Latest / Book Club with Jeffrey Sachs / Season 5, Episode 4 - Dorothy A. Brown, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans--and How We Can Fix It

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Season 5, Episode 4 - Dorothy A. Brown, The Whiteness of Wealth: How the Tax System Impoverishes Black Americans--and How We Can Fix It · Book Club with Jeffrey Sachs

• 0:00
  SPEAKER_03: Hello, I'm Jeffrey Sachs.
• 0:01
  SPEAKER_03: Welcome to Book Club, a monthly conversation with world-leading authors who have written scintillating, inspiring, and remarkably important books about history, social justices, and the challenges of building a decent world.
• 0:21
  SPEAKER_03: Greetings, everybody.
• 0:22
  SPEAKER_03: Welcome to Book Club with Jeffrey Sachs.
• 0:25
  SPEAKER_03: And today I'm delighted and honored to have uh as our uh featured author uh Professor Dorothy A.
• 0:34
  SPEAKER_03: Brown.
• 0:35
  SPEAKER_03: Uh, Professor uh Dorothy Brown is Professor of Law and the Martin D.
• 0:40
  SPEAKER_03: Ginsburg Chair in Taxation at Georgetown University Law School.
• 0:45
  SPEAKER_03: And she's written two very fascinating books that we're going to discuss.
• 0:50
  SPEAKER_03: The first is uh called The Whiteness of Wealth, about the inequalities of wealth in the United States, uh, where they came from and uh how they are perpetuated and why they are even widening.
• 1:04
  SPEAKER_03: Um, and that book is from 2021.
• 1:07
  SPEAKER_03: And there's a companion volume, if I can say that, uh Dorothy, because it does seem to me to be a companion volume, which is a book this year called Getting to Reparations, uh, How Building a Different America requires a reckoning with our past, because uh the whiteness of wealth considers how we got to these inequalities of wealth.
• 1:28
  SPEAKER_03: And uh while the whiteness of wealth does talk about solutions uh to the tax code, which is your area of great expertise, you broaden that out to uh the broad questions of social justice and reparations in this new volume.
• 1:45
  SPEAKER_03: So welcome uh to Book Club.
• 1:47
  SPEAKER_00: Thanks so much for having me.
• 1:48
  SPEAKER_03: Fun to be together.
• 1:49
  SPEAKER_00: I'm looking forward to it.
• 1:51
  SPEAKER_03: Good.
• 1:51
  SPEAKER_03: Well, thank you so much.
• 1:52
  SPEAKER_03: I learned a lot in uh both of the books, uh, but I learned a lot about taxes uh and things that I should have known.
• 2:01
  SPEAKER_03: I'm an economist, I'm supposed to know all these things, but I I did not know many things uh that you point out about the tax system and distribution of wealth in the United States.
• 2:13
  SPEAKER_03: But of course, uh the whiteness of wealth goes beyond the question of taxes, it goes to uh the issues of uh schooling, universities, job discrimination, public attitudes, uh racism uh in America and how that affects uh property prices and wealth.
• 2:32
  SPEAKER_03: But can we start at the beginning?
• 2:34
  SPEAKER_03: Your starting point is that not only is there a gap of incomes by race, but actually even more dramatically and significantly a gap of wealth, and that the net worth of a typical white household or the distribution of wealth uh among white households uh is a lot more wealth than among African American households.
• 3:02
  SPEAKER_03: And we're living in a certainly in an age where if you don't have wealth behind you, you're always at the margin struggling.
• 3:11
  SPEAKER_03: One bad shock, one bad accident, you're dispossessed, you lose your shelter, you lose your health care.
• 3:18
  SPEAKER_03: So it's not only your flow of earnings, but actually what you have in your bank account or your financial assets or your housing worth.
• 3:28
  SPEAKER_03: And uh just to before I turn it over to you, because we want to hear from you, you point out that when you started thinking about this, and I may say, by the way, it's just uh wonderful to read, also, these are very readable books, but you also say you went into tax, you didn't want to deal with all of these issues of race.
• 3:49
  SPEAKER_03: But yes, once you got to tax, you started asking a question you'd asked all your life.
• 3:55
  SPEAKER_03: Why were your parents, who were both working very hard, uh not favored by the tax system?
• 4:01
  SPEAKER_03: So you ended up uh doing what you didn't think you were gonna do in tax.
• 4:07
  SPEAKER_03: But let me turn it over to you to uh lay the groundwork for people that are listening and uh remembering we're with people from all over the world in book clubs, so that's a lot of fun.
• 4:17
  SPEAKER_03: You have a worldwide audience with you.
• 4:20
  SPEAKER_00: Terrific.
• 4:21
  SPEAKER_00: So, yes, I went into tax law.
• 4:23
  SPEAKER_00: I grew up in New York City in the South Bronx.
• 4:26
  SPEAKER_00: My mother was a nurse, my father was a plumber, and I, like a dutiful daughter, did their taxes.
• 4:33
  SPEAKER_00: And at the time I was an investment banker working on Wall Street, and my income was equal to their combined incomes.
• 4:41
  SPEAKER_00: And under our progressive tax system, that meant I should pay significantly higher taxes than they paid.
• 4:49
  SPEAKER_00: But when I was doing my tax returns and their tax returns, I paid more, but I didn't pay a lot more than my parents, who were not making a lot of money.
• 4:58
  SPEAKER_00: And I could not figure out why they were paying so much in taxes.
• 5:02
  SPEAKER_00: And since I had a full-time job, I didn't have the luxury to ponder that decision.
• 5:07
  SPEAKER_00: I knew the returns were simple.
• 5:09
  SPEAKER_00: I wasn't making any mistakes.
• 5:11
  SPEAKER_00: There was just something that I couldn't figure out.
• 5:14
  SPEAKER_00: Well, fast forward, I became a law professor, and as you know, one of the things they do when we are professors is they pay us to think.
• 5:21
  SPEAKER_00: So one particular day, I was reading an article that asked the question, how do you know there isn't a race and tax issue if you don't look?
• 5:31
  SPEAKER_00: And I was struck by that sentence because I thought there couldn't be any race and tax issue.
• 5:37
  SPEAKER_00: In fact, in tax law, the only color that mattered was green.
• 5:41
  SPEAKER_00: Wasn't that the right answer?
• 5:43
  SPEAKER_03: Yeah, I mean, the tax law on its face is not about race.
• 5:46
  SPEAKER_03: That's right.
• 5:47
  SPEAKER_03: Just about money.
• 5:48
  SPEAKER_00: It's just numbers.
• 5:50
  SPEAKER_00: Give me the calculator, we can figure it out.
• 5:52
  SPEAKER_00: So, but the article that asked the question was written by a mentor who I respected greatly.
• 5:58
  SPEAKER_00: And I picked up the phone and I said, I don't know how I'm gonna do it, but I'm gonna do it.
• 6:01
  SPEAKER_00: I'm gonna look and ask the question does race have anything to do with taxes?
• 6:07
  SPEAKER_00: And that's when I discovered the first stumbling block.
• 6:10
  SPEAKER_00: Neither the IRS nor the treasury publish statistics on taxes by race.
• 6:16
  SPEAKER_03: Yeah, so interesting, by the way, because they're, I mean, America's filled with statistics, uh, class, especially Census Bureau statistics, uh BLS uh labor statistics, and so on.
• 6:27
  SPEAKER_00: Yes, absolutely, on so on just about everything except taxes.
• 6:32
  SPEAKER_00: So at that point, I could have quit and said, well, there's no way to find out, but I'm I'm more determined than that.
• 6:39
  SPEAKER_00: So what I decided to do was to read race scholarship and apply my tax lens to the race scholarship.
• 6:48
  SPEAKER_00: And there was lots of race scholarship.
• 6:50
  SPEAKER_00: So it was easy to reverse engineer, as it were, what I found.
• 6:55
  SPEAKER_00: But it all started with a question, and I had the luxury of time to look into it.
• 7:01
  SPEAKER_03: And what you found involved in this specific issue, uh, something about married couples uh had that turned out to be quite a fascinating uh story.
• 7:12
  SPEAKER_03: And uh, if you would relate that, because uh I certainly had not ever paid attention to that fact.
• 7:18
  SPEAKER_03: I'm happily married for uh many, many decades and and uh we filed jointly.
• 7:24
  SPEAKER_03: Yes, but I I didn't know anything about the history of it.
• 7:27
  SPEAKER_00: Exactly.
• 7:28
  SPEAKER_00: So what led me to unlock the mystery of my parents' tax returns was I came across a U.S.
• 7:35
  SPEAKER_00: Commission on Civil Rights study on the economic status of black women in America.
• 7:41
  SPEAKER_00: And the line that caught my attention said, black wives contribute 41% to household income, but white wives contribute only 29%.
• 7:56
  SPEAKER_00: Now, anybody else reading that statistic would come away saying, Yeah, we know black women, black wives work more in the paid labor market.
• 8:03
  SPEAKER_00: That's not a surprise.
• 8:04
  SPEAKER_00: But what it told my tax eyes was, oh no, black wives, because they contribute so much to household income, are putting their households in a category that the tax law disadvantages and imposes what we call a marriage penalty, which means when black husbands and wives get married, their taxes go up because black husbands and wives are more likely to earn roughly equal amounts of income.
• 8:40
  SPEAKER_03: And the point that uh that you made was that take the other extreme in a black household, the say the the husband and wife are making each fifty thousand dollars, let's say.
• 8:52
  SPEAKER_03: Whereas uh in another household, which is more typical of a white household, the husband makes uh a hundred thousand.
• 9:01
  SPEAKER_03: And in the example, let's say uh the wife stays at home uh does chores or raises children or whatever it is, she makes none from a tax point of view.
• 9:11
  SPEAKER_03: And the point is that that hundred thousand would normally be taxed at a high marginal tax rate, because that's a lot of money.
• 9:20
  SPEAKER_03: That's right.
• 9:20
  SPEAKER_03: Uh, and we have a progressive tax system, so each amount incremental of earnings, say above that fifty thousand, would be taxed at a higher rate than the first fifty thousand would.
• 9:34
  SPEAKER_03: But under our tax code, if you have a household where the husband makes a hundred thousand and the wife makes none, or you have a household where the two each make fifty thousand, they both file as if it's a hundred thousand.
• 9:52
  SPEAKER_03: Correct.
• 9:52
  SPEAKER_03: It's joint filing, so you just add it up.
• 9:55
  SPEAKER_03: And in that simple, very simple example, maybe they would pay the same tax, both of them.
• 10:02
  SPEAKER_03: And uh what you point out is uh, gee, that's weird, actually.
• 10:07
  SPEAKER_03: The 100,000 household actually is better off because the wife in that example, who isn't earning anything, actually has uh time uh to do things at home.
• 10:19
  SPEAKER_03: Uh so that's really a a household that has total income that's higher, we would say, in economics.
• 10:26
  SPEAKER_03: We would impute some of the income to what we call leisure, but it's not really leisure.
• 10:32
  SPEAKER_00: It's it's it's not instead of being provided, but aren't valued.
• 10:36
  SPEAKER_00: Yes.
• 10:36
  SPEAKER_03: Yes.
• 10:37
  SPEAKER_03: And so you say that's a little strange.
• 10:39
  SPEAKER_03: And what was fascinating was how did we get to this a little bit strange idea that the uh husband that's making a hundred thousand can avoid the high tax rate when his wife's making zero by saying, Hey, honey, you've made you're making 50,000 now, and I'm only making 50,000, and we're gonna beat the progressive tax code.
• 11:00
  SPEAKER_03: And it turned out to be a lawsuit.
• 11:02
  SPEAKER_00: Yes, yes.
• 11:03
  SPEAKER_00: And what was so fascinating about this is I've taught this case and never paid attention to the backstory until I was writing the book.
• 11:15
  SPEAKER_00: So the case is Povey Seaborn and it is out of Seattle, and it's Charlotte and Henry Seaborn.
• 11:22
  SPEAKER_00: Henry was the sole wage earner, Charlotte was a stay-at-home spouse.
• 11:26
  SPEAKER_00: And back in the 1920s, in fact, this case comes uh from activity in 1927.
• 11:34
  SPEAKER_00: The only people who paid taxes in America were the richest Americans.
• 11:38
  SPEAKER_00: The only people.
• 11:40
  SPEAKER_00: And we're gonna talk about racial demographics, we're talking about rich white people, right?
• 11:45
  SPEAKER_00: Those are the only people paying taxes in the 1920s.
• 11:48
  SPEAKER_00: Well, one guy, Henry Seaborne, said, I don't want to pay, I don't want to pay.
• 11:52
  SPEAKER_00: So he and his lawyers cook up this scheme where they file separately as married couples, which the law didn't permit.
• 12:04
  SPEAKER_00: So they made up their own filing status, they made up their own filing deduction, and the IRS said you can't do it.
• 12:14
  SPEAKER_00: They went to court and they went all the way up to the Supreme Court, and the Supreme Court said, Yeah, you can do it.
• 12:19
  SPEAKER_03: Pretty amazing, by the way.
• 12:21
  SPEAKER_03: Pretty absolutely.
• 12:23
  SPEAKER_03: What a weird story.
• 12:24
  SPEAKER_00: Right?
• 12:25
  SPEAKER_00: That's what I thought, right?
• 12:26
  SPEAKER_00: And it's it's amazing because what the Seaborns were doing was filing a fraudulent return.
• 12:34
  SPEAKER_00: But they never got charged with tax for it.
• 12:36
  SPEAKER_00: They actually went, and the Supreme Court said, Oh, yeah, you're fine.
• 12:39
  SPEAKER_00: You can do that just fine.
• 12:41
  SPEAKER_00: And why they were able to do it was they were in a community property state.
• 12:46
  SPEAKER_00: And the Supreme Court said, since she has a right to half of everything you own, it's legitimate that she be treated as the owner for tax purposes.
• 12:58
  SPEAKER_00: Well, the seaborns and every rich white couple in a community property state got the win.
• 13:05
  SPEAKER_03: Right.
• 13:06
  SPEAKER_03: Because you didn't have to pay the high marginal tax rate then.
• 13:09
  SPEAKER_00: Exactly.
• 13:09
  SPEAKER_00: But every rich white couple in a separate property state lost and could look at them and say, why can't I get that tax break?
• 13:19
  SPEAKER_00: Well, they had two choices.
• 13:21
  SPEAKER_00: They could lobby their state legislature to convert from separate property to community property status, which would give the stay-at-home spouses a legal right to half of the husband's income, or they could go to Congress and get the joint return enacted, which gave the stay-at-home spouse no legal rights, but the tax break flowed to the rich white uh sole wage earner.
• 13:50
  SPEAKER_00: And that's what happened.
• 13:51
  SPEAKER_00: Well, in some states, we had um community property, but it but most rich white men did not want to give legal rights to their stay-at-home spouses, so they lobbied Congress, and in 1948, we got the joint return.
• 14:03
  SPEAKER_03: So this is a taste of how fascinating uh the book is, and that was very eye-opening for me.
• 14:08
  SPEAKER_03: You go on to many examples of a basic theme, which is it's harder for a typical black family, uh, and it has been.
• 14:19
  SPEAKER_03: First, families uh didn't have wealth, the families uh emerged out of slave families.
• 14:25
  SPEAKER_03: Right.
• 14:25
  SPEAKER_03: And when slavery ended, the slaves were not given anything, something we're gonna talk about.
• 14:31
  SPEAKER_03: Uh the slave owners may have been compensated, but the slaves were not compensated for their period of servitude.
• 14:39
  SPEAKER_03: So black households started poor.
• 14:42
  SPEAKER_03: They faced discrimination, of course, in what kind of jobs, uh, if they had jobs, uh, or uh they were tenant farmers uh or uh living one way or another in poverty.
• 14:55
  SPEAKER_03: And one issue after another meant that a young African-American child was likely to grow up with parents that had very little wealth or were in debt.
• 15:07
  SPEAKER_01: Right.
• 15:08
  SPEAKER_03: Uh and so they would inherit very little and they would receive very little of the benefits of having wealthier parents, such as parents that could pay for their higher education.
• 15:19
  SPEAKER_03: So all of these uh burdens from the labor market, from the lack of wealth, uh, from measures in the tax code, and again, I'll mention another one that honest to God, I should have known, but I did not know, mean that this inequality of wealth has uh persisted to this day and widened.
• 15:41
  SPEAKER_03: One of them that you mentioned uh and discuss at length is another important part of the American tax code, which is uh deduction of interest payments on a home loan, on a mortgage.
• 15:56
  SPEAKER_03: Uh so most of us, and uh I'm in that group, when uh I bought a flat, I got a bank loan, uh, a mortgage, uh, and I paid interest, and I deducted the interest because it made sense for me with my college salary and my wife's uh salary to deduct.
• 16:15
  SPEAKER_03: What I didn't realize was well, I I knew it was an advantage, of course, but I didn't realize it was kind of a pure gift because the lore is this stimulates home ownership.
• 16:28
  SPEAKER_03: And you give the statistics, not really so much.
• 16:33
  SPEAKER_03: It only applies to a pretty lucky few, but not to the major part of America, and sad to say, not to black households.
• 16:44
  SPEAKER_01: Yes.
• 16:45
  SPEAKER_03: So if you could uh just explain that, I I did not realize how little the interest rate deduction actually was used.
• 16:54
  SPEAKER_00: Yeah, so in order to benefit from it, you have to itemize deductions.
• 16:59
  SPEAKER_00: And meaning what you spend your money on that Congress gives you the ability to take a tax break on has to exceed the standard deduction that everybody gets.
• 17:10
  SPEAKER_00: Renters get, you don't have to own a home to get it.
• 17:13
  SPEAKER_00: And over basically, before the 2017 Tax Act, only a third of Americans itemized deductions.
• 17:22
  SPEAKER_00: Most of those were homeowners, but now we're down to 10% of taxpayers' itemized deductions.
• 17:30
  SPEAKER_00: So most people don't benefit from having a mortgage interest or any other itemized seduction.
• 17:37
  SPEAKER_00: Honestly, I had no idea.
• 17:40
  SPEAKER_00: It's even worse now than when I read the book.
• 17:42
  SPEAKER_00: Yeah.
• 17:43
  SPEAKER_00: Wow.
• 17:44
  SPEAKER_00: Yes.
• 17:45
  SPEAKER_00: So when we think about home ownership and we think about who benefits from it, the mortgage interest deduction is one piece of it.
• 17:54
  SPEAKER_00: And it may be the piece most people think of, but to me, the greater wealth-building tool is the ability to sell your home at a tax-free gain.
• 18:07
  SPEAKER_00: So if you are married and you sell your home and you have$500,000 of gain, you don't have to pay any tax on that$500,000.
• 18:19
  SPEAKER_00: And that's true now, by the way, whether you buy another home.
• 18:22
  SPEAKER_00: Yes, exactly.
• 18:24
  SPEAKER_00: It used to be a different tax break, but years ago, it was converted to if you sell it tax-free.
• 18:31
  SPEAKER_00: You don't have to buy another home, it doesn't have to be a higher in amount or a lower purchase price.
• 18:36
  SPEAKER_00: You just sell your residence.
• 18:39
  SPEAKER_00: And if you're single, you can exclude$250,000 of taxable income from paying taxes.
• 18:46
  SPEAKER_00: Or if you're married, you can exclude$500,000.
• 18:50
  SPEAKER_00: And what that does for black homeowners, because one of the things my book shows is whether we're talking about marriage or home ownership or paying for college or jobs, black Americans do these things in different ways from white Americans.
• 19:09
  SPEAKER_00: So black Americans who are homeowners, and the minority of black Americans are, don't have homes that appreciate to the level that white homeowners do.
• 19:21
  SPEAKER_00: So that tax break is disproportionately benefiting the typical white uh American homeowner in ways that it's not benefiting black homeowners because we live in different neighborhoods and those neighborhoods are valued very differently.
• 19:37
  SPEAKER_03: And so what that example shows is, I would say, a general principle of uh America, pretty much from the start, that it's a system designed for people with wealth.
• 19:49
  SPEAKER_01: Yes.
• 19:49
  SPEAKER_03: To preserve their wealth, to protect their wealth from the state, to protect their wealth from the state actually using it to maybe provide health care for people without property and other things.
• 20:02
  SPEAKER_03: But America from the beginning, in a tradition that started with John Locke, I would say, or maybe it was formulated most clearly by the British philosopher John Locke, is your property is yours, it's inviolable, no one's gonna touch it with taxes.
• 20:21
  SPEAKER_03: And the purpose of government, which many of us think should be to ensure that everybody has health care and every child has schooling.
• 20:30
  SPEAKER_03: In America, from the beginning, a country born in a revolt against taxes, after all, the purpose of government is to defend property.
• 20:42
  SPEAKER_01: Yes.
• 20:43
  SPEAKER_03: We said in the declaration, or Thomas Jefferson said in the declaration of independence, life, liberty, and the pursuit of happiness, but he was paraphrasing John Locke, who said, life, liberty, and property.
• 20:57
  SPEAKER_03: And yes, and property is what you see as a tax expert, because the tax code really is very pro-wealth, isn't it?
• 21:08
  SPEAKER_00: Oh, absolutely.
• 21:09
  SPEAKER_00: And the one thing I would add to your list is an inviolate right to transmit it.
• 21:14
  SPEAKER_00: Transmit it to heirs tax-free.
• 21:17
  SPEAKER_00: So even at the very beginning of our progressive tax system in 1913, we had an exclusion for gifts and inheritances.
• 21:26
  SPEAKER_00: So the presumption is you can make a gift, you can leave the property to whoever you want, whoever receives it, they receive it tax-free, and you don't have any income tax consequences when you give it away or when you leave it in your will to an heir.
• 21:43
  SPEAKER_03: So, yes, absolutely.
• 21:45
  SPEAKER_03: It's very interesting, also philosophically, because John Locke, who is very influential with the American founding fathers, and the person who probably most clearly stated this uh deification of Property as the very centerpiece makes the big point that the reason property is so important is you made it.
• 22:08
  SPEAKER_03: His model, which goes back to seven uh 1690, actually, is uh your property is because you're a farmer, you tilled the land, the fruits of your labor are your property, and because labor is what gave it value, you have an absolute right to that, because to take away your property would be like taking away your labor.
• 22:35
  SPEAKER_03: So that's where Locke developed his kind of pure theory of the inviolability of property rights.
• 22:42
  SPEAKER_03: But then this says, in its strange way, sure.
• 22:46
  SPEAKER_03: And some kid born to a billionaire then has a right to a billion-dollar inheritance, no problem.
• 22:54
  SPEAKER_03: Right.
• 22:54
  SPEAKER_03: He didn't do anything.
• 22:55
  SPEAKER_00: Exactly.
• 22:56
  SPEAKER_00: And if we're talking about America and farmers and who has a right to that property, it's enslavers exploiting other people's labor.
• 23:06
  SPEAKER_03: And one of my that's a that's actually a much more telling point.
• 23:11
  SPEAKER_03: It has nothing to do with the labor theory of value, it's the opposite.
• 23:14
  SPEAKER_00: Exactly.
• 23:15
  SPEAKER_03: It's like you get to steal and then you get to say it's yours.
• 23:18
  SPEAKER_03: Excuse me.
• 23:19
  SPEAKER_03: Yeah, sorry, I missed the most obvious point of all.
• 23:23
  SPEAKER_00: And and it also goes to our tax laws' bias against labor and in favor of capital.
• 23:32
  SPEAKER_00: So what you're talking about, Jeff, makes a lot of sense because our tax laws give a preferential low tax rate to capital in a way while punishing with a high tax rate labor.
• 23:48
  SPEAKER_03: Right.
• 23:48
  SPEAKER_03: And you discuss uh that, for example, the invention of a lower tax rate literally for the capital gains on uh on an asset that you own.
• 23:59
  SPEAKER_00: Because of another rich guy, Frederick Brewster, who didn't like paying taxes.
• 24:04
  SPEAKER_00: So he goes to the Supreme Court.
• 24:05
  SPEAKER_03: He was he was he was really a rich guy, by the way.
• 24:08
  SPEAKER_03: Yes.
• 24:09
  SPEAKER_00: It was a contest between him and a Rockefeller for who was the number one.
• 24:13
  SPEAKER_00: I mean, yes, he made the Seaborns look like paupers, absolutely, right?
• 24:18
  SPEAKER_00: So he sells bonds and he argues I shouldn't have to pay taxes on this because I'm a casual investor.
• 24:25
  SPEAKER_00: I don't do this for a living.
• 24:27
  SPEAKER_00: And he loses at the Supreme Court, but he wins at Congress because Congress then institutes a lower tax rate for investors selling their capital.
• 24:42
  SPEAKER_03: And by the way, Congress, which I complain about daily for a living, because it's, in my view, a bought institution.
• 24:50
  SPEAKER_03: Congressmen pay for their re-elections uh by rich donors who tell them, and by the way, cut my taxes.
• 24:58
  SPEAKER_03: So they do that, but in a way, they are also dutifully following the core principle of America, which is you are there not for your constituents, but for the wealth.
• 25:10
  SPEAKER_03: Right.
• 25:10
  SPEAKER_03: And since the wealth is so extraordinarily unequally distributed, they are saying every preference to make sure that wealth can be maintained, increased, and transmitted as use as the wealth owner sees fit, up to the point of this extraordinary, unprecedented inequality that we have now, where a handful of the richest people, a handful, ten people in big tech now have more than two and a half trillion dollars of well, ten people.
• 25:45
  SPEAKER_03: Yes, their average is 250 billion.
• 25:48
  SPEAKER_03: I forgot to check on Elon Musk's net worth this morning, but with his new IPO coming up, he could be the trillion dollar man soon.
• 25:58
  SPEAKER_03: And this is somehow considered normal uh in our state of affairs.
• 26:03
  SPEAKER_00: And what is also under the radar is how many members of Congress are wealthy.
• 26:10
  SPEAKER_03: Yeah, yeah.
• 26:11
  SPEAKER_03: That goes that's also a long tradition because if you look at the original signers of the Declaration of Independence or the original Congress itself, these were wealthy, large landowners.
• 26:23
  SPEAKER_00: Right.
• 26:23
  SPEAKER_00: The only people who could vote were property-holding white men, right?
• 26:26
  SPEAKER_00: So there's been this bias in favor of wealth in our country from the very beginning, right?
• 26:32
  SPEAKER_03: And a great story, by the way, you remind me, there's a fantastic historian that I'd like everyone to know, and we've uh talked uh on podcast, Jack Recov at Stanford University, who's the great historian of the origins of the Constitution.
• 26:48
  SPEAKER_03: And he is a great historian of James Madison, who was a political genius.
• 26:55
  SPEAKER_03: But we should remember Madison was a large land-owning, slave-owning, founding father, a genius.
• 27:03
  SPEAKER_03: Uh, and he wrote the core of the U.S.
• 27:06
  SPEAKER_03: Constitution.
• 27:07
  SPEAKER_03: But one of his motivations was that he feared that if there weren't a strong federal government, then the local politics of Virginia was going to take his property.
• 27:18
  SPEAKER_03: It was too populistic.
• 27:20
  SPEAKER_03: So he had to go to a removed level so he could preserve the property of the richest people in America.
• 27:27
  SPEAKER_00: Yeah.
• 27:28
  SPEAKER_03: Who were white, white slave owners.
• 27:30
  SPEAKER_00: Yes, exactly.
• 27:31
  SPEAKER_00: Exactly.
• 27:32
  SPEAKER_00: It yes, it's a it's a recurring theme and it's a moving target.
• 27:37
  SPEAKER_00: Okay, we have to protect people at the state and local level, but who's protecting us at the federal level?
• 27:43
  SPEAKER_03: Yeah.
• 27:44
  SPEAKER_03: And one one thing I would add, and then I want to talk about uh the what-to-do's.
• 27:49
  SPEAKER_03: There was uh just new data, I think, in in the last couple of days, which is very significant for this, which is that if you look at the U.S.
• 27:58
  SPEAKER_03: national income, the gross domestic product or the gross domestic income, you can look at it by the amount that goes to paying wages and salaries and the amount that goes to capital of some kind, the profits, the dividends, the rents, and so forth.
• 28:15
  SPEAKER_03: And what's happening for the last 50 years, roughly, and certainly the last 40 years, is that the share of the national income going to work is going down.
• 28:29
  SPEAKER_03: It used to be when I was in school and graduate school in economics, we used to say pretty reliably that the labor share of income was maybe 0.70%, or maybe between 60 and 70 percent.
• 28:44
  SPEAKER_03: Now it's at 50-50.
• 28:47
  SPEAKER_03: Uh and a lot of that labor income is actually the the returns to high earnings of professionals, so it's not the working class, and even that.
• 28:56
  SPEAKER_03: But basically what's happening, and I think a lot of it is about technology, uh, where the returns go to who owns the intellectual property, who owns the patents, who owns the machines, uh, who owns the servers, who owns the data centers, who owns the AI that we're all paying for right now.
• 29:15
  SPEAKER_03: Right.
• 29:16
  SPEAKER_03: That is not the working people.
• 29:18
  SPEAKER_03: Uh, it's not part of their wage bill.
• 29:20
  SPEAKER_03: And since these uh machines and AI are actually crimping the job market for new workers, and wages are down or stagnant, whereas profits are soaring, we're getting a shift of the income distribution.
• 29:35
  SPEAKER_03: So everything that we're talking about of the inequality of wealth is widening.
• 29:40
  SPEAKER_03: Absolutely.
• 29:41
  SPEAKER_03: And this is this is meaning also by race, since that's a large inequality to begin with, that will widen now.
• 29:50
  SPEAKER_00: And the way I think about it is what happens in the black community doesn't stay in the black community.
• 29:58
  SPEAKER_00: So it's one thing to say, well, that's just a race issue.
• 30:02
  SPEAKER_00: You know, you can fall back on stereotypes, negative stereotypes of black Americans.
• 30:07
  SPEAKER_00: However, the harm that started in the black community is going further and now harming the white community.
• 30:14
  SPEAKER_03: Yep.
• 30:15
  SPEAKER_00: So we had black Americans talking about the unfairness of the police, right?
• 30:21
  SPEAKER_00: And now we see what happens with ICE.
• 30:24
  SPEAKER_00: If we had solved the problem when black Americans were targeted by unfair police stops, we would have had a different infrastructure in place to fight back against ICE doing it.
• 30:36
  SPEAKER_00: ICE is not limiting themselves to black and brown Americans, as we saw in Minneapolis.
• 30:41
  SPEAKER_00: So the the problems that face black Americans, whether it's the racial wealth gap or whether it's the marriage penalty, there were always white married couples, I found, that were harmed by our tax laws and how we change our tax bill based on marriage.
• 30:59
  SPEAKER_00: So if we had focused on the harm to the black community and fixed it so that there wasn't a marriage penalty, it would have helped many white married couples as well.
• 31:10
  SPEAKER_00: We tend to this.
• 31:12
  SPEAKER_03: Yeah.
• 31:12
  SPEAKER_03: And it's the point that's hitting the working class in general.
• 31:16
  SPEAKER_03: Yes.
• 31:16
  SPEAKER_03: Wages are stagnant or down.
• 31:18
  SPEAKER_03: Yes.
• 31:19
  SPEAKER_03: Uh their net worth is uh very precarious, zero or in debt.
• 31:24
  SPEAKER_03: It's white uh working class households also that can't pay the dental bills or get the prescription drugs or can't find affordable housing right now.
• 31:34
  SPEAKER_03: And the uh approach politically that we know there are two approaches.
• 31:40
  SPEAKER_03: One is you really fix the problem, or two is you blame someone else.
• 31:45
  SPEAKER_03: That's right.
• 31:45
  SPEAKER_03: Uh and uh we're in the blame stage right now.
• 31:48
  SPEAKER_03: We have a a government, especially with Trump, that doesn't want to understand or fix anything, but wants to blame.
• 31:57
  SPEAKER_03: Right.
• 31:58
  SPEAKER_03: So blame the immigrants, right.
• 32:00
  SPEAKER_03: Blame uh people of color, uh blame uh the Chinese, blame the foreigners, but don't look at the wealthiest people in America who, after all, paid for this guy to get into office in the first place.
• 32:13
  SPEAKER_03: That's right.
• 32:13
  SPEAKER_00: And who are behind the tech that is putting them out of their jobs?
• 32:18
  SPEAKER_00: Exactly.
• 32:18
  SPEAKER_03: Yes, but no one wants to discuss that except you, and you are discussing that, which is uh absolutely, absolutely fantastic.
• 32:27
  SPEAKER_03: And so if we could stay with the whiteness of wealth for a moment, you talk about some of the tax changes that you would like to see.
• 32:34
  SPEAKER_03: If we could stay just for a little bit on that, and then I want to talk about the reparations issue.
• 32:40
  SPEAKER_00: Sure.
• 32:40
  SPEAKER_00: So one thing, let's not have marriage change our tax bill.
• 32:46
  SPEAKER_00: Canada has an individual filing system, they've had it for over a hundred years.
• 32:50
  SPEAKER_00: We in America used to have it before the joint return and before the seaborns.
• 32:55
  SPEAKER_00: We can go back to that and make sure that there are no marriage bonuses and no marriage penalties.
• 33:01
  SPEAKER_00: The other thing we can do is treat capital the same as labor.
• 33:06
  SPEAKER_00: We should tax income from stock the same way we tax income from wages.
• 33:11
  SPEAKER_00: Or if we want to be radical, we can flip the switch and tax income from capital more than we tax income from labor.
• 33:19
  SPEAKER_00: But I'm for an equal approach.
• 33:21
  SPEAKER_00: They should be taxed at the same rate.
• 33:23
  SPEAKER_03: The thing that I find strange, puzzling, is I think there should be a principle, you know.
• 33:30
  SPEAKER_03: I don't think it's too draconian, for example, to say you can't leave more than a billion dollars of bequests.
• 33:37
  SPEAKER_03: So you know, maybe the mega billionaires should really, you know, it's okay, they've accumulated, they've done their thing, but why should they leave billions of dollars as they see fit?
• 33:51
  SPEAKER_03: The principle that you make your way and that uh you share your bounty would seem to be a good one.
• 33:59
  SPEAKER_03: But that faces such obstacles.
• 34:02
  SPEAKER_00: Headwinds.
• 34:04
  SPEAKER_00: And I would say part of it is this nonsense that the billionaires earned their billions, just like the idea of farmers earning their income.
• 34:18
  SPEAKER_00: They farmers at the start of our country were enslavers and exploited other people's wealth.
• 34:24
  SPEAKER_00: The idea that billionaires didn't also exploit other people is a joke.
• 34:31
  SPEAKER_00: So so here's just one quick example.
• 34:33
  SPEAKER_00: Because the book I'm writing now is about billionaires.
• 34:36
  SPEAKER_03: Okay, oh, good, good.
• 34:38
  SPEAKER_00: And I'm looking at the role that white supremacy has played in creating and constructing our billionaire class.
• 34:46
  SPEAKER_00: So let's take Bill Gates.
• 34:48
  SPEAKER_00: So Bill Gates' father, he went to war and came back and accessed the GI Bill to go to college and law school.
• 34:57
  SPEAKER_00: Black returning veterans could not access the GI Bill the way white returning veterans has.
• 35:04
  SPEAKER_00: That's number one.
• 35:05
  SPEAKER_00: Bill Gates' father bought a home with a racially restrictive covenant.
• 35:12
  SPEAKER_00: So a black family couldn't have bought a home in that neighborhood.
• 35:16
  SPEAKER_00: Bill Gates Jr.
• 35:17
  SPEAKER_00: went to public school before, you know, when it started in public school.
• 35:22
  SPEAKER_00: He talks about this librarian that validated his love of books.
• 35:26
  SPEAKER_00: And as a result of that, it gave him confidence, et cetera, et cetera.
• 35:30
  SPEAKER_00: So we see Bill Gates born into a family that helped him get his wealth.
• 35:37
  SPEAKER_00: His mother introduced him to IBM, which gave Microsoft their first big contract.
• 35:43
  SPEAKER_00: His sister did the financial accounting for the books, his father provided law assistance.
• 35:49
  SPEAKER_00: So if Bill Gates were not born white in America, we wouldn't have Microsoft.
• 35:54
  SPEAKER_00: Yeah, yeah.
• 35:55
  SPEAKER_00: So this idea that it's all merit-based, no, it's tainted wealth.
• 36:00
  SPEAKER_03: And in addition, whatever one says about Bill Gates, the children, do they start with 50 billion each?
• 36:08
  SPEAKER_03: What did they do?
• 36:09
  SPEAKER_00: Right, right.
• 36:10
  SPEAKER_00: And so in my mind, talking about how the billionaire class is not meritorious.
• 36:20
  SPEAKER_00: They did not gain it because of their individual merit.
• 36:24
  SPEAKER_00: They gained it because they were born white in America, and the system for building wealth has a heavy thumb on the scale for whiteness.
• 36:32
  SPEAKER_00: And nobody talks about this.
• 36:34
  SPEAKER_00: In fact, Jeff, you won't find an article talking about billionaires that ever mentions race when it's an overwhelmingly white class.
• 36:44
  SPEAKER_03: Well, absolutely.
• 36:44
  SPEAKER_03: That list of the top 10 uh that I'm thinking of in the big tech.
• 36:49
  SPEAKER_03: Bill Gates doesn't even make the top ten anymore.
• 36:51
  SPEAKER_03: If I and at least uh let's acknowledge uh also that he's given away a lot of money, which I wish others would do as well, because I think that's a good thing.
• 37:00
  SPEAKER_00: Although I argue that's all reputation laundering.
• 37:04
  SPEAKER_03: Well, I'm not completely convinced about that.
• 37:07
  SPEAKER_03: Uh I mean there are many things to be said about it, but he's actually funded some good things also.
• 37:13
  SPEAKER_03: I'm a little bit less happy about those who don't even do their reputation laundering who say, What do I care?
• 37:20
  SPEAKER_00: And I will argue, and I think people in K-12, as well as the global health community, would push back on the so-called good that Bill Gates has done through his foundation.
• 37:30
  SPEAKER_00: But I digress.
• 37:31
  SPEAKER_03: Okay, no, no, no, but it's anyway.
• 37:33
  SPEAKER_03: It's very, very good that you're working on this and very interesting.
• 37:36
  SPEAKER_03: And let's let's turn to the reparations uh issue, because of course, uh just to put everyone in the right context, America, land of the free, was uh born as a slave nation.
• 37:52
  SPEAKER_03: And as far as I know, it is the only country in modern history needed a civil war to do the right thing to end slavery.
• 38:02
  SPEAKER_03: Uh others came late, but not with the civil war.
• 38:06
  SPEAKER_03: The United States actually had to have a bloody civil war to end this crime against humanity.
• 38:13
  SPEAKER_03: But it starts with the fact, uh, and your book Getting to Reparation starts with the fact that when the decision was taken to free the slaves, and you talk about the District of Columbia, our nation's capital, in the first days of the Civil War itself, when Abraham Lincoln is president, and uh here you have slaves in the capital of the federal government that is fighting to keep the Union.
• 38:43
  SPEAKER_03: And they recognize, because there are abolitionists there, this is really not right.
• 38:50
  SPEAKER_00: It's a bad look.
• 38:51
  SPEAKER_03: We're fighting against the Confederacy, which is fighting to defend slavery, so we shouldn't have slavery in the district.
• 38:59
  SPEAKER_03: And what is so interesting about your story, you take it from here because it's a fascinating historical moment.
• 39:07
  SPEAKER_00: So the idea was twofold.
• 39:09
  SPEAKER_00: It was it wasn't a good look to have slavery in the District of Columbia, but it was also a trial balloon.
• 39:17
  SPEAKER_00: Could we get southern states on board with ending slavery if we could compensate the white enslavers for the end of slavery?
• 39:27
  SPEAKER_03: In other words, those who release their slaves would get paid, they'd get some compensation for each slave that was freed.
• 39:36
  SPEAKER_00: Yes.
• 39:36
  SPEAKER_00: So the DC Emancipation Act said if as long as you're loyal to the Union and you fill out a form, you will uh receive a cash compensation for each formerly enslaved worker that is now freed.
• 39:53
  SPEAKER_00: And the argument was if this could work in DC, maybe it could catch on and work in other parts of the South.
• 39:59
  SPEAKER_00: Well, the enslavers in DC didn't like it.
• 40:02
  SPEAKER_00: It didn't catch on, but let's talk about how it worked.
• 40:05
  SPEAKER_00: How it worked was you would an enslaver would have to prove ownership to the enslaved person, would file a petition with the name, with the height, with the age, with the job description, and the US Treasury would then write them a check.
• 40:24
  SPEAKER_00: And from beginning to end, it happened in about a year.
• 40:28
  SPEAKER_00: So it happened rather quickly once the law was enacted in April of 1862.
• 40:34
  SPEAKER_00: Uh, it had to be amended that summer because what happened was enslavers were moving their enslaved workers just over the district line to say, oh, they weren't in DC, so they're not free.
• 40:49
  SPEAKER_00: They moved them to Maryland, for example.
• 40:51
  SPEAKER_00: But they moved them after the act became law, so it didn't work.
• 40:56
  SPEAKER_00: So you the July supplement said an enslaved person in DC could come and get their own emancipation, and there would be no payment to the enslaver.
• 41:08
  SPEAKER_00: That was an incentive to get more white enslavers to fill out the paperwork and get checks.
• 41:14
  SPEAKER_03: But as you point out, no one gave a hoot of what happened to the slaves that were emancipated in terms of here's 10 bucks for you, here's a way to get started, uh, here's uh a few uh acres of land.
• 41:29
  SPEAKER_03: Nothing.
• 41:29
  SPEAKER_03: Nothing.
• 41:30
  SPEAKER_03: Nothing.
• 41:31
  SPEAKER_03: And and the story you tell, uh, by the way, another one that I didn't know of General Sherman.
• 41:38
  SPEAKER_03: This is the general, our famous general who uh marches uh to the sea.
• 41:43
  SPEAKER_03: Uh he's got his uh statue in gold uh in front of the Plaza Hotel in Manhattan, a little bit nutty in my view, so not uh the most normal of our heroes, uh rather violent.
• 41:56
  SPEAKER_03: But in any event, in 1865, in the final throes of the Civil War, he says actually that the freed slaves should be given land, which is good.
• 42:08
  SPEAKER_00: Absolutely.
• 42:08
  SPEAKER_00: He and Secretary of War Stanton called together 20 black ministers and asked them, you know, we're hopefully we're gonna win this war.
• 42:17
  SPEAKER_00: We're close to winning it.
• 42:19
  SPEAKER_00: What is it you would want?
• 42:21
  SPEAKER_00: And they said we want land and we want to be left alone to till it and to take care of ourselves.
• 42:28
  SPEAKER_00: It was such a small ask.
• 42:31
  SPEAKER_00: And that's how we got 40 acres.
• 42:33
  SPEAKER_00: That's how we got uh the the field order, 40 acres and a mule.
• 42:37
  SPEAKER_03: They didn't say we'd like the net present value of our lost earnings uh calculated in the yes, they just said give us a little land so that we can leave us alone.
• 42:47
  SPEAKER_00: Yeah.
• 42:49
  SPEAKER_00: And the the latter part and leave us alone is what could not did not happen once the 13th, 14th, and 15th amendments were passed and black Americans were freed.
• 43:00
  SPEAKER_00: And as you said, we needed a civil war to make it happen, and the people who lost never stopped fighting.
• 43:07
  SPEAKER_03: We know uh the war ended in 1865, Abraham Lincoln was assassinated, his uh vice president Andrew Johnson came from the South, uh, was a racist himself, abrogated this uh transfer to the former slaves.
• 43:24
  SPEAKER_03: Was there ever any other kind of compensation given to emancipated slaves by states or or anyone else?
• 43:33
  SPEAKER_03: Did anything happen?
• 43:34
  SPEAKER_00: Not that I'm aware of.
• 43:35
  SPEAKER_00: I've seen nothing, absolutely nothing.
• 43:38
  SPEAKER_03: It's nothing it's amazing.
• 43:39
  SPEAKER_03: So the federal government never did anything after that.
• 43:43
  SPEAKER_00: Correct.
• 43:44
  SPEAKER_00: And what my book talks about are the instances where the federal government did pay cash compensation to other groups, just not to black Americans.
• 43:53
  SPEAKER_00: They paid compensation to Italy for Italians.
• 43:56
  SPEAKER_03: Yeah, I'm gonna come to that in just a moment, but before I do, I just wanted to say.
• 44:00
  SPEAKER_03: That one of the most amazing books I've read in my whole life, which is an unbelievable brilliance, uh, is Black Reconstruction by uh W.E.B.
• 44:11
  SPEAKER_03: Du Bois.
• 44:12
  SPEAKER_03: Uh, and I read it at the beginning of COVID when we were all sheltered, and I was listening to audiobooks, and uh, it's a huge book.
• 44:22
  SPEAKER_03: And I thought, well, I'll listen to uh, you know, a chapter or something because I'm interested, and I'd never read anything by Du Bois.
• 44:29
  SPEAKER_03: And I started listening, and it is so completely brilliant.
• 44:33
  SPEAKER_03: It's yeah, you can't put it down.
• 44:35
  SPEAKER_03: Yeah, you cannot put it down, and I listened for hours and hours and hours and hours.
• 44:40
  SPEAKER_03: And just as a footnote and a digression to our discussion, Du Bois was a genius, uh, African-American, one of the only PhD, or maybe the first PhD in uh in history, and he took on the entire American white racist academia about the history of the Civil War and the aftermath, and he won because he was a genius and a scholar.
• 45:04
  SPEAKER_03: And this book is the fruits of that.
• 45:06
  SPEAKER_03: But the point I wanted to make in this digression was not only did the freed slaves not get anything, they also were decisive in the victory of the Civil War.
• 45:18
  SPEAKER_03: So even the contribution of uh the former slaves to the military victory and to the effort of the North in winning the war was never recognized.
• 45:29
  SPEAKER_00: Correct, correct.
• 45:30
  SPEAKER_00: And one of the things that I learned in researching and writing about the reparations book was even though enslaved people left uh slavery with nothing, they managed to build wealth, they managed to open stores, they managed to buy land, they miraculously managed to do it, and in so many instances the state or other white individuals took it from them.
• 46:01
  SPEAKER_03: But this is the story of uh the so-called Reconstruction period, the dozen years after the Civil War, under the uh vote of newly emancipated former slaves, suddenly, for the first time ever, they're public schools.
• 46:20
  SPEAKER_03: There's education.
• 46:21
  SPEAKER_03: Yes.
• 46:21
  SPEAKER_03: Uh the states are actually building institutions.
• 46:25
  SPEAKER_03: And this is what Du Bois also points out.
• 46:28
  SPEAKER_03: The governance was unprecedentedly positive.
• 46:32
  SPEAKER_03: Yes.
• 46:32
  SPEAKER_03: And then came the white restoration of power, the so-called Jim Crow laws, which created apartheid in America for the next hundred years.
• 46:43
  SPEAKER_03: The whites got their revenge, but they also completely rewrote the history, which is what Du Bois took on about uh 80 years later.
• 46:53
  SPEAKER_03: They said, and the blacks ruined everything, these former slaves, drunken, this and that, when in fact, for the first time there was serious governance in the southern former slave states.
• 47:06
  SPEAKER_03: Absolutely.
• 47:06
  SPEAKER_03: So they they not only completely got their revenge uh on uh their former slaves in reimposing apartheid, but they rewrote the history.
• 47:19
  SPEAKER_00: Absolutely.
• 47:20
  SPEAKER_00: And one of the things I found interesting about Du Bois' research is he looked at property taxes in this separate but equal Jim Crow era, supposed to be used for black schools, and he found how those property taxes were diverted to white schools.
• 47:37
  SPEAKER_00: So even in separate but equal, we couldn't pay for our own schools.
• 47:41
  SPEAKER_02: Right.
• 47:41
  SPEAKER_00: They were taking black taxpayer dollars and putting them into white schools again.
• 47:48
  SPEAKER_00: Give us our land and leave us alone, right?
• 47:51
  SPEAKER_03: It's unbelievable.
• 47:53
  SPEAKER_03: So you argue, and I really like it.
• 47:58
  SPEAKER_03: This question, what do we do about all of this?
• 48:01
  SPEAKER_03: You say, uh, you personally were a skeptic that there's anything you could do or should do about it, other than let's be fair going forward, you know, reparations, not so much, it's a long time in the past, and and you changed your views about this because, among other things, you found that the idea of reparations is not so un-American, actually.
• 48:28
  SPEAKER_03: It's actually been applied, just not to the African American community.
• 48:35
  SPEAKER_00: Exactly.
• 48:36
  SPEAKER_00: So I started as skeptic, and I changed from a skeptic to we have to get this done, when one of my former colleagues told me about the Italy story.
• 48:48
  SPEAKER_00: So she teaches um foreign relations, and I said, So how's the semester go?
• 48:53
  SPEAKER_00: We were talking over the summer.
• 48:54
  SPEAKER_00: And she goes, Oh, yeah, it was yeah, it went fine.
• 48:57
  SPEAKER_00: You know, I was teaching my students about when we paid reparations to Italy.
• 49:00
  SPEAKER_00: I said, What wait a minute, what?
• 49:02
  SPEAKER_00: She said, Oh yeah, yeah, yeah.
• 49:04
  SPEAKER_00: There were Italians lynched in New Orleans and we paid reparations.
• 49:07
  SPEAKER_00: I said, What did you just say?
• 49:11
  SPEAKER_00: And she explained it.
• 49:13
  SPEAKER_00: Uh, we went on to lunch after that, but I never left that story.
• 49:17
  SPEAKER_00: I said to myself, so wait a minute.
• 49:21
  SPEAKER_00: The United States government paid cash compensation to Italy for white people lynched in Louisiana, but not ever for black people lynched.
• 49:33
  SPEAKER_03: Right.
• 49:33
  SPEAKER_00: And I said, I didn't, I had no idea.
• 49:36
  SPEAKER_00: And then I said, what else don't I know?
• 49:38
  SPEAKER_03: And by the way, you pointed out, which was also fascinating for me, that these were Sicilians who uh came to the US to work, intended to go back to Sicily, actually, send home some money, yes, go back, and they worked with African American workers and and mingled.
• 49:58
  SPEAKER_03: Yes.
• 49:58
  SPEAKER_03: And so uh you there was a line that you said that these Southerners used that Sicilians are Negroes with white skins.
• 50:06
  SPEAKER_03: Yes.
• 50:07
  SPEAKER_03: So they just were classified as uh someone that's lynchable.
• 50:12
  SPEAKER_00: That's right.
• 50:12
  SPEAKER_00: And once I started investigating, I realized it wasn't just in New Orleans that two additional times Louisianans lynched Sicilians.
• 50:23
  SPEAKER_00: It was like Louisiana could not stop lynching Italians.
• 50:27
  SPEAKER_00: I it was unbelievable.
• 50:29
  SPEAKER_00: Jeff, it was unbelievable to me.
• 50:32
  SPEAKER_03: Yeah, I I never heard anything like it, by the way.
• 50:35
  SPEAKER_03: It's it is just uh just amazing.
• 50:39
  SPEAKER_03: And there were there was compensation paid, there was reparations paid.
• 50:43
  SPEAKER_03: Yes.
• 50:44
  SPEAKER_03: And then you talk about some other cases which you should mention uh as well.
• 50:48
  SPEAKER_00: Yes, the Indian Claims Commission was set up to compensate tribal nations for the land we stole from them and for the land we purchased with unfair purchase prices or unconscionable purchase prices.
• 51:03
  SPEAKER_00: So we have another instance for compensation for economic exploitation and land theft.
• 51:09
  SPEAKER_00: Again, things that happen to black Americans.
• 51:12
  SPEAKER_00: And then the fourth and final example I use in the book is the reparations paid to Japanese Americans who were mass incarcerated during World War II.
• 51:22
  SPEAKER_00: And that happened in 1988 under President Ronald Reagan.
• 51:26
  SPEAKER_00: So I have these four case studies: the DC Emancipation Act, the lynching reparations, Indians Claims Commission, and the mass incarceration, that we know black Americans have been mass incarcerated but never received compensation.
• 51:41
  SPEAKER_00: So we have four examples where we've managed to get it done, where we didn't have a national vote, where we just did it.
• 51:53
  SPEAKER_03: Yeah, basically the idea that a wrong and a taking should be righted is uh a part of natural justice, yeah, and actually can be a part of practical law.
• 52:06
  SPEAKER_03: The case here, especially if it's about reparations about slavery, and there are other kinds of reparations, claims being made about imperialism, about the exploitation of uh different countries as well, is when the distance is relatively large, because here we're talking about 175 years or so, let's say a century and a half.
• 52:31
  SPEAKER_03: What kind of consideration should we give for that?
• 52:34
  SPEAKER_00: So, one of the arguments I make in the book, and the main argument I make in the book, is not reparations for slavery, it's for what happened after slavery ended, because slavery didn't end.
• 52:46
  SPEAKER_00: So we had channel slavery ending after the 13th Amendment and the 14th Amendment and the 15th Amendment, but why did we need a Civil Rights Act of 64, a voting rights act of 65, a fair housing act of 68?
• 53:00
  SPEAKER_03: And just for everyone listening, the Civil War was 1865, but the Civil Rights Acts were 1965, 1964, 1968, in other words, one full century later.
• 53:13
  SPEAKER_00: Yes, because those amendments did not do what they were intended to do, because our Supreme Court interpreted them very narrowly.
• 53:24
  SPEAKER_00: So my argument is look at what happened after slavery ended, and the government continued to target black Americans, state and local officials continued to strip black Americans from property.
• 53:38
  SPEAKER_00: So my argument is we didn't end slavery.
• 53:42
  SPEAKER_00: So you can talk about something that happened a hundred and something years ago, except it didn't end, it just shapeshifted, and that's what we really need to fix.
• 53:50
  SPEAKER_03: In other words, the slave legacy was followed by what I would say was an apartheid state.
• 53:56
  SPEAKER_03: Yes.
• 53:56
  SPEAKER_03: We could put it that way in familiar terms, because this was a legislated state of inequality.
• 54:03
  SPEAKER_03: Yes.
• 54:04
  SPEAKER_03: And it affected everything.
• 54:05
  SPEAKER_03: It affected jobs, it affected the tax code, it affected uh where social security would be covered and paid because sharecroppers or uh people uh working in households were not covered, and that's because they were African American.
• 54:21
  SPEAKER_01: Right.
• 54:22
  SPEAKER_03: Uh and so job market, employment, schools, tax code, housing market enforced a uh rigorous, relentless, profoundly immoral racism for another century afterwards.
• 54:39
  SPEAKER_03: That's right.
• 54:40
  SPEAKER_00: And continues today.
• 54:42
  SPEAKER_03: Yes, and a lot of the racism and everything else continues until today.
• 54:47
  SPEAKER_03: And the legacy of the wealth inequality continues certainly till today.
• 54:52
  SPEAKER_00: That's right.
• 54:53
  SPEAKER_00: So we're not talking about fixing something that ended 200 years ago.
• 54:57
  SPEAKER_00: We're talking about fixing something that still has not ended today.
• 55:01
  SPEAKER_03: You call for a commission to work out these principles, and I think it's a good provocation for all of us thinking about this.
• 55:10
  SPEAKER_03: And I know that there are other groups uh I mentioned to you uh before uh we started the podcast at the University of West Indies uh in the Caribbean, also uh considering these issues.
• 55:22
  SPEAKER_03: And you made me go back to uh something that I studied a half a century ago, a very provocative uh book called Anarchy, State, and Utopia by a professor at Harvard in the day, and a very uh I knew him, he was a very nice man and a uh good colleague of mine when I was his junior colleague, Robert Nozick, who wrote a text on libertarianism.
• 55:46
  SPEAKER_03: And libertarianism, people may know, is uh the government shouldn't redistribute income, it should protect wealth, and it should stay out of the way of the markets, no matter what kind of inequality.
• 55:58
  SPEAKER_03: And uh it's a very, in my view, wrong position, an extreme position, because it leaves the poor to suffer and so on.
• 56:07
  SPEAKER_03: But Nozick, in his theory of libertarianism, says that if you're in a situation of income and wealth distribution that's fair, and people make voluntary market-based choices, it remains fair.
• 56:23
  SPEAKER_03: That's the principle.
• 56:24
  SPEAKER_03: And then he says, but if it isn't fair at the beginning, well, then you do need what he calls the principle of rectification.
• 56:32
  SPEAKER_03: You might call it the principle of reparation.
• 56:34
  SPEAKER_01: Yes.
• 56:35
  SPEAKER_03: And then, interestingly, in this big fat book of uh 370, oh, 372 pages, there are basically our two paragraphs on that, on the rectification.
• 56:48
  SPEAKER_03: And he says, interestingly, you know, no one's worked out how to do that, which is quite interesting.
• 56:54
  SPEAKER_03: He doesn't deny it, right?
• 56:56
  SPEAKER_03: He just says no one's worked it out, and there's one footnote that he gives, and he says, a useful book to consider is a book by uh Boris Bitker, The Case for Black Reparation, 1973.
• 57:09
  SPEAKER_03: So I just uh maybe we could close on what is the scholarship on this and where does it stand and how can we move forward?
• 57:16
  SPEAKER_00: So I will say with Boris Bitker's book, I'm the second tax professor to write about reparations.
• 57:23
  SPEAKER_00: So I count it quite an honor.
• 57:25
  SPEAKER_00: And when it talks when we talk about how to move forward, my idea for moving forward is the next Democrat who's elected president signs on day one an executive order creating a commission to study.
• 57:41
  SPEAKER_00: And the commission to study the issue would have two jobs not only studying the issue, but also helping to build public support.
• 57:50
  SPEAKER_00: Because I've commissioned focus group testing, and what we've discovered is when you inform people that racism didn't end with the 13th, 14th, and 15th Amendments, when you tell them about the history, most people don't know that the GI Bill was not equally provided to returning black veterans, or that the Federal Housing Administration redlined and discriminated against black Americans who were trying to buy homes.
• 58:20
  SPEAKER_00: When people are informed about that, they think it's outrageous.
• 58:24
  SPEAKER_00: And secondly, when you tell them that the United States government has, in fact, paid reparations for the end of slavery, for lynching, for economic exploitation.
• 58:35
  SPEAKER_03: End of slavery to slaveholders.
• 58:37
  SPEAKER_03: That's what really gets them, right?
• 58:39
  SPEAKER_00: To slaveholders and mass incarceration, but never to black Americans.
• 58:43
  SPEAKER_00: They get outrage and they say it's not fair.
• 58:46
  SPEAKER_00: So I have focus group testing that shows opposition turns into significant support when people understand their history and understand we've done it before, we can do it again.
• 58:59
  SPEAKER_03: What an amazing uh place to uh bring this conversation to a close.
• 59:03
  SPEAKER_03: There will be more, Dorothy, but what you are saying is uh people need to understand history.
• 59:10
  SPEAKER_03: And when they do, people can come together on the basis of truth and on the basis of uh shared values of decency.
• 59:18
  SPEAKER_03: And I think that that's a wonderful practical lesson, which you showed in the focus groups.
• 59:23
  SPEAKER_02: Yes.
• 59:24
  SPEAKER_03: Uh, and a practical lesson for all of us.
• 59:26
  SPEAKER_03: It's the purpose of Book Club with Jeffrey Sachs that we learn together.
• 59:30
  SPEAKER_03: We talk with brilliant authors uh like you.
• 59:33
  SPEAKER_03: And so let me thank you for being with us today.
• 59:36
  SPEAKER_03: Uh, it's been a great discussion.
• 59:38
  SPEAKER_03: Let me remind everybody we have been speaking with Professor Dorothy Brown, a professor of law, and the Martin D.
• 59:45
  SPEAKER_03: Ginsburg Chair in Taxation at Georgetown University Law School.
• 59:50
  SPEAKER_03: And we've talked about two wonderful books, which I encourage everybody to read: The Whiteness of Wealth and Getting to Reparations.
• 59:58
  SPEAKER_03: Dorothy, thank you so much for being with us today.
• 1:00:01
  SPEAKER_00: Thanks for having me.
• 1:00:03
  SPEAKER_03: Thank you for joining in the conversation.
• 1:00:06
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