Darrick Hamilton was the first keynote speaker in Seattle at the White Privilege Conference on Thursday and made a very strong case for what he calls “Baby Bonds” to deal in a practical way with the disparity in wealth between white and minority communities. Hamilton is an assistant professor at Milano – The New School for Management and Urban Policy, an affiliated faculty member in the Department of Economics at The New School for Social Research, an affiliated scholar at American Progress, and a co-associate director of the American Economic Association Summer Research and Minority Scholarship Program. He earned a Ph.D. from the Department of Economics at the University of North Carolina, Chapel Hill in 1999 and upon graduation received the National Economic Association’s 2001 Rhonda M. Williams Dissertation Award.
The average weath accumulation for whites, which includes all assets minus all debt is about $106, 000. For blacks this number is $6,000, for latinos $9,000. These huge disparities are explained in our “post-racial” society by three myths: 1. Blacks are not frugal 2. Blacks have employed inferior asset management 3. Blacks display a deficient entrepreneurial spirit. Hamilton undercut each of these myths using a variety of studies and statistics and came to the conclusion that “inheritances, bequests, and intra- family transfers account for more of the racial wealth gap than any other demographic and socioeconomic indicators including education, income, and household structure.” He continued,
Apart from the national failure to endow black ex-slaves with the promised forty acres and a mule after the Civil War, blacks were deprived systematically of property, especially land, accumulated between 1880 and 1910 by government complicity, fraud, and seizures by white terrorists. During the first three decades of the twentieth century prosperous black communities and the associated property literally was destroyed by white rioters in communities ranging from Wilmington, North Carolina to Tulsa, Oklahoma (Darity and Frank 2003; Darity 2008). The historical use of restrictive covenants, redlining, and general housing and lending discrimination were also factors that inhibited blacks from accumulating wealth (Oliver and Shapiro 2006; and Katznelson 2005). Furthermore, Oliver and Shapiro and Katznelson in separate studies document exclusion of blacks from post- depression and World War II public policy which are largely responsible for the asset development of an American middle class.
Because of the lack of any generational transference of money in minority populations, he suggested that a way to address this disparate gap in wealth would be to establish a baby bond program that would give a bond to each child born in the United States whose families fell below the median for wealth (not income). These $20,000 bonds could be cashed in when the child was an adult and could be used only for building assets, like buying a house or starting a business. He claimed that presently the United States spends over $400 billion dollars on programs which attempt to address economic disparities and that this program, though expensive, would cost 90 billion. On a much smaller scale, the UK has already established a baby bonds program with a 250 or 500 pound bond established for each child born depending on the family’s median wealth.
What a provocative plan. What a creative approach to leveling the playing field, giving all a better chance to have some equity in pursuing and fulfilling dreams.
For more details about his ideas click here.