A wealth gap grows in Brooklyn: How racism perpetuates housing inequality

There is an enormous gap in wealth between white and black people in the United States. In 2013, the net worth of the median white family was $134,000, while that of the median black family was $11,000.

Why? One enormous factor, as Sean McElwee explains in detail, is wealth handed down from generation to generation. Absent countervailing policy, a large wealth gap between populations will perpetuate itself through inheritances.

That's not all, of course. Another major cause of the original wealth gap, as Ta-Nehisi Coates explained in his epic piece "The Case for Reparations," is housing policy. The biggest motor of wealth creation in 20th-century America was home ownership — a conduit for massive federal subsidies. Blacks were systematically excluded from those programs and from the legal system generally. Whites piled up home equity, while what little blacks managed to build up was stolen.

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Coates' piece was mostly about how blockbusting, redlining, contract lending, and so forth led to theft on a massive scale. But he also detailed how as recently as the mid-2000s, banks were shunting black customers into high-risk loans regardless of their credit score, the better to steal their wealth.

That wasn't the end, however. Similar practices continue to this day.

A great example comes from DW Gibson's new book The Edge Becomes the Center, an excerpt of which was recently published in New York. He follows one property developer in the New York City borough of Brooklyn, given the pseudonym "Ephraim," who makes a ton of money buying out black residents, upgrading the units, and filling them with white residents. Do that, and one can easily double the rent, he says.

It's critical that the former tenants don't get wind of their rights as tenants, however. They could come back to their former place and demand readmittance, right in the middle of construction. So Ephraim makes sure to grease their palms liberally, because the important thing for his bottom line is getting all the black people out:

This statement is a perfect encapsulation of how racism, differing levels of access to the legal system, and the legacy of past expropriation combine to lock black people out of the housing wealth machine. Of course, this story is mostly about renters, not owners, but it does illustrate the machinery at work. (The landlord in the story, needless to say, is not black.)

Though I rather doubt that white Brooklyn renters are all so baldly racist as to straight-up demand no black people be allowed in their building, it doesn't make much difference. Open, straightforward bigotry is not necessary for this exclusion machine to operate. The people who move into the neighborhood north of H Street in Washington, D.C. and call the police every time they see a black man are undoubtedly earnest liberals.

The main point is that a neighborhood without blacks is more valuable, and that brings tremendous pressure to bear against blacks getting access to housing wealth. You can see this happening in many places beyond Brooklyn — the foreclosure crisis in Prince George's County, the richest majority-black community in the nation, is ongoing, thanks to a predatory campaign by banks to funnel blacks into crappy mortgages. And when they're not dealing with that, they're being forced out of their homes so white residential areas can double in value, or stuck with houses in black areas that don't accrue in value simply because of segregation.

What policy conclusions to draw from this phenomenon is another question. Obviously, the kind of blatant racism on display in Ephraim's case is horrible, and countervailing policy pressure ought to be brought to bear against racist expropriation. I'd go deeper, and question the very idea of using a home as the major savings vehicle for the masses.

But at any rate, one thing is clear: The economic legacy of slavery and Jim Crow is not going to fix itself.