This is an incredible book. Given the subtitle, “Black Banks and the Racial Wealth Gap,” and the quote from The Atlantic on the cover: “A deep accounting of how America got to a point where a median white family has 13 times more wealth than the median black family;” I decided to start counting all the ways in which, throughout American history, the deck was knowingly stacked against the economic freedom of black people. Even I was surprised by how many instances I was able to count.
First, a foundational story. Call it:
#1: Denying Them Land
The victorious Union army granted the slaves their emancipation, and for a transitory moment the Union came close to giving them a share of the land. After his famous march from Atlanta to the sea, General William T. Sherman remained in Savannah as the war wound down. There, he consulted with several black leaders who told him that the ex-slaves, worried about lingering racial animosity, preferred to take care of themselves on their own land. Black minister Garland Frazier explained that the “way we can best take care of ourselves is to have land and turn it and till it by our own labor.” Blacks had already begun to establish self-governing communities in several places in the South. After emancipation, black communities formed hundreds of mutual aid societies to work toward economic self-sufficiency. They set up charities to take care of the poor and sick and to educate each other. “We have progressed a Century in a year,” said one freedman. During the first year of freedom in 1866, a “Negro convention” held in Greene County, North Carolina, suggested that blacks could raise their economic status by creating joint stock companies and patronizing black businesses.
The black community’s main objective, which it sought through political means, was acquiring land. Emancipated slaves and their northern Republican supporters believed that land ownership was the only way to achieve a free market in the South. Without land, they would be at the mercy of their previous owners. Sherman signed Field Order 15 in March 1865, which set aside 400,000 acres of confiscated land for freed slaves. Sherman’s plan was to create a territory exclusively for ex-slaves where they could live free of white control and manage their own economic and political affairs. In justifying this action, Sherman borrowed from Thomas Jefferson’s populist view of land as usufruct. The basic idea was that landholders owned property only due to the benevolence of the federal government, in which all land rights resided. The southern Confederates’ traitorous act of secession forfeited their land rights.
Two months after the Sherman order, Congress created the Freedmen’s Bureau and tasked it with transitioning former slaves to their new lives; part of the plan was to dole out the seized land. The Freedmen's Bureau Act of 1865 formalized Sherman’s field order into a law “providing that each negro might have forty acres at a low price on long credit.” The order came directly from President LIncoln, who wished to give freed slaves “an interest in the soil.” The price of land was to be fixed at $1.25 per acre, 40 percent of which was due up front. The land was to be protected by the military until Congress could act to formalize land titles. Some families even received left-over army mules. It seemed that the government was about to create a black landowning class. In fact, during the Reconstruction era, racial equality was even contemplated. Black lawmakers and radical Republican allies like Thaddeus Stevens, Charles Sumner actively pursued full integration and equality.
Confiscating and breaking up the land meant destroying the slaveholder oligarchies that had controlled the Confederacy. The backlash was extreme and ruinous, Having contemplated a complete reordering of the South, and perhaps exactly because the stakes were so high, the Reconstruction revolution was violently overthrown. Ex-Confederates won back through violence, fraud, and coercion what they could not achieve through military victory or political process. The Ku Klux Klan became a para-military force in the South whose purpose was the overthrow of Republican government, black politicians, and any other activists not fully in line with the established antebellum order. According to Reconstruction historian Eric Foner, “the largest number of violent acts stemmed from disputes arising from black efforts to assert their freedom from control by their former masters.” Especially vulnerable were blacks who tried to purchase land. Reformists were assassinated, and black voters were harassed. As W. E. B. Du Bois explained, “Guerilla raiding, the ever-present flickering after-flame of war, was spending its forces against Negroes, and all the Southern land was awakening as from some wild dream to poverty and social revolution.”
A postwar struggle was being waged over economic control of the South. The Freedmen’s Bureau could not survive the violence and chaos that followed Appomattox and thus promises of land and equality vanished. As Du Bois said of Reconstruction, “the slave went free; stood a brief moment in the sun; then moved back again towards slavery.
I’m transcribing this first story in full because it is so indicative of all the others that follow, and which are perfectly summed up in that Du Bois quote. Again and again through U.S. history, the black man will be offered something that moves him incrementally closer to economic equality with the white man, and then that something will be subverted or denied to him, moving him back towards the status closer to his original slavery.
To continue:
President Andrew Johnson, the accidental president who assumed office after Lincoln’s assassination, joined the white southern backlash and rolled back Lincoln’s promises. He thoroughly undermined the Freedmen’s Bureau bill, including the land grant, and fought the black rights movements, asserting that America would remain a “white man’s government.” Though the southern rebels had expected to be hanged for their treason, Johnson welcomed them back into the fold, pardoned them, and restored their confiscated land. The land General Sherman had given to freed slaves in Georgia was returned to the original owners before a full harvest season had elapsed. The effects were devastating for blacks. Had whites made good on this promise to blacks, claimed Du Bois, it “would have made a basis of real democracy in the United States.” Instead, the agents of the Freedmen’s Bureau went south to “tell the weeping freedmen, after their years of toil, that their land was not theirs, that there was a mistake -- somewhere.”
Union General Oliver Otis Howard, who had the unpleasant task of taking the land back from the freedmen after he had helped administer the order, nevertheless reasoned that the “freedmen should have land, but they … must pay for their land.” President Johnson said that the Freedmen’s bill was advantaging blacks over whites and that it was time for blacks to fend for themselves. “It is earnestly hoped that instead of wasting away, they will, by their own efforts, establish for themselves a condition of respectability and prosperity.” Johnson claimed that the laws of capitalism and free trade would allow the freedmen to accumulate land without any special help from the state. He was confident that freed slaves would be able to choose their “own employment and their own places of abode” and insist on and receive “proper remuneration” for their work and further that the “laws that regulate supply and demand will maintain their force, and the wages of the laborer will be regulated thereby.”
Does any of that sound familiar? Let the market solve the problem? Which market? The one that the recently freed blacks found themselves in?
It is important to pause and note that during this time the government was in the process of confiscating and distributing millions of acres of land for railroad expansion -- a heavy government subsidy to a private enterprise. Banks were also being supported by public taxes in order to induce them to extend credit to the South. The Homestead Acts gave out millions of acres of government land to white settlers for years. The sheer scale of the land redistribution and its exclusion of blacks from the bounty was not the laissez-faire free market Johnson was describing. Blacks were denied land, not because the government was beholden to market rules, but because the government was controlled by political factions favoring the southern white elite, and giving blacks land was politically unpopular.
The myth that free-market principles were guiding political choices was further exposed as hypocrisy because blacks could not even pay “market prices” for land. White southerners simply refused to sell land to blacks. Land was sometimes sold at half the price to white buyers compared to what black buyers were offering just to avoid selling their land to blacks. Even when white landowners did not have sufficient resources to cultivate the land themselves, they still spurned black buyers. Southern states even passed laws that forbade white sellers to sell land to blacks. The abstract laws of supply and demand could not work when actual state laws excluded blacks from free markets.
The southern economy was anything but a free market. Prominent southern lawyers, legislators, and judges drafted laws that governed all aspects of black life and spurred racial bias across the South. These “black codes” prohibited blacks from property ownership, trade, testifying in courts, and voting. Blacks could not engage in commercial trades other than what they were conscripted to do. An 1865 South Carolina law declared that “no person of color shall pursue or practice the art, trade, or business of an artisan mechanic or shopkeeper, or any other trade, employment or business … on his own account and for his own benefit until he shall have obtained a license which shall be good for one year only.” One black veteran remarked of these laws, “If you call this Freedom, what do you call Slavery?”
This is all directly in the wake of the U.S. Civil War, and may therefore be thought by some to be ancient history. Certainly things are not like that any more! But one thing this book does exceptionally well is show, from these beginnings, an uninterrupted chain of similar actions and decisions that will continue to preference the white citizen while hobbling the black.
As Martin Luther King Jr. echoed a century later, “the Emancipation Proclamation freed the slave, a legal entity, but it failed to free the Negro, a person.” This pattern would be repeated. This was just the first of several pivotal points in U.S. history when government reformers would choose to grant political rights instead of achieving real justice by addressing economic inequality. Indeed, it would happen to Dr. King’s own movement a century later.
It is, always and continually, the form of freedom without the function.
#2: The Swindle of the Freedmen’s Savings Bank
Baradarn’s book is very much about “black banks,” institutions set up in the late 1800s and early 1900s for blacks and blacks only -- a place where they could put their meager savings and try to build up some kind of economic independence.
The Freedmen’s Savings and Trust Company, also known as the Freedmen’s Savings Bank, was the first and only savings bank created by the federal government. Blacks had not asked for the bank, but land grants having been foreclosed by violence and southern retrenchment, the bank was a stand-in. The reformers promised the black community that the bank was the preferred and proper means by which they would achieve landownership of their own. The bank’s founder, John Alvord, said the freedmen “have a passion for land,” and the bank would provide the way. “Their notion of having land given to them by government is passing away, and we hear them saying, ‘We will work and save and buy for ourselves.’” Saving their wages in the bank was offered not only as the only way to buy land, but as the respectable and proper way of doing so.
The problem, of course, was that the Freedmen’s Savings Bank was a fraud. Despite its original charter which required the bank to hold the vast majority of its assets either in cash or in safe treasury instruments, slowly, over time, the bank and the accumulated savings of the freedmen were raided and used for riskier and riskier investments. Its management was turned over to Henry Cooke, the brother of Jay Cooke, the president of the prestigious First National Bank, who used the assets of the Freedmen’s Savings Bank to speculate in risky railroad stocks and to artificially shore up the balance sheet of his brother’s bank when needed.
The scheme began to unravel following the Panic of 1873, when railroad investments failed. The bank experienced several runs at the height of the panic. The panic would not have affected the bank if it had been a savings bank. But by 1866, the business of the bank had become, according to one observer, “reckless speculation, overcapitalization, stock manipulation, intrigue and bribery, and downright plundering.” Cooke’s speculation on his brother’s venture led to a loss of $2 million in deposits in eighteen months.
In a last-ditch effort to save the bank, the trustees appointed Frederick Douglass as bank president in March of 1874. Douglass did not ask to be nominated, and the bank board knew that Douglass had no experience in banking, but they felt that his reputation and popularity would restore confidence to fleeing depositors. Once in office, Douglass set out to determine the bank’s viability. Based solely on the bank’s books and representations from managers, the bank appeared to be well situated to survive the panic. This perceived stability motivated Douglass to lend the bank $10,000 of his own money to cover the bank’s illiquid assets. Rather than validating his confidence, however, this load tipped Douglass off that something was awry. Douglass quickly discovered that the bank was “full of dead men’s bones, rottenness, and corruption.”
As soon as Douglass realized that the bank was headed toward certain failure, he imposed drastic spending cuts to limit depositors’ losses. He then relayed this information to Congress, underscoring the bank’s insolvency and declaring that he “could no longer ask [his] people to deposit their money in it.” Despite the other trustees’ attempts to convince Congress otherwise, Congress sided with Douglass, and on June 20, 1874, Congress amended the charter to authorize the trustees to end operations. Within a few weeks’ time, the bank’s doors were shut for good on June 29, 1874, leaving 61,131 depositors without access to nearly $3 million in deposits. More than half of accumulated black wealth disappeared through the mismanagement of the Freedmen’s Savings Bank.
This failure would have long repercussions in black society. Believing that their assets were backed by the full faith and credit of the United States, and since no one was ever prosecuted for the bank’s failure, many blacks blamed and lost trust in the federal government.
#3: The Failure of the Populist Party
Layered over the failure of the Freedmen’s Savings Bank, there was the sharecropping arrangement that determined the economic fate of so many poor blacks (and whites) in the South.
Legally, the sharecroppers were freedmen and the white plantation owners were the landlords; in reality, the arrangement was fraught with many of the tensions and inequalities of their former relationship. “The strong economic chain between master and slave had not been broken by the stroke of Lincoln’s pen,” said an observer at the turn of the century. Physical bondage was replaced by debt bondage.
Sharecroppers paid for the land, supplies, and tools using credit, and they paid back their debts with their crop yields, typically with nothing left to spare. Usually the landlord did the calculations himself, and the illiterate debtor would have to trust that he had made no surplus year after year. Each plantation became its own system of banking and debt collection as blacks lost access to the democratically accountable justice systems of the state.
But it was a system that exploited poor whites as well as poor blacks, and when economic depression hit in the 1880s and 1890s, there was a moment when it seemed like poor whites and poor blacks might be united in a new populist political party that could overthrow this system.
Poor black and white farmers were natural allies in this fight, and the Populist Party in the South attempted to forge this alliance. “They are in the ditch just like we are,” said a Texas Populist leader. Thomas Watson, leader of the southern Populist Party, explained that white supremacy was a deception that blinded the poor and pitted them against each other in order to perpetuate “a monetary system which beggars you both.” The Populists urged “color tenants'' to stand with white tenants and promised that the People’s Party would “wipe out the color line and put every man on his citizenship irrespective of color.” The Populists went further than all the other parties, including the Republican Party, with respect to racial equality. “I am in favor of giving the colored man full representation,” said the president of the Populist convention in Texas. “He is a citizen just as much as we are, and the party that acts on that fact will gain the colored vote of the south.” In the 1890s the Knights of Labor attempted to build the first biracial populist organization, claiming that 15 percent of their 600,000 members were black. Frederick Douglass had suggested just such an alliance between yeomen and freedmen in 1866 -- “a party … among the poor.”
Holy shit. The white supremacists of the day weren’t going to allow that.
Just as Reconstruction reformers had failed to break the cotton oligarchy and achieve black equality, so too did the Populists. They failed because the established political parties of the North and South had already understood that sowing animosity between poor whites and poor blacks was the easiest way to maintain the status quo and to reject the costly and disruptive demands of a coalition of the poor. In the end, a racial hierarchy was preferable to class revolt. Once again, the revolution was stifled by violence. Public lynching, cross burnings, and the Klan vented rage and resentment at the black underclass. The war-ravaged and economically depressed South created a breeding ground ripe for racial hostility. If aggression is the result of frustration, said historian C. Vann Woodward, “then the South toward the end of the [1890s] was the perfect cultural seedbed for aggression against the minority race. Economic, political, and social frustrations had pyramided to a climax of social tensions.”
#4: Jim Crow and the Supreme Court
And it’s important to note that this was not just rich, white Southerners. The politics of both North and South combined to create this racial hierarchy.
Southern planters and northern industrialists joined forces in maintaining a racial hierarchy that benefited both by preserving the status quo. Northern liberals left the divisive “Negro issue” alone and even enabled the South’s racial hierarchy for the sake of peace and unity. The most powerful and effective formula for “redeeming the South” was the “magical formula of white supremacy,” which the South used unapologetically. Judges, politicians, and newspapers all obliged -- preferring to save the union that survived the Civil War by sacrificing the rights of blacks. It became common during the 1890s to hear northern liberals profess the strength of the union and accept the South’s need to keep black labor under the fist of the state.
The next logical step was Jim Crow -- state laws that kept blacks from exercising the rights protected for them by the Thirteenth, Fourteenth, and Fifteenth Amendments to the federal constitution.
In order to maintain absolute control of the levers of state power and enforce a permanent racial hierarchy, southerners worked tirelessly to keep blacks from the polls. Having to contend with the Fifteenth Amendment, innovative southern politicians created literacy tests, property ownership requirements, and poll taxes, making sure to create loopholes for poor whites through “grandfathering” clauses. Disenfranchisement was swift and total. Slowly and then suddenly, all the rights written into the Thirteenth, Fourteenth, and Fifteenth Amendments were nullified by southern legislatures, courts, and the paramilitary-style violence of the Klan.
In this effort, the Southern states were greatly aided by the U.S. Supreme Court, which decided in case after case that the rights protected in these amendments were essentially subservient to the higher right of the white man’s property.
In a series of decisions between 1873 and 1898, including the Slaughterhouse Cases, United States v. Reese, and United States v. Cruikshank, the Supreme Court weakened the rights of black citizens and their ability to contest racism. The Supreme Court was not just reconciling the North and the South, but navigating federal and state tensions that had simmered to a boiling point during the Civil War. Each of these cases gave states power over the treatment of their citizens and weakened federal oversight. In two 1890 cases, Louisville, New Orleans, and Texas Railroad v. Mississippi, the Court ruled that states were permitted to segregate their carriers. In Williams v. Mississippi, the Court cleared the way for southern states to disenfranchise black voters. And then in 1896, Plessy v. Ferguson dealt the most devastating and long-lasting blow by blessing the doctrine of “separate but equal,” which legitimized Jim Crow laws and segregation for half a century. By the time the Supreme Court was finished, the Equal Protection Clause of the Fourteenth Amendment was deprived of all meaning. In fact, for the next century, it came up more to defend corporations against state overreach than it did black men and women against the hostile arm of the state. These cases moved the law towards protection of property as the primary objective as opposed to protection of blacks from violence. According to one historian, by 1900, “the slave law of the South may have been dead, but it ruled us from its grave.”
This helped create the world of separation that came to be called the Jim Crow South of the early 1900s. Separate bathrooms, drinking fountains, entrances, exits -- one for whites, the other for blacks -- all enforced and supported as the actual rule of law.
Once the Supreme Court deprived blacks of their rights to due process, southern courts and police became tools of oppression and the maintenance of the new social and economic order. The legislatures made Jim Crow the rule of law, police enforced it, and courts punished violators. Blacks lived in a police state in the South with the tacit approval of the Supreme Court. Added to that were the constant, random, and vicious acts of terrorism -- the “Southern trees that began to bear strange fruit, Blood on the leaves and blood at the root.” All of which was condoned, enforced, and perpetuated by state power.
#5: Separate (and Unequal) Financial Institutions
And so, like everything else in their lives, blacks in the early 1900s would have to create and patronize their own financial institutions -- the rise of the “black banks” that Baradaran refers to in her subtitle. And like so much else in their world, while separate, these banks were far from being equal.
Hemmed in by the walls of Jim Crow, black communities had to create their own financial institutions, but the injustice of segregation that created these banks also made them weak. In other words, the same forces of racism and segregation that created black banks would continually work against their success. James Baldwin explained the dilemma with regard to black leadership, which he defined as a “nicely refined torture [of] having been created and defeated by the same circumstances.” Baldwin explained that black leaders were created by “the American scene, which thereafter works against them at every point; and the best that they can hope for is ultimately to work themselves out of their jobs.”
It’s the same Catch-22 all over again. Be separate so you can be equal, but we won’t let you be equal. There are a bunch of examples of this dynamic in action, whether we’re talking about the black banks, or other “black” businesses.
#6: Unfair Competition
Black businesses had to find customers for whatever they were selling from within their own race, but the prohibitions did not work in reverse. White businesses often sold goods to blacks, which meant that black businesses had to compete not only with other black businesses but with any white business serving black customers as well. Prominent insurance executive Merah Stuart explained the bind of black businesses in these terms: “the American Negro has been driven into an awkward, selfish corner, attempting to operate racial business to rear a stepchild economy.” Stuart explained that this was an “economic detour” that no other immigrant group had to pass through, as these groups were allowed passage to the “economic Broadway of America.” By contrast, blacks, despite “centuries of unrequited toil … must turn to a detour that leads he knows not where.”
#7: No Insurance
Many proactive white insurers refused to insure blacks altogether based on their actuarial models and “scientific data.” Frederick L. Hoffman’s 1896 book ‘Race Traits and Tendencies of the American Negro’ convinced insurers that black lives should not be insured, because blacks were destined for extinction. Hoffman claimed that the rampant disease and premature death in the black community was a feature of their race and had nothing to do with their circumstances. “It is not the conditions of life but in the race traits and tendencies that we find the causes of the excessive mortality.” He concluded that “a combination of these traits and tendencies must in the end cause the extinction of the race.” Hoffman based his conclusion on scientific data collected from chest measurements said to show that blacks had a deteriorated physique, which he attributed not to overwork or malnutrition but to racial inferiority. Hoffman was a statistician for the Prudential Insurance Company of America, and his argument was that the company should not insure blacks. Based on his widely read study, insurance providers concluded that it would be “unwise to insure Negroes.” Black insurance companies stepped into the breach, and a few of them eventually grew to become the most profitable of all black-owned businesses.
#8: White Resentment and Violence
That last comment on successful black businesses is an interesting one. There are examples in U.S. history of black people and/or black communities finding economic success despite the detours they were required to take. An all-too-common response to these situations, however, was violent resentment of their white neighbors. This quote is from a contemporary source that burned the successful “black district” in Tulsa, Oklahoma, in 1921.
“[T]he Negro in Oklahoma has shared in the sudden prosperity that has come to many of his white brothers, and there are some colored men there who are wealthy. This fact has caused a bitter resentment on the part of the lower order of whites, who feel that these colored men, members of an ‘inferior race,’ are exceedingly presumptuous in achieving greater economic prosperity than they who are members of a divinely ordered superior race. … In one case where a colored man owned and operated a printing plant with $25,000 worth of printing machinery in it, the leader of the mob that set fire to and destroyed the plant was a Linotype operator employed for years by the colored owner at $48 per week.”
Throughout American history, there have been several examples of majority groups reacting violently when their economic power has been threatened -- a theory of host group dominance that holds that the host group, or majority group, should benefit most if any money is to be made. Those groups that are not dominant “host groups” must occupy positions that the dominant group neglects so as not to compete with them for major business profits. Lower-status groups can compete for scraps or for middle positions, but must not occupy the most profitable rungs of the business sector. For example, the state of California passed laws against Japanese businessmen after they became economically successful. Land rights held by blacks during Reconstruction were another example. Native Americans were likewise expelled from their land when oil was discovered on it. What happened in Tulsa was a vivid example of the theory of host group dominance -- the black business district was simply too successful to survive.
#9: No Federal Farm Loans
After creating the Federal Reserve, President Wilson and the 64th Congress passed the Federal Farm Loan Act of 1916 for the express purpose of increasing credit to rural family farmers. The act established the Federal Farm Loan Board to administer the loans, twelve Federal Farm Loan Banks, and National Farm Loan Associations (established groups of ten or more mortgage-holding farmers). The bill reduced interest rates on farm loans across the South and made credit much more accessible. This bill was the first federal government loan program, and thanks to southern senators, it left black farmers out. The legislators created loopholes and provisions to exclude blacks and left the program to be administered in local offices in the South, with significant direction given to local bureaucrats in lending, which effectively meant that blacks would not be given loans.
This will be another common theme -- government programs designed to help the poor or other constituents, and each being designed to explicitly or implicitly exclude black Americans.
#10: Black Ghettos
As many blacks moved from the South to the cities of the North -- something called the Great Migration, an effort to escape Jim Crow and to find economic opportunity -- they increasingly were zoned and confined into certain neighborhoods.
The concept and terminology of a racial ghetto derives from the forced segregation of Jews in Europe -- first in enclaves in the seventeenth century and then with barbed wire during the Nazi regime. There was no barbed wire in America’s black ghettos, but even more effective modes of containment through racial covenants and government credit and zoning policies that maintained the boundaries of the ghetto. Often referred to as black enclaves, black neighborhoods, or other racially neutral descriptions, the word ghetto is a much more accurate descriptor because it captures the involuntary nature of segregation. The ghetto was created by white racism, which in turn generated a complex web of interrelated social, political and economic challenges. Blacks were forced into a parallel and inferior economy simply because whites in the north would not accept them as neighbors. This had profound effects on African American economic advancement for the next century. Black racial segregation was so complete and so entrenched, that it is the defining characteristic of racial inequality in the twentieth-century and the major roadblock to economic progress.
#11: No Bank Bailouts During the Great Depression
One of these black ghettos was in Chicago, known as their “black belt.” Even within the limits it proscribed, some economic success was to be found. One of the most successful of the black banks was owned by Jesse Binga.
In 1926, Binga’s bank, located in the center of the black belt, was the most expensive property in the district, valued at $120,000. He owned over $500,000 in other real estate as well. On the eve of the Great Depression, Jesse Binga, sixty-four years old and at the height of his success, began collecting capital to start a second bank. Binga’s unparalleled success made him a storied leader in the black community, and funds flowed in. The 1929 stock market crash, however, shattered his plans. By the end of the year, Binga’s bank became the “canary in the coal mine” for bank failure in Chicago, His bank was the first in Chicago to fail during the Great Depression.
Binga used all means available to him to save his bank and his customers’ deposits, including lending the bank his own money. The balance sheets of Binga’s bank from 1929 and 1930 reveal that the bank held $800,000 of home loans in default. He reached out to the Chicago Clearinghouse for a short-term loan from the fund he had helped build, but the board rejected his request. One member of the clearinghouse later explained that during one meeting, the chairman had referred to Binga’s bank as “a little nigger bank that does not mean anything.” It was the first closure of a member bank of the Chicago Clearinghouse in twenty years. All the other banks that belonged to this clearinghouse were given aid and survived the Great Depression. W. E. B. Du Bois noted that the bankers’ association “could have saved the bank and saved it easily without loss or prospect of loss. Yet the Binga Bank was allowed to fail because the owners and masters of the credit facilities of the nation did not care to save it. Binga was not the kind of man they wanted to succeed. On July 31, 1930, Illinois bank auditors closed Binga’s bank, and his depositors lost most of their savings.
Binga’s bank wasn’t the only one. Very few black banks would survive the Great Depression.
#12: White Flight and Lowering Property Values
White resentment and anger would create the very situation it feared the most -- the creeping growth of the black ghettos -- even as the most affluent of the blacks took actions that would otherwise erase the line and reduce it.
The North maintained strict racial segregation through a series of tools used consecutively and simultaneously, including violence, zoning laws, and racial covenants -- much of which was organized by neighborhood associations and realtors. The color line -- the place where the black ghetto met the white community -- was a highly contested space and the scene of much of the race rioting and violence. As the swelling ghetto pushed against the white community, the white community pushed back forcefully. The black middle class were usually the early settlers forging into the racial frontier by buying homes in the new territory. With a 50 percent down payment required for a home purchase at the time, the only buyers of black property were the black upper class -- only 2 percent of the black population in the North in the 1920s.
These professional-class pioneers were often the primary victims of bombings and mob violence. A famous case was that of Doctor Ossian Sweet and his wife Gladys, who bought a home outside Detroit’s Black Bottom slum in 1925. The Sweets bought their home for $18,500, which was $6,000 more than its market value. The home was shortly besieged by a white mob that surrounded the home for several days hoping to pressure the Sweets to abandon their property. When the mob began to break windows, Sweet fought back. He and several friends fired into the crowd and killed a member of the mob. Sweet was charged with murder and was defended by Clarence Darrow and Walter White, president of the NAACP. This case was an outlier, not just because Sweet was acquitted of a murder charge by an all-white jury, but because he fought back in the first place. Most black professionals were not willing to wage a violent defense of their home.
The reason white neighbors would threaten a black doctor was not necessarily that they did not want him in their neighborhood, but because it signaled a racial breach. Members of the black middle class moving into a neighborhood were seen as harbingers of a neighborhood being swallowed by the ghetto. These fears turned into self-fulfilling prophecies, because once a neighborhood “tipped” and was seen as a “black neighborhood,” whites fled and the neighborhood declined and was swallowed up by the ghetto. In 1930, a realtor turned University of Chicago economist, Homer Hoyt, created an economic model based on extensive real estate data that revealed that real estate in a neighborhood declined as soon as a few blacks purchased property there. The lower market values were a result, he explained, “due entirely to racial prejudice, which may have no reasonable basis.” This declining property value did not affect the home prices of most immigrant groups -- only blacks and Mexicans.
So sad and fascinating at the same time. Affluent blacks see their property values fall because whites flee the neighborhoods that they buy into. Not because the affluent black brings the ghetto with them, but because they are buying the only properties that they are allowed to buy.
#13: Transferring Wealth from Black to White
The segregated nature of the black banks was their path both to success and failure. Here’s a great explanation of how banks are supposed to work.
The most crucial structural problem black banks faced was their inability to multiply money due to segregation. Banks create money and wealth through fractional reserve lending. By lending customer deposits, banks create new money; they “multiply” existing money in a process called “the money multiplier effect.” A bank customer, Alice, deposits her money in Bank A. The bank holds a fraction of that money as “reserves” at the bank and lends out the majority of it to another customer, Betty. Betty uses that money to buy a home from Celia, who deposits that money into her own bank, Bank C. That is new money created from the loan. Alice’s bank deposit slip shows that she still has her money at Bank A, but now Celia also has a deposit at Bank C -- money that was not there before. In this process, if Alice’s initial deposit was $100 and it was lent out ten times, with each bank holding 10 percent for reserves, it would have created $900 of new money. The money supply increases from $100 to $1,000. This is the “magic” of fractional reserve lending. Every time a loan is made, a deposit is created. To repeat, banks created money, or bank deposits, by making new loans. This money multiplier effect is what makes banks the engines at the center of the economy -- the new money is “created literally out of thin air.” This is what Alexander Hamilton meant when he said that banks allow capital to “acquire life” and become productive -- banks increase the overall wealth of a community by simply taking deposits and lending them out.
The problem, of course, is that black banks can’t do this because, in their segregated economy, they can’t capture both the loan and the new deposit.
The catch is that they can only do so insofar as the creditors and debtors are operating in the same system. Now let’s see what happens when a black bank attempts fractional reserve lending. Anton deposits his money at black-owned Bank A. Bank A makes a loan to Bella, who is black. Bella uses that money to buy a home. For the money multiplier to work in a segregated economy, Bella’s money must be recycled in the black economy. Theoretically, black banks would circulate and multiply this money and hum along with white banks doing the same thing -- both multiplying money in their own segregated economies. However, this was not possible. During this era, practically without exception, the sellers of the real estate were white and the buyers were black, placing them in separate banking systems. The sale proceeds usually landed in a white bank, while the loan was held at the black bank. Because blacks did not own property, their banks would constantly be stuck in an inferior position and their loans would be swallowed into the white system.
Unbelievably, then, the black bank became a wealth transfer device from the increasingly impoverished black economy to the increasingly affluent white economy.
As soon as the black bank loan was deposited into the seller’s bank, it had already escaped the black community and would continue to multiply in the white community. Even assuming that the first seller was black, she would have had to deposit her proceeds from the sale back into the black banking sector. Only if both the buyer and seller were black and each deposited their money at black banks could the money multiplier work. Every seller down the line would have to do that for the black banking system to be able to “control the black dollar” and multiply money in the black community. In reality, there would eventually be a white seller in the chain and the money would escape the black community. In the days of strict segregation, when white banks did not lend to blacks and white customers did not deposit money into black banks, the resulting “new” money always went into the white banking sector. Money could not be multiplied in two different segregated banking systems when one did not have much capital to begin with. In other words, the banks themselves could not help the black community hold and multiply capital without changing the structure of property ownership first.
#14: Blacks Excluded from New Deal Programs
After the Great Depression came the New Deal, and another opportunity to exclude blacks from government programs designed to help the poor and unemployed.
The New Deal changed America’s legal and political landscape in myriad ways, but perhaps nothing changed more radically than the nation’s banking and credit markets. Unfortunately, most of the significant New Deal policies were administered in such a way as to maintain the South’s racial hierarchy, which meant an almost categorical exclusion of blacks from government subsidies. The bulk of the New Deal reforms can accurately be described as “white affirmative action” because state resources were used to provide direct financial advantages to white Americans at the expense of other racial groups.
These exclusions were there because the government needed the support of Southern legislators in order to pass them -- and they would only offer their support if the exclusions were in place. Sometimes these exclusions were blatant (banning blacks), sometimes subtle (banning professions where the majority of blacks were employed), but either way, they came to represent a kind of “policy apartheid.”
Where blacks could not be left out, the southern bloc ensured that the laws would be administered locally, where officials would allocate benefits in accordance with the racial order. One administrator of the Federal Emergency Relief Administration (FERA) said that “he had to tailor relief … to accommodate the demands of southern plantation owners for cheap farm labor by curtailing [the level of] relief payments to agricultural laborers and sharecroppers.” This was done across the New Deal programs to exclude the large majority of blacks from relief measures and the newly created social safety net, a result characterized as “a form of policy apartheid.”
#15: White Only Unions
One pivotal outcome of these labor-protecting exclusions, and specifically regarding the right to collective action, was that they left black workers powerless to organize and demand better working conditions. The result not only hurt black workers; it gave white workers a leg up as the union movement achieved monumental improvements in workers’ rights for their members. Through collective action, white workers gained a voice and a seat at the bargaining table, while black workers were effectively silenced.
#16: Building Roads and Bridges Through Black Neighborhoods
One of the New Deal programs was the Public Works Administration (PWA), which initially had the goal of putting people to work building new low-cost housing for the urban black ghettos.
The plan was fiercely opposed by critics who said that it was not the responsibility of the federal government to deal with inner-city housing problems. The opposition believed that the goal of PWA should be to get private investors on board by offering them a share of the profits. Investors were not interested in rebuilding the slums, so the plan was scuttled.
However, investors were interested in revamping the single-family mortgage market, so this was the route the reforms followed. Not only did this choice not help the ghetto, it would work directly against it in both predictable and unexpected ways. For example, many PWA grants in major cities like New York and Chicago were used to route roads and bridges over and through the ghetto, a decision that favored suburban car commuters, left public transportation in a state of neglect and disrepair for decades, and bifurcated neighborhoods in long-established communities. On the other side of the color line, government-fueled mortgage markets offered the white middle class an escape from the cities even as it trapped the black poor within them. Consequently, race became the primary determinant of homeownership for the next century.
#17: Redlining
Another New Deal program was the Home Owners Loan Corporation (HOLC).
The HOLC permanently changed mortgage lending in the United States by simplifying and streamlining the home mortgage. Part of the streamlining process was the creation of standardized home appraisals. HOLC appraisers used census data and elaborate questionnaires to predict the likelihood of property appreciation in neighborhoods across the country. The HOLC then used this data to create meticulous maps giving each metropolitan region and neighborhood across the country a value. The maps had four color categories based on perceived risk: A(green), B (blue), C (yellow), and D (red), green being the most desirable and red being the least.
In making judgments about a home’s potential to appreciate, HOLC mapmakers, like individual appraisers before them, used the race of residents as a proxy for desirability. Green neighborhoods were homogeneous and white. At the other end of the scale, the red neighborhoods were predominantly black. In fact, race was a greater factor in a neighborhood’s predicted decline than other structural characteristics such as the age of homes, proximity to city centers, creditworthiness of residents, transportation opportunities, public parks, or any other features. Obviously, these designations became a self-fulfilling prophecy. This process of “redlining” eventually created a dual credit market based on race. W. E. B. Du Bois was vindicated in his 1903 prophecy that “the problem of the Twentieth Century is the problem of the color line,” but perhaps in a way that even the wary Du Bois could not have imagined.
#18: No Credit Cards
Another reform coming out of the New Deal that helped a lot of people get back on their feet and then get ahead was the expansion of lines of small consumer credit and credit cards.
Most of these consumer loans went toward making purchases that made life easier and more enjoyable, but credit also provided a buffer to protect wealth and livelihood against the predictable tumults of life. Small loans gave families flexibility in dealing with unexpected costs or tragedies. For example, if wages fell short one month, a car broke down, or the breadwinner lost a job, a family could shift some expenses onto a revolving credit line and protect themselves from hardship or bankruptcy.
But here again, blacks need not apply.
There were two groups that did not rely on consumer credit in postwar America: the very wealthy and the poor black population -- the wealthy because they did not need it, and blacks who desperately did need it but were excluded from the credit card market. Credit card and finance companies avoided the ghetto due to both racism and its risk-prone economy. Blacks had to keep relying on expensive and extractive installment credit that assured instability and continued poverty. This was another instance in which the New Deal credit reforms created an abundant and low-cost credit market for whites and an extractive and inescapable debt trap for blacks.
#19: No Homestead Act
The original Homestead Act was passed in 1862, and allowed thousands of whites to acquire land in the new western territories that would eventually be shaped into new U.S. states. Of course, blacks were excluded from the 1862 version of the law, so during the civil rights era of the 1960s, there was talk of a new Homestead Act, specifically for black citizens.
[Dempsey] Travis was able to sustain his mortgage business, but he became convinced that without government help, blacks would never achieve equality. At the tail end of the civil rights era, Dempsey Travis proposed a plan he called “The 1970 Homestead Act,” a new credit guarantee program targeted at black homeownership. When white Americans had been given land through the various Homestead Acts, blacks were left out, he reasoned. Nor had blacks been able to own land in America without fear of “being dispossessed by angry white individuals or mob[s].” He was speaking from personal experience as a realtor and longtime resident of Chicago. The proposal went nowhere.
#20: No G.I. Bill
Italian, Irish, Polish, and other European immigrants who had each been deemed inferior races decades earlier came to be accepted as white Americans. Italians for the most part could not attend college before the war, but most gained entry afterward through the GI Bill. Black GIs were not given similar access. Education was still highly segregated, and there were not enough black-only colleges to accommodate them.
#21: The Political Focus on the Civil Rights Movement
This one’s a little complicated.
The consensus of the black community toward the civil rights movement, if there was one, was that it had failed, or at least that it was incomplete. Black leaders knew that the progressive momentum had halted. Yes, the “whites only” signs were now gone and employers could no longer legally discriminate based on race, but many still suffered from unemployment, dilapidated housing, and intractable poverty.
The civil rights movement held America to its democratic promise and undoubtedly opened opportunities for the black community, but these initial successes produced significant obstacles to future progress. The initial face of the movement cemented the country’s focus on legal and political rights rather than economic equality, even though the black community and white leaders knew that the former would be meaningless without the latter. The rhetoric of color-blind equality entrapped reformers who could not and did not conceive of reforms that included recompense for past wrong. Moreover, many white Americans saw legislative and Supreme Court victories as a fait accompli and excused policymakers from pressing for more meaningful and necessary reforms. And finally, the uprisings, which sprang from a mix of hope and despair, created a public and policy backlash that spawned a new system of control through the criminal justice system. The war against poverty was subsumed by the new war against crime before the former had ever been fully waged.
In other words, the political and legal victories of the civil rights movement, important as they were, did little to change the economic situation of most blacks in the country.
#22: Black Capitalism
Of course, during the civil rights era, there were a lot of anti-poverty programs supported by and organized by the Lyndon Johnson administration. For a few short years, black Americans were able to find some of the economic support they needed. But they would almost all go by the wayside in favor of an insidious reframing offered by Richard Nixon. The violence of the era, with some blacks guilty of outright agitation and terrorism, really unnerved white America and their newly-elected champion.
Nixon and his advisors intended black capitalism to be a total replacement for Johnson’s antipoverty programs. According to a Nixon biographer, he “presented black capitalism as both a panacea and a fait accompli.” Nixon’s speechwriter Raymond K. Price explained that the path forward was to replace “the Negro habit of dependence” with “one of independence” and “personal responsibility.”
But had the black community not been trying to “help themselves” for generations while being repeatedly blocked by law and thwarted by policy? As Nixon seemed to portray it, the history of the black community was a perpetual state of dependency on government largesse. This explanation was inconceivably shortsighted. Never mind that the meager “handouts” had only begun a few years earlier, or that the ghetto was the only pocket in the entire American landscape that had not been the recipient of generous postwar subsidies. In fact, the ghetto was created due to the complete and utter lack of any handouts. It has only ever had an economic system of unchecked, unmitigated, and absolute capitalism. Yet now that the deferred dream had erupted into violence, policymakers proposed that blacks learn how to be capitalists.
It was time, evidently, for those lazy and unlawful black people to fend for themselves. It was time for them to stand up on their own two feet and compete in the capitalist society that was available to all people -- white and black. In terms of political strategy, it was a stroke of brilliance. It completely ignored all the support that white Americans had received for generations, while preaching the gospel of rugged individualism and American upward mobility. Black capitalism was very popular in white America.
But it was, of course, as Baradarn describes in this chapter title, a decoy. Another in a long series of myths that had been used to justify inequality.
Inequality along racial lines has been a constant on the American scene, but different eras have justified it with different myths. Christianity was corrupted to prove that white men had a divine right -- even a duty -- to subjugate and enslave blacks. When religious theory fell out of favor, social Darwinism and skull measurements held that blacks were an inferior species that had lost the evolutionary race, and thus their subjugation was nature’s will. Now economic theory established that “market forces” decreed that blacks should hold the bottom rung because, for example, the law of supply and demand caused blacks to pay more for credit and the market determined how much their labor was worth, and that integration was antimarket. Any effort to change these “market laws” was delegitimized and labeled as harmful government interference with, in the words of President Reagan, “the magic of the marketplace.” And just as God’s will was difficult to challenge in the 1800s, so too was free-market economic theory after the neoliberal revolution of the late 1960s, lest one be labeled a heretic or a communist.
See. When blacks fail in the market, it’s not because they’ve been discriminated against, it is just the magic of the marketplace at work.
#23: Black Poverty
And then, in an even more twisted fashion, the failure of blacks to compete in this “fair” marketplace, became yet another tool used in their further subjugation.
Black poverty came to be seen as a direct result of a culture that lacked responsibility, work ethic, and “family values.” Having achieved racial equality, what else could explain the wide wealth gap? Government interventions and the welfare state had allegedly created perverse incentives for blacks to avoid employment and have children out of wedlock. President Reagan attacked welfare spending, characterizing it as tax dollars being spent on “welfare queens” feasting on T-bone steak while hardworking Americans “were standing in the checkout line with [their] package of hamburgers.” In railing against welfare, Reagan used the example of a particular black female fraudster who had snatched unearned privileges by exploiting the welfare system at the expense of honest taxpayers. This was an inaccurate picture of welfare, as whites received the large majority of welfare benefits and welfare fraud was rare. However, the depiction of the black population as riddled with crime and drugs, unwilling to work, and living comfortably off government largesse had remarkable durability.
It is worth distilling this message in order to fully appreciate the irony. The story was that after decades of New Deal-era federal subsidies had created a white middle class, reinforced a segregated black underclass, and created cyclic poverty that made it difficult for many to find shelter and food without government aid, it was black people who were being unjustly enriched by the overly generous hand of the state.
#24: The War on Drugs
According to this story, the only state intervention required in the ghetto was “law and order.” By the time Ronald Reagan took office, the groundwork for the war on crime had been laid, but the Reagan administration turned up the heat. Part of President Reagan’s appeal, according to one political insider, was derived from “the emotional distress of those who fear or resent the Negro, and who expect Reagan somehow to keep him ‘in his place’ or at least echo their own anger and frustration.” In 1982, Reagan initiated the War on Drugs, even though drugs had not yet registered as a perceived public problem. Even the staunchest advocates of the drug war now admit that it was unfairly skewed to impose the harshest prison sentences on black drug criminals rather than white ones, and it resulted in a generational devastation of the lives of young black men. In just a few years, federal funding for antidrug law enforcement skyrocketed (while funding for treatment or prevention programs plummeted). Anyone selling or possessing crack cocaine could face a lifetime in prison. A media offensive sensationalized a crack “epidemic” in the inner city, one that didn’t really exist yet. But it would.
#25: Outlawing Offsets to Address Past Wrongs
Also during this era, affirmative action and the many programs that would fit under that umbrella began to develop -- including the creation of “enterprise zones” and programs to preference minority business owners for government loans and support. However, one key Supreme Court ruling would help ensure that none of these programs would ever admit the shameful past of discrimination and injustice.
In the 1978 case Regents of the University of California v. Bakke, a plurality of the Court upheld race-based preferential treatment in university admissions, but rewrote the underlying premise of affirmative action in the process. Justice Lewis Powell held that the only “compelling state interest” that could justify affirmative action was increasing “diversity.” It was no longer a legitimate state interest to create programs meant to remedy past discrimination.
Understanding what this meant for the prospect of future reforms, Justice Thurgood Marshall wrote a forceful and plaintive dissent. Having personally waged a fight against centuries of unjust laws and having case by case “rethreaded parts of the Constitution itself, stitching the Negro, at long last, into the fabric of the nation,” Marshall knew the stakes involved. He explained to the Court that the “legacy of years of slavery and of years of second-class citizenship in the wake of emancipation could not be so easily eliminated.” He could not believe that the Constitution stood as a barrier to remedying such a legacy, especially as it had only been a decade since the civil rights laws had banned racial discrimination, and too little had changed. “Measured by any benchmark of comfort or achievement, meaningful equality remains a distant dream for the Negro.” Marshall explained that blacks were still economically disadvantaged, a position that was an “inevitable consequence of centuries of unequal treatment.” Marshall pleaded that “bringing the Negro into the mainsteam of American life should be a state interest of the highest order” and warned that a “[failure] to do so is to ensure that America will forever remain a divided society.”
It was all based on the premise that racial equality had been achieved, starting as Nixon essentially declared a successful end to the civil right movement and continuing pretty much up to the present day.
With the firmly established myth that equality had finally been achieved, black poverty and crime could only be explained as a sign of moral failure, and the only acceptable response to the failure to rise out of the ghetto was tough love and forceful containment. While policymakers were celebrating the triumph of equality and capitalism, the invisible hand of the free market was actually pulling apart and increasing the opportunity and wealth gap between black and white.
It is such a key point. Simply declaring equality doesn’t make things equal. But more important than that, the market eats inequality, even if it is not publicly recognized. What we choose to treat as invisible, will not be such to the invisible hand of the market.
#26: The Psychological Effects of Poverty
Recent research has revealed even more profound psychological effects of poverty on behavior and outlook. Eviction, homelessness, and extended poverty are experienced as psychological trauma, especially for children. Children who grow up in an environment of scarcity, fear, or social disorder are exposed to stress that significantly hinders their social and academic capacity. It even affects their decision-making process. The famous “marshmallow experiment” revealed that children who could practice self-control and delay gratification (wait for the second marshmallow) were more successful as adults across the board. Yet the experiment has been misunderstood as it relates to poverty. One consistent result of the experiment, noted by its designer Walter Mischel and replicated by every subsequent experimenter, was that the poor consistently “failed” the marshmallow test. One might be tempted to believe that being poor was thus a result of a lack of self-control. However, as researchers like Melissa Sturge-Apple have homed in on the decision-making process, they have revealed a much more complex story. By measuring the heart rate and brain activity of the children during the test, the experimenters revealed that the poor children were making a careful and calm choice to enjoy the marshmallow immediately instead of waiting for an uncertain second marshmallow. “When resources are low and scarce, the rational decision is to take the immediate benefit and to discount future gain.” Calmer decision making -- or less impulsiveness -- among wealthy children led them to wait for the additional treat, but that same measured and calm decision making led the poor children to decide not to wait. Poor children’s rational decision making was misinterpreted as lack of self-control. Today, one in three black children grows up in poverty compared to one out of ten white children. One out of five black children under the age of five grow up in extreme poverty.
Here’s a take I’ve not encountered before. Some folks say that bad choices lead to poverty. Well, this study seems to say that poverty leads not to “bad” choices, but choices that have been interpreted as bad. As with so much social science, what is cause and what is effect is always a difficult knot to disentangle.
#27: Subprime Mortgages
During the heyday of the housing bubble, subprime mortgages were all the rage.
So profitable was the subprime market in the years preceding the crisis that banks chose not to give prime loans (those insured by the GSEs) and focused instead on subprime loans. The Wall Street Journal reported that more than 50 percent of borrowers who were sold subprime loans could have qualified for prime loans. At the peak of the subprime market in 2006, 61 percent of borrowers were steered toward subprime, which meant that “a significant number of borrowers with top-notch credit signed up for expensive subprime loans.” Mortgage brokers made more money for convincing -- duping -- borrowers into taking out costlier subprime loans than the prime loans that they were eligible for and could more easily afford. The higher the interest paid by borrowers, the bigger the bonus received by the mortgage broker.
And predictably, blacks were much more likely to be sold subprime loans.
As economist Vivian Henderson argued decades ago, “racism put blacks in their economic place, but changes in the modern economy make the place in which they find themselves more and more precarious.” It was revealed after the crisis that banks were specifically targeting black borrowers for their worst loan products even when they qualified for prime loans. The Center for Responsible Lending found that black borrowers were 150 percent more likely to get high-cost loans. Data collected under the Home Mortgage Disclosure Act confirmed that blacks were being targeted for subprime loans even when they would have qualified for prime loans. Mortgage originators like Countrywide opened branches in inner cities to peddle as many subprime loans as possible. Most of the areas that were targeted for subprime lending were formerly red-lined districts -- Chicago’s black belt, for example, was the area with the most subprime loans between 2004 and 2006. Subprime was just the new face of predatory lending, with some lenders even targeting elderly black homeowners to sell them sham reverse mortgages that resulted in their losing their homes. Deprivation again led to exploitation.
And, like so many times before, this exploitation was deliberate. Not just the invisible hand of the market, but the conscious actions of human beings.
The Department of Justice sued Wells Fargo in 2010 for intentionally and systematically targeting minority borrowers and pushing them toward subprime loans. The DOJ claimed that Wells Fargo and Bank of America, two of the largest mortgage lenders, steered thousands of minority borrowers into costlier subprime loans when whites with a similar credit score were given prime loans. The DOJ unearthed signs of explicit discrimination at Wells Fargo, with loan officers referring to black borrowers as “mud people” and to subprime loans as “ghetto loans.” “We just went right after them,” Beth Jacobson, a former Wells Fargo loan officer, told the Times. “Wells Fargo mortgage had an emerging-markets unit that specifically targeted black churches because it figured church leaders had a lot of influence and could convince congregants to take out subprime loans.” Wells Fargo settled the case and avoided trial. Bank of America also settled their discrimination lawsuit, in which the DOJ accused its mortgage issuer, Countrywide, of racial discrimination in lending.
Summary
It is difficult to summarize this brilliant and troubling book. Needless to say, even though I had decided to count all the deliberate actions taken in the United States to curtail the economic development of its black citizens, I had no idea those actions would total 27 discrete ideas, perpetrated over the entire course of American history. In her epilogue, Baradaran provides some thoughts on what to do about this terrible legacy. In that regard, I found this concept especially insightful.
There have been major political and social roadblocks to dealing effectively with the wealth gap, and each of history’s potential reformers has faced them. The biggest roadblock is inherent in majoritarian democracy itself. If reform is seen as zero-sum, the institutional structure of American government resists any wealth transfer viewed as a benefit to a minority of the population. However, there is a way to overcome the resistance by convincing the majority that reforms aimed at a segment of the population will benefit the entire population. For example, passage of civil rights laws was made easier when policymakers became aware that communists and other foreign enemies were exploiting Jim Crow and using it in propaganda against the United States. When civil rights came to be seen as a matter of critical foreign policy import, it was actively pursued. To point this out is not to cast doubt on the sincerity of individuals or groups pursuing reforms or to throw an overly cynical taint on monumental changes, but it is to acknowledge the reality of human nature and democratic governance. Then, as now, the public must be convinced that their own interests are aligned with the advancement of racial minorities or that they will not suffer when others are promoted.
This is very much what Thurgood Marshall said in 1978. Bringing the Negro into the mainstream of American life should be a state interest of the highest order. A failure to do so is to ensure that America will forever remain a divided society. Too often, government programs are seen through the lens of “us and them.” Why are you helping them, not us! Perhaps one day we will realize that there truly is no them. Helping my brother, after all, helps me.
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This post first appeared on Eric Lanke's blog, an association executive and author. You can contact him at eric.lanke@gmail.com.
