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America needs 'wealth redistribution,' not 'income transfer': economist

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To close the racial gap in the U.S. there needs to be “wealth redistribution," not “income transfer,” said Ohio State economics professor Trevon Logan.

“We have to have a wealth redistribution policy for the descendants particularly of American slavery,” Logan told Yahoo Finance. “Given the wealth disparities that we have today, a large-scale income transfer to African-Americans would actually widen racial wealth inequality because the people who hold wealth would see their wealth holdings increase in value even more."

Any measure of wealth redistribution, Logan explained, would cost “trillions.”

“And the level of those trillions matters upon whether you're going to try to equate racial wealth at the median or at the mean. And, of course, that would be a large difference between equating those two.”

While Logan said the “only” way to create economic equity in America is to “close the racial wealth gap... Other programs like baby bonds, canceling, for example, student loans, all of those things would help to close the racial wealth gap, but they would not eliminate it.”

“And so again, this country faces a really stark decision of wanting race-neutral solutions to racial-specific problems. To address a racial-specific problem, such as the racial wealth gap, which is astounding in its magnitude, we need to have a racially-specific solution,” said Logan, adding that all racial neutral policies will “chip away” at the racial wealth gap because they are “correlated,” but will not “directly address it.”

'There's a genuine opportunity'

One such racial specific solution is reparations.

“You know, it is an odd thing to leave reparations off the table and talk about closing the racial wealth gap,” Logan said.

The Biden administration has announced new actions to close the racial wealth gap, but the initiatives fall short of reparations.

“If we're having this discussion of wanting to close the racial wealth gap and we're not calling it reparations, there's a genuine opportunity that the Biden administration could enter into to begin a discussion of how closing the racial wealth gap would be reparations,” Logan said. “The current wealth gap is the net present value of the cumulative effects of dispossession, theft, discrimination, and economic racial oppression.”

Race massacres like the destruction of the Greenwood district of Tulsa, Okla., is one of many events where Black Americans saw their wealth systematically destroyed. Calculating the loss of wealth in Tulsa and in other neighborhoods is difficult to do, Logan said.

“When you compound not only the actual destruction of property with an additional compounding of the lack of any reparative insurance claims that were paid, the actual harm to those who were affected by those individual incidents of racial oppression are actually quite acute,” he said.

Kristin Myers is a reporter and anchor for Yahoo Finance. Follow her on Twitter.

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