California Reparations Report Is Based on the Concept of “Compound Harm,” Which Einstein Called the Eighth Wonder of the World

Einstein, like Churchill, Twain, and Napoleon, is a Quote Magnet to whom random sayings become attached in the popular mind. One of the most beloved pseudo-quotes attributed to Einstein is his praise, however phrased, of compound interest.

I was reminded of those sayings about compound interest when looking through the new 492-page interim part one report of the official California Task Force to Study and Develop Reparation Proposals for African Americans,. (California was admitted to the Union as a free state in 1851, but … so what?) This part lays out the justifications for reparations and possible mechanisms, while the second part next year will put a price tag on reparations. From the Daily Mail:

Proposed reparations in California’s draft proposal

Estimate the amount black businesses have lost in stolen or destroyed property through ‘racial terror’ and distribute it back to black Californians

Adopt mandatory curriculum for all teachers to take anti-bias training

Recruit black educators for K-12 schools

Provide scholarships to black high school graduates to cover four years of undergraduate at a choice school

Compensate individuals who were forcibly removed from their homes due to state action, such as park and highway constructions

Create funding to invest in environmental infrastructure

Create equal access to parks and national resources in black neighborhoods

Compensate families who were denied inheritances they would have received if they were white

Compensate those who have been discriminated and deprived of rightful profits from artistic, creative, athletics, and intellectual endeavors

Raise the minimum wage in predominantly black industries, such as food and agricultural

Require scaling up the minimum wage for experienced workers

Create a fund to support black-owned businesses and eliminate licensure barriers that harm black workers

Compensate people whose health has been permanently damaged by anti-black healthcare

Implement policy to close the racial wealth gap in California

Implement a clear and detailed program to help African Americans obtain reparations

Establish an Office of African Americans/Freedmen Affairs to help document eligibility and prevent future harm

Source: California Attorney General Office

How to justify what will no doubt be an immense bill presented to California taxpayers next year?

Like Einstein said, compound interest. You see, if black person X hadn’t been unfairly deprived of some sum of money way back when, due to what Einstein probably didn’t call “compound interest, the Eighth Wonder of the World,” today it would be worth a gazillion dollars dollars to their heirs. (After all, whoever heard of African Americans spending their money on themselves and not leaving it to their heirs?) For example, if in 1851, some black person was unfairly deprived of something worth $100,000 today, and that $100,000 had compounded at a 3% real (above inflation) for the 171 years since, today it would be worth to his heirs $15,673,000. If you go all the way back to 1619, as the California document frequently does rhetorically, the sum owed for depriving one black of $100,000 in 1619 is $14,907,388,035.

That $14,907,388,035 is rightfully their’s, and somebody (i.e., you) is going to pay!

This obsession with compound interest in the context of rationalizing a huge reparations payout helps explain the extraordinary antiquarianism of the Great Awokening (e.g., the constant invocations of FDR’s redlining, the Tulsa race riot, Emmett Till and so forth). Of course, most of the time, more recent history has more effect of you today than more ancient history. But not in the case of compound interest. The further back into the past you can date some harm done on you, the more compound interest you deserve.

Granted, the term “compounding interest” doesn’t appear in this Part One report, although I bet the concept will appear in Part Two. But Part One is obsessed with the even more dubious concept of compounding harm. The text string “compound” appears 28 times in this document.

Some examples:

In order to address this practical reality, this interim report of the Reparations Task Force describes a sample of government actions and the compounding harms that have resulted, organized into 12 specific areas of systemic discrimination. …

These harms have compounded over generations, resulting in an enormous wealth gap that is the same today as it had been two years before the Civil Rights Act was passed in 1964. …

Government actions and derelictions of duty have caused compounding physical and psychological injury for generations. …

Government laws and policies perpetuating badges of slavery have helped white Americans accumulate wealth, while erecting barriers that have prevented African Americans from doing the same. These harms compounded over generations, resulting in an enormous gap in wealth between white and African Americans today in the nation and in California. …

Nevertheless, the effects of 400 years of compounding governmental and private acts of racial violence and discrimination described in this report have resulted in disparities between Black and white Californians in almost every corner of life. …

Four hundred years of discrimination has resulted in an enormous and persistent wealth gap between Black and white Americans, as discussed in Chapter 13 The Wealth Gap, and continuous and compounding harm on the health of African Americans …

Violence and terror targeting African Americans has directly destroyed Black wealth—which has a compounding effect over time to prevent African Americans from amassing more wealth and thus contributing greatly to the wealth gap. …

And so forth and so on.

I guess you could make an opportunity cost argument for compound harm by linking it to all the compound interest your ancestors didn’t get. E.g., if only my ancestors didn’t have their Manhattan Beach property taken by eminent domain in 98 years ago to make a park out of it due to racism (as opposed to the two dozen neighboring white landowners whose property was condemned too), then they would have carefully stewarded that undeveloped property down through the generations and I would have made a fortune off selling it today. So, in terms of compound interest, I suffered more compound harm than my ancestors.

Or something like that.

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