Reparations and The Illusion of Money
Money (based on debt) isn't real, it's just an abstraction that we use to save for the future and make trading goods easier.
When thinking about Black economic development, we have to remember to separate real economic activity from money. Too often I see people focusing on accumulating wealth, but then denominating that wealth in US Dollars and purely financial assets. This is backwards. Because, again, money isn't real. Truly wealthy people know this, and they know that the worst thing to have in your portfolio is cash sitting in a bank account or under a proverbial mattress.
When you exchange money for something real, you now have something useful to you, while the person you bought it from essentially has a piece paper that could lose its "value" at any moment (.e.g. a global pandemic causes the price of toilet paper to go up). Money is used as an abstract representation of value. But as soon as people stop believing in the abstraction, it becomes worthless. Therefore, it's worth is entirely subjective and it has no utility. The US government artificially creates utility by making you pay taxes with US dollars. In a zombie apocalypse scenario when taxes are presumably no longer necessary, would you rather have 1 billion dollars or 1 billion bullets?
All currencies fluctuate in value and eventually die out. However, wood can always be burned for warmth, or used to built shelter. Water can always be used to quench your thirst or cook food. Food can always be used to keep you alive.
And in this line of thought, debt is also "worthless." There are plenty of financial advisors and so-called gurus out there telling you to pay down debt. This is terrible advice, especially for Black people who should be focused on economic development and self-sufficiency. First, money is debt. So, if money is worthless, then so is debt based on money. Second, if you use debt to get money to buy a luxury handbag, it's probably a bad decision. Not because debt is bad, but using that money to buy one bag is stupid, when you could have just bought a cheaper bag and then used the rest of the money to buy survival gear and supplies to put in the bag, for example. But if you use debt that costs 5% a year in interest to invest in something that earns you 10% annual returns, then you just leveraged that debt to make a 5% net return. In this case, debt is "good." Also, you could always declare bankruptcy, abandon your credit score, and/or just leave the country and default on your dollar-denominated debts if you wanted.
If you use debt to start a business, or buy a piece of useful equipment, or build a house on farm land, then that debt was well spent and now you have something of value while the debt holder basically just has an IOU. Now the main consideration is the ability of the debt holder to enforce that debt. Do they have the power to make you pay it back or seize the asset you used to buy with the debt?
But I digress. My point is that we should be using whatever money we get in the Black community to buy and invest in things that have real productive value, in other words, the ability to keep generating value.
The final point on money is the importance of sovereignty, and why all of our economic development efforts must have that as a primary consideration. I previously wrote that sovereignty is the basis of wealth. Well, part of that means monetary sovereignty...the ability to issue money rather than just be a user of it.
In this context, debt is completely different than the debt you and I or a business would use. The US federal government, for example, never has to default on its dollar-denominated debt/obligations. More on that in the next section.
One of the main arguments against reparations given by people who actually agree with reparations in principal is where will the money come from to pay it? They don't want to take money from some people to give it to others...even though that's literally what slavery and Jim Crow did by transferring wealth from Africans to others via free labor and intellectual property (i.e. our inventions/creations). Transferring it back is not a "redistribution" of wealth, but rather returning back what was stolen. As far as we are concerned, there is no statute of limitations on slavery and genocide. That debt must be settled no matter how much time passes, and we're tired of waiting to collect.
In cities, counties, and states with large Black populations, we could gain control of governments (and their budgets) through electoral politics. Then we could use their taxing authority and budgets to pay for reparations programs, but this would just be a start. At some point we're going to need the federal government to come into play. Why? Because the federal government doesn't have the same budget constraints as cities, counties, and states. The federal government has no actual limit on how much money (US Dollars) it can spend. Its only practical limit is not causing too much inflation with its spending, but we're a long way from that being a real problem. The amount of the budget that Congress spends so much time bickering over is a purely political decision, almost completely devoid of real economic concerns.
Let me make it plain. The United States government creates money out of thin air. There is NO LIMIT on how much money they CAN create. How much they SHOULD create is another question. The US Government can never run out of money or default on its debts, so all this talk of debts and deficits is irrelevant to them paying what they owe us. If they owe $15 trillion, they can just print $15 trillion.
What about inflation? Well, I'm glad you asked. If they print too much money, yes, inflation could be a problem, which is why we should spend and invest whatever money we get strategically and as quickly as possible. Strategically so we don't drive up prices on things too fast (e.g. handbags, Bentleys, and Ferraris), and quickly, so we're not exposed to the US dollar for too long.
However, in practical terms, as long as there is excess manufacturing capacity and unemployment anywhere in the world where we want to buy stuff from, it is unlikely that our reparations payments cause significant inflation, especially if those payments are spread out over time, which is most likely.
So, in short, there's plenty of money and inflation can be managed, so the amount of spending should not be an impediment. What matters is the result of spending. If we, for example, took all the reparations money and bought gold, it would be a poor use of it compared to building housing, infrastructure, food sources, and general productive capacity.
What the reparations detractors fail to realize is that the current sorry economic state of Blacks in America is a drain on the whole economy. It hurts everyone via lower economic output and causing unnecessary strain on resources (i.e. diseases of poverty and despair), driving down everyone's standard of living. Stimulating the Black economy will stimulate the US economy, and even the global economy since inevitably we will spend at least some of the money we receive outside our community.
Now, that said, without a plan to make the best use of reparations payments, all those resources will just end right back with non-Black-owned corporations and the government, and we may end up with little to show for it. So our focus in addition to fighting for reparations should be to start organizing and building the economic infrastructure we'll need to mobilize any reparations payments we receive. That's the focus of my work and why I wrote In The Black 2050 as a starting point to outline potential strategies. If you want to be a part of the solution, keep following along and share this information with others so we can build a base of support for TANGIBLE and sustainable economic solutions.