they never experienced any discrimination in California.
But support for such legislation is based on a fallacy, and even if it weren’t, such legislation violates the Supreme Court’s current interpretation of the Constitution’s equal protection clause (an interpretation which admittedly might change if President Biden continues to appoint staunchly progressive Supreme Court justices in his second term, and appoints enough of them to dominate the Supreme Court. Progressive justices are much more willing to uphold racial preferences).
White people’s wealth today is not based on slavery or redlining (nor is America’s wealth based on slavery), so reparations can’t be justified on that basis. Most wealth isn’t inherited. And “most of the wealth gap between blacks and whites is not due to inheritance” — indeed, the black-white wealth gap among people who had no inheritance is about three-quarters as big as it is among people who did have an inheritance. (See Thompson & Suarez, Exploring the Racial Wealth Gap Using the Survey of Consumer Finances (2015)).
Even less of it is inherited from three generations or more earlier, because people who inherit wealth tend to spend it or lose it. “According to Time Magazine, 90 percent of all rich families, from the Astors to the Ziffs, lose their fortune by the third generation,” noted Ester Bloom in The Atlantic. So white people’s wealth does not originate in slavery or the Jim Crow era.
As I explain in today’s Wall Street Journal:
The [Wall Street Journal] editorial board is right to criticize a California legislative committee’s passage of reparations proposals that could cost taxpayers a huge amount of money (“Slavery Reparations in California?” April 24). Paying race-based reparations to blacks is unconstitutional. Under Supreme Court precedent, racial handouts are allowed only as a remedy for recent systemic discrimination by the unit of government providing the handout.
California wasn’t a slave state, and it hasn’t engaged in recent systemic discrimination against blacks, so reparations aren’t warranted under court rulings such as Coral Construction Co. v. King County (1991). Discrimination that occurred decades ago isn’t a reason for racial preferences under court rulings like Hammon v. Barry (1987), which rejected affirmative action as a remedy for discrimination that occurred 18 years earlier.
Moreover, the racial wealth gap isn’t due to segregation or government discrimination. Racial wealth gaps exist even in countries like Malaysia and Uganda, where the ethnic group with less wealth is politically dominant and received racial preferences from the government. So the racial wealth gap isn’t a reason for reparations.
Racism is not the reason why blacks make less money than whites. Non-white immigrants from Africa and Asia commonly earn more than whites do, showing that racism is not a barrier to success. Asian Americans have the highest average net worth and highest average income, despite harsh discrimination against Chinese and Japanese Americans in the past. There is a simple “roadmap out of poverty” that works for poor Americans of any race, according to the black economist Walter Williams: “Complete high school; get a job, any kind of a job; get married before having children; and be a law-abiding citizen. Among both black and white Americans so described, the poverty rate is in the single digits.
Past discrimination did not cause present-day racial disparities in wealth or income. Asians once were subjected to massive discrimination, yet today, they have higher incomes than whites. As the New York Post notes, “several historically marginalized groups out-perform whites today. Take Japanese Americans, for example: For nearly four decades in the 20th century (1913 – 1952), this group was legally prevented from owning land and property in over a dozen American states [including California]. Moreover, 120,000 Japanese Americans were interned during World War II,” which forced many interned Japanese people to sell their businesses at fire-sale prices, ruining them. “But by 1959, the income disparity between Japanese Americans and white Americans nearly vanished. Today, Japanese Americans outperform whites by large margins in income statistics, education outcomes, test scores, and incarceration rates.”
Reparations may not fix the racial “wealth gap” anyway. Many people just spend windfalls they receive from the government, rather than saving or investing the money. When Uganda seized the businesses of Indian immigrants without compensation and gave them to blacks as reparations for colonialism, the businesses did not last for long afterwards, and Uganda’s economy collapsed. When Uganda let Indians come back to Uganda and set up businesses again 14 years later, Indians once again ended up dominating Uganda’s economy, even though they had to start from scratch.
Conversely, minorities targeted by racist attacks often rebuild their wealth by tightening their belts and reducing consumption to bring their wealth back up to past levels. So racism doesn’t necessarily reduce the wealth of their descendants. For example, blacks rebuilt Tulsa’s “Black Wall Street” after a white mob burned it down. And medieval and north African Jews often rebuilt European ghettos that were destroyed by antisemitic mobs. As a web site notes,
Thanks to recent scholarship and pop culture depictions of the massacre in Greenwood, more and more Americans are coming to know the story of the Tulsa Race Massacre that destroyed Black Wall Street. But the common narrative — that the massacre destroyed the neighborhood and it never recovered — is incorrect. In fact, Greenwood’s resilient residents rebuilt their community almost immediately after the massacre — in defiance of hastily-enacted racist zoning codes — giving rise to the popular use of the neighborhood’s moniker of Black Wall Street after, not before, the massacre.
For more than 50 years, Malaysia has systematically discriminated against its large ethnic Chinese minority, and in favor of its Malay ethnic majority, giving Malays affirmative-action preferences in jobs, education, and government contracts. Yet, Malaysia’s ethnic Chinese continue to out-earn its ethnic Malays, and continue to have more wealth per capita. Why should Malays work and study as hard as the Chinese when affirmative action lets them coast?
Eventually, reparations payments to blacks will be ruled unconstitutional by the Supreme Court, if it retains its current conservative majority (or even a centrist majority). Giving people money based on their race generally violates the Constitution’s equal protection clause, even when the recipients are a minority group. Municipalities in California may have discriminated against blacks in the distant past, such as through redlining in the mid-20th Century. But that discrimination occurred too far in the past to justify a race-based handout. The Supreme Court ruled in Richmond v. J.A. Croson Co. (1989) that governments can’t hand out benefits based on race in response to private or “societal discrimination,” as opposed to discrimination by government officials. It also emphasized that the government cannot provide race-based “remedies that are ageless in their reach into the past.” So courts have struck down city affirmative action programs adopted in response to discrimination by the city that occurred over 20 years before the affirmative-action plan, because that’s too long ago. For example, a federal appeals court struck down an affirmative-action plan for black people where the discrimination occurred 18 years before the plan, in Hammon v. Barry (1987). Another appeals court struck down an affirmative-action plan for women where the discrimination occurred 14 years before the plan, in Brunet v. City of Columbus (1993).
Racial handouts can’t be based on a few individual instances of discrimination by the government; instead, systemic discrimination must be shown. (See, e.g., Middleton v. City of Flint (1996); Coral Construction Co. v. King County (1991)).
Blacks do have lower average incomes than whites in California. But such racial disparities are not something that California can use racial preferences to remedy, given that California’s government did not cause them through recent systemic discrimination.
Some federal appeals courts have gone even further to rule that racial preferences can only be used to remedy a governmental unit’s own intentional discrimination, as opposed to other patterns of discrimination. (See, e.g., Builders Association of Chicago v. Cook County (2001); Vitolo v. Guzman (2021)). The Supreme Court implied that only intentional discrimination by a governmental unit would justify race-based affirmative action, when it wrote in its Croson decision that “In the extreme case, some form of narrowly tailored racial preference might be necessary to break down patterns of deliberate exclusion.” (italics added).
