The case for reparation payments to descendants of slaves.

Under most economic situations large cash payments to huge segments of lower income people would be highly disruptive and extremely inflationary, but our current and unique situation is not likely to repeat during our lifetimes and would be ideal for such payments.

Paying reparations to the descendants of former slaves would be a good way to effect an economic stimulus and get the reparations issue off the table. President-elect Obama did say he wanted to do something very big quickly as a stimulus and likely he and his team will.

I'd have some trouble seeing Michael Jordan and Oprah collecting reparations, but if there were a means test, say a net worth under 300,000, I'm all for reparations to slave descendants but it would have to be done quickly to be a stimulus package. It would also bailout the big three automakers and a lot better than just dumping $25B on them. Just throw a Chevy Ford or Chrysler into each reparations package.

Reparations payments unfortunately would precipitate the "mother of all inflationary spikes" and some recipients would claim the inflation was a conspiracy to rob them of their money. So I think including a new Big Three car as part of the deal would soften the blow of the inevitable inflation and incidentally bail out the big three. The inflation would also solve the mortgage crisis because all the homes now underwater would emerge, wet but above water.

The inflation spike wouldn't begin when payments are made though, it would begin much sooner. The moment they looked likely people and governments worldwide would immediately start dumping dollars so it would have to be sprung as a surprise so those getting the payments would get the greatest benefits. Double reparations should be offered to those who commit to three years in the military or Peace Corps.

However, springing a full-blown reparations plan on the nation without selling the idea first would be a very bad first move for Obama, he would immediately be perceived as governing as a black man and not a President of all the people. The reaction from the public would be worse than the initial reaction to Treasury Secretary Paulson’s $700 bln bailout for the banks. So it probably won’t happen, even though it would solve many problems, it would create others and perhaps bring out the worst in some people.

On a related subject that would be thrown into the reparations debate I have heard it said that blacks are not capable of racism or its corollary group-think because they do not control the means of production. This is nonsense and nothing but a carefully crafted fraud designed to keep blacks in the status of a perpetually victimized class. By establishing that various concepts like group-think and racism can only be practiced by one race and not the other it is possible to perpetuate a race-based privilege. That is unconstitutional under the Fourteenth Amendment ironically designed to protect blacks from such discrimination, but by establishing that there can be race based concepts even the election of an African American President cannot shake the idea that this group is oppressed.

Reparations would blow that argument off the table, but that is not likely a motivation Barak Obama would consider for the payments so that could not be used as an argument to sell the idea to the American public. Probably a hard sell even as an economic stimulus package, and selling the idea would raise awareness around the world that the value of the dollar would be diluted. Dilution would occur with any stimulus, and a Paul Volker type of clamping down on the money supply will occur rather quickly after a recovery begins in any case so reparations as a stimulus package would cause more problems for a new Obama Administration that their likely to want.

So, even though this may be a perfect moment for reparations in some respects it would cause huge political problems for the new President. Probably worse than the gays-in-the-military thing was for Clinton.