Loan Forgiveness and Reparations

 Vox has a discussion of the student loan forgiveness program.  It seems to me there's a parallel between this program and proposal for reparations, most notably reparations to black Americans.

In both cases, at least part of the rationale is to redress wrongs which people have suffered in the past, and to recognize and mitigate the damage currently being suffered. (There is a difference--in the case of slavery the people who would receive the benefits would be the descendants of those wronged; in the case of student loans those who took out the loans would receive the forgiveness.  I'm assuming the death of the borrower wipes out the loan obligations, which isn't totally clear.)

In both cases, there's the problem of fixing the problem which caused the damage. In the case of loan forgiveness, it may have been a bad loan from the start, based on fraud or misjudgment by the lender or the borrower. Or it may have turned bad by subsequent events--illness of the borrower, economic hardship, failure of the college, etc. In the case of slavery the damages resulting from slavery have carried forward. 

Biden seems to be trying to correct the problems in student loans, although I get the idea  there's skepticism about the effectiveness.  So there's the fear that students will end up with bad loans in the future, and that colleges will raise tuition anticipating future forgiveness.  In the case of reparations it's not clear to me that the various proposals really address the ongoing problems.  IMO that's the big weakness of reparations.

Eizenstat on Reparations

Interesting take on reparation from Stu Eizenstat based on his experience with reparations to Jews.

Reparations as Honey Pot

Under some designs of reparations we might see a "honeypot" effect.  I wanted to write "honeypot", but I find by google that's used in computing for a trap for hackers. What I mean is the effect where something of value is free, or easily accessible, thereby attracting all sorts of con-men who exploit it. We see in the Oklahoma land-rush.

We also see, again in Oklahoma, as described by Daivd Grann's book, Killers of the Flower Moon., an National Book Award finalist. Briefly, oil was discovered on the Osage Native American reservation in the 1910's, enriching the members of the tribe.  Immediately the new wealth attracted a wide variety of people seeking to exploit this new resource:

• merchants selling luxuries at exploitative prices.
• "guardians" appointed to manage the money of "incompetent Indians". 
• murder

Unfortunately in cases where government action or inaction creates opportunity for illicit gain, we don't lay the traps in advance; we try to recover after the fact.

How Soon I Forget--Reparations

I'd forgotten I'd actually posted my views on reparations this spring. I haven't changed my mind since, just forgot I'd written it.

I do have more thoughts on the difficulty of administering such a program, which I might get to in the future.  I have to say the history of the Pigford suit doesn't increase my confidence in the ability of the government to run such a program

I also have some reservations about Coates' Atlantic article in 2014 which raised the profile of the issue, which I might get to.

There's also a question: if we can design a program which would effectively raise the wealth of blacks, what basis would we have to deny other minorities access to such a program? Or even poor whites?

Reparations: the Booker Plan

Politico has a piece on Cory Booker's townhall..  On reparations he said:

He said he supports reparations for African-Americans who are descendants of slaves, pointing to his baby bond legislation, which would give newborns savings accounts worth tens of thousands of dollars by the time they’re 18 to address the racial wealth gap. 

How does this fit with my previous discussion?

Tne New Yorker had a discussion of the proposal late last year. Apparently the professor Darity who's been pushing reparations has come up with this plan as more politically feasible than reparations.  Notably the plan apparently applies to all infants, regardless of race, but with the money put into the bonds dependent on the family's income.

From the article:

His plan is not as precisely targeted toward people of color as it might be: because the federal government cannot determine the value of the assets held by any given American family, the amount children receive is determined by their parents’ wages, a scale on which black families tend to appear better off than they actually are. Even so, Booker’s staff has calculated that the average white child would accrue about fifteen thousand dollars through the program, and the average black child would gain twenty-nine thousand dollars—making it the largest asset for most black families.

My point in the previous post was there was a tension between apologizing to blacks and redressing their situation.   Booker's plan might be cost-effective in boosting the prospects of infants in low-income families, but it seems to me to lose the emotional impact of reparations.   

On Reparations

I find I've never published a post on reparations.  I'm sure I can find some draft posts, particularly commenting on Ta-Nehisi Coates' Atlantic article on the subject.  But that would be work, and I'm lazy.

So here's a brief summary of my views on a complex subject:

• seems to me reparations can be (1) compensation for damages suffered in the past and (2) a symbolic apology for fault in inflicting damages. The apology may carry over to the idea of reconciliation between parties, where there may or may not be any balance of damages inflicted and suffered between or among the parties. I write "and" because I think both apply, in different proportions in different cases. 
• examples of reparations include the payments made to Japanese-Americans who were confined to concentration camps during WWII, payments made by Germany to Jews who survived the Holocaust, perhaps the Pigford payments to African-American, Hispanic, and female farmers,  Reconciliation proceedings have occurred in Rwanda between Hutsi and Tutsi and in South Africa between black natives and white colonists. And, of course, we can't forget the Pigford payments to African-American farmers and the similar payments to Hispanic, female, and Native American farmers.
• as a former bureaucrat I recoil at the prospect of some poor bureaucrats having to work out the rules and administer any program 

When we're talking about possible reparations to African-Americans based on the damages from slavery and past racial bias, it seems to me we're talking symbolic apologies.  Administratively there's some similarity between a program of reparations and  some policy programs, such as a disaster payments program.  In both cases you're looking at what has already happened to determine eligibility  to implement a policy.  The difference in reparations programs is the amount of time that's passed and therefore the evidence which is available to support a claim for payments.

This differs from prospective programs, where the recipient is going to perform some action, install a conservation practice or divert acreage from production as a quid pro quo for the money.

My own feeling is money proposed to be spent as reparations would be more effective devoted to some prospective programs.  The problem I have is, of course, we don't have good data on what programs are effective.  And proposing spending a trillion dollars on Head Start, free college, etc. etc. instead of a trillion dollars to those who can prove descent from an ancestor who lived in America in 1860, for example, doesn't carry the same symbolic energy.