Lecture Notes: The Racial Wealth Gap and Historical Context

Introduction

• Historical perspective on wealth in America, particularly pertaining to enslaved people.
• Enslaved individuals represented significant wealth, worth over $3 billion by 1863.

Transformation and Optimism

• America has undergone painful transformation, breaking racial barriers.
• Optimism about the future; potential for a Black president within 25-40 years.

Racial Wealth Gap

• Wealth disparities between white and Black households remain stark.
  • Median white household wealth: $171,000.
  • Median Black household wealth: $17,600.
  • The wealth gap is growing.
• Wealth is linked to past injustices leading to present suffering.
• The American Dream is elusive for many Black families.

Historical Events

• January 1865: Civil War nearing end; General Sherman and Secretary Stanton meet with Black leaders.
  • Request for land: "The way we can best take care of ourselves is to have land."
  • Special Field Order Number 15 issued, granting land to freed slaves.
• Lincoln's assassination led to reversal of land allocations by President Johnson.
• White backlash against equality led to evictions of freed slaves from acquired land.

Historical Wealth Creation

• Wealth accumulation is compounded over generations.
• Example: Jay-Z's artwork investment illustrates wealth growth through time.
• Investing in stable environments can lead to significant returns (e.g., $100 in 1863 worth $3.5 million today).

Home Ownership and Inequality

• Home equity accounts for two-thirds of middle-class wealth in America.
• Historical barriers to home ownership for Black families:
  • The Great Depression saw high default rates; New Deal introduced mortgage credit.
  • FHA's racially biased lending practices (redlining) restricted Black families from home ownership.
• Redlining affected various aspects of life, including employment and education.

Continued Discrimination

• 1968: Fair Housing Act outlawed housing discrimination.
• Cory Booker's family faced discrimination in home buying; needed a sting operation to overcome barriers.
• Historical discrimination led to a significant homeownership gap.

Changes in the 1990s

• Government push to open mortgage markets led to increased Black home ownership.
• However, Black families were more likely to receive subprime loans despite having good credit.
• Financial crisis of 2008 disproportionately affected Black communities, resulting in loss of wealth.

The Need for Reparations

• Significant systemic issues create lasting wealth gaps.
• Calls for reparations as a potential solution to address historical injustices.
  • Acknowledgment of generational costs associated with slavery and discrimination.
• The concept of reparations linked to the idea of repairing historical breaches.

Conclusion

• Current wealth gap requires radical solutions to close.
• Addressing systemic issues is vital to ensure a thriving nation and to heal historical wounds.
• Equality without reparative actions is insufficient for true equity.