A modest proposal: reparations for Jamaica

 Prime Minister Cameron has rightfully faced questions about reparations for slavery during his recent trip to Jamaica.

How much is owed? Well, that gets controversial, but let’s take a stab at it. Slavery seized the wages otherwise due the slaves, minus the cost of keeping the slaves alive. Since slaves were considered an investment, the price of slaves reflected the value of that stolen income. 

One rough estimate of the value of Jamaica’s slaves in the late 1820s, before Parliament started seriously debating abolition, comes to £14.0 million. 

There is a problem with this method, which is that slaves were tortured into working far more hours at far higher effort than any free worker would have agreed to. (The best work on this comes from Roger Ransom and Richard Sutch on the American South.) This measure only captures the damage inflicted by that torture inasmuch as it created higher value for the torturers. It does not capture the damage the torture inflicted on the tortured.

It also captures only the value of the wages to be stolen from enslaved Jamaicans who were alive in the 1820s. It does not take into account the value of the wages stolen from enslaved people who had the bad luck to die before abolition. In fact, it does not account for wages already stolen from the people alive at abolition. 

But let us start with the number we have. How do we convert that into a 2015 value? One possibility is to simply adjust for inflation. That would give us £1.3 billion.

Wow! That is not a lot of money. Add in the rest of the West Indies and you get only £4.3 billion. In 2013, the U.K. spent £11.5 billion on overseas aid. Come on, Cameron! Cut a check and go home. 

Or at least that is what a reasonable government would do if it believed that the above was the correct and unassailable calculation. Of course, it is not. The value extracted from the slaves was invested in other things. One quick-and-dirty assumption is that the value of those investments increased with the value of the United Kingdom’s GDP. Use that assumption, and you get a current value of £53.3 billion, which is a substantial amount of money ... and still does not account for all the costs of slavery. 

If you think that £53.3 billion is the correct amount (or possibly something even higher) then I can see why you might be reluctant to admit to even £4.3 billion in damages. At current long-term rates, it would cost the U.K. about £1.5 billion per year to compensate Jamaica for that. 

Maybe the Jamaicans should demand to become part of the United Kingdom. Why not? Let Scotland go and replace it with Jamaica! Consider that in 2014 the United Kingdom subsidized the Scottish budget to the tune of £10.9 billion. (That figure allocates North Sea oil and gas revenues to Scotland.) Jamaica would be much cheaper! Public spending per person in England is about £8500. The price level in the U.K. is 2.2 times higher than in Jamaica, so equalized real spending would cost the exchequer only £3900 per person; roughly £10.6 billion per year. 

But Jamaica already generates tax revenues around £2.3 billion. And helpful people at the IMF (see pages 16 and 26 here and page 44 here) have calculated how much could be collected with better enforcement brought to you courtesy of the good people of Her Majesty’s Revenue and Customs, which would up the amount to £3.1 billion. Add in the £300 million collected by brining Jamaican VAT rates up to U.K. levels, and you have  £3.4 billion, for a net cost to the Exchequer of only £7.0 billion! (Rounding explains the discrepancy.) 

Take off the part of that due as reparations for slavery, and Jamaica requires only £5.5 billion to join the U.K! Moreover, considering that Jamaica has a GDP of only £8.6 billion, you would need to phase that subsidy in over at least two decades. Include the phase-in, and you get a net present cost of bringing Jamaica into the U.K. of only £66.7 billion over 20 years, scarcely more than the £53.3 billion reparations bill! 

Plus savings if Scotland walks out in the meantime. 

And then there are the growth effects on Jamaica. If Jamaica became as rich as French Guiana (the poorest overseas department of France), its nominal GDP would increase to £36 billion. 

What is not to like about that? Sure, it would still be a net drain on U.K. coffers, generating taxes of £14 billion against expenditures of £23 billion, but now you are quibbling. It is still cheaper than Scotland! 

So the solution is obvious. Cameron should offer membership in the United Kingdom to Jamaica.

Comments

[J.H.]

:)

love the solution.

How about calculating that for the entire West Indies? :)

Cameron though would probably counter your proposal with the note that if Scotland walks out in the meantime and Jamaica (and the rest of the West Indies) isn't offered membership in the UK then he would save British taxpayers £10.9 billion. And if the West Indies are successful in pressing a legal case for reparations and the UK has to fork out £53.3 billion then that's still fine since that would be cheaper than the £66.7 billion bill over 20 years for bringing Jamaica alone into the UK. In fact he might well argue that the reparations bill (which he could fit to whittle down if it ever got any legal traction) would represent more of a one-off payment than incorporating Jamaica and the rest of the West Indies since the reparations bill represents a one-off payment while the incorporation bill would represent a continuing drain to the tune of £9 billion per year for Jamaica alone. ;)

[J.H.]

In all seriousness though assuming that the reparations bill for the West Indies was £53.3 billion, what amount/percentage of that could be offset by simply forgiving the collective debt of the West Indian countries?

That to me would seem a fairly straightforward solution since many of those countries would struggle to repay such debt anyway and without the debt load they could use their resources for local development.

[J.H.]

Incidentally, it is little wonder that Cameron wished to avoid talking about reparations or even giving any opening to such discussion as the National Commission on Reparations in Jamaica has estimated (http://www.jamaicaobserver.com/news/-7-5-trillion-for-slavery) from 2014 that Jamaica would be due to at least £2.3 trillion. Not billion. Trillion.

This they calculated based off Dr. Robert Beckford's estimation of £7.5 trillion being owed by the UK to its former colonies in the Caribbean based off unpaid labour (estimated at £4 trillion), unjust enrichment to the British economy (£2.5 trillion) and compensation for wrongful imprisonment, pain and suffering (£1 trillion)

That total of £7.5 trillion would be equivalent to 3.66 times the annual GDP of the UK.

Even if one shaves off the unjust enrichment claim (on the basis that having now paid for the unpaid labour the enrichment could no longer be considered unjust) then that is £5 trillion for the West Indies or 2.44 times the GDP of the UK. That would push the cost of compensation to something like £140 billion per year to the West Indies or close 19% of the last budget of the UK (which already had a deficit of £69 billion).

If legal challenges for reparations gets anywhere even close to being successful and pushing for a figure even close to £5 trillion then Cameron (or whoever is Prime Minister at the time) might well adopt a variation of your modest proposal:

- don't offer the West Indies unification with the United Kingdom but instead ink a treaty between the UK and its former colonies in the Caribbean which would put in place a Common Travel Area-like arrangement between the West Indies (and among the West Indies' states) and the UK (which would be stronger than even the EU/EEA free movement clauses as it would mean that West Indians who land in the UK would automatically be eligible for immediate permanent residency) as well an EEA-like economic structure (but possibly with the provisio that this would be biased in favour of the West Indians for a specified transition time). This would have the benefit of most of the features of political unification without the need to expand the British parliament to include seats for 7 million West Indians; so it saves on costs ;-)

[Gareth Wilson]

Here's a proposal: come up with a generous figure for reparations. Pay for Jamaica to hold a referendum. Promise to pay that sum in reparations if a majority of registered voters in Jamaica agree that it is total compensation for slavery, forever.

[Noel Maurer]

J.H.: The combined central government debt of Jamaica, Trinidad, Barbados, Bahamas, and the OECS is only £32.2 billion. That is rather less than £53.3 billion.

The trillion-pound figure looks specious. The number is higher than the total net capital stock of the United Kingdom. Slavery generated profits, but it did not come close to financing all the physical capital in the U.K.

(Estimate on net capital stock from http://www.ons.gov.uk/ons/rel/cap-stock/capital-stock--capital-consumption/capital-stocks-and-consumption-of-fixed-capital--2012/stb-caps-stock.html.)

[J.H.]

Noel: That debt figure doesn't take into account Belize and Guyana, but I would imagine that even including those two the combined central government debt of all of them wouldn't amount to more than £34-35 billion if the debt of that group you mentioned was already £32.2 billion.

The trillion pound figure is pretty incredulous. Although it is not the only trillion amount floating around when it comes to estimates for slavery reparations: http://www.newsweek.com/slavery-reparations-could-cost-14-trillion-according-new-calculation-364141