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Dr. Darity Weighs In On The Stereotype Of Black Americans Wasteful Spending With Reparations: Magnifying Ls, Undercounting Ws


Grassroots reparations activists have said the issue will be among the most important for Black Americans in the 2024 election. Conversations about cash payouts reached pitch after reports began circulating about economists’ recommendation that each Black Californian descended from the enslaved be paid $223,000 for housing discrimination.

Though the recommendation was just one in a comprehensive report and the task force’s suggestions have yet to be finalized, the figure sparked backlash. 

Some, including prominent Black Americans, spoke out against large cash payouts for reparations. Dr. Umar Johnson and actor Faizon Love are among those who publicly cited their belief that Black Americans would waste the cash reparations.

It’s a long-held stereotype and trope that Black Americans are wasteful spenders and poor money managers.

However, data from studies over the last two decades counter that narrative. For example, a study released in 2017 shows Black Americans actually spend less on frivolous purchases than their white counterparts. They spend more on necessities like electricity, water and gas.

Despite this, the stereotype that Black people would engage in wasteful spending of reparations continues to be magnified, while the good that would come from cash payments is often diminished.

According to expert economist and Duke professor Dr. William “Sandy” Darity, the pervasive former narrative is by design.

“The smear that Black people spend more frivolously than other racial/ethnic communities is made by two sets of people: those who oppose black reparations outright and those who oppose Black reparations in the form of direct payments to eligible recipients,” Darity told Moguldom in an emailed statement. “The former group frequently are stone-cold racists; the latter group frequently suffers from internalized racism—beliefs that Black Americans are intrinsically dysfunctional.”

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“The latter group, insofar as they profess to support Black reparations, want monies for redress to go to some third party or institution to manage on behalf of those eligible. NAARC and NCOBRA, for example, want reparations monies to be funneled through some type of National Reparations Trust Authority or state or municipal reparations management agencies,” Darity continued. “Both the racists and the purveyors of internalized racism simply are wrong.”

Darity underscored his point by providing further data that refutes the notion that Black Americans are wasteful.

“First, there is absolutely no evidence that Black Americans spend more or spend less wisely than any other community,” Darity wrote. “In fact, white households actually spend 1.3 times as much as Black households out of a given level of income. Black Americans actually save slightly more than whites out of similar levels of income.”

He linked to a research study about the racial wealth gap to prove his point. Darity also said one of his former students, Parfait Gasana, completed a research project over a decade ago in which he examined conspicuous consumption patterns across racial/ethnic groups.

“He found that all social groups engage, to some degree in conspicuous consumption, but they purchase different types of products for display purposes,” Darity explained. “While Blacks and Latinos purchase clothing as their primary items of conspicuous consumption, white Americans primary item of conspicuous consumption is the purchase of multiple cars.”

He added, “the difference in these patterns is probably attributable to the wealth gap.”

Darity also noted that several guaranteed income pilots showed Black people are more likely to spend extra money on necessities. He then rebuked the audacity of people who say Black Americans “will spend their money on the wrong things as deeply paternalistic.”

“Who has the right to judge what is and what is not a bad spending decision? It is worth noting that when the U.S. government paid reparations to Japanese Americans and when the German government paid reparations to Jewish victims of the Holocaust, no one raised the question of what they would do with the money,” Darity said.

“In general, debtors are not in a position to inquire about how those to whom they owe money will spend it. However, it is, at minimum, intriguing that the question always is raised when it comes to paying a debt owed to Black Americans,” he concluded.

PHOTOS: Dr. William “Sandy” Darity Jr. (by Justin Cook/Minneapolis Fed) / Stock image of cash. (Canva)

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