rambling about the suburbs & segregation (semi-structured )

I’m gonna lay out some evidence I’ve been threading together on the suburbs, the history of segregation & racism in America, and policy proposal, or at least frameworks, for our next government. This was initially conceived as a twitter thread—so it’s a bit staccato, but I want to have my thoughts in one place, with evidence to back it up, for my own use in future research. If you have comments or questions, or places I should add to the story, let me know at https://twitter.com/jackzillaUSA.

We start with the Great Migration(s).

“In 1910, prior to the onset of the Great Migration, only 11 percent of black and white southern-born males in their 30s (the 1870s birth cohort) resided outside the South.”

The labor shock of WWI increased in demand in manufacturing, with better pay than southern jobs. White and black southerners responded. White southerners were more willing to travel further, and clustered relatively more in the west, black southerners clustered relatively more in the Midwest and Northeast.

And, of course, “for African Americans specifically, political disenfranchisement, mob violence, de jure segregation, and, in general, the ascendance of the Jim Crow regime may have provided a strong incentive to leave the region” [1] “May have” is doing a lot of work in that sentence.

The same process would repeat in general during the Great Depression/WWII. Demand, movement. By 1950, 68% (from 89%) of African-Americans lived in the south, 19.6% born to the region had left. those with higher education were more likely to move. [2] Another predictor of movement to the north (and capital accumulation in general during reconstruction and post-reconstruction) was health. [3] White southerners, in contrast, recouped their losses from the war within a few generations. [4]

So: after the civil war, reconstruction largely failed in the south, discrimination abounded, so once the demand was there, people moved north.

White northerners are racist too. Segregation, while unconstitutional, was rampant in northern cities. Those who fled north were denied fair housing opportunities in northern cities, and the roots of white flight began to be planted. But for the time being, home ownership was still too difficult for middle-class families of any race to achieve en masse, so suburbanization was kept at bay. Then came the Depression. A second great migration, a second world war, and the recreation of much of the ingredients of the first series of events. The difference was that this time, the Government valued home-ownership far more, and responded to the demand of white Americans to own homes in segregated suburbs. post-WWII period, and the decline in city-population in favor of the suburbs from 1940-1970.

The FDR/Truman administrations set the stage for the suburbanization of the next thirty years. Homeownership rates shot up from 45% in 1940 to 65% by 1970. Mortgage innovation alone accounted for 21% of that increase. The GI bill was significant too. But these changes were in lock-step with the overall movement of white flight as a response to the second Great Migration. [5]

One of the many studies I wanted to share in writing this post is this, which simplified the metrics of white flight in a single statistic.

“The best causal estimates imply that each black arrival led to 2.7 white departures.”. [6]

Visualize this. A black family moves in, more than two white families move out. Those who stay engaged in harassment, mob violence, political disenfranchisement, and the rigging of local policy so that, while it may not have excluded by race specifically (though it often did), it had the express effect of segregating neighborhoods. This happened everywhere.

So, by design and by the anger of their would-be neighbors, black Americans were locked out of suburbanization. A better accounting of this active segregation (which covers most of the stuff I’m talking about here, better than I do) is found in Richard Rothstein’s book ‘The Color of Law’. Suffice to say, the Fair Housing Act was too little, too late to undo segregation. I know this from my life, I saw it growing up. There is no fundamental economic reason for a suburb to be 90%+ white. It always comes back to the history of active government and private policy.

We are left with the persistent effects of these decisions. They consume our country across almost every possible dimension. Education, culture–you name it, the segregation of the suburbs and the wealth disparities that generated will be a part of the story. Segregation was strictly negative for black Americans, and had a mix of positive and negative effects for white Americans. [8] This indicates to me that the racism was only partially for material gain, and was largely an explicit expression of ideological racism.

It hasn’t left us. If you look at the comment section on news related to any crime in my home town of Orland Park, or in the resistance to expansion of multi-family residential zoning, or the fear of ‘riff-raff’ moving into idyllic suburbs, you will see our history manifest, either in coded terms (‘we don’t want riff-raff’) or, more often on social media these days, racial slurs & raw ignorance. It’s disgusting, public, privileged, All-American.

Undoing this process is a huge endeavor. My interest today is in one small part of it. The Mortgage-interest deduction (MID) could be justified as an incentive towards home ownership. While I believe that goal is not particularly admirable, it could be argued in good faith. But the MID does not achieve this [9, 10, 11]. Homeownership rates have stayed stable in the past decades, and quasi-experimental evidence from the implementation of the MID in Europe showed little causal movement in home ownership.

The estimated the value of this deduction in the United States is around $61.9 billion, but perhaps up to $72.4 billion or more. This is very close to the estimated cost of “Free college” programs at $70 billion. [12] The valuation of entrenched segregation and home-ownership (and subsequent ability to pass down wealth to one’s family) go far further, and hopefully will be the subject of later posts. But my urge is always to start with the MID because it is so nakedly a hand-out without discernable benefits besides giving white (now-wealthy) people money because their ancestors captured the mechanisms of Government in a crucial time period.

I believe it could be a bold policy proposal to go for a ‘swap’ of MID for tuition-free college (or other efforts), ideally with means-testing to amplify benefits to low-income Americans. While I’ve criticized free college before, Elizabeth Warren’s plan would skew towards the middle-class more than I initially thought, and may even be progressive along strictly racial lines rather than wealth lines alone. I also fear that that repealing the MID will be so unpopular (it polls at 77% among economists to repeal, and 10% among the general electorate), that pairing it with a wildly-popular idea that is somewhat a compensatory hand-out to the suburbs will make it politically feasible [13, 14].

Really though, I want to have a solid political framework to work off of here. I’ll try to summarize:

Black southerners fled discrimination and lack of economic opportunity by moving north, where they subsequently faced a lack of economic opportunity and discrimination. The federal government cut off African-Americans from the vast majority of wealth generation that occurred over a 60-year period of rising home-ownership and suburbanization and failed to desegregate America when the window was most open. ‘Preventing Future Discrimination’, itself a difficult proposition for the government, is not sufficient. Redistribution of entrenched wealth, gained via unconstitutional segregation, seems to be an actionable alternative.

Repealing & Replacing the MID is a strong place for federal-level policy to begin undoing the harm it did if we can’t politically stomach direct reparations. In future posts I hope to outline more about what I’ve learned and believe about the economic case against the MID/suburbs broadly, or at least suburbs in their current state.

Citations:

[1] https://www.nber.org/papers/w21384.pdf

[2] https://www.nber.org/papers/w2697

[3] https://www.nber.org/papers/w14037

[4] https://www.nber.org/papers/w25700

[5] https://www.nber.org/chapters/c12802

[6] https://www.nber.org/papers/w13543

[7] https://www.amazon.com/Color-Law-Forgotten-Government-Segregated/dp/1631492853

[8] https://www.nber.org/papers/w13343.pdf

[9] https://www.nber.org/papers/w23600

[10] https://www.nber.org/papers/w9284.pdf

[11] https://www.nber.org/chapters/c13054.pdf