This article originally appeared on the blog of Heretic, the magazine of We Are Libertarians.
The idea of “Jubilee Economics” has been appearing in the public discourse more and more since the onset of the COVID-19 pandemic. But what exactly is Jubilee? Who does it help? Why should it be implemented?
Through this eight-part series, Heretic editor Ryan Lindsey gives an ethics- and faith-based case for the radical economic and social concept of Jubilee.
Debt and Racial Justice
This was not a planned part of my series on Jubilee economics, but given the way that systemic racism has once again reared its ugly head in America over the past few weeks, I felt like there was no way for me to ethically avoid discussing the connection between debt and racial injustice.
Specifically, I want to take a look at student debt, and the way that it hinders economic progress and reinforces racial wealth inequality.
According to the Center for American Progress, as of 2016 the median white household’s wealth was $126.1k, whereas the median black household’s wealth was just $10.1k. The disparity between average wealth was (is) even greater: $935.6k for white households but only $102.5k for black households.
Contrary to many conservative talking points, this is not the result of “cultural issues”, “laziness”, or a “lack of industriousness” – those are nothing but thinly-veiled dog whistles to the prejudiced. No, this racial wealth inequality is the direct result of America’s racist past and present. It is a fact that centuries of slavery, Jim Crow, segregation, and other forms of systemic racism have led to general generational wealth disparities between white and non-white Americans.
This racism is easy to track in American public policy:
- The Land Act of 1785 transferred land (wealth) to white men only.
- The 1866 Homestead Act failed to transfer public lands available to white farmers to newly freed black farmers and communities.
- Throughout the Jim Crow era, white people were able to use violence to steal the land and wealth of black people with zero legal repercussions (see the Memphis Race Riot of 1866 or the Tulsa Race Massacre of 1921).
- The Federal Government routinely denied patents to black innovators and gave them to white copycats.
- Black citizens were largely excluded from many New Deal economic assistance policies that whites benefited from.
- Black World War II veterans were largely excluded form the GI Bill, which was pivotal in establishing a white middle class.
In his 1974 work Wealth Distribution and its Impact on Minorities, Robert S. Browne presented shocking figures about racial wealth inequality showing that black families owned only 1.9% of total American wealth, with approximately $18.3 billion in assets compared to the $941.9 billion owned by white families. In 1966, black families owned only:
- 3.5% of the total value of American home equity
- 1.2% of the total value of government bonds
- 1.2% of the total value of farm equity
- 1.2% of the total value of business equity
- 1.1% of all the money in banks
- 0.1% of the total value of all stocks
This trend of severe inequality has continued into the present day. It is so powerful that not even the mythical leveler that many like to imagine education being cannot overcome it. A 2011 study by the Insight Center for Community Economic Development shows that regardless of education level, white Americans in general still have more wealth than black Americans. In fact, a white college drop-out or holder of a 2-year Associates Degree is likely to have more wealth than a black American with post-graduate education.
- Black high school dropouts have an average of $1.5k in wealth; white high school dropouts have an average of $34.7k.
- Black high school graduates have an average of $3.2k in wealth; white high school graduates have an average of $78.3k.
- Black Americans with some college have an average of $7.1k in wealth; white Americans with some college have an average of $86.2k.
- Black college graduates have an average of $23.4k in wealth; white Americans college graduates have an average of $180.5k.
- Black Americans with post-BA/BS education have an average of $84k in wealth; white Americans with post-BA/BS education have an average of $293.1k.
All of this is a direct result of racist culture and public policy.
In the script of the American dream, education is supposed to lead to wealth. However, the facts and history make it clear that this is not the case for black and brown Americans.
In order to finance higher education, black families already suffering from generational wealth inequality are forced to rely much more heavily on student debt (and riskier forms of student loans) than white families. These risks are only enhanced by other racial disparities in American universities, such as for-profit universities that regularly engage in race-based targeting.
These racial disparities continue even after graduation, in the forms of lower levels of familial wealth, discrimination in the job market, lack of opportunities, etc. All this means that black students are more likely than white students to default on their student loans, have high interest rates, and overall higher debts. The American dream says that education is the key to wealth and success. But for far too many black Americans, higher education is a debt trap that only serves to perpetuate racial wealth inequality.
At every level of high education, black students in general have to take on high levels of student debt than white students. Thus, cancelling student debt (Jubilee!) at every level of higher education would disproportionately help black students and families, which would begin to help level out the racial wealth inequality in America.
Now, this is not to say that cancelling student debt would cure racial wealth inequalities. The problems of student debt and racially unequal access to capital are linked, but still very independent problems. I believe that debt cancellation is a tool to relieve racial inequality, not cure it. The fact that black college graduates still have less wealth on average than white high school drop-outs (as I pointed out earlier) is impacted by student debt, but is much more driven by an utterly insufficient amount of assets and capital for black communities.
Education alone is unable to address the centuries-long discrimination against black Americans from capital and wealth, the systemic economic racism of this country. In truth, I believe that the most just approach to racial wealth inequality would be (in addition to student debt cancellation) a large-scale, thorough, and extremely comprehensive reparations program. This program must result form a cultural shift and it must acknowledge America’s history of economic injustice, and the terrible consequences of those injustices in the present day. This system of reparations should compensate for the sins of history and seek to level racial wealth inequality.
In other words, we need a Jubilee.