For many years now, a few activists have been pushing the idea of reparations for slavery, while opponents have pointed out that those who were responsible for slavery are long gone and, if implemented, the cost of reparations would fall on present-day Americans who had nothing to do with the institution of slavery.
Nevertheless, reparations advocates keep at it. Nikole Hannah-Jones argues that reparations should also cover a host of racially discriminatory policies, and she has an ally in Duke economics professor William Darity, who claims that the enormous expenditure would not lead either to higher taxes or inflation.
In this AIER article, David Henderson and Phil Magness argue that Darity is seduced by “tooth-fairy economics.” They write:
Vaguely sensing that there’s no such thing as a free lunch, Hannah-Jones asks where the federal government would get the money to pay such a massive amount. Wouldn’t taxes have to be raised, she queries. Mr. Darity confidently asserts that no such action is necessary.
“It’s a matter of the federal government financing it in the same way that it financed . . . the stimulus package for the Great Recession” and the COVID-era CARES Act, Darity continues. To do so, the federal government need only “spend the money but without raising taxes.”
Henderson and Magness politely explain that the government can’t just “spend the money” without any consequences. The funds have to come from somewhere; government spending cannot be costless.
Now, Ms. Hannah-Jones does have a point that blacks were harmed by many government policies after slavery ended. The problem, however, is that those policies also harmed most other Americans.
Consider “prevailing wage” laws such as the federal Davis-Bacon Act. It was meant (as its sponsors admitted back in 1931) to keep off government construction projects black workers who would accept lower wages in order to get hired. That did indeed hurt them, but it also hurt all federal taxpayers, since construction projects ended up costing more than they would otherwise have. It also hurt nonunion firms and construction workers since the “prevailing wage” is usually defined as the union-scale wage. Very few white, unionized workers benefited at the expense of everyone else.
The authors conclude by arguing that Darity and Hannah-Jones ought to favor the repeal of all discriminatory policies:
How about instead going through the various federal programs, and state and local programs, for that matter, that intervene in markets or violate property rights, often in discriminatory ways, and ending them? It would be great if Nikole Hannah-Jones and William Darity signed on to this 2023 project.