The news cycle has been littered with talk about reparations lately.
The concept of cash transfers to every descendant of slaves in America is no longer a pipedream of a few disillusioned academics on the periphery but a mainstream policy idea currently being debated in California.
Now, the Biden administration is lending credence to the reparations movement by revising Census demographic questions to segment the Black population between those who are or descend from immigrants (like this writer) and those who trace their ancestry back to American plantations.
We must ask a fundamental question: what outcome do they seek with reparations?
If ensuring that everyone has equal access to opportunities and economic mobility, a massive cash infusion may not be the right solution.
Reparations will not wipe poverty out for good or make the generational financial situations of the most disadvantaged Blacks materially better off in the long run.
If that were the case, five decades of government cash and non-cash transfers would have eliminated ghettos and other impoverished areas ages ago.
Government policies have a debilitating impact on the economic prospects of Blacks that reparations won’t solve.
Smart reforms can empower individuals without further dividing Blacks from whites and even Blacks among each other.
California has pioneered a reparations task force to help the state compensate Black residents for past racial animus and continued injustices.
To be clear, historically, slavery was banned under the Mexican government in 1837, and California was admitted to the union as a free state in 1850.
Nevertheless, Blacks comprise about 6.5% of the population, and their household median income is $63,000, below the state median income of $83,000.
A reparations plan would be staggering.
San Francisco is considering paying Black residents $5 million each as well as a guaranteed income of at least $97,000 and personal debt forgiveness costing each non-Black family at least $600,000.
Economists estimate that Blacks statewide are owed $800 billion — more than 2.5 times the state’s annual $300 billion budget — for over-policing, housing discrimination, and disproportionate incarceration rates.
Add to that a recommended $1 million per older Black resident for poor health outcomes.
All of this cash would only be an “initial down payment,” suggesting a never-ending gravy train.
The financial implications of sinking the state’s entire budget (and likely some from the federal government) into reparations are nightmarish.
In turn, the businesses and residents that would flee California because they could not afford or would refuse the tax increases would drain the state of taxpayers, employers, and economic activity.
Cash alone will never solve the financial issues that Blacks face, and it can trigger new problems.
These payments would create the same kind of disincentive to work that excessive stimulus checks sparked during the pandemic.
Without financial education to make good choices, that money will quickly be spent.
Just ask most lottery winners who go broke within three to five years of their windfall.
And let’s not forget the inflationary impacts of massive government cash infusions as well.
California’s Black unemployment rate is 7%, much higher than the state’s 4.1% unemployment rate.
Energy should be directed at encouraging work and removing the obstacles from an individual experiencing economic mobility.
That begins with a solid educational foundation.
If 67% of California’s Black children do not read or write at grade level and just 77% of Black students graduate high school, Black kids are already set on a downward trajectory.
Investing in educational choices and programs that help those struggling to catch up are critical. Next, these kids must be enlightened on fulfilling and lucrative careers that do not require a four-year college degree.
College is expensive, and Black students are more likely to go into debt to afford school.
A four-year degree may not be the best post-high school step for every student either.
Let’s discard the every-kid-to-college model and embrace an every-kid-to-success mindset.
Encourage schools and businesses to partner in providing hands-on learning, training opportunities, and post-high school vocational programs that open up pathways to millions of middle-skilled occupations.
States like California and private employers should audit their positions to remove college degree requirements from positions that simply do not need them and instead focus on skills and experience.
In addition, excessive occupational licensure is a costly and time-consuming hurdle for many minorities to work in particular career fields or start their own businesses.
According to the Institute for Justice, California is the third most burdensome state for these government hurdles.
In some occupations, those with criminal records are unfairly prohibited from even obtaining a license, especially in fields unrelated to their previous criminal activity.
Want to address recidivism? Start by giving people a chance to work.
Finally, entrepreneurship in California has been strangled by restrictive labor laws like AB5, which reclassifies independent contractors as employees leading to lost incomes and livelihoods.
The legislature should overturn AB5 to give Black professionals, from entertainers to writers, the freedom to create their own opportunities.
By pursuing smart reforms, from education to the workforce, we can unleash opportunity for all disadvantaged Americans without triggering the unintended consequences that will only set them back further.