Reparations Don’t Work
Reparations have become a central and highly emotive issue in American politics. What was once framed as a moral or symbolic demand has now entered the realm of concrete policy. California has moved further than any other state. In December 2025, lawmakers voted to create a Reparations Fund, transforming reparations from rhetoric into fiscal commitment. This decision reflects the intensity of contemporary political pressure. It does not, however, resolve the underlying empirical question. Would reparations materially improve black outcomes in the long-term?
At the heart of the argument for reparations lies a simple assumption. Historical deprivation is presumed to generate present disadvantage, and compensatory transfers are expected to reverse that process. Yet when the historical and economic evidence is examined carefully, this assumption becomes increasingly difficult to sustain. Across societies, long periods, and radically different institutional settings, long-term outcomes appear to be shaped less by past endowments of land or wealth than by the persistence of human capital, cognitive ability, and family organization. These factors determine who recovers from shocks and who does not.
This pattern is visible in research comparing people and places. When populations experience major disruptions and relocate, outcomes tend to follow families rather than regions. High ability families consistently reconstitute status wherever they settle, while low ability families do not permanently benefit from relocation to previously prosperous areas. Geography and historical circumstance matter in the short-term, but they do not determine outcomes across generations. This directly challenges the belief that correcting an initial material imbalance through reparations would generate lasting change.
The same logic becomes even clearer when examined over longer historical horizons. Evidence from China provides a particularly instructive case, because repeated political collapses and regime changes created natural experiments in redistribution. One study examines elite persistence across the transition from the Ming dynasty to the Qing dynasty, a period characterized by civil war, demographic collapse, and institutional rupture. The fall of the Ming destroyed established power structures, displaced families, and reshaped landholding patterns across large parts of China. Yet genealogical records show that elite families disproportionately regained status within a few generations, regardless of whether they remained in the same regions or migrated elsewhere.
What is most revealing is how this persistence occurred. Elite continuity followed people rather than places. Regions that suffered extreme upheaval did not permanently lose elite families, nor did newly prosperous regions permanently elevate families without elite backgrounds. Status was reproduced through literacy, education, marriage strategies, and kinship networks rather than through ownership of specific plots of land or access to political office. Redistribution tied to geography or assets altered surface conditions, but it did not alter who ultimately rose.
If this conclusion seems abstract, twentieth-century China provides an even starker example. After the Communist Revolution and the Cultural Revolution, redistribution was not partial or symbolic. Landownership was abolished, inheritance was suppressed, and access to education was forcibly equalized. In the short-term, inequality collapsed. Pre-revolution elites lost land, political power, and educational privilege. If reparative redistribution was capable of permanently reshaping outcomes, this environment should have produced it.
Yet the long-term results were unambiguous. Two generations later, descendants of pre-revolution elites earned significantly higher incomes and attained more education than descendants of non-elite households, despite having no inherited assets and decades of political hostility toward elite backgrounds. Redistribution succeeded in destroying property, but it failed to destroy advantage.
The reason lies in the mechanisms through which advantage is transmitted. The evidence shows that elites passed on human capital through informal family channels rather than through schools or wealth. Descendants of elites performed better on standardized literacy tests even when educational attainment was held constant. They worked longer hours, exhibited stronger effort orientation, and transitioned more rapidly from agriculture into higher productivity sectors once restrictions loosened. At the same time, kinship networks survived confiscation and continued to transmit social capital. Redistribution eliminated assets, but capability remained intact.
This insight helps explain why wealth transfers alone rarely produce lasting effects. Long-term evidence on wealth shocks shows that most wealth does not persist mechanically across generations. Random windfalls dissipate rapidly through consumption, fertility, and poor investment decisions. After a few generations, descendants’ wealth converges toward what their own behavior generates rather than what their ancestors received. Persistent wealth differences reflect the inheritance of behaviors and abilities associated with wealth creation, not the durability of the wealth itself. From this perspective, reparations represent a wealth shock, not a structural transformation.
Land based reparations are especially vulnerable to this critique. Historical evidence on homesteading shows that regions with widespread small scale land grants were slower to industrialize and slower to transition out of agriculture. By encouraging reliance on farming, homesteading reduced long-term productivity and discouraged the settlement of more capital intensive and innovative populations. Rather than creating prosperity, land distribution often locked regions into economic stagnation.
This history is directly relevant to post-slavery counterfactuals. Had formerly enslaved blacks been compensated primarily with land, they would likely have been anchored to low productivity agriculture precisely as the American economy was shifting toward industry and urban employment. Landownership would have reduced geographic and occupational mobility, delaying entry into higher return sectors and potentially entrenching poverty rather than alleviating it.
Historical experience within the black population itself reinforces this conclusion. In the late nineteenth century, black Americans made substantial gains in landownership, in some regions matching or exceeding white rates of acquisition under comparable conditions. Yet black landownership declined in the twentieth century not simply because of dispossession, but because economic incentives changed. As education expanded and urban labor markets offered higher returns, many families sold rural land and migrated. Property was liquidated because human capital offered better opportunities elsewhere. Declining landownership reflected adaptation, not failure.
Even so, one might argue that cash reparations, rather than land, would have avoided these pitfalls. Yet here too the evidence is discouraging. Another critical mechanism shaping long-term wealth accumulation is financial literacy. Research consistently shows that black Americans exhibit lower levels of financial literacy than whites, even when education levels are held constant. Furthermore, evidence indicates that financial literacy education does not produce uniform effects. Whites derive greater improvements from training, whereas blacks exhibit smaller gains. Consequently, increased access to financial literacy education does not eliminate racial gaps in financial knowledge among minority populations.
This matters because wealth accumulation is not automatic. Saving, investing, and preserving capital require specific forms of knowledge and behavior. Without these, large transfers are prone to rapid dissipation through consumption, poor investment choices, or exposure to financial exploitation. Thus, there is no empirical basis for assuming that blacks would have saved or invested compensatory cash transfers in ways that would have created lasting inter-generational wealth.
Taken together, the evidence forms a coherent pattern. Reparations is an emotionally powerful claim rooted in real historical injustice. But the empirical record does not support the belief that compensatory transfers, whether land or money, would have produced lasting economic convergence. Wealth shocks fade. Land can trap populations in low productivity sectors. Financial literacy constrains the effective use of capital. Elites re-emerge because human capital persists.
California’s reparations initiative reflects political urgency rather than historical realism. If the objective is long-term improvement rather than symbolic redress, the evidence points toward strengthening human capital, financial capability, and institutional quality rather than redistributing past assets. History does not show that prosperity can be engineered by compensating for yesterday. It shows that outcomes are determined by the capabilities people possess.