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Landry Ayres: Welcome to Zooming In at The UnPopulist, I'm Landry Ayres.
On today’s episode, Aaron Ross Powell is joined by guest Richard Rothstein, a Distinguished Fellow of the Economic Policy Institute and a Senior Fellow Emeritus at the Thurgood Marshall Institute of the NAACP Legal Defense Fund. He is the author of The Color of Law: A Forgotten History of How Our Government Segregated America. His latest book, [co-authored with his daughter, Leah Rothstein] is Just Action: How to Challenge Segregation Enacted Under the Color of Law.
He and Aaron discuss the root of America's modern segregation, the role of the Supreme Court in its development, and what we can do to remedy it. We hope you enjoy it.
A transcript of today’s podcast appears below. It has been edited for flow and clarity.
Aaron Powell: Is America still segregated?
Richard Rothstein: Yes, America is still segregated. The policies that segregated us, mostly federal, state, and local public policies, were so powerful that they still determine the racial landscape of today. I can give you one example. Perhaps the most powerful policy that the federal government implemented to impose segregation on this country was a program of the Federal Housing Administration and Veterans Administrations in the mid-20th century to move the entire white working class and middle class population out of urban areas into single-family homes in all white suburbs, and prohibit African Americans from participating in this program.
The most well known of those suburbs is Levittown, east of New York City. It's the one I wrote about in The Color of Law, but they exist in every metropolitan area. The builder, Levitt, could not assemble the capital to build Levittown, 17,000 homes in one place. No bank would be crazy enough to lend him that money. We were not a suburban country at that time. We were a manufacturing economy. Factories had to be located near deep water ports, or railroad terminals, so they could get their parts and ship their final products.
That's where both white and Black middle class workers were living. The federal government designed this program, implemented by the Federal Housing Administration, Veterans Administration, to move the whites out of those areas. Levitt could not, as I say, assemble the capital from private sources to build his project. He had to go to the Federal Housing and Veterans Administrations, submit his plans for the project: the materials he was going to use, the layout of the streets, and a required commitment of the federal government never to sell a home to an African American.
The notion of de facto segregation is utter nonsense. There was nothing de facto about this. This was a federal requirement of segregation. — Richard Rothstein
The Federal Housing Administration even required Levitt—and this was true of builders all over the country—to place a clause in the deed of every home prohibiting resale to African Americans or rental to African Americans. This was not the action of rogue bureaucrats in the Federal Housing and Veterans Administrations, it was written out in a federal manual. It was distributed to appraisers all over the country whose job it was to evaluate the applications of builders who wanted to create these suburban developments. The manual said that you could not recommend for a federal bank guarantee a loan to a developer who was going to sell to African Americans.
The manual went so far as to say that you couldn't even recommend for a federal bank guarantee a loan to a developer who's going to build an all-white project that was going to be located near where African Americans were living. Because of the words of the manual, that would run the risk of infiltration by inharmonious racial groups. In my book, The Color of Law, I have a photograph of a six-foot-high half-mile-long concrete wall that the developer of an all-white project was required to construct at the behest of the Federal Housing Administration in order to get a bank guarantee of his loans in order to separate his proposed white project from a nearby African American neighborhood.
The notion of de facto segregation is utter nonsense. There was nothing de facto about this. This was a federal requirement of segregation. Why do I say that these policies were so powerful, they still determine our racial segregation inequality today? Well, the white families, the returning war veterans, workers in factories, employees of banks who were living in urban areas and moved into these suburban communities, all-white communities, didn't do it to get wealthy. They did it because we had a housing shortage after World War II.
Unbeknownst to them, unexpectedly to anybody, they did become wealthy from this federally subsidized move. Levittown, the example that I just mentioned, at the time a home sold for about $9,000 a piece. Today that's a little bit more than $100,000 in inflation-adjusted terms. Homes in Levittown no longer sell for $100,000.
None of these suburbs sell for $100,000, $200,000, $300,000, $400,000, $500,000. In some places it's $1 million or more for these $100,000 homes. The white families who were subsidized by the federal government to move into these homes gained wealth from the appreciation in the value of their homes. They used that wealth to send their children to college. They used it to perhaps take care of temporary emergencies like unemployment or medical emergency.
They used it to subsidize their social security for more comfortable retirements, and they used it to bequeath wealth to their children and grandchildren who then had down payments for their own homes. African Americans were prohibited by explicit federal policy from participating in this program that generated unexpected wealth for whites. The result is that today, African American incomes on average are about 60% of white incomes. There's a disparity there.
You'd think that if the income ratio was 60%, the wealth ratio would be 60% as well. People can save the same amount of money from the same incomes, but in reality, while African American family incomes on average are about 60% of white incomes, African American household wealth is 5% or less of white household wealth. That enormous disparity, which continues to predict much of the racial inequality we have today, is entirely attributable to unconstitutional federal housing policy that was practiced in the mid-20th century.
Now, just to go back to Levittown for a second, the example I just used. We passed the Fair Housing Act in 1968. It said, in effect, "Okay, African Americans, you can now move to Levittown, this place that we excluded you from." But Levittown is now unaffordable to working and middle class African Americans, is unaffordable to most whites unless they have down payments from their own inheritances. Homes there sell for $400,000, roughly—some more, some less, but around that.
Levittown is now about 2% African American. There are African Americans who can afford to buy $400,000 homes. But the surrounding neighborhood of Levittown is about 13% African American because working class families, middle class families, can't afford $400,000 homes today.
Of course, no remedy is perfect, but if you have a violation of the Constitution, we ought to be figuring out how to remedy its consequences. The Supreme Court, when it said the 1866 law was constitutional after all in 1968, and then in effect said, let bygones be bygones, that's not a constitutional principle. If there's a principle of democracy and of equal justice, we try the remedy. We don't sit back and say, “Well, we're not going to try to remedy them because we might not remedy them perfectly.” — Richard Rothstein
That disparity between the 2% African American participation in Levittown that was enabled by the Fair Housing Act, and the 13% that you'd expect, if it was representative of its broader neighborhood, is what the Fair Housing Act has not been enabled to accomplish, and why those 1940s policies of the federal government still determine the racial segregation of today. Now, there are many, many other policies of federal, state, and local governments equally racially explicit that helped to determine our segregation. I just mentioned that one as an example.
Aaron Powell: I can imagine listeners wondering: 100 years before that Fair Housing Act, we had the 14th Amendment ratified in 1868, which is pretty clear that there needs to be equal protection of the laws and it applies to the federal government. How do policies that are as explicitly segregated along racial lines get justified or rationalized?
Richard Rothstein: Well, we have a rogue Supreme Court, which didn't just become rogue recently, but since the adoption of that amendment, the 14th Amendment, has annihilated its meaning. It's more than just the 14th Amendment. In 1865, the 13th Amendment was adopted, which prohibited slavery and also had a clause in it that authorized Congress to eliminate what the Supreme Court later referred to as the badges and incidents of slavery. That is any form of second class citizenship.
Pursuant to that clause of the 13th Amendment, Congress in 1866 passed the Civil Rights Act that was racially explicit. It said, "All citizens of this country should have the same rights as white people." They weren't talking about anybody. They were talking about people who weren't white having the same rights as white people.
That 1866 law was then incorporated into the 14th Amendment, and the Supreme Court then annihilated it, prohibited its enforcement, and said that it was unconstitutional. They annihilated it in 1883 for the next almost 100 years. Those laws were not enforced and the Supreme Court allowed—well, the most famous of them is the separate but equal clause of the law of 1896 that the Supreme Court blessed that was blatantly unconstitutional in light of the 13th Amendment and unlawful in light of the 1866 Civil Rights Act.
In 1968, 102 years after that 1866 Civil Rights Law was passed, the Supreme Court said, “Oh, whoops, we made a mistake. That was really a constitutional law. Congress had the authority to eliminate the badges and incidents of slavery. It provided no remedy for it.” Its effect, in the Supreme Court's view, is let bygones be bygones. It has actually prohibited explicit remedies, most recently in the affirmative action case for African American inequality that was created by blatant, unconstitutional, unlawful policies of federal, state, and local governments subsequent to the passage of the 13th and 14th Amendments and the enabling legislation that was enacted pursuant to those amendments.
How could it happen? It happened because we give undue deference to the Supreme Court, allowing the Court to make policy decisions that are in obvious contradiction to the intent of, in this case, the 13th and 14th Amendments.
Aaron Powell: We have not allowed banks to, for example, refuse to give mortgages to members of different racial or ethnic groups for a little while now. We generally don't allow racist laws to stay on the books. Yet, this persists. You've talked about the continuing effects of the legalized segregation that we saw, the inability to acquire, accumulate, pass on wealth, et cetera. Are there still legal mechanisms by which segregation is happening, being enforced, being reinforced right now?
Richard Rothstein: We no longer pass laws with racially explicit language, but there is ongoing discrimination that's mostly the effect, the disparate impact, of laws that we have, although some of it is pretty explicit. You mentioned banks and real estate agents. You may be familiar with an expose that was done by Long Island Newsday just a few years ago in which they sent paired testers, African Americans and whites with identical resumes, financial backgrounds. Newsday's editor even went out to Nordstroms and bought identical handbags for the white and Black testers.
They went to real estate agents and found that in 50% of the cases—and this was in 2019, almost 50 years after passage of the Fair Housing Act—African Americans were discriminated against in their search for homes. It was banks and insurance companies. They continued to discriminate. The African Americans who went to the real estate agents were told that they wouldn't be comfortable in certain neighborhoods; it's not someplace that they would like to go. They would tell whites that certain neighborhoods were dangerous, and African Americans that they were safe. Same neighborhoods.
Pursuant to that clause of the 13th Amendment, Congress in 1866 passed the Civil Rights Act that was racially explicit. It said, "All citizens of this country should have the same rights as white people." They weren't talking about anybody. They were talking about people who weren't white having the same rights as white people. — Richard Rothstein
The only way to wipe out this kind of discrimination is with a paired testing program—because if an African American goes to a real estate agent, wants to buy a home, and is shown homes only in certain neighborhoods, that family has no way of knowing that other families who are white were shown different neighborhoods. The only way to do that is with this paired testing program. We're not doing it around the country. We should be.
My daughter and I wrote a sequel to The Color of Law, explaining what you can do about the unconstitutional and unlawful segregation we've inherited. One very simple thing is: people who are concerned can volunteer to be testers for fair housing centers around the country to engage in this kind of testing. No, banks don't discriminate anymore. They don't say, "We're not going to give you a mortgage because you're black," the way they used to. They continue to discriminate. They're not caught because we're not doing paired testing.
Of course, the other much more powerful reason is not just discrimination. If you have the money to buy a $400,000 home, the bank may or may not discriminate against you. The biggest problem we face is that the inequality we created with our unconstitutional policies, African Americans are much less likely to have the ability to buy a $400,000 home, even if they're not discriminated against, than whites because of this history that I've described.
Aaron Powell: How would you respond to a conservative listener who hears that argument about the kind of ongoing discrimination that you're talking about and says something like, “Look, you already said that African Americans have 60% of the income of white Americans, that they have a much smaller fraction of the wealth of white Americans. We know that crime rates are higher in predominantly Black neighborhoods than they are in white neighborhoods, and that all of these are perfectly reasonable things to take into account when decision making.”
You say, “I'm not discriminating against them because they're Black. I'm maybe just assuming that they're not going to have as much wealth as someone else might have.” Or “I'm not trying to steer people out of this neighborhood because it's got a certain racial makeup, but because I think it actually does have higher or lower crime rates, and that's what we're responding to.” It's not really the racialized discrimination that ought to trouble us.
Richard Rothstein: It's a blatant violation of the law to tell whites and Blacks that certain neighborhoods are different in their characteristics, depending on whether you're white or Black. If there really is a neighborhood that's high crime and dangerous, why are we steering Blacks to it who want to buy a home? If there really is a neighborhood that's safe, why aren't we steering Blacks to it as well as whites?
People who are buying homes are not looking for lower income neighborhoods, they're looking for middle class neighborhoods, and whites are steered away from them in a purposeful attempt to prevent desegregation of those neighborhoods. These are not high crime places.
Aaron Powell: When you talk about solutions, then—and I want to turn to the solutions that you and your daughter offer in this sequel book—is there a worry that if we turn back to those same governments and give them greater authority, reach, powers to correct things, that we're setting ourselves up for those newfound powers being turned against the minorities the next time we get, say, a less racially enlightened person like Trump back in office or these smaller towns throughout the South where racial ideas have not advanced as much as we might like them to? Is there a worry that calling the government back in risks making things worse?
Richard Rothstein: It can't be any worse, given the enormous disparities that we have by race in this country. If you have a constitutional violation and you take your constitutional responsibilities seriously as an American citizen, then you have an obligation to figure out how to remedy it. Worrying that the remedy may be imperfect or there may be unintended consequences is an excuse to perpetuate an unconstitutional and unequal system.
Of course, no remedy is perfect, but doing nothing is less perfect than attempting to remedy, which is why I say it seems to be self-evident. If you have a violation of the Constitution, we ought to be figuring out how to remedy its consequences. The Supreme Court, when it said the 1866 law was constitutional after all in 1968, and then in effect said, let bygones be bygones, that's not a constitutional principle. If there's a principle of democracy and of equal justice, we try the remedy. We don't sit back and say, “Well, we're not going to try to remedy them because we might not remedy them perfectly.”
Aaron Powell: Let's talk about the solutions, then. You already mentioned one…
Richard Rothstein: Paired testing, matching identical Black and white home buyers. It's a perfectly legal tactic.
Aaron Powell: The idea there would be to test to what extent discrimination is actually occurring on the ground so that then we have the data, the evidence needed, to carry out mitigation of it?
Richard Rothstein: Yes. I mentioned the federal policy at the FHA and VA. There were so many federal, state, and local policies as well. One of them is the action of state licensing agencies that licensed realtors throughout the 20th century that openly and blatantly engaged in discrimination. The National Realtors Association had a code of ethics in the 20th century that said it was unethical to sell a home to a Black family in a white neighborhood. Any time and every time that a state licensing agency licensed a member of the National Association of Realtors who subscribed to that code of ethics, it was violating the 14th Amendment.
Why do we do paired testing? So that we can remove the licenses of realtors—not on the first offense—who are engaged in perpetuating and reinforcing segregation. It's not just home buying. We should be doing paired testing on landlords as well, where there's equally as serious a problem. These are crimes. They're violations of the law. The laws against discrimination, the Fair Housing Act, should be enforced. When this discrimination is uncovered, complaints should be filed, again, not on the first offense, but you follow up and see if there's a pattern, and then if necessary, enforce the law. Why is this law one that we shouldn't enforce?
Aaron Powell: What other mechanisms do we have? That's a test to see if the law is being violated. If it is, then take action under existing laws. Are there legal or policy changes that we should be making, new policies that we should be enacting, to address these issues as well?
Richard Rothstein: In our book, Just Action, which was written by my daughter Leah and me, our view was that there is no political will now at the federal level to make significant changes in the segregation in society. Once you create segregation, there are many, many programs, policies, practices at the local level that reinforce and exacerbate it. Many of them, they're race-neutral policies, but they have a disparate impact.
I can give you two examples. One is that our property tax assessment system is discriminatory in effect. Everywhere in the country, African American homeowners and landlords in African American neighborhoods pay property taxes at a higher rate than white homeowners do. They do that for a number of reasons. The typical county or city assesses property infrequently, reassesses property infrequently, and adjusts it from year to year based on some common factor, inflation or something like that.
Over time, as you well know, properties' values in white neighborhoods appreciate value faster than property values in Black neighborhoods. The result is that after a few years of no reassessment—and there are communities that don't reassess properties more frequently than every 20, 30 years—over time, the white properties have appreciated in value faster than the Black properties or the properties in white neighborhoods faster than those in Black neighborhoods.
The result is that assessed values in Black neighborhoods are closer to their market values than the assessed values in white neighborhoods because the market values have gone up much more rapidly. When you do the calculations of a uniform property tax rate, African Americans are paying a higher tax relative to the market value of their homes than whites are. Now, this is the discriminatory effect of a purely race-neutral law. No county assessor today says, “I'm going to discriminate in how I conduct assessments and over-assess homes in Black neighborhoods.”
It's a blatant violation of the law to tell whites and Blacks that certain neighborhoods are different in their characteristics, depending on whether you're white or Black. If there really is a neighborhood that's high crime and dangerous, why are we steering Blacks to it who want to buy a home? If there really is a neighborhood that's safe, why aren't we steering Blacks to it as well as whites? — Richard Rothstein
This is not a federal policy. The federal government created the conditions that lead to this. Property assessments is a purely local program. It needs to be reformed. African Americans, if we were serious, should be due refunds for the over-assessment of their properties. This is something, a local issue, that's the result of a disparate impact of a race-neutral program that doesn't take account of the conditions, the unequal conditions, that have been created in the past. That's one example.
Another example of a disparate impact of a policy is when you apply for a mortgage, whether you get a mortgage and whether you get a good interest rate is usually dependent in part on how good your credit is. The credit is reported on the basis of something called a credit score. The higher your credit score, the lower your interest rate when you apply for a mortgage or even your eligibility for a mortgage.
African Americans, because of the conditions that we described before, on average, 40% of them own their own homes today. 70% of whites do. That means all other things equal, if somebody is applying for a mortgage and they're white, they're more likely to have owned a home previously than somebody who's applying for a mortgage who is Black.
If you've owned a home previously and you've paid your mortgage on time every month, never defaulted, you've been a faithful borrower, you get points in your credit score. You get a higher credit score. If you've rented your entire life, never missed a rental payment, paid your rent every month on time, you get no credit for it. It's not counted in your credit score.
There are fewer banks, for example, in Black neighborhoods—so the kinds of credit that African Americans have is also less likely to be counted. If you're somebody with a good rental record, you're less likely to qualify for a mortgage than somebody with a good mortgage record, even if your rent level has been exactly the same as the white borrower with a mortgage payment. That's a discriminatory system.
Now, there are efforts to try to reform it at the federal level. They're very slow and they typically require effort on the part of the applicant, which is not required for somebody who's had a mortgage record: their credit records are transmitted electronically by the large banks and mortgage companies to the credit scoring agencies. There are efforts at the federal level to allow people with good rental records to assemble their rental payments over decades and submit them for credit. That's not an adequate solution.
A local community group could, for example, press local banks and credit unions to take account of the rental records of applicants for mortgages so that they are on a more equal footing with those who've previously owned homes. That's another example of a policy that has a disparate impact on African Americans. It's because of these past unconstitutional policies, but the credit system itself is not racially discriminatory on its face.
There are more NIMBYs probably in California, the so-called progressive state, than there are anywhere else in the country.
It's not the case that places that are characterized as progressive or blue states are more likely to enact reforms than policies elsewhere. — Richard Rothstein
Aaron Powell: Those solutions only work if the local community is sufficiently committed to addressing these inequalities. That requires a local community that has a certain set of values and beliefs when it comes to racial equality, recognizing racial inequality, seeing it as something that ought to be addressed, that we ought to put effort into, and so on. That seems like the kind of thing that's going to vary by community. More progressive communities are going to be more interested in doing that kind of stuff than less progressive communities. Is it the case that this kind of segregation or these kinds of inequalities you're talking about are as much a problem in progressive communities, progressive cities, and so on, as they are in red districts and red states? Because if they're not, I can imagine saying, “Well, you've offered solutions that are only going to be adopted in the places where they're not needed.”
Richard Rothstein: No. First, I think that the term “progressive” doesn't work in this context. I'm sure you've heard the term NIMBY, Not In My Back Yard. These are people who oppose any reform in their local zoning rules that would permit duplexes or triplexes or any housing that would be affordable to people who aren't as wealthy as they are—in effect, as white as they are. There are more NIMBYs probably in California, the so-called progressive state, than there are anywhere else in the country.
It's not the case that places that are characterized as progressive or blue states are more likely to enact reforms than policies elsewhere. In 2020, 20 million Americans participated in Black Lives Matter demonstrations, and they were not just in the blue states. They were all over the country. The participants were suburban and urban. They were white and Black. They were low-income and middle-income. I don't know that anybody's ever counted them, but there were probably more whites who participated in those Black Lives Matter demonstrations than there were African Americans overall in suburban communities as well as urban ones all over the country.
Those people in red states as well as blue states then went home and they put Black Lives Matter signs on their lawns and did nothing further. Our view in Just Action is that those people didn't do anything further because they didn't know what to do, and nobody asked them to do anything.
We're equally divided in this country on a whole range of issues. Those divisions are not uniformly blue versus red, as every state has a significant share of people who care about remedying crimes of the past. The question is, how do they get mobilized? We wrote this book, Just Action, to answer this question of people like that who said, “What can we do about it?” That question did not just come from people in blue states. They may be a more of a minority in red states, but there are plenty of them who are mobilizable if we attempt to do that.
Landry Ayres: Thank you for listening to Zooming In, a project of The UnPopulist. For more like this, make sure to subscribe for free at theunpopulist.net. Until next time.
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