Who loses in the battle against inflation.
Inflation is, like, the thing going on in the economy right now. Even for non-economy watchers — which, let’s be honest here, is most people — every time you walk into the gas station or grocery store lately, there really is a sense of, “What in the world is going on?” Since you’re probably paying attention to inflation, that might mean you’re also keeping a bit more of an eye on the Federal Reserve — the government body charged with keeping the economy in check.
The Fed has a dual mandate on the economy (stick with me here), which is maximum employment and price stability. To put it plainly, that means to keep unemployment low while at the same time making sure inflation doesn’t rise too much. And when inflation does go up too much, one of its main policy tools to slow things down is to raise interest rates to make borrowing more expensive to cool off demand, which in turn can increase unemployment. That’s what the Fed did to end runaway inflation in the late 1970s, and while it was successful, it also sucked. The Fed pushed the economy into a recession and pushed unemployment above 10 percent to achieve its goals.
Now we’re here again: Inflation is once again a problem, and the Fed is trying to make it not one, once again by using the tools in its toolbox that could entail a lot of pain for a lot of people. There’s hope the Fed could engineer a soft landing — meaning not tipping the country into a recession — as the job market and other economic indicators remain strong. Still, the prevailing economic wisdom remains sort of the same: Bringing inflation down for everyone means making the economy worse, and that process is going to hurt some people — namely, workers — pretty hard.
But what if the prevailing wisdom is wrong, and workers don’t have to suffer? That’s what Nathan Tankus, research director of the Modern Money Network and publisher of the newsletter Notes on the Crises, thinks. Or, at the very least, he believes that leaving inflation up to a single body — the Fed — to try to find a balance between the prices people should pay and the jobs and incomes people should have is off. He also backs the notion of a federal jobs guarantee.
I recently reached out to Tankus, who is also in the Modern Monetary Theory camp (my colleague Dylan Matthews has an explainer on what that is for you here), to talk about how the larger forces of capitalism are squeezing the little guy. To Tankus, the Fed is an angle to examine. He makes a compelling case.
A transcript of our interview, edited for length and clarity, is below.
So I’m half-joking here, but since this is supposedly a column about scam-ish things, is … the Fed a scam?
Um, kind of?
Obviously, it’s a real administrative agency; it does important things like clear the payments that go through the banking system every single day, trillions and trillions of dollars of payments. It’s critically important in that basic job of providing a safe and stable payment system. There’s cases in which the Fed is not quote-unquote a scam. But the way in which the Federal Reserve is a scam is the promise that it can manage the economy in the best interest of everyone and that when the Federal Reserve decides it’s time to pump the brakes, that the way it does that, the impact on jobs for ordinary Americans is the best way to do that job.
To shorten that a bit, it’s a scam to say that we need to balance things like inflation on the backs of the unemployed.
But in all seriousness, to back up a bit, inflation in the US and around the world is a big problem right now. And part of the Federal Reserve’s job is to try to bring it down. Can you just explain, at least in theory, how this is supposed to work?
There are two important components to this. One is the basic, simple idea — inflation is when too much money chases too few goods. So if you have too much money out there and there’s too few goods, that’s going to cause inflation. And what we need to do is to have less money out there, meaning having less people spend less on currently produced goods and services.
In more simple terms, what you’re saying is you need to have less income or, in the case of the unemployed, almost no income, in order to manage inflation.
You don’t necessarily have to buy that. We have a conflict in Ukraine and sanctions on Russia causing food and energy prices to go through the roof. Well, is the cause of that resulting inflation really that you have too much money? Or is there this global circumstance that is beyond individual control? As a well-known economist, Olivier Blanchard, put it recently, it’s kind of difficult to explain to people that Russia invaded Ukraine, so you need to lose your job.
On the demand side, though, on the Fed trying to reduce demand, does it work?
That’s a complicated question. I would say it largely doesn’t work. If you think about a lot of the prices that we care about — health care prices aren’t going to move down because people have a little bit less money. There are all sorts of prices in the economy that are acyclical, meaning they don’t respond to the ebb and flow of the state of the economy.
To the extent that there are prices that do — let’s say potentially there’s some impact on commodity prices, on food and energy prices — it’s because speculators think there will be a global recession that happens as the result of the Federal Reserve raising interest rates and that globally, demand for food and energy will ease.
It largely doesn’t work, but there’s ways in which it can work, but those ways in which it can work involve a pretty brutal impact on ordinary people.
Got it.
The other important part about that is it sets us up to be in an even worse situation for next time. If you think rent is a problem, raising interest rates is going to make it a lot more expensive to build apartment buildings and provide housing for people. The same can be true for certain parts of the economy — oil and gas, certain commodity investments.
We go through these cycles where there is a little bit of price pressure and because the Federal Reserve has been given responsibility for it, we use their interest rate policy. It is the only tool that we have, instead of using other policy tools that could potentially push through bottlenecks. That leads to a negative dynamic, especially for ordinary people.
Part of our issue is that we haven’t had other agencies who have been explicitly given the task to think about inflation, to preemptively respond to problems that could potentially cause inflation. As a result, it takes a long time to convince both the administration and the agencies under them to start focusing on it. We’re starting to, in recent months, have agencies such as the Federal Maritime Commission [which regulates international ocean transportation] in an emergency jump in to being helpful contributors to bringing down inflation. But the worst time to do it is after we’ve already had some degree of inflation, as there’s already enormous pressure on the Federal Reserve to raise interest rates. And it’s people who aren’t used to thinking in these terms because it’s not what they were told their job was.
This is the sense in which the Federal Reserve — or the myth of the Federal Reserve — is a scam. We’ve been sold this lie that we can give this one agency responsibility for managing the economy, inoculated from politics, and then it’ll work out best for everyone.
Managing the economy requires a lot of different agencies that are contributing, and it would work a lot better if you were approaching solving problems from many different angles.
If you weren’t already indoctrinated on this stuff, and most people reading this probably haven’t thought much about the Federal Reserve at all, you wouldn’t necessarily think, “Oh, yeah, one agency moving interest rates up and down, that’s the way to manage the entire complex 21st-century economy, rather than using many tools and many different specialties to do that job.” It’s kind of a crazy idea if you haven’t been absorbed in a world that takes that for granted.
It is a little wild that we accept this premise that in order to “fix” the economy, everything just has to be miserable for a while, and oh, by the way, hope you get to keep your job! The way to make the economy “good” again is to make it really terrible for a while for a lot of people.
We’re also not used to what good is. When somebody talks about whether the economy is “good” — and we can debate about whether the economy is good right now — a lot of the time, people respond with, “Well, my local restaurant has a ‘Help Wanted’ sign and they’re not able to get enough staff.” That’s a mindset that’s very hard to break. Most of us are workers, in some sense or another, and from the workers’ perspective, bosses who really, really need you and aren’t able to find other people to fill those jobs is good for you. That means you have more bargaining power, that you can have better wages, that you can push to make your workplace better for you. But because we’re so used to thinking of things from a consumer perspective, it can be hard to notice when things are good.
You’ve got to switch your mindset. If the local low-end retailer that you know pays the lowest wages and they’re having trouble finding workers, that’s generally a good thing, that’s not a bad thing.
It might be a little more convenient if the economy gets cracked down upon and suddenly there are a ton of people working for restaurants and you have the quickest service possible. But maybe you’re also on the other end of that, where your wages aren’t going up as much anymore, or you’re one of the ones who wins the unlucky lottery of losing your job altogether.
That’s a thing I think about a lot, the way we’ve come to view ourselves as consumers and not workers. But getting back to the point, why do we, as the public, buy into this idea that the Central Bank is the only one that can fix inflation and that’s it?
It’s a combination of things. One thing is that people don’t think about it very much at all; they don’t know who the head of the Federal Reserve is or that it exists. Maybe they’ve glanced at a dollar bill once and thought, “Oh, that’s weird, I wonder what that is.”
If you have heard of it, I think it’s intuitive. A lot of people think that the economy works where the Federal Reserve prints the money, that gets us out of recessions, but then they printed too much money. That’s not really how it works. When they’re talking about raising interest rates and cracking down on the economy, they’re not talking about getting literally less dollar bills out there. They’re talking about how you need less income.
The mechanism works through reducing your income, and once they reduce your income, they’re going to reduce your spending, and that’s how they’re supposed to get inflation under control. I think if a lot more people understood that they were talking about cracking down on your income, it would be much more controversial and be something that bothered people a lot more.
What do you think the better way to fight inflation is then?
Pre-pandemic — I said this in the Financial Times with a couple of colleagues of mine — that it is very dangerous for the Federal Reserve to be the sole holder of the price stability mandate, because what they’re going to do is to ignore their maximum employment mandate, as they’ve done decade in and decade out. And they’re going to do it with the inappropriate tools that they have.
So the first step is spreading that mandate around, having an inter-agency council the way that we have a Financial Stability Oversight Council, [which was created after the financial crisis to identify risks in the financial system]. We should have a price stability oversight council. That is a way that you can focus on problems before they happen. It provides a place for saying, “Hey, we need to fix the ports, and we need to do this if we are going to stop inflation.” There were people in government who were talking about port problems in 2018 and 2019, but no one in government had the foresight to connect this with the inflation conversation.
The biggest thing is to proactively respond to problems. All the Federal Reserve can do is, after the fact, say, “Something’s broken, and we need to kill income in the economy to fix it.”
Would this solution be perfect? No. You can come up with all sorts of examples of the political gridlock that we currently have, but nevertheless, we are seeing movement with these bipartisan bills focusing on specific bottlenecks, like semiconductors. With the continued years of problems, it’s taken inflation and the fallout from the pandemic to get people thinking about these non-monetary policy tools. We should have had agencies and individuals working on and putting out these things in advance. If we had something like that in 2020, then all those proposals would have been on the table from an official government agency or inter-agency council in January 2021 rather than being outside proposals that eventually made their way into Congress’s knowledge.
The other piece of that is that we need some other sort of agency, whether it’s the Treasury Department or something else, that has some more fiscal policy discretion, that can spend money to solve these kinds of target problems. They might seem like micro problems but can become these big economy problems.
We give the Federal Reserve unlimited discretion over interest rates, which has huge impacts, including how much interest the federal government pays to private entities. We could afford to give a limited amount of discretion to some sort of fiscal body to respond to targeted issues. That obviously has a big set of political questions that would have to be answered as well, but you know, what’s good for the goose is good for the gander. If discretion is good and helps to manage the economy with the Federal Reserve, even though they can’t predict and proactively fix problems, then we can have some discretion and independence in some sort of fiscal policy that’s tasked with proactive things.
Which, as we all know, the government is great at being proactive.
Ha.
So what is the takeaway here? Fed not a scam, but maybe the way we depend on them to fix the economy, a little not great.
We need to take their ability to try to fix the economy by causing unemployment off the table. This is why my colleagues and I think a legally enforceable right to a job is important, meaning a federal jobs guarantee. Because if some agency — whether it’s a fiscal agency or monetary policy or Congress — thinks we need to reduce inflation by reducing demand, we need some kind of automatic stabilizer [policies that kick in automatically as economic decisions change to stabilize the economy] there to make sure that, at the very least, someone will have some basic job with basic paying benefits at the end of that process. They can’t just unemploy, cause destitution, among people. That legal right to a job is a critical function that should happen.
These problems seem new in this moment, but they are a lot of the same issues that were happening 50 years ago. The interest rate-mongers won that battle then, but they don’t have to win again now.
We live in a world that’s constantly trying to sucker us and trick us, where we’re always surrounded by scams big and small. It can feel impossible to navigate. Every two weeks, join Emily Stewart to look at all the little ways our economic systems control and manipulate the average person. Welcome to The Big Squeeze.
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Have ideas for a future column or thoughts on this one? Email emily.stewart@vox.com.
Answers to your questions about the updated omicron variant vaccines.
The wait is over: Updated versions of Covid-19 booster shots have received a green light from the Food and Drug Administration, and the Centers for Disease Control and Prevention now recommends them for all Americans age 12 and older.
This push for new, updated boosters is coming at a good time. Health officials are warning of another likely spike in Covid-19 transmission this fall as people head back indoors once again.
The reformulated booster doses of the mRNA vaccines from Pfizer/BioNTech and Moderna are “bivalent.” That means they target the original version of SARS-CoV-2 as well as the newer omicron variant. The hope is that when administered as boosters, these new shots will increase protection against the latest mutations in the virus, and head off a rise in hospitalizations and deaths.
With new vaccines come new questions about what makes them better, who’s eligible, and when to get one. To help people understand when, why, and how to get their booster doses, we’re answering some of those questions here.
Let’s get into it.
Who’s eligible for the new coronavirus boosters?
According to the CDC’s recommendations, everyone 12 and older should get an updated booster shot. People 18 and over can get either a Pfizer or Moderna shot, while teens between 12 and 18 should get a Pfizer shot, as the FDA hasn’t reviewed Moderna data for younger teens yet. The CDC’s guidance suggests that getting either booster, regardless of what prior vaccines you received, is fine, although there’s no hard data yet on mixing and matching.
The CDC’s Advisory Committee on Immunization Practices did not recommend updated boosters for kids younger than 12 because manufacturers haven’t yet submitted data on these age groups for the FDA’s review. That will likely happen later this fall. Meanwhile, younger kids (between 6 months and 12 years) can get the original formulation of the vaccines.
How will I know if my booster is updated for the omicron variant?
As the bivalent boosters roll out, the older, monovalent boosters will become unavailable, so you won’t have to decide whether to get one or the other.
For people 12 and older, it’s all bivalent boosters for now — at least, until next-generation vaccines (like universal coronavirus vaccines and intranasal vaccines) become available in the US, and that’s unlikely to happen in the next few months.
How long after my last vaccine (or a recent Covid-19 infection) should I get a new booster shot?
Covid-19 infection and vaccination both provide some level of protection against future infections, which can last for a few months. During those months, your memory B cells — your immune system’s antibody factories — don’t respond as robustly to Covid-19 booster shots, perhaps because they’re busy fine-tuning the quality of the antibodies they’re producing in response to the original infection or vaccine.
Whatever the reason, this means that if you were recently infected with or vaccinated for Covid-19, you should take a beat before getting your bivalent booster shot.
How many months? Regardless of whether you were recently boosted or recently got Covid, the guidance is similar. The data supporting this guidance is pretty scant, though, so while we’ve summarized it below, it’s worth knowing there’s no perfect time interval.
If you’ve recently had Covid-19, you’ll probably want to wait at least three months to get a booster shot (even though you technically can get a booster shot as soon as your symptoms are gone). A recent preprint (i.e., non-peer-reviewed) study suggested that receiving a booster within two months of infection doesn’t really add much protection, and CDC guidance suggests waiting even longer to get vaccinated — three months after symptom onset — to improve the immune system’s response to the booster shot.
“A Covid infection in a vaccinated person — essentially that functions as a booster,” said Andrew Pekosz, a professor of microbiology and immunology at Johns Hopkins University, in a late-July interview.
If you’ve recently been boosted, the CDC offers a tool to help people determine when they are eligible for a booster. The timeline of your eligibility can change slightly based on age and individual risk factors, with people at higher risk being prioritized. But note: The CDC’s tool doesn’t include a question about recent infection. You can think of a recent infection as basically equivalent to a vaccine for the purposes of using the tool, or you can talk to your health care provider if you’re not sure what to do.
Generally, epidemiologist Katelyn Jetelina suggested in a recent issue of her newsletter, healthy people should wait four to six months after an infection or vaccination to get a booster — a bit longer than the CDC’s recommendations. She also suggests shortening that wait to three to four months for people at high risk for severe infection or who plan to attend an event where the infection risk is high (like a wedding), and stresses that, broadly speaking, there’s some uncertainty about the ideal interval between doses.
Bottom line: Although there are no firm rules about how soon to get a bivalent booster after infection or vaccination, you’re likely to get the most bang for your vaccine buck if you give it at least three months.
What makes these booster shots different?
You might remember that mRNA vaccines are different from conventional vaccines: Rather than delivering a whole inert virus or a fragment of it, mRNA vaccines give human cells the genetic instructions for making pieces of the virus.
In the case of the Covid-19 vaccines, the vaccines serve as an assembly manual for the spike protein of the virus. The bivalent vaccines from both Moderna and Pfizer/BioNTech that have been authorized for use in the US contain mRNA instructions for making the spike protein of the original version of SARS-CoV-2 and the spike protein common to the BA.4 and BA.5 omicron subvariants.
After you get a vaccine, your immune system revs up and starts making antibodies, which are proteins that bind to the virus and can stop it from causing an infection. If you have high levels of antibodies that can neutralize a virus, this usually means you’re well protected against infection. Antibody production, however, tapers off over time, so a vaccinated individual may be vulnerable to an infection after a few months. A booster shot ramps antibody production back up.
But antibodies attach best to very particular sites on the virus. If those sites mutate, as they have with the recent SARS-CoV-2 variants, antibodies become less effective at blocking infection. The bivalent vaccines restore some of this protection by training the immune system on both a newer version and an older version of the spike.
How effective are these boosters?
Although clinical trial data suggests the bivalent boosters offer some improvement over the older monovalent boosters, the size of the step up isn’t as big as some researchers would like it to be.
(A caveat here: These studies reported findings on a vaccine designed to target the BA.1 omicron variant. But the US has decided to go ahead with a vaccine that targets the more current BA.4 and BA.5 variants in the hope that it will provide more protection. European and Canadian authorities are using vaccines aimed at the spike protein found in the BA.1 subvariant. It’s a trade-off between having more human data, as with the BA.1 vaccine, versus a more timely match to the current variant, as with the BA.4/5 vaccine.)
The new vaccines raise antibody levels less robustly than the original boosters did — twofold compared to 25-fold — and it’s not yet clear they offer much improvement in preventing severe disease or death compared with immune system memory cells — B cells and T cells — trained on an earlier version of the virus.
Additionally, there are multiple effective treatments for Covid-19 now available. The risks of the worst forms of Covid-19 disease are in decline. Some experts have argued the money spent on bivalent vaccines would be better spent on other investments, like next-generation vaccines.
“We’ve spent $3 billion on these bivalent vaccines. Is that really how you’re going to best spend your money, given how uncomfortably scant those data were?” said Paul Offit, director of vaccine education at the Children’s Hospital of Philadelphia. “There are, I think, other strategies out there,” including developing intranasal vaccines that could help prevent infection.
But many feel the bivalent vaccines are a great step forward. For starters, the BA.4/5-targeted bivalent boosters being rolled out in the US will likely reduce the risk of transmission in the people who receive them, although that benefit is theoretical until human trial data on these vaccines becomes available — probably not for a few more weeks.
During an Infectious Diseases Society of America briefing on Wednesday, Kathryn Edwards, scientific director of the Vanderbilt Vaccine Research Program, expressed hope that surveillance systems for detecting new viral variants and determining changes in vaccine effectiveness would simplify further iterations of booster shots. “I’m optimistic that we have a technology that allows us to rapidly change and make vaccines for different kinds of viruses,” she said. The goal is for the vaccines to follow the model of annual flu shots, with scientists making adjustments aimed at protecting people from the viral variant most likely to be circulating at any given moment.
How often will we need boosters?
At a White House briefing on Tuesday, chief medical adviser Anthony Fauci said Covid-19 boosters would likely go from being needed every four to six months to becoming an annual shot, much like the flu shot. Whether that actually happens depends on how things go in the coming months.
The indicators experts will be watching include signs that in healthy adults, protection from severe disease wanes sooner than a year after getting a booster shot. They’ll also be watching for signs that the virus is evolving unpredictably in dangerous ways. A “variant curveball” could change the plan for annual vaccination, said Ashish Jha, the White House Covid-19 response coordinator, in the same White House briefing.
“We’ll have to see how long the booster persists,” said Edwards during Wednesday’s briefing. “As more people throughout the world get vaccinated, we may find that there’s fewer changes to the virus,” making it easier to predict the most effective formula for future booster shots, she said.
Even if next year’s Covid-19 trajectory turns out to support an annual vaccination plan, severely immunocompromised people may need more frequent booster shots because their immune systems mount a weaker response to vaccines.
Can I get a Covid-19 booster and a flu shot at the same time?
Yes. The CDC says there’s no difference in vaccine effectiveness or side effects whether a person gets a Covid-19 vaccine alone or with another vaccine.
Earlier on, before there was much “real-world” experience with Covid-19 boosters, it made sense to allow some time between these boosters and other vaccinations. That way, if people experienced adverse events after one of the vaccinations, providers could more easily identify which of the vaccines had caused the problems. But now, there’s more than enough experience with Covid-19 boosters to make the wait unnecessary.
Where do I get one of the new bivalent booster shots?
The US government has already purchased more than 170 million doses of bivalent Covid-19 vaccines. Many of the same places that offered original booster shots will simply be replacing them with the bivalent boosters, but where those places are depends on where you live. The vaccines.gov website is a great way to find a location nearest you.
State and local health departments have vaccination sites, and many retail pharmacies, health centers, and doctor’s offices are also offering Covid-19 boosters. This morning, my local CVS had bivalent booster appointments open as soon as this Friday.
What happens if too few people get boosted?
For booster shots to be effective at reducing both transmission and illness, as many people as possible need to get them. So far, just 49 percent of people eligible for a first booster in the US have gotten one. If that trend continues with the reformulated shots, boosted individuals will likely be protected, but the virus will continue spreading. That will give it more opportunities to mutate in dangerous ways.
However, vaccines are not just a tool to protect individuals, but a way to protect the population at large, since they lower rates of transmission and relieve burdens on the health system. This extends beyond the US. As the pandemic has demonstrated over and over, problems in other countries don’t stay in other countries.
“We have to think of Covid-19 as a global disease [and] really have to make an even stronger effort here in the US to get vaccines out into the world,” said Pekosz.
Otherwise, we risk repeating the same patterns of new variants causing renewed surges in cases, hospitalizations, and deaths.
Does getting a booster come at the expense of someone in a low-income country?
Given the need to vaccinate the world and the ongoing vaccine inequities leaving many of the most vulnerable unprotected against Covid-19, it’s reasonable to ask whether there’s an opportunity cost to getting a fourth shot when nearly one-third of humanity has yet to receive their first.
But experts say that your booster shot isn’t the main problem. Closing international vaccination gaps requires strategy and action from the government, not individuals.
“Once a vaccine gets into your local pharmacy, it’s really not going to be pulled back and sent someplace else,” Pekosz said. “The US government needs to realistically assess what the needs are for vaccines here and send surplus vaccines directly to other countries as opposed to stockpiling them here in the US.”
Economist William “Sandy” Darity and folklorist Kirsten Mullen on how the United States can compensate Black Americans for slavery, Jim Crow, and ongoing discrimination.
At the heart of the reparations debate are questions about what reparations for Black Americans could look like.
If cash payments are one way forward, how much money would be sufficient to cover the horrors of centuries of slavery and decades of Jim Crow and racial discrimination? And how would the United States, with its inflation woes and mounting debt, pay for them?
For the second episode of the “40 Acres,” a special four-part miniseries on Vox Conversations, I talk to the husband and wife duo, economist William “Sandy” Darity and folklorist Kirsten Mullen, about the reparations framework they outline in their book From Here to Equality: Reparations for Black Americans in the Twenty-First Century.
Darity and Mullen’s reparations framework is based on three elements: acknowledgment, redress, and closure.
First the United States would need to recognize and admit the grievous wrongs it has committed against Black Americans, and those who benefited from those wrongs must acknowledge the advantages they’ve gained as a result.
Darity and Mullen’s plan for redress involves compensation to eliminate the racial wealth gap and disparities in income, health, education, incarceration, and more.
Only then would the United States be able to arrive at closure — the point at which Black people and white people can come to terms over the past and unite to create a transformed United States.
The accompanying price tag, as Darity and Mullen calculated it, is $14 trillion. I talked to Darity and Mullen about how they arrived at this figure and how the US could pay for it.
Our conversation also explored their proposed guidelines for eligibility — only Black Americans who have identified as Black for at least the past 12 years, and who can prove that they are descended from people formerly enslaved in the US. And we discussed piecemeal reparations efforts happening across the country, like the housing vouchers doled out to a few Black homeowners in Evanston, Illinois, which they believe take away from the federal government’s responsibility. Ultimately, Darity and Mullen show how America’s unfulfilled promise of land has left Black Americans far behind.
Below is an excerpt of our conversation, edited for length and clarity. There’s much more in the full podcast, so subscribe to Vox Conversations on Apple Podcasts, Google Podcasts, Spotify, Stitcher, or wherever you listen to podcasts.
Fabiola Cineas
Why are you focusing on the racial wealth gap in [the context of reparations]?
Kirsten Mullen
I think it’s important to distinguish between wealth and income. Wealth can take the place of income, but income cannot take the place of wealth.
You know, we think of income as one’s earnings. It’s a consequence of actions. It’s a consequence of work, time spent producing services or materials for a fixed fee. Wealth, on the other hand, is a stock of assets. These are things that are happening while you’re sleeping. Interest that’s being earned on investments, on trust accounts, or you’re receiving rents, or you’re receiving mortgage payments from some other individual for property that you own or control. Wealth is the thing that gives individuals a reserve, a cushion. Wealth is a thing that makes it possible for you to move into a neighborhood with high amenities, to put your kids in private primary and secondary schools, elite colleges, if you choose.
Wealth is a thing that makes it possible for individuals to obtain high-quality medical care or legal counsel. Wealth is a thing that allows you, if you choose, to participate in the political process. We know that it’s really important in this country to not only vote, but if you’re able to, also support the political process financially. But not everybody can afford to do that. You know, it’s mostly people who have wealth who have this opportunity to participate in our political life in this way.
Fabiola Cineas
And relatedly, should there be a cap, an income cap on reparations? Like should the wealthiest Black Americans who would be eligible for reparations be [considered]?
Kirsten Mullen
You know, this is not a poverty relief program. Reparations is about a debt that the federal government owes to all Black American descendants of US slavery. When you think about reparations payments that have been made in the past, internationally, but also domestically, they didn’t say, “Oh, this person is too wealthy to receive reparations.” So, no, you know, Oprah Winfrey, Michael Jordan — all these people would absolutely be eligible for reparations. Now they could decide that they did not want to accept them if they chose, but they should not be excluded from reparations.
William “Sandy” Darity
And, you know, they could make the decision to take their reparations payments and use them for whatever purpose they have in mind. One possibility would be to make a donation to the charitable organization that they prefer to support.
Fabiola Cineas
In your reparations framework, you’ve arrived at about $840,000 for each eligible Black household. How did you arrive at this number?
William “Sandy” Darity
We calculated that number on the basis of the estimate of the difference in average wealth between Black and white households that’s reported in the 2019 Survey of Consumer Finances, which is the most recent survey that was taken to provide information about household net worth.
We arrived at the figure of $840,900, which is the exact difference between white average household net worth and Black average household net worth. If you multiply that figure across the total number of Black households, that differential — that gives you a figure in the vicinity of $14 trillion.
The 40 Acres Vox Conversations series explores where the reparations debate stands now and where it is headed. This series is made possible by a grant from the Robert Wood Johnson Foundation to Canopy Collective, an independent initiative under fiscal sponsorship of Multiplier. All Vox reporting is editorially independent and produced by our journalists. Views expressed are not necessarily those of Canopy Collective or the Robert Wood Johnson Foundation.