Baby Stocks: A Market-Based Model for Paying Reparations

This article addresses the concept of paying reparations for slavery and systemic racism in the United States by using individually-owned investment accounts granted at birth (i.e., “baby stocks”) in order to redress racially unequal ownership of the U.S. stock market. Thus far, most of the literature on reparations has focused on making the moral case that reparations are due and calculating the total amount that should be paid. Building upon this background, this article proceeds to consider the prospective question of how should reparations be paid? Based on evidence from long-term investing, the author argues that a portion of reparations should be paid with an index fund of the U.S. stock market, because stocks accumulate wealth better over time than other major asset classes. The philosophical and practical complexities of paying reparations with baby stocks are addressed, especially the issue of limiting autonomy to manage assets in order to reduce market risks and maximize long-term gains. Finally, potential avenues for developing baby stocks within the context of current political and financial realities are discussed.